24/7 Studio Equipment

RER
Kings of Hollywood
January 2007
Story and Photos by Michael Roth

24/7 is not just the name of a rental company. It also describes a way of life in the studio equipment rental business.

In the course of a typical episode of the TV series "24," counter terrorism agent Jack Bauer, played by Kiefer Sutherland, is likely to be shot at, shoot attackers, rescue hostages, foil a terrorist attack, prevent a nuclear bomb explosion or try to prevent a nuclear bomb explosion or try to prevent the assassination of a presidential candidate. All while working around the clock without sleep and trying to rescue his kidnapped daughter.

For 24/7 Studio Equipment, which provides equipment for "24" and a number of other television series and movies, a typical day, while not quite as dramatic, will also provide changes , twists and turns as production companies alter their plans and expect their equipment provides to adapt.

"Sometimes the script is changed during lunch," says Dugald Stermer, property foreman on "24." And everything changes in a minute." Transportation coordinator Hal Lary tells of a snap decision made to shoot a scene on an airplane several hours away in the Mojave Desert and the logistical challenge of moving equipment, cameras, actors and equipment.

"It was much easier because I never had to worry about the equipment because 24/7's people were on the job," says Lary.

"On Saturday, I must have called and changed our order six times in and hour," adds Stermer. "Anthony [Vietro, rigging key grip] needed 80-footers, I needed booms, and another department wanted scissors. I asked for a 40-foot knuckle, the electrician says, 'I can't use the 40, I need a 60-foot knuckle.' And on and on."

Film and television production facilities regularly require aerial equipment, generators, forklifts, light towers and more. And with production costs often running into the hundreds of thousands of dollars per hour, film production companies need extremely reliable rental companies whose personnel don't mind doing business under such demanding conditions. They must also be willing to be available on a 24/7 basis.

"We once got a mandate to go with the cheapest company," says Phil Stone, construction coordinator on "24." "We needed a large forklift. They brougcht us the wrong kind, the forks didn't match it and it was over four hours late. I had to explain to the producer to back off on using the 'cheapest.' The cheapest isn't necessarily the lowest-cost provider."

Only a few rental specialists pursue the studio business and the newest is 24/7 Studio Equipment, whose president Lance Sorenson, a 20-year studio rental veteran, began his company one year ago. Armed with a cell phone and a pager during his long work days as well as when he's off work, at home relaxing, at a movie, even at a friend's wedding, Sorenson is notorious for answering his calls or returning them with almost legendary reliability and swiftness.

"I always have to remember that it's my phone and my pager going off when they could be calling the phone and the pager of somebody else from another company," Sorenson says. "And do I want that to be somebody else? No. I want it to be me."

Sorenson laughs recalling how he missed the last 20 minutes of "Pirates of the Caribbean: Dead Man's Chest" because his pager went off and he left the theater to return the call and take care of a customer's problem. "I missed the ending, but it was worth it," he says. "Because I'm willing to do that, I'm owning a piece of this business. In the big scheme of things, that's really important to me. This business is my passion."

-- STRONG PROSPECTS --

Kevin Rodgers founded NES Equipment Rentals in 1996, backed by a private equity group, acquiring niche businesses and gradually developing a national network. Although Rodgers doesn't forsee Rental Holdings, the group of niche rental companies he is acquiring with the backing of Chicago-based Prospect Partners, as having the goal of establishing a national rental company, the initial modus operandi is similar, with one compelling difference.

Where NES acquired companies and put the former owners to work as employees, Rental Holdings is acquiring is acquiring or founding companies with the president, in charge of daily operations, participating in ownership as an equity partner. "We see a difference in results being achieved by operators who have an ownership stake in their businesses," Rodgers says.

Prospect's first acquisition was Industrial Hoist Services, acquired from NES in December 2004, which specializes in the rental, service and sales of pneumatic, electrical and mechanical-powered chain hoists and winches. The equipment is typically supplied to refineries, power plants, shipyards, offshore applications, steel and paper mills and other large industrial users. The president of HIS is James Kowalik, a veteran of the hoist and rigging business who owned the first business NES ever acquired and stayed on to run it within NES.

IHS made three acquisitions in 2006, B&H Air Tools, Port Rentals Sales & Service and Delta Wire Rope. HIS (which now includes B&H and Port) along with Delta Wire Rope, Broussard, La., run by Mike Lindsey, forms the Delta Group. Rental Holdings' second major business group is 24/7 Studio Equipment.

