March 2017
CED
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contents CED Magazine | March 2017
vol. 83 no. 3
www.cedmag.com
>> FEATURES
24
First-Time Attendees
New dealer and manufacturer members take advantage of networking and education opportunities available at AED’s 2017 Summit & CONDEX.
30 CED SPECIAL SECTION
The road to the future is paved with
TELEMATICS Technology can help address some of the inherent challenges with travel in any business, but especially in the construction industry. Get exclusive insight on how telematics can impact your business with CED’s telematic spread, pages 30 -39.
40
Specialized Services Take a closer look at how DIS is driven by technology, but focused on people.
42 A Closer Look
Bobcat Company is one of the few major manufacturers based in North Dakota, but its reach goes far beyond the Roughrider State.
March 2017 | Construction Equipment Distribution | www.cedmag.com | 3
contents CED Magazine | March 2017
>> EDITORIAL Editor SARA SMITH ssmith@aednet.org Design and Layout KRIS JENSEN-VAN HESTE kjvanheste@gmail.com
>> COLUMNISTS Heidi Bitsoli
Freelance writer
Bruce Bunting Knapheide
Steve Chacon Accruit
Todd Cohen
Speaker and author
Christine Corelli
Christine Corelli And Associates
Michael Dexter
AED Senior Regional Manager
Daniel B. Fisher
AED Vice President, Gov. Affairs
Steve Johnson
AED Vice President, Foundation Operations
H
ave you ever wanted to schedule a meeting with your lawmakers but thought it was too time-consuming and confusing? Or Are you wondering how the new administration will influence your dealership? Don’t be kept in the dark as to what is happening in Washington. The time is now and the stakes have never been higher. You can make a difference, and it starts with attending the 2017 AED/EDA Washington Fly-In from April 4-6, 2017. AED and EDA have planned a jam-packed agenda to ensure your EDITOR'S time in Washington isn’t wasted. We’ll get you up to speed on how to DESK be an effective advocate on the issues important to your company. All you need to do is show up and let your inner advocate show. Learn more information and register online by visiting bit.ly/2017flyin. The Fly-In isn’t the only exciting event the association has right around the corner. If you are a financial or human resource professionals who is ready to bring new ideas and approaches to the dealership, learn about the industry's trends and tactics, further your professional development, and come together to talk to industry-peers, you should be in attendance at this year’s Financial/ HR Symposium happening April 26-28, 2017 in beautiful Miami, Florida. In fact, The 2017 Financial/HR Symposium is now valid for 5 PDCs for SHRM-CPSM or SHRM-SCPSM, as well as CPE credits provided by K∙Coe Isom. With 18 unique educational options, three exciting networking events, including a 3-hour cocktail and boat tour that is enclosed with your registration fee, you would be disappointed if you weren’t in attendance. So what are you waiting for? Check out the details and reserve your spot at bit.ly/2017aedsymposium. I look forward to hearing your success stories from attending both of these upcoming events! Sara Smith, Editor ssmith@aednet.org
Larry Kaye Karen Algeo Krizman Freelance writer
Rebecca Lintow AED Foundation
Phil Riggs
AED Regional Manager
Brian Shanahan
Shanahan Design Inc.
Eric Stiles
Sentry Insurance
>> ADVERTISING
Vice President of Sales JON CRUTHERS 800-388-0650 ext. 5127 jcruthers@aednet.org Production Manager MARTIN CABRAL 800-388-0650 ext. 5118 mcabral@aednet.org Since 1920 Official Publication of
650 E. Algonquin Road, Suite 305 Schaumburg, IL 60173 630-574-0650 fax 630-457-0132
vol. 83 no. 3
16 >> Capital Corner The Ten Lawmakers You New to Know This Congress
17 >> Regional Report
A Regional Manager's perspective on Summit and the year ahead
18 >> Thoughts From The Exhibitor’s Booth A perspective from the other side of the table
22 >> The AED Foundation Fundraising Gala The Gala Raised a Record Setting $85,000
28 >> Change Management
For Ditch Witch of Oklahoma and Arkansas, AED Offers New Avenues
29 >> Donor Profile
The Ten Lawmakers You New to Know This Congress
53 >> Like-Kind Exchange
Combining like-kind exchanges with trade-in treatment
As the official magazine of Associated Equipment Distributors, this publication carries authoritative notices and articles in regard to the activities of the association. In all other respects, the association cannot be responsible for the contents thereof or the opinions of contributors. Copyright © 2016 by Associated Equipment Distributors. Construction Equipment Distribution (ISSN0010-6755) is published monthly as the official journal of Associated Equipment Distributors. Subscription rate – $39 per year for members; $79 per year for nonmembers. Office of publication: 650 E. Algonquin Road, Suite 305, Schaumburg, Ill. 60173 Phone: 630-574-0650. Periodicals postage at Schaumburg, Ill. 60173 and other post offices. Additional entry, Pontiac, Ill. POSTMASTER: Send address changes to Construction Equipment Distribution, 650 E. Algonquin Road, Suite 305, Schaumburg, Ill. 60173.
4 | www.cedmag.com | Construction Equipment Distribution | March 2017
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business services your aed membership provides solutions and options AED’s membership services and benefits are designed to enhance and develop the profitability and continuity of construction equipment dealers by providing tools and resources.
aed legal call counsel AED’s call counsel is a FREE legal hotline for AED members provided by Kopon Airdo, LLC — AED’s general counsel. Take advantage of this member benefit today, call 312-506-4480 or visit www.koponairdo.com.
CallCenter.indd 9
aed hr help desk AED’s HR Help Desk allows AED members to get answers to simple questions or many employment-related issues free of charge. Call about any HR compliance or procedural issue, even sensitive personnel situations. Contact Karla Dobbeck at Kdobbeck@askhrt.com or (888) 412-8079.
1/14/2016 2:40:14 PM
>> FROM THE PRESIDENT
BRIAN P. McGUIRE
The Stakes Have Never Been Higher For Your Dealership; You Can Make A Difference We have a new administration that supported by AED members, as well as needs educating and a Congress that workforce development and the skilled 2017 AED/EDA needs pushing, and I know many of you technical worker shortage. WASHINGTON FLY-IN are wondering how all that affects your That's why it's essential for you to be April 4-6, 2017 dealership. present at the AED/EDA Washington Register online: bit.ly/2017flyin While congressional leaders and the Fly-In, April 4-6, in Washington D.C. The Reserve your room: bit.ly/17flyinroom Fly-In provides an opportunity for you Trump administration are prioritizing rebuilding our nation's crumbling to join your fellow equipment industry infrastructure, action speaks louder than colleagues and press lawmakers for action words, and your presence in Washington is needed now more than on the issues that are important to your company. ever. In the near future, policymakers will be considering proposals Your time in Washington will benefit your company as your that will have a substantial impact on your company’s bottom line. association brings you up to speed on how to be an effective In early February, members of the AED Executive Committee and advocate. Make 2017 the year that you get engaged. Board of Directors and I went to Washington, D.C., for a series of As an exclusive member benefit, the association’s new government meetings with senior lawmakers, including Senate Majority Leader affairs program will even schedule important Capitol Hill meetings Mitch McConnell and House Majority Whip Steve Scalise. Our that put you face-to-face with the lawmakers who make a difference message to these lawmakers was clear, and it is important for our in your community. You no longer have to spend time drafting members to get involved and become engaged. Meeting with your emails or making daunting phone calls. Reach out to AED’s vice lawmakers is a vital engine in pushing our industry's legislative president of government affairs, Daniel Fisher (dfisher@aednet.org), priorities, gaining political intelligence and learning about how and take advantage of this free member service. Congress plans to address issues with an impact on your company. The stakes have never been greater, and you can make a The industry must engage to ensure that Congress will be tackling difference. All you need to do is show up and let your inner the issues that will shape your future – the comprehensive tax advocate show. You won’t regret attending, and we promise you will reform that could eliminate business interest deduction, policies even have some fun while gaining important insight on the future of that remove burdensome regulations on business and industries our industry. BRIAN P. McGUIRE is president and CEO of Associated Equipment Distributors. He can be reached at bmcguire@aednet.org. BRIAN P. MCGUIRE AED President & CEO
>> OFFICERS WES STOWERS Chairman Stowers Machinery Corp. DIANE BENCK Vice Chairman West Side Tractor Sales Co. MICHAEL D. BRENNAN Senior Vice President Bramco, LLC CRAIG DRURY Vice President Vermeer Canada Inc RON BARLET Vice President Bejac Corporation JOHN C. KIMBALL VP of Finance Kimball Equipment Company WHIT PERRYMAN Immediate Past Chairman Vermeer Texas-Louisiana DENNIS VANDER MOLEN Foundation Chairman Vermeer MidSouth Inc.
ROBERT K. HENDERSON AED Executive Vice President & COO
JASON K. BLAKE AED Senior Vice President & CFO
>> AT-LARGE DIRECTORS
>> REGIONAL DIRECTORS
JAMES P. COWIN
MICHAEL LALONDE West Reg. Westrax Machinery, Inc. MATHEW ROLAND Midwest Reg. Roland Machinery Co. TODD HYSTAD Western Canada Reg. Vimar Equipment Ltd. JOHN SHEARER Rocky Mountain Reg. 4 Rivers Equipment, LLC JOHN RIGGS IV South Central Reg. J A Riggs Tractor Co. BRAD STIMMEL Southeast Reg. ASC Construction Equipment KAREN ZAJICK Northeast Reg. Norris Sales Co.
Cowin Equipment Co., Inc. PAUL FARRELL Modern Group Ltd. GAYLE HUMPHRIES JCB of Georgia STEVE MEADOWS Berry Companies, Inc. JAMES A. NELSON Heavy Machines, Inc. KENNETH E. TAYLOR Ohio CAT
March 2017 | Construction Equipment Distribution | www.cedmag.com | 7
>> AED INSIDER Trump Infrastructure Project List Details Priorities Several national news organizations have circulated a document purportedly listing the Trump administration’s top infrastructure priorities from across the country. The 50 projects, which are estimated to cost $137.5 billion and create more than 193,000 jobs, would be funded by both public and private sources. While neither the Trump administration nor the president’s transition team have claimed to be the source of the document’s creation, the National Governor’s Association has insisted its origin was within the Trump team. Nonetheless, all of the projects listed are important to the United States’ infrastructure and will create substantial construction equipment market activity. Consequently, the construction equipment industry must engage early and often to ensure the promises of a $1 trillion infrastructure package become a reality. Robust, long-term infrastructure investment will be a focus during the AED Washington Fly-In on April 4–6, in Washington, D.C. Register now and help ensure these projects and more receive the funding needed to put your equipment to work! Read full details at www. aednet.org/trump-infrastructure-project-list-details-priorities.
8 | www.cedmag.com | Construction Equipment Distribution | March 2017
>> AED INSIDER AED: Chao Faces Challenges as New U.S. Transportation Secretary Brian P. McGuire, president and CEO of Associated Equipment Distributors, issued the following statement after the Senate’s confirmation of Elaine Chao as U.S. Secretary of Transportation. “AED congratulates Elaine Chao on her confirmation to serve as President Trump’s Transportation Secretary. Unfortunately, Secretary Chao is inheriting an untenable situation: a neglected transportation infrastructure and a Highway Trust Fund that’s set for insolvency. "After years of underinvestment, Secretary’s Chao’s leadership is needed more than ever to implement President Trump’s bold infrastructure vision. The construction equipment industry is ready to rebuild the country. "Our leaders can’t sit by and watch our nation’s infrastructure continue to crumble, our international competitiveness suffer, and economic growth sputter, as the federal government continues to put off tough decisions for the next generation. "I’m confident that with Secretary Chao at the helm of the Department of Transportation, we’re one step closer to a bold, innovative plan to rebuild America.”
AED Joins Industry Partners to Urge Highway Investment A collection of organizations – including the AFL-CIO, AASHTO, APTA, ARTBA, NAM and the U.S. Chamber of Commerce – plan to send a letter to President Trump urging his administration to prioritize making the Highway Trust Fund solvent as part of his infrastructure package. “It is critical that your infrastructure plan not only encourages greater participation from the private sector in infrastructure projects and reduces needless red tape, but also provides real revenue for the Highway Trust Fund that will help the users and beneficiaries of America’s transportation and freight network,” the groups say in their letter. “Private financing, while important and needed, cannot replace the role of public funding and federal leadership.” Find more information here: aednet. org/aed-joined-industry-partners-to-urgehighway-investment.
