The basis of any successful business or enterprise: build working relationships with customers. Canada’s Driving Force Vehicle Rentals, Sales and Leasing goes above and beyond in applying this creed to its everyday operations.
“Our business is built on relationships,” says Jeff Polovick, president, CEO and founder of Driving Force, “not whether there was a huge opportunity in the marketplace.”
Since its creation in 1978, Driving Force has had a firm footing in the energy and mining industries, providing trucks and specialty vehicles to companies in western Canada and the Arctic. In recent years, the company has further expanded to serve Ontario and the Atlantic provinces.
Today, the company’s 12,000-vehicle fleet is mostly composed of light- and medium-duty trucks from Classes 1 to 7, including pickup trucks, vans and purpose-built specialty vehicles. Approximately 10% of the fleet is passenger cars to round out its product offering to commercial accounts and retail consumers.
A Strong Foundation
Even before Driving Force, Polovick was no stranger to the industry.
In 1978, after passing up an opportunity to buy an established business, Polovick started Grove Rentals and Leasing with a silent partner who owned a car dealership in Spruce Grove, Alberta. “We were a one-man operation,” Polovick says. “My wife was doing the billings from home. It was a startup operation, believe me.”
He soon recognized untapped potential in Edmonton and Fort McMurray, Alberta, home to one of the largest oil sand deposits in North America. The company quickly grew to serve other markets and moved out of Spruce Grove and into new headquarters in the nearby city of Edmonton. It was time for a new name, and Driving Force Vehicle Rentals, Sales and Leasing was born.
The company found success early on in providing vehicles to Alberta’s rapidly growing petrochemical sector. “It was all about who could provide the best service, who could get vehicles, and who had the relationships with the contractors that were building,” says Polovick.
He found an advantage in his ability to respond quickly to the emerging needs of his customers, as opposed to the national vehicle providers who had more layers in their decision-making processes. He continues to credit that ability, now supported by a flat organizational structure that stretches across the country. “It’s our ability to react quickly that makes the difference to our customers, which translates into success for us,” he says.
This advantage is illustrated in one defining moment for the company in the 1990s, when a fire at a Fort McMurray refinery shut down oil production in the plant. “A coker caught fire, and there was a need for 100 vehicles within three days’ time,” Polovick says. “We were able to move quickly enough to meet that demand, and delivered the vehicles within 48 hours.”
Boom, Bust and Boom
Driving Force has weathered its share of ups and downs through the years.
In the early 1980s, the ruling federal party introduced the National Energy Program, designed to give Canada more control of its resource industry. “The program made it onerous for many companies working in the industry,” says Polovick. “Since the rules no longer favored free enterprise, they decided that there was no point in exploring in Canada.” As a result, drilling and exploration nearly stopped. “It was Survival 101, but we made it through,” he reflects.
Since then, Driving Force has maintained its growth trend through two recessions and in the face of unpredictable oil prices. The recent shale oil boom has provided new business for Driving Force, but this year’s drop in OPEC prices has had a chilling effect on new projects. “Right now, everyone is tightening their belts in the oil and gas industries because the price of oil is so low,” Polovick says.
As a result, customers are moving from leases to short-term rentals to free up capital, putting Driving Force in a favorable position to continue doing business with them. “This only happens if you have the relationship with the customer and if you have dealt with them for a number of years,” Polovick observes.
The recent slowdown has also prompted Driving Force to search for acquisition opportunities in other parts of the country.
Weathering the Storms
As with any business, Driving Force has had to manage forces beyond its control, such as the economy and government regulations.
In 1991, the Canadian government introduced a 7% general sales tax, which eliminated a 12% federal excise tax. This caught the Canadian rental industry in a tax Catch-22: While other types of taxable goods and services could claim a tax credit, rental companies — unless they claimed their fleets as short-term assets — could not.
This meant that rental vehicles put into service before 1991 incurred not only the excise tax, but also the sales tax upon disposal. As a result, Polovick estimates the company paid about $3 million extra in taxes over a three-year period. “Those were very lean years as we worked through that fleet,” he recalls.
In 2008, the Recession hit the petrochemical industry as hard as any other, Polovick says. “The price of oil dove again,” he says. “Our established funding sources dried up, and we needed to move quickly to replace those funds.”
This prompted Driving Force to work with a lead bank to create a unique financing syndicate. When the market started to improve in 2010, Driving Force was ready. “We gained a lot of market share because we had already arranged our capital when many of our competitors were still struggling for financing,” he says.
Polovick also credits the smart buying and selling of inventory as a hedge against business slowdowns. “If you’re doing the right things with your fleet, you should be able to dispose of the vehicles properly when times are slower,” he says. “You might not make it on the rental but you will when you sell it.”
Geographic and Business Diversity
Business-to-business truck rentals have been the company’s core offering from the beginning. Polovick appreciates the B2B relationship. “Corporations prefer a relationship more so than the retail consumer,” he says. “They understand the value of providing good service.”
A function of its years of experience in the market and attention to customer needs, the company also offers fleet management services to its clients. “Over the years, we’ve truly grown to encompass the concept of solving people’s fleet problems,” Polovick says.
Driving Force recently opened in Newfoundland and is looking to grow through further acquisitions. The company is in talks to acquire two companies serving Toronto and is actively searching for other acquisition opportunities.
Retail rentals are a growing part of the business, but not the primary focus. According to Polovick, “The retail car market is really monetized right now.”
Polovick has a stake in five car and truck dealerships across Canada, all of which are sources for the company’s rental and leasing fleets.
He is also part owner of a consumer-facing retail sales location focusing on non-prime sales. The location serves as a resale outlet for Driving Force fleet vehicles while also meeting the needs of an underserviced market segment. “We are specializing in customers who, for various reasons, don’t have prime credit but can eventually turn into prime customers,” says Polovick.
Culture Makes the Difference
Driving Force leadership pays particular attention to its corporate culture.
With more than 500 employees at 30 locations across the country, Polovick says the company constantly works to better its employee relationships. “How can we expect our employees to satisfy our customers if they aren’t happy, themselves?” Polovick asks.
Driving Force surveys all employees annually to determine their level of satisfaction. The anonymous survey is composed of 26 questions and has been administered companywide for the last 15 years. The results, says Polovick, are used to help managers determine the health of the company culture in every branch.
The company’s attention to its employees has resulted in accolades such as being ranked among Canada’s 50 Best Managed Companies multiple times, Canada’s Top Small and Medium Employers and One of Canada’s 10 Most Admired Corporate Cultures. Polovick was recently inducted into the Alberta Business Hall of Fame as well as being recognized as Entrepreneur of the Year for the Prairies region.
The importance of culture is reflected in numerous initiatives across the company, including the hiring of staff with intellectual disabilities. “We find appropriate positions for all our employees to play valuable roles in the company, and at the same time ensure that their job will be something they enjoy, too,” says Polovick.
“The culture makes the difference. You’ve got to love what you do. If you love what you’re doing, then you really aren’t working anymore.”