In 2004, as part of NES, total revenues for Industrial Hoist were $9.5 million. Same-store revenues increased 21 percent in 2005 and 55 percent for the 11-month period ended November 2006. The Delta Group brought in $47 million in revenue in 2006.

24/7 Studio Equipment grossed more than $6 million in 2006, its first year of operation.

"Our goal is to build a portfolio of niche market companies," says Rodgers. "If they stretch geographically, that's fine, but the preferred plan is to go deeper into existing markets as opposed to going into new markets and getting spread too thin. At the end of the day, however, it all depends on what opportunities come up. The one constant is that our primary focus will continue to be on niche market businesses, staying away from general rental."

Passion is what it takes to succeed in studio equipment rentals, along with careful attention to detail.

"In construction, if the customer calls for a 7 a.m. delivery, it often means that delivery any time prior to 7 is OK," says 24/7 CEO Kevin Rodgers. "But in studio rentals, you may where they are doing a shoot and you aren't allowed into the area before 8 o'clock, but it has to be there by 8:15. So you have a really narrow window to make deliveries. And if they say they want it picked up when they are finished shooting, say between 5:00 and 5:30, they really mean between 5:00 and 5:30 because it can't be left on the street or they are often required to hire special security to stay with the machine. Contrast that to a construction site, where often it's picked up the next day or even the day after that, so long as the customer isn't paying extra, it's not going anywhere and there is other equipment out on the job as well. It's a much different scenario."

If delivery is late on a construction site, often the crew can do something else while waiting `for the machine. If they are waiting for a lift, they may be able to work on something on the ground while waiting. "In studio rental, if you mess up, you're not just messing up one guy," says Sorenson. "A whole production company might be waiting because they need that machine to hang lights or cameras. That could be 120 people, and if you have a Tom Cruise or a DeNiro or a Pacino waiting along with that cast and crew, the costs are huge."

Equipment must be specially designed for studio work. For example, because 24/7's boom lifts are often used to hang lights or cameras from various angles during filming, the booms are painted black with a special non-reflective paint so the boom can't be seen if the scene is being shot from the

opposite angle. All 24/7 booms are equipped with cribbing cutout switches installed at the factory the machines are used with cribbing blocks, as mandated by the film production industry. Aerial equipment on sets must have foam-filled tires to avoid flats, as well as non-marking tires to work on ceramic or marble floors without scratching the surfaces.

24/7 also offers dual-fuel units so they can use propane for inside work on sound stages, gas for the outside. When 24/7 rents light towers for film locations, they provide secondary power sources to limit noise.

And as in any other rental business, it takes effort from the 24/7 staff to make sure the right equipment is sent.

"It's not uncommon for customers to order a piece of equipment that's too big or too small," says Sorenson. "If the customer says, 'We want a 20-foot scissor lift,' it's our job to ask, 'Do you want to stand at 20 feet or do you want to reach 20 feet?' and 'Is it for inside or outside?' If we don't ask those questions, we'd be killing ourselves with extra rental deliveries and pick-

ups."

While most rental sales specialists follow Dodge Reports to keep up with information on construction projects, Sorenson and the 24/7 sales staff follows the start-up of film and TV projects conscientiously. Sorenson tries to regularly watch the TV shows 24/7 rents to so he'll have an ongoing feel for what they are trying to achieve in production. He read film and television production journals to keep ahead of what projects are likely to be launched by the various studios. And just as effective, rental sales personnel regularly visit jobsites to keep up with developments on projects and what customers will need, Sorenson spends the majority of his time in the field visiting with production staff from the series and film projects to keep up with needs that change on an ongoing basis.

This degree of specialization illustrates why it is difficult for general rental companies to compete in this arena. While general rental companies pick up some business with studios, their ability to service customers typically cannot compare with the specialist.