2017 AED/EDA Washington Fly-In
It’s more important than ever for equipment dealers and manufacturers to attend the 2017 AED/EDA Washington Fly-In, April 4-6 – the equipment industry’s premier public policy event. As the Trump administration takes control and the new congressional session heats up, policymakers will be considering proposals that will have a substantial impact on your company’s bottom line. In years past, the industry could rely on Capitol Hill gridlock to stifle harmful bills and the threat of looming deadlines and elections to push through mustpass highway and tax proposals. A new sheriff is in town and “business as usual” is a relic of the past. Congress and the new administration will consider the following issues that will have a direct impact on your primary product markets and cost of doing business: ▶ Comprehensive tax reform ▶ Surface transportation, water, and airport infrastructure investment ▶ Workforce development ▶ Protectionist trade policies ▶ Energy development ▶ Regulatory reform
▶ Workplace safety and employment issues ▶ Expansion of environmental policies AED and EDA have planned a jam-packed agenda to ensure your time in Washington isn’t wasted. We’ll get you up to speed on how to be an effective advocate on the issues important to your company. You’ll hear directly from senior lawmakers, administration officials, and Washington policy experts. We will even schedule meetings for you with members of Congress. And we promise, you’ll even have some fun! The stakes have never been greater. You can make a difference! View the schedule and current attendee list at bit.ly/2017flyin.
New Capitol Hill Meeting Scheduling Service for Fly-In Attendees AED is pleased to announce an exclusive member benefit for Washington Fly-In attendees. The association’s Washington office will now schedule your Capitol Hill meetings for you. Just email AED’s new vice president of government affairs Daniel Fisher (dfisher@ aednet.org) and tell him you’d like to take advantage of this free AED member service for your Capitol Hill meetings.
March 2017 | Construction Equipment Distribution | www.cedmag.com | 9
>> AED INSIDER EARN CPE AND SHRM CREDITS
The 2017 Financial/HR Symposium is now valid for 5 PDCs for SHRM-CPSM or SHRMSCPSM and CPE credits provided by K∙Coe Isom, so register today to receive your credits!
FINANCIAL/HR SYMPOSIUM
MIAMI
2017
April 26–28 | Miami, FL Register at bit.ly/2017symposium Don't Miss the Second Annual 2017 Financial/HR Symposium in Miami
J
oin AED for its second annual Financial/HR Symposium in beautiful Miami, Florida. Learn from industry experts on both the finance and HR side about the most pressing topics impacting equipment distributors. Bring back tools and solutions to the issues that are affecting your dealership. In addition to hearing new ideas, learning about best practices, and receiving regulatory and legal updates, attendees will have several opportunities to brainstorm and network with like-minded dealership professionals. The Financial/HR Symposium is an ideal event for Financial and human resource professionals who are ready to bring new ideas and approaches to the dealership, learn about the industry's trends and tactics, further their professional development, and come together to talk to their peers and thought leaders should be in attendance at the Financial/HR Symposium.
Hear from Industry Thought-Leaders
Choose from a variety of 18 educational sessions, where you will hear from industry thought-leaders who will bring you up to speed on the latest trends in finance and human resources such as; how the U.S. economy will impact the market, technician assessment tools, effective communication skills, tax opportunities for your dealership and more.
2017 KEYNOTE SPEAKER CDR. KIRK LIPPOLD, USN (RET.) Commander Kirk Lippold, USN (Ret.), author of "Front Burner: The Al Qaeda’s Attack on the USS Cole,", knows what it takes to create the foundation for successful leadership that prepares teams to rise to any challenge they may face. In 2000, when the USS Cole was attacked by Al -Qaeda terrorists in the port of Aden, Yemen, Lippold and his crew distinguished themselves by saving the American warship from sinking in the face of one of the most brazen acts of terrorism prior to September 11, 2001. Lippold shows how the difference between team success and failure lies in the instinctive principles
10 | www.cedmag.com | Construction Equipment Distribution | March 2017
that are ingrained through training and guide people to action. Based on the leadership standards he instilled in his crew leading up to that historic day, Lippold has developed the "Five
Pillars of Leadership"; that construct a framework for getting the most from your workforce: integrity, vision, personal responsibility and accountability, trust, and professional competence.
>> AED INSIDER
AED congratulates award recipients honored at AED's 2017 Summit & CONDEX in Chicago. MORTON R. HUNTER, SR. DISTINGUISHED INDUSTRY/ ASSOCIATION CONTRIBUTION AWARD
This award is given in honor of Morton R. Hunter, Sr., “The Man With The Idea” who along with 10 colleagues founded AED and served for 10 years as the association’s first secretary and then president in 1925. He originated AED’s magazine and devoted himself as the editor until 1950. Presented to an individual who has demonstrated outstanding contributions and dedication to the principles and goals of the association, and to its every cause, continuing to inspire the organization today.
Don Shilling
General Equipment & Supplies, Inc.
PAUL D. (Bud) HERMANN EMERGING LEADERS AWARD
This award is given in honor of Paul D. (Bud) Hermann, the former executive director of AED, who started the emerging leaders group. Presented to the individual who has demonstrated significant contributions as an emerging leader to AED through involvement with the emerging leaders council and has furthered growth and change within the industry.
Corey Vander Molen Vermeer MidSouth
CHAIRMAN’S AWARD
The award recognizes a person or company that has provided “above and beyond” support to the Association during the chairman’s term.
Bill Stephenson DLL
DEMOCRACY AWARD
This award is given to the individual who has demonstrated significant contributions toward the public policy and advocacy efforts on behalf of AED.
Whit Perryman
Vermeer Texas-Louisiana
March 2017 | Construction Equipment Distribution | www.cedmag.com | 11
>> INDUSTRY NEWS
EquipmentWatch Names Top Manufacturers in 2017 Highest Retained Value Awards EquipmentWatch analysts have released their annual list of Highest Retained Value Award winners, the industry’s only award based on residual values for heavy equipment. Top honors in each category were given to the model series projected to retain the highest percentage of its original value after five years. Twenty-eight awards were presented in all, recognizing winners in construction, agricultural and lift/access equipment categories. Caterpillar and John Deere tied for most awards won in 2017, with four each; however, Caterpillar maintains a slight all-time edge with a total of nine (over Deere’s eight) accumulated wins over the two years since the program’s inception. While the largest brands (Caterpillar, Deere, Komatsu) continued to dominate certain categories, there were a notable number of smaller manufacturers with series that showed significantly better retained values than their competition— Gehl, Bomag, Challenger, and Hyundai were just a few of these specialized brand winners. Surprisingly, only five series continued their 2016 dominance and won again in 2017, a sign that residual values among the most popular types of equipment are very competitive. For manufacturers, the Highest Retained Value Award is indicative of excellence across an organization. Product quality has the most obvious impact on an asset’s performance on the secondary market, but engineering is not solely responsible for equipment’s residual value. Residual values are also highly impacted by brand affinity (which creates the demand for a manufacturer’s product) and original pricing (which, if set too high, will result in a lower retained percentage at end of term). A manufacturer must excel on all three fronts in order to gain recognition as a Highest Retained Value Award winner. For purchasers of equipment, there is
Award Category
Make/Model Series
Backhoe Loaders
Case 580
Balers
New Holland BR
Boom Lift, Articulating
JLG A
Boom Lift, Telescopic
Haulotte HB
Combines
Case IH Axial-Flow 140
Dozers, Track, Large
Deere 850
Dozers, Track, Small
Deere 700
Drum Compactors
Bomag BW211
Electric Scissor Lifts
Custom Equipment HB
Excavators, Crawler, Large
Caterpillar 349
Excavators, Crawler, Medium
Volvo EC350
Excavators, Crawler, Small
Bobcat E85
Excavators, Compact
Volvo EC35
I.C. Scissor Lifts
JLG RT
Lift Trucks, Telehandlers
SkyTrak Telehandler
Lift Trucks, Warehouse/Narrow Aisle
Komatsu BX
Loaders, Wheel, Large
Caterpillar 980
Loaders, Compact Track
Kubota SVL90
Loaders, Skid Steer, Large
Caterpillar 262
Loaders, Skid Steer, Small
Gehl 4240
Loaders, Wheel, Medium
Komatsu WA320
Loaders, Wheel, Small
Hyundai HL740
Motor Graders
Komatsu GD655
Rear Dumps
Caterpillar 740
Sprayers, Self-Propelled
Apache AS
Tractors, Track
Challenger MT800
Tractors, Wheel, Large
Deere 8R
Tractors, Wheel, Small
Deere 5E
perhaps no single measurement more influential in the buying decision process. The residual value of an asset will have a significant impact on leasing terms and lifetime ownership costs. Informed buyers do well to weigh value retention heavily when considering equipment acquisition. To create the 2017 Highest Retained Value Awards, EquipmentWatch analysts considered 12,536 models which were then
12 | www.cedmag.com | Construction Equipment Distribution | March 2017
narrowed down to 156 series from 36 brands. Once the finalists were set, residual values were calculated at the series level by leveraging a database covering more than $412B in market activity in order to identify the winner in each category. To learn more about the winning models and program methodology visit www. equipmentwatch.com/residual-valueawards.
>> INDUSTRY NEWS
Komatsu Hosts 'Day-In-The-Life' Construction Career Fair For 3 Colleges Komatsu America Corp., a leading global heavy equipment manufacturer, recently hosted more than 30 students from three Atlanta-area colleges and technical schools at their Cartersville, Ga., customer center training site. Students came to learn about construction-related jobs, as well as how to operate select Komatsu machines, including bulldozers, excavators, wheel loaders and dump trucks. As guests of Komatsu America and local distributors Tractor & Equipment Co., Linder Industrial Machinery Co., Brandeis Machinery, and Power Equipment Co., students from Chattahoochee Technical College, Reinhardt University and Kennesaw State University learned about a day in the work life of construction and mining employees, as well as current and future job opportunities. Students also strapped on hardhats, climbed inside 20-foot, 200,000lb. machines, and for an afternoon, received hands-on training and operated state-of-the-art construction equipment. “It’s so important to do all we can to attract top talent to the industry,” said Tom Suess, director, training and publications for Komatsu America. “Komatsu and our local distributors jumped at the chance to host these students and their school administrators. I think we opened the eyes of some students today about how technologically and globally focused the industry is, and how bright a future they can have if they pursue a career in this field,” Suess said. “I had never operated equipment before coming out here,” said Chattahoochee Tech student Chandler Firestine. “It’s been an awesome experience being able to really get inside one of the machines and see
how they work mechanically . . . especially being a diesel tech. I would love to come out here again and do it if I could,” Firestine said. Komatsu America Corp. is a U.S. subsidiary of Komatsu Ltd., the world’s second largest manufacturer and supplier of earthmoving equipment, consisting of construction, mining and compact construction equipment. Komatsu America also serves the forklift and forestry markets. Through its distributor network, Komatsu offers a state-of-the-art parts and service program to support its equipment. Komatsu has proudly provided high-quality reliable products for nearly a century. Visit the website at www.komatsuamerica.com for more information. March 2017 | Construction Equipment Distribution | www.cedmag.com | 13
>> PRODUCT PREVIEW
Tackle Variety of Job Site Tasks With New Root Rakes From Deere The toughest land-clearing and ground-leveling jobs are no match for the new John Deere Root Rakes (RR72, RR78 and RR84), the latest additions to the ever-expanding lineup of Worksite Pro™ attachments. Optimized to work with John Deere G- and E-Series skid steers and compact track loaders (CTLs), and K-Series compact wheel loaders, these attachments get the job done quickly and can be a more economical option than dozer blades. The root rakes are ideal for land clearing, ground leveling and moving materials away from buildings and obstructions. These attachments were designed to easily gather rocks and debris while allowing soil to sift through, for minimal site and landscape disturbance and maximum efficiency. Built with alloy-steel construction, replaceable pin-on teeth and zinc-plated pivot pins with protected Zerks, these attachments can ruggedly resist impact that any ground materials provide. Another key feature is a weld-on “D” ring that expands the list of job site tasks these root rakes can tackle, such as pulling brush in forestry applications or scrap on a job site. "The root rakes are exceptional additions to our line of Worksite Pro attachments that increase the productivity of any compact machine being used in job site prep applications,” said Gregg Zupancic, product 14 | www.cedmag.com | Construction Equipment Distribution | March 2017
marketing manager, John Deere Construction & Forestry. “We designed this line of root rakes to be a tough solution, ready to take on any terrain in its path.” The root rakes are available in 72-inch (RR72), 78-inch (RR78) and 84-inch (RR84) width for maximum productivity. The height and width of the root rakes also help shield the fronts of the machines, protecting against damage from large piles of brush or jagged scrap. With the universal, self-cleaning Quik-Tatch™ easy attachment system found on all John Deere skid steers, CTLs and compact wheel loaders, the machine can easily add and remove the root rake in no time. The new attachment is also backed by John Deere parts, service and warranty coverage. Like all Worksite Pro attachments, the root rake is compatible with many competitive models. To learn more, visit www.johndeere.com or contact your local John Deere dealer for details.
