U-Haul: Building on the Power of Relationships

The company was founded on faith in people, says Stuart Shoen, executive VP of U-Haul and third generation in the family business. In the mid-1940s, he relates, there were plenty of trailer rental companies but none that would rent one-way. Husband and wife L.S. and Anna Mary Carty Shoen conceived of a program to serve customers needing a long haul for a one-way move, such as from Portland to San Francisco (“I think that was the first customer,” Shoen says) and wanting to do the move themselves.

Along with the contract to use one of their small inventory of trailers, the Shoens told the customer to drop the trailer off at a service station that looked reputable, and gave the customer a packet to give that proprietor that said, “Congratulations, you’re the newest U-Haul dealer. If you want to rent this U-Haul trailer, give the same packet to your customer.” The packet included a suggested rental rate and amount to be remitted to them, and asked him to let them know if he was interested in being part of the U-Haul network because, if so, they would send to him their next customer going to his city.

It was a similarly flexible approach the company took when it expanded into self-storage, a business move that came out of the thesis Stuart’s father, Edward Joseph, now the company CEO, researched for his MBA at Harvard in the early ’70s. “It was so well received, the professors wanted to go into the storage business with him,” Stuart relates. Instead, Joe convinced his parents, L.S. and Anna Mary, to get into storage — through arrangements with existing storage businesses. “Dealership agreements are as close to a handshake as we can get,” says Shoen. “They can end it any time they want out. It encourages both parties to do right by each other.” The biggest growth of dealers in that industry is independent storage facilities, Shoen points out. “Almost all are mom-and-pop. And we are fine to not own the storage.” U-Haul provides the storage dealer with some trucks and Web-based software to run the business, and requires no investment but only that it follow U-Haul’s policies and procedures. Self-storage, says Shoen, is a great complement to their truck rentals, as it is a consistent day in, day out business whereas the trucks are more seasonal.

That same decade saw the full-service gas station going by the wayside. There was an oil crisis at the time, but, also, cars were beginning to need less in the way of servicing. “We lost a lot of dealers,” says Shoen. Since independent service stations had been the backbone of U-Haul, “it made us nervous. We began putting our resources into owning our own locations.” There are now about 1,500 company-owned dealerships, although that is still a small part of the overall operations that include more than 16,000 independent dealerships.

Noting that U-Haul is in every community in the United States, Shoen explains the company’s strategy is to work with existing businesses that have “excess labor” — such as the old full-service gas station where employees were busy only when they were pumping gas — and, in the off-time, can field phone calls. “We have furniture stores, cell-phone stores, even liquor stores in small towns.”

The exact number of dealers “is always a moving number,” says Shoen. The laissez-faire approach to acquiring dealerships has been replaced by what Shoen calls a “robust organization” with area field managers who actively prospect for good locations. The profile of that “good location,” though, has not changed: a reputable-looking, existing business with excess labor that can field calls when not serving customers for the primary business.

Categorizing the relationship as U-Haul being a “guest of local mom-and-pop businesses,” Shoen says, “It fits harmoniously with being a do-it-yourself person — we make sure we’re there to help.”

And that, he believes, is the strength behind the company’s success. “We’re still around because we’re more like our customer — a DIY-er at heart. You can’t just throw money at it, like some venture capital groups.” Giving the example of accommodating a storage customer who needs access at 2:00 in the morning, he says, “You don’t even know you need to be doing that stuff unless you’re a like-minded individual with your customer.”

The Road to Success

• From a single location in Portland, Ore., in 1945, U-Haul has grown to more than 16,000 independent dealerships and 1,500 company-owned dealerships throughout North America, including a presence in all 10 Canadian provinces, and is now headquartered in Phoenix.
• Direct employees number about 22,000 in the summer months; slightly fewer than 20,000 in the winter months.
• U-Haul owns about 100,000 trucks and 100,000 trailers.
• U-Haul is putting natural gas- and propane-fueled trucks into its rental fleet in parts of the country where there is infrastructure to support it.
• U-Haul works directly with Ford Motor Company, which produces the truck cab and chassis to its specifications at Ford’s Ohio assembly plant. These are then shipped to six U-Haul locations where the box is added to the chassis.
• U-Haul is pioneering sustainability efforts with its suppliers, such as developing with Ford a paint process that cuts down the number of times the paint must be baked onto the truck and thereby also reduces electricity consumption.