-- NOW PLAYING --

Some of the films and TV series' 24/7 Studio Equipment has supplied in 2006 & 2007:

Feature Films Released/To Be Released:
Pirates of the Carribean: Dead Man's Chest
Pirates of the Carribean: At World's End
The Holiday
Dreamgirls
Live Free Or Die Hard
Oceans 13
Lions For Lambs
Chuck and Larry
Evan Almighty
Norbit
Transformers
King of California
Drillbit Taylor
The Comeback
Vacancy
Carlie Wilson's War

Past & Present Television Series':
24
CSI: Crime Scene Investigation (Las Vegas)
CSI: Miami
CSI: New York
Nip/Tuck
Deadwood (HBO)
Dexter (Showtime)
Heroes
Bones
The Unit
Ghost Whisperer
The Closer
My Name Is Earl
Entourage (HBO)
Big Love (HBO)
Shark
Las Vegas
Daybreak
Studio 60 on the Sunset Strip
Close To Home

The studio rental business can also be more costly and labor-intensive to run than the typical construction equipment rental business because equipment is often used on a more short-term basis. "At NES [Studio Rentals, previously run by Sorenson], our labor costs were higher than anybody else's in the company," says Sorenson. "That's because each piece of equipment was getting more check-ins and check-outs. Comparing us with other locations that had a lot of aerial equipment, you could take a 60-foot boom at another branch and in a three-month period, it might go in and out of the yard three to six times. In that same period, mine might go in and out of the yard three to six times. In that same period, mine might have gone out 20 to 25 times, so I'm spending a lot more money checking it in and out."

Sorenson says he never moves equipment from one job to another without firsts bringing it back to the yard and checking it out thoroughly, partly to guarantee the best to the customer and also because in case of damage, he needs to be sure who he should charge.

King of Hollywood
Although Sorenson loves the movies, he didn't start out looking for a career in Hollywood. He started working in the construction business, and in 1984 went to work in outside rental sales for Pico Rivera, Calif.-based ADCO Equipment. As he made his rounds to jobsites and industrial facilities, Sorenson frequently noticed film production crews at work and observed that they always had generators, air compressors, light towers, forklifts, aerial equipment and other items ADCO carried. He decided to find out who rented to these production companies.

Not knowing anything about the film business, Sorenson tried to just walk on film sites and ask who was in charge of renting equipment. After being bounced off several sites without even getting a chance to present his case to anyone, he creatively found ways of getting onto studio lots and asking around to find out who was in charge of renting equipment.

Sorenson kept hearing that the studios rented equipment from Northridge Equipment Rentals whose rep, Jerry Myers, proclaimed him-self "the King of Hollywood." Sorenson laughs as he recalls thinking that if he kept trying, maybe some day he could be a prince and get a piece of the studio rental business for ADCO. As Sorenson began to understand how the business worked, he managed to convince then-ADCO owner Ernie Duncan the business had potential.

Before long ADCO became the leading player in rentals to film studios in Southern California and Sorenson was working long days

and evenings visiting studios and production facilities. It was before the days of cell phones. Armed with a pager, Sorenson became skilled at quickly finding pay phones whenever his pager went off, no small achievement on freeways and downtown Los Angeles streets.

More important, Sorenson became known as a man of his word, who would return calls with startling quickness, and find ways to make things happen, even when the demands were excessive and demanded a level and style of service few construction rental companies were accustomed to.

"When I was working at ADCO and I brought this business idea to them, there were people at that company who felt like, 'Why do we want to get involved in that business?" Sorenson says. "They were very content at working Monday through Friday and having drivers start at 5 o'clock in the morning and end at 3:30. Each day at 4 o'clock every truck was parked immaculately ready to start at 5 o'clock the next morning. And then this whole goofy business started creating evening deliveries, evening deliveries, evening pickups, and weekend work, and stuff like that. But Ernie Duncan was a smart guy, he knew an opportunity when it came up and he helped me by giving me whatever I needed."

ADCO eventually was sold to United Rentals and shortly thereafter Sorenson was recruited by National Equipment Services CEO Rodgers to develop the studio rental business for NES, which he did from 1998 through the end of 2005 when Rodgers, working Chicago-based private equity firm Prospect Partners, offered Sorenson an opportunity to run his own company. In mid-January 2006 24/7 Studio Equipment was born. The company opened a facility with 16,000 square feet of office space on two floors, with 27,000 square feet of shop space in two buildings in Burbank, just a short drive from Universal, Warner Bros. and Disney. "Our location is terrific," Sorenson says. "Our guys don't even have to get on the freeway to go to those studios."

Finding appropriate facilities has increasingly become a more complex issue for rental companies and it was no exception for 24/7. "Finding a place was the biggest challenge we had," says Rodgers. "It was a lot harder than finding the money to back the project."