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>> CAPITAL CORNER
DANIEL B. FISHER
The Ten Lawmakers You Need to Know This Congress Here's your Top 10 list of the lesser-known but powerful lawmakers who will shape the legislative initiatives important to the construction equipment industry.
As the Trump administration gets rolling and a new Congress takes the reins on Capitol Hill, it’s important for business leaders to acquaint themselves with the key players in Washington. Most people are familiar with House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, and Democratic leaders Nancy Pelosi and Chuck Schumer. But who are the lesserknown but powerful lawmakers who will shape the legislative initiatives important to the construction equipment industry? Here’s your top ten list: 1. House Ways and Means Committee Chairman Kevin Brady (R-Texas): As leader of the powerful Ways and Means Committee, Brady will oversee shepherding the House GOP’s comprehensive tax reform bill through Congress. What will happen with LIFO, likekind exchanges, and the business interest deduction? Will Congress reduce tax rates and allow a full and immediate write-off for business investments? Brady will be at the center of the action. He’ll also find himself in the middle of health care and trade policy issues. 2. Senate Finance Committee Chairman Orrin Hatch (R-Utah): Brady’s counterpart in the Senate, Hatch is currently the longest-serving senator and is at the helm of the most influential committee in the upper chamber. While Hatch’s committee hasn’t made nearly the same progress as the Ways and Means Committee on a tax reform proposal, don’t be fooled. The Finance Committee will likely have its own bill, and Hatch will be leading the effort to get it across the finish line. 3. Senate Finance Committee Ranking Member Ron Wyden (D-Ore.): The Senate rules (requiring 60 votes to pass most proposals) give substantial power to the minority party to block and alter legislation. Consequently, for comprehensive tax reform to reach the president’s desk, it will need some Democratic support. Enter Wyden, the independent-minded, lead Finance Committee Democrat. Wyden will be the person Republicans need to appease to make tax reform a reality this Congress. 4.- 8. Senators Heidi Heitkamp (D-N.D.), Joe Manchin (D-W.Va.), Claire McCaskill (D-Mo.), Jon Tester (D-Mont.) and Joe Donnelly (D-Ind.): Representing states that Trump carried by at least ten percentage points, these five senators will be running for reelection and for their political lives in 2018. They’ll need to
balance their commitment to Democratic leadership while appealing to the voters in their conservativeleaning states. All five will be targeted by Republicans to support GOP priorities such as tax, immigration, and regulatory reform bills and health care and energy legislation. Their support (or lack thereof) could make or break a bill’s passage and the hopes of the Democrats retaking the Senate in 2018. 9. House Transportation and Infrastructure Committee Chairman Bill Shuster (R-Pa.): Donald Trump has made a substantial infrastructure package a key part of his agenda. Shuster, the leader of the House panel with jurisdiction over highway, bridge, airport, water infrastructure, and port construction legislation, is tasked with shepherding a major investment bill through a House that is reluctant to spend money (and many are even skeptical of the federal role in funding public works projects). He’s done it before (FAST Act, WRDA), but can he do it again? 10. Senate Environment and Public Works Committee Chairman John Barrasso (R-Wyo.): Barrasso succeeds long-time infrastructure supporter Sen. Jim Inhofe (R-Okla.), a stalwart for highway and water investment, as leader of the EPW Committee. A member of Senate leadership (he’s Republican Policy Committee Chairman), Barrasso will be key in ensuring that infrastructure funding issues are a priority for the Senate Republican caucus. If anyone can make the case to infrastructure skeptics about the need for substantial, long-term investments, it’s Barrasso, a respected conservative voice. Honorable Mention: Rep. Lou Barletta (R-Pa.): Barletta, an early and ardent Trump supporter, hit the jackpot when the GOP nominee won the presidency. As a senior member of two committees key to the construction equipment industry (Transportation and Infrastructure, and Education and the Workforce) and the Trump Presidential Transition Team Executive Committee, Barletta has a direct line to the West Wing. He’s a passionate advocate for infrastructure investment (cosponsoring legislation to increase the user fee to fund highway projects) and workforce development. On Capitol Hill, Barletta is among a very small group that endorsed Trump during the Republican primary, and you can bet the president’s inner circle knows it.
DANIEL FISHER is AED’s vice president of government affairs. He can be reached at dfisher@aednet.org and 202-897-8799. 16 | www.cedmag.com | Construction Equipment Distribution | March 2017
>> REGIONAL REPORT
PHIL RIGGS
A Regional Manager’s Perspective on Summit in Chicago and the Year Ahead
Our mission is, in part, to continuously provide products and services for you and the employees in your dealership that will lead to streamlined operations and a more profitable dealership. We’re really good at that, too, by the way..
If you look at the numbers, Summit this year was a major success for the industry. In total, 1,450 people were in attendance for the industry’s only event that allows dealers to come together for a few days each year to focus on the bigger picture of improving their dealership in order to better support their customers and employees. If you dig a little deeper, you’ll find that 160 individual dealerships in the U.S. and Canada invested the time to attend, along with many of the industry’s manufacturers and service providers. What’s even more telling is the 450 dealership professionals, 116 exhibit booths, 43 hospitality suites and 35 dealer professional education sessions that made up the week’s event. Anyone not in Chicago that week missed out on networking, education, and the possibility of discovering new solutions for their business. Fortunately, your Association’s mission is, in part, to continuously provide products and services for you and the employees in your dealership that will lead to streamlined operations and a more profitable dealership. We’re really good at that, too, by the way – actually, we’re unmatched when it comes to the equipment distribution business. A solid indicator of this can be found in the 2017 AED Resource Guide – which all of you should have and be circulating throughout the business. If you need more, check our website or give me a call. It is a comprehensive look at everything AED is providing for members throughout the year, if only they’ll take advantage of it. Let’s take a look at some of the more prominent programs coming up this year: ▶ AED/EDA Washington Fly-In, April 4-6: AED and EDA have planned a jam-packed agenda to ensure your time in Washington isn’t wasted. We’ll get you up to speed on how to be an effective advocate on the issues important to your company. You’ll hear directly from senior lawmakers, administration officials, and Washington policy experts. We will even schedule meetings for you with members of Congress. You’ll influence change in D.C. and, as a hopeful result, we won’t be stuck with the bill when tax reform happens. ▶ Financial/HR Symposium, Miami, April 26-28: Learn from industry experts on both the finance and HR side about the most pressing topics impacting equipment distributors. Bring back tools and solutions for the issues that are affecting your dealership.
In addition to hearing new ideas, learning about best practices, and receiving regulatory and legal updates, attendees will have several opportunities to brainstorm and network with like-minded dealership professionals. ▶ AED Leadership Conference, Sonoma, Aug. 20-22: AED has designed this specifically for the up-andcoming talent in your dealership. They may be the designated successor or they could be a candidate for a key position in your succession plan. Either way, this conference will help young professionals further develop their leadership style, gain insight into executive operations, and network with other budding industry experts. ▶ The Equipment Economic Forum, Chicago, Sept. 11-13: This is an intense two-day conference for executives and senior-level managers, focusing on current industry trends and the latest issues facing the heavy equipment industry. Gain insights to help you succeed and maximize your profit opportunities. I would highly recommend these to every dealer, regardless of size, location or product offerings. They are outstanding opportunities, all of which will send attendees back confident in their ability to complete the task at hand and able to implement new ideas for everyday obstacles. Aside from these programs, don’t lose sight of all the other great services AED and The AED Foundation provide for the industry: ▶ Financial benchmarking reports and dealer 20 groups ▶ Continuing education programs in the form of self-study courses, webinars and manager certification programs ▶ Technical assessments for service technicians ▶ Local career development initiatives ▶ Meetings with members of Congress at your dealership ▶ And the new Management Development Institute I encourage you to lean on your regional manager for more information on these programs and services and communicate with them on a regular basis about how to best serve your dealership’s specific needs. From everything I’ve heard so far from the Western region, 2017 is shaping up to be a great year for the industry as a whole. Let AED help to make it a great year for your employees and your business as well.
PHIL RIGGS is an AED regional manager. Reach him at priggs@aednet.org or 630-574-0650 ext. 5128. March 2017 | Construction Equipment Distribution | www.cedmag.com | 17
SUMMIT & CONDEX
2017
REFLECTIONS
Thoughts From Inside The Exhibitor's Booth By Bruce Bunting
This year I attended my tenth AED Summit & CONDEX, so I am still a mere rookie when compared to other members of the Associated Equipment Distributors (AED). While I was thinking about my time spent at this year’s Summit & CONDEX in Chicago, it struck me that when I compare AED to other professional organizations that I participate with year in and year out, AED stands in a class by itself. This is primarily because of the openness, of the individual members and the organization as a whole, to have a dialogue. I value the ability to have an open discussion regarding the never-ending challenges we face. The AED Summit is second to none when it comes to building a rock-solid foundation for the future. With roots steeped in tradition, yet always looking toward the future, AED’s Summit & CONDEX maintains an unyielding high-level commitment to the success of its members. I look forward each year to participating in CONDEX as an opportunity to renew longstanding relationships as well as build new ones. This event stands alone in providing the best environment for having a business-to-business discussion with dealer principals and their key staff
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members regarding what they are facing in their markets. This event encourages the ability to have a professional dialogue in a relaxed atmosphere, which just makes it easier to find real solutions. And with the volatility of today’s economy, having strong relationships with AED members allows me to be more proactive regarding the challenges and opportunities that they are facing in their everyday businesses. The challenge to provide safe, productive and profitable field service solutions looms large on most AED members’ business radars. In a world where so many things have become disposable, AED stands firmly as an organization of professionals that do more than just talk about things and lament about what should be done. It is an organization that stands every day for building a strong foundation, not just for its own businesses, but for the future of the entire market as a whole. They put words into action by tirelessly providing learning opportunities for the seasoned professional as well as the future leaders. AED has a strong legacy but doesn’t rest on its laurels – it stands for action. Today AED represents a vital segment of the U.S. economy.
