25.05.2015

New CEO for Hertz Equipment

Hertz has replaced the chief executive of its equipment rental business - Brian MacDonald - with industry veteran Larry Silber.

The move was implemented late last week and is effective immediately. MacDonald was only appointed to the role last June, with the aim to head up the equipment rental division as the company moves through the process of splitting it away from the car rental business - see: CEO selected for Hertz Equipment. The group also appointed a new chief executive last year, with John Tague taking over in November - see: Hertz appoints new CEO.

Silber began his career with Ingersoll Rand where he spent exactly 30 years in a variety of roles, from sales to general manager of its Material Handling division, to running its company store and used equipment business to being president of its Utility Equipment business and finally chief executive of Ingersoll Rand Canada. He retired in 2008 - six month after Doosan acquired Ingersoll Rand - and then joined Hayward Industries, the world's largest swimming pool equipment manufacturer, as chief operating officer. Four years later he took over as interim chief executive of SMTC, where he remains a director. In 2014 he established LHS Global Advisors and works on a consulting basis with a number of companies and sits as a director of Pike Electric, Weiler and SMTC.
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Larry Silber

Tague said: "Hertz Equipment Rental is one of the world's leading equipment rental businesses, and we are confident that Larry's leadership and experience, as well as his reputation as a great operator, will reenergise the company’s performance on the top line and importantly in dollar value utilisation, which is a key performance driver for this industry."

"Given his deep set of experiences in the heavy equipment sector, we are excited to have Larry Silber lead Hertz Equipment’s business transformation, while also helping us navigate through the separation process."

Silber added: "It is an honour to join the Hertz team at this critical time in its history as it prepares for a future as an independent company. I have long been associated with Hertz Equipment and am excited to be joining the premier global equipment rental company. We will position the company for stronger, more diversified growth with the most efficient cost structure possible. Customers and investors should be confident that the company will be a long-term competitive and reliable force in the market."

Vertikal Comment

This is something of a surprise and suggests that all is not going well at Hertz, which is under pressure from Carl Icahn who acquired an 8.5 percent speculative stake in the business last September. The Hertz board then capitulated to his demands, granting him three seats on the board and a major say in the appointment of the new chief executive - see: Icahn moves into Hertz

The company is still working on the restatement of its previous accounts, and only issued revenue numbers for the first quarter, which showed a small decline in dollar terms. Whether MacDonald became frustrated with the situation at Hertz and quit, or was pushed in order to show action was being taken to address flat revenues and challenges on separating the business, we do not know. It is hard to believe though that changing the man at the top of such a large and complex operation (even one with Silber’s experience) will have the sort of short term impact that the group - or Icahn - is looking for. In fact adding to the instability is likely to have the opposite impact.

With the clear proviso that we do not know why the change occurred – it is more likely to be related to dressing up the equipment business in order to make the sale/split a short term success, than any desire to make the rental business better for its customers, employees and those shareholders who invested for the longer term.

Watch this space.