Of course, I knew practically nothing about equipment leasing at that time, but my new employer asked several of us freshly minted graduates to complete white papers on areas of potential interest — areas not yet served by the bank. Quite literally, I drew my subject — and my future career path — out of a hat.
Within three months we each wrote our white papers on different topical areas, with their pros and cons. My paper recommended that the bank tackle what I thought was a promising new opportunity for growth and expansion. Part of the rationale was to stay competitive with other banks that already were entering or likely would soon enter the equipment leasing arena. Also, there were significant tax advantages to getting into this segment of the business, and there was the value of diversifying into an additional business line.
Marine National accepted that white paper’s recommendation, and we started in the new direction. Others with more skills and experience assisted us a lot. Actually, that’s a special character trait of our industry — the cooperation and supportive attitude that is so prevalent. For example, Equilease helped us get into this new business and US Leasing provided similar services for others.
Looking back to the early 1970s, there was a lack of understanding about the leasing industry. A decade later, the dark gray shading brightened. Customers gained leasing experience, and the overall business segment developed a greater transparency. Market leaders provided direction. In the 1990s, very aggressive tax structure transactions turned out to be more creative and entrepreneurial than they should have been. The “Perfect Storm” of 1999-2001, with gain-on-sale accounting, abuse of securitization and growth-at-any-cost focus, was an ugly period. Many well-known players in our industry had problems and struggled.
There was a huge amount of interest in our industry’s situation. This resulted in a deep-dive research study produced by The Alta Group for the Equipment Leasing and Finance Foundation. The report looked into those companies, their management and processes. The research effort was very topical and timely, new and different for the Equipment Leasing and Finance Association and its foundation, yielding interesting results that still are widely studied and used — particularly for training younger management personnel.
Fast-forward through the last decade to today. The U.S. economy seems to be improving — but only slightly. The employment recovery is sluggish — although somewhat better than it was. The U.S. political process is stalemated — barely able to function as a two-party system. The economic turmoil in Europe and the political turmoil in the Middle East and Africa continue. The growth rates in China and India are declining. But our equipment leasing companies have survived via a new focus on controlling expenses, retaining current customers, resetting the business model, developing a more global perspective and continuing to move forward.
The reality is that obstacles definitely are greater today and tomorrow. And there are fewer opportunities to be creative versus 40 years ago. But there are opportunities and certainly there will continue to be opportunities.
Looking ahead, innovative technology applications, smarter asset management and big data capture and analysis will be critical parts of any success mix, as companies in commercial finance target products and services to narrower segments. To differentiate from competition, they will strive to tailor their customer approaches to a point where they are almost uniquely designed for one. It’s not about being on the cutting-edge per se, but being in much closer alignment than ever before with those you serve and with whom you collaborate.
Reduced margins, competitive markets and rising costs mean organizations must strive for operational and technical excellence to remain profitable. One trend is that as business strategies continually evolve to address new challenges, organizations will survive and thrive by aligning core business processes and technology solutions with management objectives.
Another major trend is the impact of global economic conditions and the movement of equipment worldwide. Having an international perspective in asset management is a growing requirement. In fact, quite a few leasing companies and manufacturers are becoming more global in their organizational structures and in their approach. This is one area of Alta’s consulting practice that we have greatly expanded to serve our clients’ needs in this way. Alta’s approach to lifecycle management and asset management mirrors the global emphasis, offering clients a straightforward model and confidence that our worldwide reach and experienced team can deliver the needed results.
We also are assisting clients to anticipate and manage a growing myriad of risk concerns that didn’t exist in the same way 40 years ago, and we are helping to deal with burdensome regulatory requirements for transparency and reporting that present challenges. These are not insurmountable issues but they do require a level of knowledge and expertise not necessary to the same extent in the past. Most companies will be outsourcing, using more specialized resources to meet the new challenges and to seize rewarding opportunities.
The industry survived that Perfect Storm and is stronger because of it. The generous cooperation and supportive attitude mentioned above could not be stronger. Remarkably bright and creative people still gravitate to this business and gather at our events around the world. They continue to be helpful and welcoming to new people in our midst, young employees who perhaps have drawn a slip of paper from a hat and launched their own career path for the next 40 or so years.
Those future leaders — Monitor readers, no doubt — likely will look back on the current decade and the next one as the good old days, when the world got dramatically smaller, time zones compressed, and new uses of digital technology facilitated 24/7 communications. That next generation of this industry’s executives will recall this as the time when automobiles started driving themselves via intelligent transportation systems; when computerized real-time translation and interpretation aided their business communication immensely; and when solar, wind and improved battery power technology captured a significant market share. They also will recall this period as the era when our industry truly broadened into the global marketplace.
My advice: Be resilient. Persevere. Embrace new technology. Be creative — but not too creative. Find a new niche and go global with it. Focus and prioritize. Above all, develop a compelling value proposition and formulate a plan — perhaps imperfect — and then implement it. Our industry is full of examples, from the 1960s through today, of remarkably innovative and successful leasing companies whether they be large or small, bank-owned, captive or independent. Let them be your guides.
Perfect Storms come and go. In their wake, they often leave damage and they always produce opportunities. Yes, it helps to be lucky — and it also is important to be in the right place at the right time, ready with a good plan, bright people and a strong ability to persist.
John C. Deane is a founder and the CEO of The Alta Group, a global consultancy exclusively focused since 1992 on helping equipment leasing and finance companies implement best practices. He currently leads the consultancy composed of eight major practice areas. He has managed hundreds of consulting and advisory projects worldwide for clients of all sizes. Prior to co-founding The Alta Group, Deane served as a principal in the firm of Amembal, Deane & Associates, a provider of training, educational and consulting services for the equipment and leasing industry, and was CEO of both Great Western Leasing and BancOne Leasing. He also worked as the CFO and president of several major financial corporations. Deane has served as chairman of the ELFA and a member of the World Leasing Council. For more information, visit www.thealtagroup.com.
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