Summit Canadian Breakfast Draws Large Audience By Michael Dexter Almost 60 early risers met on Thursday, January 12, during the AED 2017 Summit, to hear the latest news from the Canadian Parliament and discuss shared dealer and manufacturer issues. Attendees were treated to an “Ottawa Briefing” presented by Stuart McCarthy of Blue Sky Strategy Group, AED’s Canadian registered lobbyist. McCarthy first highlighted AED’s Canada goals for 2017, which include the following: ▶ Raising AED’s profile among select ministers, ministerial staffers, parliamentarians, bureaucratic and industry officials and key decision makers. ▶ Promoting awareness of the unique challenges facing AED members in Canada. ▶ Advancing the objectives that AED is trying to achieve in Canada. ▶ Ensuring that AED is the credible voice speaking on behalf of our industry. To date, AED has had three years of nominal engagement in Canada, with the primary focus on the annual Ottawa Fly-In Briefing where AED members engage MPs, ministers, and their staff at a reception and one-on-one meetings. CED Magazine also publishes monthly articles for members on issues in Canada. This has laid the groundwork for more sustained engagement. “I came away with a good insight into how things work in Ottawa,” said J. Morgan Cronin, president of Toronto-based Equipment Sales and Service Ltd. “As Canadian dealers we have different concerns than U.S. dealers. The Canadian political system works differently than the U.S., so Ottawa has to be engaged differently.”Mr. McCarthy continued with a discussion of the Canadian government’s legislative priorities, including ramping up spending in historic infrastructure investment, fostering innovation, creating jobs, and easing regulations on doing business. A major focus will also be on domestic and international carbon taxes. “The breakfast was particularly insightful for members like me who did not attend the Ottawa Fly-In. It allowed us time to connect with fellow Canadians and realize our common challenges and opportunities,” stated Tom Stevenson, president of Hub Equipment in Toronto. “It also highlighted the importance of lobbying our local MPs and being more focused on the huge infrastructure debate. We need to start replicating our American cousins who are far more politically active than we are.”Key areas of focus for AED in Canada: ▶ Accelerated capital depreciation: Expanding the qualification of accelerated capital depreciation so Canadian workers can have access to the newest, most efficient, environmentally friendly equipment, thereby creating the best possible climate for investment, economic growth, and job creation ▶ Infrastructure investment: Increased $$$, allocations to projects where AED members and customers benefit, creating sustainable, long-term mechanisms to ensure year-over-year consistency in infrastructure investment ▶ Skills training: Recognizing there is an aging workforce and
a shortage of skilled laborers entering the industry; supporting the Canadian government in enhancing training opportunities in order to support our sector, Canadian businesses; and creating skilled middle-class jobs• Harmonization of regulations: Whether dealing with electronic logging device rules, hours of service or other policy/regulatory proposals, AED supports federal and provincial regulators in coordinating closely with each other, engaging with industry to find workable solutions, and carefully weighing the benefits and negative consequences of government action AED’s proposed Canadian Action Plan features the following:
▶ Sustaining engagement with select ministers, ministerial staffers, parliamentarians, bureaucratic and industry officials, and key decision makers, which is crucial for serious advancement of AED policy objectives in Canada ▶ Increasing AED’s presence in Canada, to ensure a stronger voice ▶ Showcasing the local impact AED members have on their communities and their MPs, enabling them to be champions for AED ▶ Creating regional events: AED can work with provincial governments to establish favorable relationships within members’ home provinces ▶ Engagement with influencers – CCMTA, FCM, Chamber of Commerce “It was an excellent overview and insight into both the workings of our government and how to access it,” said Rick Van Exan, VP of marketing at Toromont in Concord, Ontario. “This affords us the opportunity to prepare in advance for the challenges we face as an industry and explore where government might fit into the solutions.” In summary, AED can have a much stronger Canadian presence. A stronger presence equals a stronger voice equals greater influence. AED’s presence should be sustained, not just annually to capitalize on opportunities. AED’s presence must be local and regional; national MPs and jobs in local communities are not the only things that count. March 2017 | Construction Equipment Distribution | www.cedmag.com | 19
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The AED Foundation Fundraising Gala
Raises Record $85,000 By Rebecca Lintow The AED Foundation's final tally for the annual Fundraising Gala held during Summit at the Untitled Supper Club in Chicago was a record-breaking $85,000. The funds will support industry career promotion, career and technical education programs sponsored by The AED Foundation, and cutting-edge research on workforce issues. “I’d like to thank all of our sponsors, board members, host committee and other donors who made this event possible,” said AED Foundation President Robert Henderson. “The AED Foundation has a critical mission to ensure the future success of the heavy equipment industry.” Key sponsors included Wells Fargo Equipment Finance and Sentry Insurance. At the Gala, The AED Foundation and Ritchie Bros. presented the 10th Annual Live Auction. Auction items varied from fishing trips to jewelry to golf packages. A special thank you is extended to all the sponsors. Auction items were donated by Ritchie Bros., AED staff, BLS Enterprises Inc., Caterpillar Inc., Caterpillar Financial, IronPlanet, The Knapheide Manufacturing Company, Komatsu America Corp., Liebherr Construction Equipment Co., LiuGong Construction Machinery, Mr. and Mrs. Brian P. McGuire, United Group’s Industrial Seats division, and Volvo Construction Equipment North America Inc. This year we separated the Gala from the main Summit Dinner and moved it off-site to give The
From left are Ed Kirby and his wife, Gay; Penny Heath-Townshed, widow of Lester Heath); Robert Henderson and Brian McGuire.
AED Foundation the spotlight it deserves. The event was a tremendous success. Not only did it benefit The AED Foundation, but it was a fun party. The Foundation is working hard to put the “fun” back in fundraising. Wait until you see what we’re planning for Las Vegas next year. You won’t want to miss it. The AED Foundation focuses on three primary areas: accreditation, career promotion
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and research. The AED Foundation funds the research that backs up its claims on the importance of workforce development and shares that data with legislators, educators, the media and other stakeholders. The latest study by the College of William & Mary, released last month, can be accessed at AEDFoundation.org/dealer-resources. The Gala also afforded The AED Foundation
Left: Robert K. Henderson, president of The AED Foundation, presents The Foundation Partner Award to Komatsu America Corp. Accepting is Mike Hayes, director of distributor development for Komatsu America Corp. and AED Foundation board member. Right: Henderson presents The Foundation Champion Award to Caterpillar. Accepting is Anthony Fassino, region manager for Caterpillar and AED Foundation board member.
the opportunity to recognize key leaders within the organization. The Lester J. Heath, III Award was given to Mr. H. E. (Ed) Kirby Jr., president of Kirby-Smith Machinery. The award, named for Lester Heath, the first president of The AED Foundation, honors an individual demonstrating outstanding contributions to the Foundation through involvement in and support of Foundation activities including education, accreditation and workforce development. The Foundation Champion Award, in recognition of distinguished service or merit of a manufacturer or service provider that has made significant contributions to the workforce goals of The AED Foundation, was given to Caterpillar Inc. and accepted by Anthony Fassino, region
manager for Caterpillar and AED Foundation board member. The Foundation Partner Award, in recognition of distinguished service or merit of a manufacturer or service provider that has provided significant contributions to the professional education goals of The AED Foundation, was given to Komatsu America Corp. and accepted by Mike Hayes, director of distributor development for Komatsu America Corp. and AED Foundation board member. Stay tuned for information on the 2018 AED Foundation Fundraising Gala at the fabulous Mirage Hotel and Casino in Las Vegas. To learn how your company can support The AED Foundation at the Gala, contact Rebecca Lintow at 630-468-5113 or rlintow@aednet.org. March 2017 | Construction Equipment Distribution | www.cedmag.com | 23
New dealer and manufacturer members take ad
at AED's 2017 Su By Megan Mattingly-Arthur Associated Equipment Distributors (AED) held its highly anticipated 2017 Summit & CONDEX January 10–13 at the Hyatt Regency Chicago. Thousands of construction equipment industry professionals from the United States, Canada and beyond attended the multi-day event to hear from distinguished speakers, browse exhibits and product showcases, take advantage of comprehensive professional dealer education courses, and attend networking events and the first annual AED Foundation Fundraising Gala – all designed to help those who attended achieve even greater success in their business, and their business relationships, in 2017. Among the attendees were representatives from nearly a dozen new AED dealer and manufacturer member businesses. Many, like Shafer Equipment Company’s president Jay D. Shafer, were extremely grateful for the invaluable networking opportunities the 2017 Summit & CONDEX provided. “As a relatively small dealer with one location in Reno, Nev., we don’t get much one-on-one with any of the manufacturers we represent,” Shafer said. “We represent eight different manufacturers and it would take two to three weeks to fly all over the country to meet with them individually. The airfare would be huge! We crammed 11 meetings into two days in one location (at the Summit & CONDEX), which was a much better use of our time and resources. CONDEX is always good . . . I re-engaged with a few people I had lost touch with and will probably do some business with.” Shafer also had the chance to talk one-on-one with former Vice President Dick Cheney at his VIP reception. “I was invited to attend the Dick Cheney pre-speech cocktail hour,” he said. “What a gracious and bright man! It was great to spend a few moments one-on-one to get his insights.” Networking events, such as The AED Foundation Fundraising Gala and 10th Annual Live Auction presented by AED and the Ritchie Bros., were also the highlight for Sean Bruder, partner and account manager for Canadian company CG Equipment. Bruder appreciated how easy it 24 | www.cedmag.com | Construction Equipment Distribution | March 2017
dvantage of networking, education opportunities
ummit & CONDEX was to have his networking time planned in advance. “(For me), the most beneficial part was the networking with suppliers and other dealers,” Bruder said. “I attended the Ritchie Bros. bar and really enjoyed networking with fellow dealers and continuing relationships with our suppliers. Most of the networking for me was set up before we came.” In addition to having chances to mix with other construction equipment industry professionals, Bruder particularly enjoyed the keynote presentation by FDNY Chief Richard Picciotto, a battalion commander in Manhattan during the 9/11 terrorist attack who wrote about the harrowing experience in his New York Times best-seller, “Last Man Down: A Firefighter’s Story of Survival and Escape from the World Trade Center.” Said Bruder, “It was nothing short of amazing . . . wow, incredible story!” One way that this year’s AED Summit & CONDEX differed from previous years was that it featured an additional day of programming, giving attendees the chance to make the most of the Association’s expanded professional dealer education offerings. The event offered a wide range of courses divided into seven tracks: Customer Engagement, People Management, Executive, Product Support, Sales, Rentals and Small Dealers. For Bruder, the opportunity to take professional dealer education courses at the 2017 AED Summit was another of his favorite things about his time there. Even though he attended educational sessions each day of the event, Bruder said he’d like to have even more time for these courses in the future. “(I really enjoyed) the continuing learning through the courses offered,” he said. “I attended sessions each day. The best courses I found were on rental and parts. (I would have liked a) little more time to do the courses but, overall, it was a great experience.” For more information on the Association’s professional education courses or upcoming AED events, call 630-5740650, email info@aednet.org or visit www.aednet.org. March 2017 | Construction Equipment Distribution | www.cedmag.com | 25
The AED Foundation Releases New Technician Workforce Research at Summit & CONDEX Following the 2015 report released by The AED Foundation and The College of William & Mary titled AED and the Skills Gap: Assessing the Skills Gap, Its Causes and Possible Solutions, The AED Foundation requested a follow-up report seeking to identify methods to mitigate the skills gap affecting the construction equipment industry and the resulting $2.4 billion in annual foregone revenue facing AED members. Most importantly, The AED Foundation sought guidance that Association members can use to close the skills gap in their own districts. The report focuses on Career and Technical Education (CTE), one of the main proxies by which skilled technicians receive training to prepare them for the skilledlabor workforce. In the examination of CTE, this report seeks to identify the reasons for
Download the report at bit.ly/aedfoundationreport
the collapse of high school CTE and the resulting effect on the economy. The report also identifies best practices at the secondary (and to a lesser extent, the postsecondary) education level in delivering successful CTE programs. In addition, the report provides a detailed
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overview of CTE funding levels from federal and state sources. Finally, the report identifies key access points at the secondary and postsecondary education levels via individual state “playbooks�; AED members should use these playbooks as guides in order to contribute to closing the skills gap.
2017
register online bit.ly/aedevents
2017 Leadership conference August 20-22, 2017 | Fairmont Sonoma Mission Inn & Spa | Sonoma, California
Are you a business owner or a manager who is: • Looking to develop the next generation of leaders for your family owned business? •
Interested in forming a deep, sustainable team to ensure that you and your organization will remain successful?
•
Searching for new technology trends within the equipment industry?
•
Learning critical leadership skills including dynamics of change in culture, laws of leading and discovering diverse forms of influence?
BUILDING BLOCKS to Developing a WINNING TEAM Developing QUALIFIED leaders and the effort it takes to acquire the RIGHT candidates can be a difficult process. AED’s Leadership Conference is designed specifically for the rising talent in your dealership. The emerging leaders will work among their peers to develop new skills for managing and leading productivity and to learn new techniques to take back to the dealership.
If so, join AED on Sunday, August 20 Tuesday, August 22 for an informational conference where attendees can expand their horizons and explore the future of their business on a whole new level.