Sorenson opened for business before he even received his equipment. "When we started getting equipment, all we got [at first] were small electric scissors, 19-footers and 26-footers, and 5K industrial forklifts," Sorenson says. "We were getting calls for them, but we were also getting calls for 60-foot booms, 80-foot booms, and 45-foot articulates and we didn't have them!"

Sorenson passed up a few orders, re-rented from others until the shipments came in, and since then, based on the 20 years of relationships he had established, business has grown steadily and rapidly.

While the rapid success of 24/7 can mostly be attributed to Sorenson's ready-to-do-business coterie of contacts gathered through two decades in the studio equipment business, Sorenson would be the last to claim credit for himself. Among Sorenson's first hires was Tim Moore, who worked with him at ADCO and NES, and is now vice president of operations, the man who keeps the business operating while Sorenson makes his daily rounds of the studios and production sites. Johnny Brown, another former NES employee, joined with Sorenson to head up the sales effort and a couple of months later Paul Lozano, formerly of ADCO/United Rentals, also joined the sales team.

To set up the back office and serve as chief financial officer, Sorenson recruited a personal friend Gary Mielke, who has served in financial roles for several corporations including the position of CFO for the Steamboat Ski & Resort Corp. in Colorado. Other key recruits include head dispatcher Bob Mulloy, shop manager Floyd Griffin and administrations manager Missy Semasinghe. Mielke came to the organization knowing nothing about equipment rental but was intrigued by the viability of Sorenson's business plan. Mielke enjoyed the experience of building a company from scratch with the opportunity to set things up the way they wanted.

"At first I was just kind of helping Lance along, but the more I learned about the business and the quality of the business as they run it, I saw that it was like we used to do in the resort business," says Mielke. "Your customer is number one and you orient your whole company around the concept. It started getting pretty exciting. When you're hiring every person in your organization, how can you pick people so they all have the same attitude toward service? You probably only get a chance to do that once in your life, and it was pretty neat."

Part of the challenge was preparing the facility, a task that went beyond the physical.

"Once we knew we were starting with a building that hadn't been occupied for two or three years, we had to decide how to get the building usable for the operation," Mielke says. "Then from the financial side, the landlord was concerned about how financially trustworthy we were, and what our background was. If a landlord can rent to Fortune 500 companies with a good credit rating, it's easy, but when you're a start up, the landlord becomes a partner too to a degree. We had to communicate a lot to get them to understand what we wanted to do and how we wanted to do it. And all that time we're trying to get started, the first shipments were coming in the door and we had to get computer systems up and clerical people hired and get people who can make the office happen, because the way Lance and Tim run the company, the back office needs to be as smooth as the front part of the operation."

"When you want to start a business, you need to have phones and faxes, and you can't just call the phone company and order 20 phones and fax lines and get them the next day," adds Sorenson. "It takes a few weeks. So we worked on cell phones and used the fax machine at my house."

The strength of the back-office team is critical for 24/7 because Sorenson, unlike most presidents, spends most of his days in the field, visiting customers. "My goal is to be in front of a customer by 7 o'clock every morning," Sorenson says. He typically spends no more than a couple of hours a day in his office.

It's because of Sorenson's relationship building that customers have stayed with him year after year. He knows many of the customers on a more personal basis, sometimes attending sporting events with them or dining with them along with their wives. Many have attended golf tournaments Sorenson sponsored while at NES, a tradition he continued recently holding 24/7's first golf tournament, bringing in 144 customers for a day of golf.

But as Sorenson says, those relationships need to regularly be cultivated and communications is ongoing. "Our people are trained so that I call him at 8, we can find a way to work around it."

Relationships help, but it still depends on performance. "My relationship is good for one 'Get out of jail free' pass," he laughs.

Since starting 24/7 Sorenson has been overwhelmed with the response. After signing a lease Jan. 17, 2006 and beginning to receive equipment shipments in mid-February, by the end of May, 24 /7 had a full range of boom lifts, scissor lifts, and forklifts and more that 350 machines in the rental fleet. In May, rental volume topped $325.000. In July, the company topped $700,000 in rental revenue and in October, it brought in $900,000. By early December, the company passed $6 million in rental volume for the year, an almost unheard-of number for a start-up in a partial year, with a total fleet of 452 units at a cost of about $16 million.