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C h a n g e M a n a g e m e n t It's not just another business cliche By Steve Johnson Entering into the year 2017, I have once again been in a reflective mood. In my years in business, I have walked the critical path, pushed the envelopes, been right-sized, undergone knowledge transfers, sat directly on the cutting edge, jumped out of the box, been taken offline, launched trial balloons, delivered deliverables, lost traction, gone viral, drilled down to the granular level, hunted the BHAG, arrived “just in time” and, sometimes painfully, had my paradigm shifted. There’s always a new book and the following wave of new buzzwords. A person doesn’t have to have been in the business world too long before business jargon starts going from meaningful to meaningless. The thriving art of business clichés may evolve into business comedy; however, that does not mean that some of the underlying ideas aren’t important. For example, consider the topic of “change management.” A cliché in itself, that subject has a number of accompanying sub-clichés: company agility, resistance management, gotta raise the bar, alternative futures, continuous improvement, etc. There is humor in business clichés, yet successful companies understand that there are serious business implications inherent in many of them. The list of big companies that could not successfully navigate change is long: Washington Mutual, American Motors, Prime Computer, Bethlehem Steel, PanAm, TWA, Digital Equipment Corporation, Montgomery Ward, Sears, and Faberge, to name a few. The list of equipment dealers that did not survive the great recession is also a sobering reality. Moving on, as we all know, “change is constant.” There is the ebb and flow of the
economic and business cycles, tighter EPA regulations, infrastructure spending concerns, global economic and industry changes, business constraints from federal and state business regulations, and changing government policies as political power regularly shifts. Now there is a new U.S. president in office, and
Been There Done That
structures and processes facilitate optimal performance and profitability? Are you in a position to perhaps capitalize on change and gain market share as the economy continues to grow and perhaps even accelerates its expansion? Now is the time to develop solid
Change Ahead FASTEN SEAT BELT
though many businesses are optimistic about a better national business environment, there are still a lot of question marks about what that means. Changes impact not only the overall business environment, but inter-industry dynamics as well. Your business is being affected by industry consolidation, evolving technology, trends in manufacturer-dealer channels, cultural changes that create new recruitment challenges, and the list goes on. These certainly can affect your local competitive situation and future success. Do you have a company plan to address equipment industry change? Do your business
product/market plans; focus on employee education, excellence and productivity; and strategically position your company for the future. The AED Foundation’s singular mission is to enhance member dealer success, particularly in the areas of dealer–school partnerships via AED Foundation accreditation, industry career promotion, and industry-specific education. Take a look at how Foundation products and services can enhance your change management plan. For more information, feel free to contact The AED Foundation.
STEVE JOHNSON is vice president of The AED Foundation. Reach him at sjohnson@aednet.org or 630-574-0650 ext. 5134. 28 | www.cedmag.com | Construction Equipment Distribution | March 2017
For Ditch Witch Of Oklahoma And Arkansas, The AED Foundation Offers New Avenues By Heidi Bitsoli
Gary Bridwell , president of Ditch Witch of Oklahoma and Arkansas, been involved in The AED Foundation in many capacities, including serving as a board member, contributing to The Foundation’s annual campaign and participating on the host committee for the annual Gala.
Gary Bridwell knows supporting The AED Foundation is a solid investment. Bridwell , president of Ditch Witch of Oklahoma and Arkansas, has been in the construction equipment industry – with Ditch Witch specifically – for his entire professional life, now more than 30 years. He’s been familiar with the brand even longer, however, as his father had worked for the factory. As the younger Bridwell was getting his MBA from Oklahoma The AED Foundation State University, an opportunity came along to open a Ditch Donor Spotlight Witch dealership in Oklahoma, the first one in the state. “My Your donation fuels the father and I partnered up and bought the dealership.” They ran work that allows The AED it together for 20 years, and in time built it up, adding another Foundation to develop a Oklahoma site and two locations in Arkansas. Fast forward to 2017, dealer model for success. The and Bridwell is president of the four dealerships. future of dealerships depend Ditch Witch offers new and used underground construction on how we come together to and utility equipment, including trenchers, directional drills, fluid build our industry's workforce. management, vacuum excavators and mini skid steers. It also sells, Thank you, Ditch Witch of leases, trains on and services its full product line of Ditch Witch parts. Oklahoma and Arkansas, for Bridwell has supported The AED Foundation for many years and investing in the future of our easily rattles off the benefits of joining. He’s been involved in many industry! capacities, including serving as a board member, contributing to The To contribute to The AED Foundation’s annual campaign and participating on the host committee Foundation annual campaign, visit bit.ly/2017aedfcampaign. for the annual Gala. “The AED Foundation ... gives a great intrinsic value for outside education” beyond the Ditch Witch brand, Bridwell says. Through The AED Foundation's various educational opportunities, “we can interact and communicate with other, larger dealers such Komatsu and Caterpillar, see new things, network with all kinds of businessmen, (and meet with) educators and industry leaders.” “Just in your own market you won’t be able to stretch out” as much, so this opens many doors. “We’re stronger together.” Bridwell has served two two-year terms on The AED Foundation board. Most recently he helped head a committee to try to get a Waco, Texas, school accredited per The AED Foundation's standards. It was an eye-opening process, Bridwell admits, working with the school, other construction equipment dealers and foundation leaders to outline the processes needed, examine (and attempt to remedy) curriculum deficiencies, and determine ways to meet and establish credentials. Ultimately the school opted not to become accredited, but the experience proved educational and rewarding, Bridwell says. Bridwell stepped down from the board in 2015 because he needed to focus on Ditch Witch growth. A new dealership facility is being built in Oklahoma City, and Bridwell is directing his attention to that at the moment. Once the project is complete and time permits, he says he’d be open to a third term. “Board time doesn’t necessarily require a lot of hours, but it does take you away from the dealership.” Even though the educational institution in Waco did not opt to accredit, Bridwell remains driven to help develop the educational programs needed within the industry. In large part that’s because there continues to be a shortage of qualified workers. As the post-secondary educational climate has changed in recent decades and more students are encouraged to pursue four-year degrees as opposed to more hands-on work, that trend has hit the construction equipment industry hard, as it leaves a widening talent gap. “Even if we’re not hiring, if someone comes along with the right skills we’ll take them on.” High character is necessary, as is an aptitude for mechanical and electronic skills, Bridwell says. His company will sometimes help school a potential gem of a worker by footing the bill for some of his or her education. That Bridwell mentions “high character” as an essential fits right in with what he loves about the business, the industry and the region he calls home. “I love the interaction with the customers. These are grounded, salt-of-the-earth people.” His farming background dovetails with that nicely, too. “I always enjoyed that. I like running equipment, and the dealership gives a chance to run equipment but to do more, too.” As does being part of The AED Foundation. “In the last four or five years … (the Foundation has) raised the bar on the level of professionalism, leadership and education,” Bridwell says. “That’s what keeps bringing me back.” March 2017 | Construction Equipment Distribution | www.cedmag.com | 29
CED SPECIAL SECTION
The road to the future is paved with
TELEMATICS
Managing Planned Maintenance Contracts with Telematics Systems By Brad Stemper ne of the best ways to ensure overall health, productivity and reliability of a machine—either new or used—throughout the course of its lifetime is through investing in a planned maintenance contract. These contracts allow an equipment owner to opt for agreed-to servicing with manufacturer-approved parts, fluids and components, at agreed-to intervals. A planned maintenance contract also provides peace of mind for the owner and/or fleet manager—it’s simply one less thing to worry about. Equipment owners want to protect their investments, minimize total cost of ownership and make sure that they are getting all they can out of a machine. Proper servicing at regular intervals—particularly when a machine is brand new—improves its life expectancy and ensures that it’s going to perform reliably throughout the course of its lifetime. Planned maintenance contracts also improve resale value. Knowing that a machine has been properly serviced provides better assurance to a second owner that the machine will run reliably, and increases the likelihood of resale. In addition to regular service and repairs, a planned maintenance contract also ensures that a machine is being thoroughly inspected more often. A qualified technician will visit a machine with a critical eye, looking for wear, rust, oil where it shouldn’t be, etc. They will also regularly examine cutting edges, bucket teeth, undercarriage components, lights, windshield wipers and all other wear items. This extra attention often helps to diagnose other issues and prevent further unscheduled downtime.
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Telematics and planned maintenance Contractors can improve production, effectively manage planned maintenance and
protect their equipment investments through the utilization of telematics. These advanced monitoring systems offer unprecedented data on how machines are being utilized in the field. Idle time, fuel consumption, operating conditions, and maintenance milestone alerts can all be monitored in real time, ensuring that a machine is being utilized to its maximum earning potential. One of the simplest ways that telematics can be used right out of the gate is to help manage maintenance intervals and scheduling. Eliminating the need for outdated whiteboards and logbooks, telematics data can show contractors and fleet managers where machines are in their maintenance schedule and how many hours are on the engine. It also allows fleet managers to organize maintenance items around the machine’s operating schedule to eliminate unnecessary downtime.
Alerts, warnings, detailed history
Telematics systems are capable of sending alerts when a machine approaches a maintenance milestone or is operating outside of an acceptable parameter. It can also provide fleet managers and service personnel with a detailed history of faults, alarms, warnings, engine RPMs and operating conditions, which help diagnose issues before they cause equipment failure and unplanned downtime. As an example, if a machine is equipped with a DPF system and a report shows a high amount of idle time, a technician will know to take a closer look at certain components, because the excessive heat from manual regen can cause hidden damage to the engine. Knowing exactly when a machine needs to be serviced can also prevent fleet managers from unnecessarily pulling a machine from a busy job site, potentially offsetting the value
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of maintenance by what is lost in valuable production time. It allows service personnel to better plan for maintenance activities and ensures that all of the proper parts, filters and components are in stock because they know just when that machine will need to be serviced.
Maintenance notifications
Setting up maintenance notifications through telematics is simple—fleet managers are able to designate maintenance milestones, set up thresholds and reminders (50 hours, 100 hours before service, etc.), and specify to whom the notifications are sent. Some choose to have the notifications sent to both the owner/fleet manager and the service manager, so that both parties can coordinate service times. Equipment owners can also set up regular utilization reports that cover engine hours, fuel consumption, engine RPMs, etc. These regular reports allow fleet managers and service personnel to analyze trends that can offer additional insight in regard to maintenance procedures.
Defining the roles
While a planned maintenance contract provides value to an equipment owner by driving maintenance responsibilities onto the dealer, everyone involved has a responsibility to the contract. Here is an outline of the responsibilities of the manufacturer, the dealer, the owner and the operator. ▶ Manufacturer: The manufacturer is responsible for providing product support to their dealers, providing support for any necessary repairs, providing service information and training, and identifying product deficiencies and taking corrective action in the form of recalls, product Continued on Page 33
The road to the future is paved with TELEMATICS
The Speed and Impact of Telematics Courtesy of AEM 1.2 trillion. That is the amount of money that companies spend annually on business travel. Imagine if that number could be reduced. Well, it can. Technology can help address some of the inherent challenges with travel in any business—but especially in the construction industry. Basic information such as knowing where a fleet is located, how a fleet is being used, metrics and so much more can help reduce that $1.2 trillion number. This is according to a report that is providing analysis into the global fleet management market. The research shows that one in every 20 companies employs a specialized mobility manager, while 25 percent are of the opinion that their fleet and travel management department can actually merge to make mobility processes more efficient. Also, the role of fleet manager has changed to include new technologies and transport methods. At the same time, suppliers are increasingly offering new products to win a share of the mobility market. This is translating into growth of the telematics market— particularly in off-highway vehicles. The Future Market Insights report examines the trends of the off-highway vehicle telematics market for the forecast period 2016-2026. It says telematics is the sending, receiving and storing of information through the use of telecommunication devices. The technology provides critical data that can ultimately improve fleet
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utilization in any industry—but particularly in construction. Kurt Nantkes, senior vice president, Zonar, says telematics can have a significant impact on entire fleets. “Accurate utilization of telematics drives every function of their business—repair costs, rental dependency, liquidation, job costing, cost per hour metrics. When properly using telematics, fleets can implement smart-fleet management solutions.”
Data, Data, Data
Nantkes points to seven key ways telematics can improve fleet utilization. These top seven ways include the following: 1. Protection against theft: Telematics-enabled asset tracking locates assets in real time, which can notify of a piece of equipment’s location immediately. 2. Effective utilization of assets within a fleet: Project managers can maximize the usage of all assets to avoid unnecessary sourcing of equipment. 3. Collecting meter data: Many construction fleets rely on meter data to maintain vehicles daily. Often, this is manual. Telematics can collect this data automatically. 4. Visibility into preventative maintenance: Remote diagnostics, shop resources, uptime and scheduled preventative maintenance are all possible with telematics. 5. Maximize cycle times and uptime: Telematics can identify the most effective routes and use of equipment. 6. Fuel efficiency: Use data to monitor idle times, speed, acceleration, hard braking and more to improve fuel usage. 7. Electronic verified inspection reporting: Ensure that federally
required daily vehicle inspections occur. Sue Rutherford, vice president of marketing, ORBCOMM, adds that big data is coming, and being able to compile all this data and then translate it into something meaningful is key. “The industry has already started this with the varying levels of preventative maintenance being offered,” she explains. “Some solutions are tying this deterministic maintenance scheduling into the supply chain, integrating the knowledge of a particular part that will need to be ordered in time for that part to be replaced.” She adds that some telematics devices with high-precision GPS are also being incorporated within autonomous vehicles to replace drivers and enable around-theclock servicing and control of vehicles.
Telematics Challenges
Nantkes says that many companies are wary of the cost of hardware and implementation. However, as more companies of all sizes are realizing, telematics solutions can pay for themselves with fuel savings alone in less than a year. Rutherford adds that other challenges are the lack of standards and lots of hardware providers and application providers. “As well, there is the option of manufacturer solution versus aftermarket solution,” she continues. “Manufacturers can offer more value in diagnosing or pulling the right data from the machines, but for a construction site with a mixed fleet, these same devices won’t work across all the
equipment. Aftermarket devices have the opposite problem. Generation of data is easy, but you need to be able to interpret the data for it to make sense from a business case point of view.” The lack of standards is something the Association of Equipment Manufacturers (AEM) and Association of Equipment Management Professionals (AEMP) are addressing with a mixed-fleet telematics standard, which has received ISO (International Organization for Standardization) approval to be accepted as a global standard. The standard enables equipment users to gather telematics data into their preferred business or fleet management software. This will ultimately provide easier access to data across an entire fleet of vehicles. Another challenge is connectivity. Rutherford says, “Connectivity used to be an issue, but with newer and cheaper satellite connectivity offerings, this problem has been addressed by covering remote regions as well as being able to offer a global, single SKU telematics platform.” Going forward, telematics will be one way to improve fleet utilization, but it will become critical to educate construction professionals on the ROI (return on investment) and investment of the technology. Rutherford suggests contractors need to “think big, ask questions, ask for a demo, ask about coverage, ask about interoperability, ask about support.”
March 2017 | Construction Equipment Distribution | www.cedmag.com | 31
The road to the future is paved with TELEMATICS
Tracked Equipment Assets: Telematics For Cranes, Aerial Work Platforms Go Beyond The Basics I
By Katie Parrish nternet of Things may be the catch phrase of the year for the construction equipment industry. Communication between wireless tech and physical objects has grown exponentially in the last decade, and as Moore’s Law predicted, the movement continues to pick up speed. Just in the last few months, we’ve seen virtual reality move into crane operation, the launch of Bluetooth-enabled wind anemometers controlled through smartphones, and the introduction of engines that can be tracked to provide information to the operator in the cab. Telematics have been around for more than a decade in the construction industry. In fact, Lift and Access held a roundtable in 2008 with machine OEMs and aftermarket telematics providers to analyze products on the market. More recently, the Association of Equipment Manufacturers (AEM) and the Association of Equipment Management Professionals (AEMP) produced a construction equipment telematics standard that enables equipment users to gather more OEM equipment data into their preferred business or fleet management software. This provides easier access, improves the ability to manage and analyze information across their fleets, and saves time and money in their operations. However, the lifting equipment industry has different data needs than general construction equipment, such as dualengine monitoring and lubrication levels for slewing rings. The AEM/AEMP mixed-fleet telematics standard does not currently include crane or aerial work platform data fields. Instead, some lifting equipment OEMs have opted to produce their own proprietary systems. For years, crane companies have offered custom-engineered solutions that collect more data than traditional load moment indicator systems. For example, products like Tadano’s HELLO-NET were designed to provide day-to-day crane operation status, mileage, fuel, machine position data and maintenance, and Kobelco Cranes North America’s K-Cross includes integrated software to help the crane owner analyze the data the system collects. The Link-Belt Pulse 2.0 in-house-designed crane operating system also goes beyond the basics, offering a boom extend mode controller, self-diagnostic capabilities, and continuous monitoring of multiple crane functions and conditions. JLG’s ClearSky connected asset technology was the first system customized specifically for aerial work platforms (AWPs). Before its introduction in 2008, AWP owners had adapted telematics systems from other industries. What makes this system unique is its ability to remotely communicate with the machine to gather critical information. It gives owners the ability to perform on-demand diagnostics and troubleshooting, review maintenance alerts, deter theft and recover stolen equipment, and locate the machine via GPS and mapping. Since its introduction, ClearSky has been made available as an aftermarket addition to existing equipment and is standard hardware on the Ultra
Boom series. Other manufacturers are perhaps preparing for the AEM/AEMP mixed-fleet telematics standard to include lifting equipment. Genie’s self-powered equipment now features a telematics-ready connector. Standing behind the philosophy that each equipment owner is different, Genie reports the connector gives customers the option to choose their telematics hardware and software solutions. “The Genie telematics-ready connector provides a standard gateway for many different telematics solutions and allows for a ‘plug-and-play’ installation,” the company reports. “As long as the customer’s machine is wired to be telematicsready, which all Genie units manufactured in 2015 and beyond are, a monthly telematics subscription service and telematics hardware of a customer’s choosing provides the ability to listen to a machine, utilize mobile apps to see the information anywhere, and compile dashboards and reports to help analyze the information and optimize your business.” Genie added that additional machine data will be available through the connector in the future. Skyjack, another heavy-hitting AWP manufacturer, approaches telematics similarly. It readies its machines for telematics, allowing customers to fit their devices to a Skyjack machine and interface with the software of their choice.
Just in the last few months, we’ve seen virtual reality move into crane operation, the launch of Bluetooth-enabled wind anemometers controlled through smartphones, and the introduction of engines that can be tracked to provide information to the operator in the cab.
Originally published in the Sept-Oct 2016 edition of Lift and Access 32 | www.cedmag.com | Construction Equipment Distribution | March 2017
Users’ take on telematics
Telematics means something different for every equipment owner. In a recent Lift and Access survey, 75% of respondents were using telematics in their fleets and noted a number of advantages. For some, the benefits are keeping track of their assets and equipment run time/operating hours. Others see it as a way to not only track maintenance, but also monitor the operators’ behavior. However, a concern for respondents to the survey is the return on investment for telematics, which says that more education is needed in order for owners to maximize the value of these systems. One equipment rental company reported that telematics “are not cheap, but the insights you can gain into your customers’ behavior are extremely valuable.” Overall, telematics were seen as a positive feature that still needs fine tuning. “Technology is moving fast these days, providing options we could only dream of five years ago,” another survey respondent said.
The road to the future is paved with TELEMATICS
Equipment Telematics: Riding on the Leading Edge By James White Modern construction equipment and machinery now includes advanced technology for optimizing safety, efficiency and more. It’s called equipment telematics, and by using it you can remotely track information about your equipment. The information you collect using equipment telematics helps improve machine utilization, reduces fuel and energy consumption, and even lessens the need for frequent maintenance and lengthy repair schedules. From a project management perspective, equipment telematics can improve on-site safety, reduce theft and misuse problems, and help you comply with local noise limits when using geo-fencing and time-fencing options. Depending on the system you use, telematics data is transmitted via satellite, and more recently by wireless connections. The wireless connections that travel over cellular networks are called cellular M2M (machine-to-machine), and they are part of the new phenomenon called the Internet of Things, or IOT. Other wireless connectivity used for equipment telematics includes Wi-Fi, RFID (radio frequency identification), ZigBee, and more.
The Cellular M2M Connection
If you don’t know much about cellular M2M systems, the technology can seem daunting and remarkably complex. But that doesn’t have to be the case. In simple terms, it involves equipping construction machinery and equipment with wireless-ready modules to allow them to securely communicate data that’s vital to your business. With M2M-ready equipment, you can tap in remotely from work or home and keep track of what’s going on. In other words, you don’t have to be at the project site to monitor progress, efficiency and operating information. This technology frees up more of your time so you can focus on your business, and minimizes the communication process so you can save valuable resources such as time and money. In
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the event of an emergency, it can also cut down on reaction time, in many cases saving lives in the process.
A Utility Industry Scenario
Utility companies use cellular M2M technology to simplify data collection and billing procedures. By equipping gas, electric and water meters with M2M modules, the meters communicate usage data in real time. That means employees don’t have to travel to check meters, which saves gas, reduces wear and tear on vehicles, and much more. It’s not restrictive either. Cellular M2M technology can also track a great deal of information such as emergency calls, fleet management, alarms and security, point of sale (POS), and automotive needs. It depends on the technology used, and the equipment on which those systems are installed.
A Construction Scenario
A great example of telematics and M2M systems in the world of construction is Empire CAT’s VisionLink technology. When using it, management and project administrators can remotely monitor crucial data. You can see things like the following: Equipment location and operating times Entire fleet summaries when multiple pieces of equipment are in use Fuel consumption Working time versus idle time Location boundaries with email updates. Location boundaries are useful to prevent theft and misuse of your equipment. When a piece of machinery exits the boundaries you set, you’ll receive alerts and email updates. This is also good from an insurance perspective because it lowers premiums, thanks to advanced security. If you’re having issues with your equipment or need advice, service technicians can tap in remotely and offer aid. This can help you cut down on maintenance and repair issues, which saves you money. Using equipment telematics and cellular M2M technologies delivers one more important benefit. It helps you stay competitive.
JAMES WHITE is an experienced home improvement blogger and construction worker. Twitter: @JGtheSavage. This story was originally published on www.ConstructionInformer.com.
improvement programs, etc. They should also provide an accurate detail of systems, components, variances, etc., required for specific applications (for example, cold weather fluid recommendations). These maintenance variances can make a significant difference to operations with specific needs. ▶ Dealer: The dealer is the direct route between the customer and the manufacturer, so they are responsible for making sure the purchaser understands their planned maintenance contract. They are also responsible for providing product support and service for any planned maintenance items and repairs on behalf of the manufacturer, as well as having a strong knowledge of the manufacturer’s policies and procedures. The dealership will have product experience to apply to the machine and its application—understanding key maintenance needs specific to a product or application that deserves extra attention. ▶ Owner: The owner is ultimately responsible for making sure that all maintenance procedures are completed at the required intervals, as well as following manufacturer recommendations in regard to all fluids, oils and filters. Above all, the owner must be willing to make the machine available for service. ▶ Operator: Beyond regular service intervals, inspections and telematics reports, the operator is the most in tune with a machine’s performance on a job site. The operator is responsible for the dayto-day maintenance and activities of the machine, so owners should ensure that operators have the right training, are well acquainted with the operator’s manual, the capabilities and limitations of the equipment. Ultimately, managing planned maintenance through telematics is one of the best ways to ensure the overall productivity of a machine over its lifetime, and monitoring the complete status of a fleet with telematics and using that information for proper maintenance and efficient fleet deployment can have a real impact on a contractor’s profitability.
March 2017 | Construction Equipment Distribution | www.cedmag.com | 33
The road to the future is paved with TELEMATICS
Construction Industry Dominates In The Off-Highway Vehicle Telematics Market
By John Gregerson accurate scheduling estimates, given users know the amount of time required for equipment to perform a particular task. Should it come as a surprise that the construction industry “Telematics solutions for the construction industry — has emerged as the leading user of telematics for off-highway specifically mixed-fleet and heavy equipment — are just coming vehicles (OHV)? Not exactly. As it has shown with drones, the industry is demonstrating increasing enterprise in developing or into their own now,” Willy Schlacks, president and cofounder of equipment rental provider EquipmentShare, recently told adopting new technologies it once might have bypassed, despite reporters. potential benefits such applications conferred. Although FMI has cited lack of standardization as an Construction equipment currently accounts for 62.4 percent impediment to growth, the International Organization for of the value share of OHVs, a market that additionally includes Standardization (ISO) in late November published a mixedagricultural and mining vehicles, according to “Offfleet telematics Highway Vehicle (OHV) Telematics Market: Global standard developed Industry Analysis and Opportunity Assessment, by the Association of 2016–2026,” a study by Valley Cottage, NY-based Equipment Management Future Market Insights (FMI). “Adoption of Professionals (AEMP) telematics in the construction industry is higher due and the Association to increasing demand from construction equipment of Equipment rental companies,” FMI indicated in a statement. Manufacturers (AEM). In terms of value, the study projects OHV By establishing telematics will grow at a compound annual growth a common format, rate (CAGR) of 8.9 percent between 2016 and 2026, the standard allows for reasons that include a reduction in costs in end users to access telematics services. The market’s OEM segment is telematics data from expected to register a CAGR of 9 percent over the — Willy Schlacks, president and any machine in their same period. cofounder of equipment rental fleet and consolidate the By technology, the global OHV market has been provider EquipmentShare information in a single segmented into cellular and satellite, with cellular place, potentially saving the preferred technology for service providers due time and expenses to its ready availability, the report indicates. on job sites or within operations. “The standard allows fleet Cranes next?: As planned, the ISO mixed-fleet standard managers and contractors to aggregate data into one display will expand to govern other types of construction equipment, for easy analysis,” AEMP president Stan Orr indicated in a including cranes and aerial work platforms. statement. “The productivity advantages will be cumulative, and Telematics isn’t new, but equipment and software suppliers the advances to cost effectiveness are expected to be significant.” have taken a GPS-based technology originally intended to At present, the standard applies to earthmoving equipment, identify the location of vehicles and incorporated on-board though data points derived from it are applicable to other types diagnostics and monitoring sensors to aggregate, record, and of machinery, whether as a matter of location, operating hours, transmit a vast array of performance data to the operator’s or fuel usage, distance traveled, caution codes, idle time, engine equipment manufacturer’s website via cellular networks. The operating data, or a variety of diagnostic codes. stream of real-time data is seemingly endless, from fuel burn If all goes as planned, the standard will govern use of other rates and fluid consumption to engine and driver performance. types of construction equipment, including cranes and aerial The technology also alerts service providers and operators work platforms, Orr told reporters. “Working with AEM, we’ve of developing problems. Accordingly, telematics is useful for always maintained that once we got this standard out, we’d developing predictive maintenance schedules that improve the start tackling the next step,” he said. “Ultimately, everything in performance, productivity, and longevity of both off- and onconstruction that’s going to be implemented, we’ll want to make road vehicles. In addition to reducing fuel consumption costs, telematics data promote more efficient asset allocation and more it part of the standard.”