Although Sorenson is far too humble to ever refer to himself as the new 'King of Hollywood', or to suggest the company's success is his own doing rather than a major team effort, the fact is that 24/7 is now the largest rental company serving the television and motion picture industry in L.A. area. And it got there not by proclamation, but by providing an unparalleled level of service.

Spreading out
While some might think studio equipment rental is primarily an L.A. story, it's far from the case as many states are offering incentives to film studios and businesses that support film production. One such state is New Mexico, and Sorenson has received numerous requests from customers to come to New Mexico to support their film work there. Louisiana is another such state. In the not-too distant future, Sorenson hopes to open facilities in both New Mexico and Louisiana.

Sorenson and 24/7 are moving fast. They probably won't have to spend their days getting shot at, rescuing hostages, foiling terrorist attacks or preventing assassinations, but life will not be boring. And both the 24 and the 7 in 24/7 are for real.

FROM THE EDITOR-DON'T MAKE THEM CHANGE THE CHANNEL

Not Many heads of rental companies start their day by driving across town to a movie studio. But then again, not many rental companies are like 24/7 Studio Equipment.

What jobs are coming to town? This is the question people in the rental business are always asking. Outside sales reps live and breathe Dodge Reports and any other information that can give them a clue about new construction jobs. Bust Lance Sorenson, president of 24/7, is too busy meeting with production staffs of motions picture and television studio to worry about housing starts. More important to him is what movies are about to be shot and what TV shows require on their sets.

Most of us like watching movies and have our favorite TV shows. But when Sorenson watches, it's not just entertainment. Sorenson is paying attention to camera angles and, on occasion, he'll spot a forklift in the background, and chances are pretty good it's one of his.

But whether a company is renting to construction sites, industrial facilities or film production companies, the basic principles remain the same and these are what Sorenson embodies wholeheartedly.

No. 1 is start early. Sorenson is up before 5 a.m., on the road by 6 and has the daily goal of being in front of customer by 7. It doesn't matter if you're talking construction needs, industrial plant turnarounds or, in Sorenson's case, the next film shoot. What are the customer's needs, how can the rental company help? What equipment do you need, when do you need it, and what does the job require?

Principal No.2 is communication. This is not a new concept, but every contractor I've ever interviewed has repeated it. "If you're going to be late on a delivery, don't wait until you're already late to tell me. Tell me in advance so I can be prepared." The worst is when equipment is scheduled for delivery, or a technician for repair and they don't even show up or give the customer an explanation. If I was that customer, I'd say don't even bother to call me again.

I've ridden around Los Angeles with Lance more than once and I've seen it for myself: his phone never stops ringing. If I'm trying to interview him, he can barely get through an answer without his phone going off. And if a caller misses him, he calls back fast. We live in the age of cell phones and PDAs, yet some people still don't call customers back right away. Sorenson honed that quick callback technique 20 years ago, before cell phones, when all there were pagers and Lance had to get off the freeway and find the nearest pay phone. I'll bet he had every pay phone in the city staked out.

Ask Sorenson "why?" and the answer is simple. "If they aren't calling me, they're going to call somebody else."

Principle No. 3 if to care about other people and their problems. In some ways, this is a human characteristic that is hard to teach. Empathy is a special quality on a personal level-it's key for anybody operating in sales. Sorenson seems to come by it's naturally.

Principle No. 4: Take responsibility when things go wrong and defer credit when things go right. It's not always easy, egotistic as we humans are, but if something goes wrong on a rental, be the first to say, "I'm responsible, whet can I do to make it up to you?" And if a customer lets you know your company performed well, tell them what a hard-working group of people you have and let your staff know the customer cared enough to pass along a compliment.

Principle No. 5: Make sure you ask the right questions. If a person says they need a 20-foot scissor lift, you need to find out if the person needs to reach 20 feet or stand at 20 feet above the ground. Do they need electric, do they need dual fuel, and is the unit for indoor or outdoor use? Bringing the wrong equipment inconveniences the customer4e and adds unnecessary costs to your rental operation.

These are principles for any rental business, not just studio rentals. Every day is show time. Perform or they'll surf to another channel.

You may have noticed a logo on RER's cover commemorating 50 years of RER. In later issues, we will reflect back on RER's history and, more importantly, the 50 years the magazine has covered the rental industry. Keep reading while we try to make our 50th year the best yet.