“Telematics solutions for the construction industry – specifically mixed-fleet and heavy equipment – are just coming into their own."
JOHN GREGERSON, Senior Editor, is responsible for feature reporting and analysis at BuiltWorlds, a media network committed to fostering innovation in the built environment. His experience includes more than 25 years as an award-winning reporter, editor, and manager at ENR and Building Design + Construction, where he served as editor-in-chief. For more from John, visit www.BuiltWorlds.com. 34 | www.cedmag.com | Construction Equipment Distribution | March 2017
The road to the future is paved with TELEMATICS
Equipment Rentals: 3 Unique Ways to Use Telematics With Your Fleet By Kristy Cartier Equipment renting has been part of recorded human history in one form or another since Iraq’s ancient Sumerian times (according to this Automotive Fleet article). And now, technology is poised to pivot the industry once again. Specifically, telematics is already being used by many rental fleet managers to verify equipment deliveries and actual utilization hours. This information helps them with billing and fleet maintenance. However, if you dig deeper into the data, there are three other ways to apply the information: inventory management, staff scheduling and staying competitive.
expensive to have idle service staff. And, on the flip side, it’s not good if you have too many repairs for the technicians on hand. Telematics helps you spot equipment maintenance trends, and alerts notify you of any trouble codes that may arise. This allows you to reduce some operation inefficiency by strategically scheduling when regular repairs, such as oil changes or tread replacements, are done. It won’t eliminate all breakdowns, but knowing the general wear-and-tear trends could reduce their frequency and keep your maintenance shed humming. Additionally, the data should allow you to “right-size” your service department to match the work performed.
Inventory Management
Staying Competitive
Idle inventory costs your rental business money. And so do “out of stock” issues. You can’t rent what you don’t have. The grocery business went through a similar transformation in the 90s, learning how to harness the power of their own scanner data. They could better understand what items sold well at regular price and when on sale, plus which sales provided the best inventory turnover. Telematics data could do the same for your inventory mix. Pair your rental management system data with equipment usage hours from an application like FleetOutlook to gain a more complete picture of how your fleet is being used. Then you can find answers to questions such as these: What equipment rents the most often? What equipment types are preferred? Which pieces have the most hours of service? Reviewing the results might lead you to running specials on your least rented pieces, or even making the decision to sell them (and you will have the usage history from your telematics software to get the best price for them, too!).
Uber and Lyft, among others, have disrupted the taxi industry. Airbnb and Travelocity are encroaching on hotels’ turf with private rentals. Some startups are eyeing your equipment rental business too. Companies like Getable have developed tools that make it easier to rent equipment between private parties, sometimes known as peer-to-peer. If this latest “as-a-service” concept becomes popular, it could impact your bottom line by siphoning off your smaller rental customers or improving the ROI of ownership (from additional income). How can you maintain your market share? This might seem simple, but fight back with great customer service. A good experience for the
customer is aided by your having the right inventory and pricing or having convenient rental options, such as checking availability and then booking via a mobile app. Access to your fleet’s telematics data will help you show your industry expertise across a breadth of equipment and site conditions. As noted earlier, you can reduce downtime from breakdowns with regular maintenance and readily fix equipment if something unexpected does occur.
Conclusion
The history of equipment rentals is long and storied. Telematics is just another chapter. As with any new tool, the trick is how you use it. There are certainly many ways to apply telematics information to your business, from the standard monitoring to digging into the data trends it provides. How would you use the technology with your rental fleet? KRISTY CARTIER is a Marketing Associate with CalAmp. She covers fleet and equipment topics ranging from on-time arrivals to mixed fleet management.
Staff Scheduling
Combat irregular maintenance scheduling. Like idle inventory, it is March 2017 | Construction Equipment Distribution | www.cedmag.com | 35
The road to the future is paved with TELEMATICS
The Power of Connected Equipment: Sell More And Sell Smarter By Willy Schlacks President and cofounder, EquipmentShare Internet of Things (IoT) innovations in the construction industry are helping original equipment manufacturers (OEMs) make smarter decisions than ever before when it comes to maintenance, management and ultimately getting the longest lifespan out of their of equipment. One of the construction industry’s most stand-out and growing IoT solutions – telematics – gives OEMs, equipment distributors and contractors a deeper look into the health and status of their equipment. Providing a bird’s-eye view of everything from engine health and potential maintenance issues to location and usage rates, telematics aggregates the most essential equipment data into a digestible overview for equipment owners and managers. For construction equipment distributors, telematics is making a big impact on business decisions surrounding the sale of each piece of equipment on the lot and their entire fleet. Everything from long-term equipment data to engine analytics to life cycle are helping CEDs sell equipment based on more insights, aggregated data and analytics. The following is an overview of how machine connectivity – mainly telematics – has and will continue to change the game for construction equipment distributors and OEMs in the space.
Telematics success stories
Telematics adds value for OEMs by enabling greater insight into the equipment and machinery they’re selling. For example, telematics provides insight into usage rates, lifespan and maintenance trends, so OEMs can get a clearer picture of what’s working (and what’s not) and make changes that will better their business in terms of future production. On the same front, equipment distributors can tap into telematics to increase equipment insight and equipment knowledge when it comes to making a sale. OEMs like Caterpillar and John Deere have even developed their own in-house telematics solutions to track and manage the equipment they produce – a proof point that leaning on telematics helps gather the necessary insight for making smarter, more informed business decisions. Caterpillar recently redesigned its VisionLink telematics dashboard, enabling the web interface to work better with smartphones and tablets. The updates also enable the dashboard to display information 36 | www.cedmag.com | Construction Equipment Distribution | March 2017
from both third-party machine manufacturers and telematics hardware makers. Additionally, the dashboard is now customizable, enabling customers to access the machine data they want most as soon as they log in. One example of machine data tracked is fuel levels, enabling customers to be more efficient in deciding when and where to dispatch employees to refill fuel. In 2016, John Deere launched the JDLink Dashboard, a new telematics interface that enables customers to better optimize their machines, uptime and job sites. The dashboard enables contractors to easily manage their equipment with intuitive, easy-to-use tools. The overall goal of the in-house telematics solution is to streamline equipment maintenance management, ultimately increasing productivity and profits for John Deere customers.
Providing greater visibility Telematics not only benefit equipment providers, but also contractors who rely on those insights for day-to-day operations and effective fleet management – things such as utilization tracking, engine monitoring and proactive maintenance. To get more attention from the contractors they’re selling to, OEMs
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and equipment distributors must take into consideration how users want to view equipment data provided by telematics. For instance, most users want a single window to view all their telematics data. In reality, OEMs can’t provide all of that with an in-house system – especially when many of today’s contractors own mixed fleets spanning a variety of brands and manufacturers. While these in-house telematics products can be customized to some degree, their solutions can only go so far. Typically, in-house telematics solutions have relatively low usage rates because contractors can’t see equipment data across their entire fleet. OEM user adoption of telematics and satisfaction will be much higher with an advanced white label solution that aggregates all their asset data, as opposed to a single brand of assets. OEMs have the advantage of utilizing advanced white-labeled telematics systems that are designed for OEMs and contractors such as MachineLINK. com. Such systems extract all the data necessary for OEM analytics and provide OEM customers a world-class management tool. One particular advantage of a white label solution is that OEMs can aggregate data outside their own machines, enabling data aggregation for each piece of their customers’ equipment – increasing long-term customer usage and satisfaction.
MAKING NOISE AT CONEXPO '17
The future of connected equipment
Today’s telematics systems aggregate large amounts of equipment data into a single online dashboard and organize the information in an easy-tounderstand, useful way. OEMs and equipment distributors then have the opportunity to easily track equipment data across their entire fleet – from production to sale – all in one place. Advanced telematics systems that harness predictive analytics have the ability to make intelligent, cost-saving management suggestions and provide information to back a successful sale to eager-to-purchase contractors. Telematics not only has the potential to leverage big data for predictive analytics, but also aggregation of data, laying the foundation for the future of construction vehicle, machine and equipment automation. This is especially true for OEMs and equipment distributors who are constantly on the forefront of the next big innovation and emerging technology that will impact their future products. IoT solutions, including telematics, are changing the way equipment distributors and OEMs manage their fleets. With increased visibility into their fleets, solutions to maximize sales and the ability to make smarter business decisions, are all made possible through the power of telematics data. Telematics will only continue to grow in importance for serving as a key solution for OEMs and equipment distributors alike, who are looking to become more profitable and successful with their equipment. WILLY SCHLACKS is president and co-founder of EquipmentShare, a construction technology company dedicated to helping contractors and heavy equipment owners increase the utilization of their assets. Driven by ES Track, the company’s proprietary telematics solution, EquipmentShare enables contractors to see critical equipment data such as asset health and utilization.
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The road to the future is paved with TELEMATICS
EquipmentShare Secures $26M By Rob McManamy At this rate, Wall Street may soon start calling Airbnb “the EquipmentShare of affordable lodging.” In early 2015, TechCrunch had likened the Columbia, Mo.-based construction technology startup to an “Airbnb for equipment rental,” but that was more than a year before the peer-to-peer marketplace dealer had secured $5.5 million in venture funding led by Romulus Capital. Now EquipmentShare has made even bigger news, announcing $26 million in new VC funding led by Insight Venture Partners, as well as existing investors Romulus and Y Combinator. “With this funding, we’re able to spark even greater change in this industry by further expanding our rental marketplace footprint and providing contractors everywhere with the telematics data they need to optimize their equipment,” said Willy Schlacks, 33, president of EquipmentShare. He and older brother Jabbok, the firm’s 39-year-old CEO, founded the company in 2014. At that time, Y Combinator had led the initial round of seed funding that raised $2.1 million. Of note, according to a form D filing with the SEC, EquipmentShare reported January 5 that it had actually raised $28.4 million to date. That includes the initial seed funding, according to Schlacks. EquipmentShare said it will use this month’s windfall to launch its new mixedfleet telematics solution, ES Track, and to open contractor-to-contractor rental locations in eight more U.S. markets, in the South and the Midwest. Already, it operates in Columbia, Mo.; St. Louis; Dallas; Jacksonville, Fla.; and Auckland, New Zealand. The new U.S. offices will include one in Kansas City, Mo., where
EquipmentShare already announced earlier this month that it plans to hire 20 new software and web developers. Below, a sample window into how ES Track works. “Since our founding, we’ve committed ourselves to helping the construction industry become more efficient, lucrative, and productive,” stated firm president Schlacks. “ES Track enables contractors and OEMs [original equipment manufacturers]
effect in December 2017. It will require all contractors to prove hours of service compliance using ELDs. “EquipmentShare is quickly emerging as the gold standard telematics-connectivity platform and marketplace for the construction industry, changing the paradigm on how contractors operate their businesses,” said Insight Venture Partners VP Harley Miller, who has now joined EquipmentShare’s board of directors. “We
to make more informed decisions about their fleets through automated data collection. Not only can contractors automate maintenance and job analytics, but [now] they can also boost the ROI of their fleets by renting their underutilized assets on EquipmentShare.” The company describes ES Track as a “robust” telematics platform that allows contractors to track the location, health, and use of their entire fleet in real time, all in one place. It provides “in-depth oversight tools” and analytics for both contractors and OEMs. That will be even more useful once a new electronic logging device (ELD) mandate, issued by the Federal Motor Carrier Safety Administration, takes
are pleased to add EquipmentShare to our portfolio of companies, as they continue to outpace the competition and redefine a massive and growing industry.” Added Romulus Capital cofounder Neil Chheda, “[It is] one of the fastest-growing construction technology companies in the nation. In the 18 months following our investment in their seed round, the company expanded into two new markets and developed a comprehensive telematics platform that will benefit contractors on an entirely new scale. [It] is a prime example of a company that has taken the collaborative consumption model and evolved it into a more meaningful technology business.”
ROB MCMANAMY, Editor-in-Chief, is responsible for leading BUILTWORLDS written content, focused on news and analysis. His award-winning experience includes more than 25 years as a reporter, editor and manager with McGraw-Hill's ENR and Design-Build magazines, as well as leadership roles at rival 38 | www.cedmag.com | Construction Equipment Distribution | March 2017 trade journals Building Design + Construction and Public Works.
The road to the future is paved with TELEMATICS
Technology, Telematics Changing Rental World Rental companies, especially in the construction industry, are taking advantage of new technology to improve the way they manage business. Incorporating rental management software that not only provides cutting-edge features, but also integrates with many other applications (like AEMP telematics), is no longer optional. So what is it, and what does it do for rental businesses? While they’ve been available for years with add-in devices, more manufacturers are now producing large equipment with builtin telematics features. Rental management software connected to those devices tells rental stores where their machines are, how much they’re being used, and whether they’re due for maintenance. Fleet tracking integration also allows stores to remotely turn their equipment on or off, lock or unlock it, and even restrict it within a geofence to prevent unauthorized site removal. Stores can also cap usage to prevent equipment
from being overused if a contract has capping requirements. Small tools are also equipped with RFID technology; stores that use rental management technology with integrated RFID can scan for precision and speed when filling contracts. For example, in Point of Rental Software’s 2016 update, the Contract Fulfillment module allows employees to add over-prepped items, sell missing or damaged items, and use either of two new scanning features: blind or doubleblind scanning. Blind scanning allows customer service representatives to scan incoming items without opening a contract – the items will automatically be assigned to the correct contract within a customer’s account. Double-blind scanning performs the same functions, but across the accounts of several customers, closing all fulfilled contracts automatically. Analytics and KPI’s are an important by-product of the functionality created by
embedded technology. With advanced reporting, rental management software now allows managers and business owners to mine data gathered from specific items. Trend reports provide insight into seasonal trends, to help you know when to defleet or refleet, buy or sell items. Quantity Compare Analysis reports allow you to see utilization to know whether to purchase more or sell off, as well as track sales to forecast future revenue. Integrations with technology that offers benchmark metrics also provide KPI’s that allow stores to compare performance against market competitors. Other technologies manage the rest of your business, such as online shopping carts, automated parts ordering, and CRM functionality, are integrations rental stores should look for in a rental management software. In today’s market, having up-to-date technology helps ensure your store turns a profit.
Glynn General Corporation Providing Quality Equipment Warranty Programs Since 1984 Coverage Types/Coverage Terms
● Extended service protection plans for New and Used Equipment ● Powertrain, Powertrain plus Hydraulics and Full Machine ● Used Equipment Terms available from 3 months (375 hours) to 2 years (2,500 hours) ● New Equipment Terms available from 2 years (2,000 hours) to 5 years (7,500 hours) ● Competitive Premiums/Fair and Reasonable Claims Reimbursement ● Insurer AmTrust International
Loss damage waiver and physical damage insurance programs available.
171 Follins Lane St. Simons Island, Georgia 31522 Tel: 912-638-4320 www.glynngeneral.com
Southeast/East Territory Eric Strickland Tel: 912-577-9799 Midwest Territory Slade Rowland Tel: 912-222-4268 Central Territory Michael Raley Tel: 817-301-7984 West Territory Jeremy Cockroft Tel: 970-946-8132 Brian Freitag Tel: 970-946-8133
March 2017 | Construction Equipment Distribution | www.cedmag.com | 39
DIS
DRIVEN BY
TECHNOLOGY FOCUSED ON PEOPLE
By Karen Algeo Krizman Although technology drives the DIS Corporation, its focus is clearly on people. “We basically say customer first, always,” states DIS President Randy McIntyre. “That’s our philosophy. We focus on the customer.” The Bellingham, Washington-based company provides software and business systems to agricultural and construction equipment dealers throughout North America. Its background is firmly rooted in the dealership world. In 1974, when a tractor went missing on its journey to a dealership in the Pacific Northwest, Bob Brim convinced the dealership’s owner – who happened to be his father – to allow him to automate some of the business’s work processes. Borrowing time in the dead of night on an IBM computer mainframe at a nearby college, the younger Brim wrote software for an inventory control system that would be the impetus for his launch of DIS in 1980. Soon after opening its doors, DIS found itself being endorsed by the likes of Ford Tractor, the Case Corporation, and other movers and shakers in the agricultural and construction equipment industry. Combining hard work, dedication to its customers and innovation, the company quickly grew into one of Inc. Magazine’s “500 Fastest-Growing Companies.” Completely staff-owned today, DIS continues to thrive, meeting the needs of approximately 1,800 customers and supporting 3,500 stores, while continuing to roll out new products. “Over the last five years, we’ve released two really nice additional products: Quantum, which is a replacement for our Keystone (business system); and Service Logistics, which is a field tech tool,” says McIntyre, who joined the company in 1984 as a sales representative. “Then we also have a mobile app tool called Sales Logistics, which helps with tracking of equipment, whether it’s doing inventory or just knowing where the equipment is. Those three things over the last five years are significant and we’re proud of them.” With technology constantly evolving, DIS is always looking toward the future, building on its business systems and continuing to develop new mobile apps.
“We’re working with another product called Ultimate that works with another product of ours called DIS Solutions,” McIntyre says. “Those are both web-enabled products, so we’re continuing to enhance and build better capabilities – better reporting capabilities, better CRM capabilities. And then we’re building mobile apps to integrate with them – all driven by what the customer needs.” A member of the Associated Equipment Distributors (AED) for approximately 30 years, DIS takes advantage of the many classes offered by the organization to help it understand just what its customers need. “Those classes tell us what the customer is needing, so we can learn really quickly what we need to work on for the next generation of enhancements,” says McIntyre, who has served on a number of AED panels himself over the years. Like the industry it serves, however, DIS Corporation is experiencing its own workforce crisis. “The hardest thing is finding the developers – the talent that can do the coding,” McIntyre says. “It’s highly competitive. There are not enough developers in the United States; not just us, but anywhere.” To solve its developer shortage, DIS is working with Western Washington University (WWU) to entice the workers of tomorrow to consider joining the industry. “We work with the local university and do internships,” says McIntyre, himself a WWU grad. “And we actually hire some of the younger ones who want to stay in the area. We’re doing our own thing much like AED does. We work with the local university to help us in developing what we need in the way of developers coming out of college. Being based in the Pacific Northwest, DIS has to contend with competition for developers from mammoths such as Microsoft, Amazon and Google. “I think one thing that we have is that we’re kind of more family oriented,” McIntyre says. “We have a beautiful small community, a couple hundred thousand people in the surrounding area, so we’re much smaller. And we have a lot of great natural resources around – we have mountains, we have the Puget Sound – that are easy to get to. It’s a lifestyle decision to work for us more than anything else.” For more information about DIS, visit www.dis-corp.com, email dis@ discorp.com or call 800-426-8870.
“(AED's) classes tell us what the customer is needing, so we can learn really quickly what we need to work on for the next generation of enhancements.” —Randy McIntyre DIS president
40 | www.cedmag.com | Construction Equipment Distribution | March 2017
CED
Got a story for CED? Contact CED Editor Sara Smith | ssmith@aednet.org | 630-468-5143
Inside
As the monthly publication of AED, we take pride in covering the industry in a unique and insightful way! CED gives our membership what they want to read; business information, statistics and industry-related news, plus fresh, original content that fuels a more profitable dealership. Over the past year or so, you might have noticed a few changes that began to take place within the magazine. First, with a color update here and there, to a complete revamp of content within each issue. Our goal is to continuously make these improvements to provide a resource that is designed to enhance dayto-day activities within the dealership and that begins with you, our reader. CED welcomes letters on any subjects that are raised within the magazine. Your opinion and observations matter. If you have a story or topic that you think should be covered within an upcoming issue, we encourage you to send a short summary to CED Editor Sara Smith at ssmith@aednet.org.
What we publish Our construction equipment magazine is typically divided into a number of columns and featured stories. If your company is interested in submitting content for the magazine, we certainly want to hear your pitch, but first we’d like for you to get a feel for our magazine style and focus. There are three common stories that the magazine publishes and include, press releases/statements, previews, and industry related columns. Most articles are expected to be between 650 and 1300 words, unless specified. See below for detailed information: ▶ Industry News: Is your company a member of The Association and have exciting news to share, then let us know! As a member benefit, we will publish updates ranging from new employees, anniversaries,
new openings, to everything in between. Product Preview: Any submission that introduces readers on new features or launches of equipment, buckets and/or attachments. Industry Columns: Articles that include specific content related to the monthly theme that provides advice and informs construction equipment dealers on ideas and tips of a particular subject.
How to Submit to CED Magazine Submitting your story to CED is easy! Let us walk you through some necessary steps. First, it is best if you submit your fully-completed story for our publishing team to review. You should include any high-resolution photos that are 150 dpi or higher, a brief bio that consist of 1-3 sentences and any necessary contact information. If you are pitching an unwritten story idea, simply submit it as a formal email that includes your story outline, proposed length and direction. Please note that it is the contributor's responsibility to provide accurate, factual and correct information, this includes spelling of proper names, places, address and foreign spelling, including accents.
CED Magazine reprint services Now is the time to capitalize on the publicity with a reprint of your article. Whether your company was spotlighted in CED’s industry news, product preview or an industry column, a high-quality, custom reprint can be purchased as a promotional tool for your sales team. All CED reprints are produced in full-color on 100lb gloss paper for a sophisticated handout for your customers and prospects. For more information and pricing, please contact Jon Cruthers at jcruthers@aednet.org. March 2017 | Construction Equipment Distribution | www.cedmag.com | 41
Bobcat Knows Good Things Come in Small Packages
By Karen Algeo Krizman obcat Company is one of the few major manufacturers based in North Dakota, but its reach goes far beyond the Roughrider State. A subsidiary of South Korea’s Doosan Infracore Co. Ltd., Bobcat provides compact equipment to construction, rental, landscaping, agricultural, grounds maintenance, utility and mining industries, as well as various governments, around the world. Yet despite its global dealings, the company, which was founded in 1947, remains firmly rooted in North Dakota. The state’s largest manufacturer, Bobcat recently completed a $9.5 million expansion of its West Fargo headquarters, which will help accommodate growth and innovation going forward. “We want to continue building on our leading global position in the compact equipment industry,” said Steve Ross, vice president of compact sales for Doosan Bobcat North America. “We’re constantly exploring and developing innovative solutions for our customers – both in terms of product and in how we service and support our customers moving forward. “We also continue to evolve and strengthen our relationship with our dealers. We’re working closely with them to make sure we continue to deliver on expectations that grow our business and strengthen the dealer network.” Bobcat has cultivated a network of approximately 550 independent dealerships to sell its products. As its brand and reach continue to grow, the company finds itself having to expand its training offerings to dealers as well. "As the business continues to grow and change at light speed, we must have highly capable and skilled dealer employees and dealers who want to take the time and make the investment to continue to developing them. So as a company, we continue to invest in learning paths and different training formats that help in these areas," Ross said. Like its peers in the industry, Bobcat is also seeing the effects of the shortage of skilled equipment technicians. To combat the workforce crisis, the company has joined other members of the Associated Equipment Distributors in efforts to attract more young people to the field. “We partner with several schools across the country to deliver training to our dealer technicians in locations across North America," Ross said. “This also lets the students at the school get some exposure to industry training as well as the Bobcat name. We have created a more thorough website aimed at getting potential technicians in touch with job openings at the dealer level. We’ve also partnered with a military placement company that helps people coming out of the military find jobs with Bobcat dealers.” For Ross, who joined Bobcat in 2004 before ascending to his current position with its parent company, the appeal of working for the company is obvious. “It’s about working with a fantastic, hardworking and highly skilled group of dealers and employees on a daily basis,” he said. “As with any business, we have a variety of extremely challenging goals, but it’s the passion and dedication to the business that our employees and dealers have that makes it all worthwhile.”
B
42 | www.cedmag.com | Construction Equipment Distribution | March 2017
Branch Management
2017
register online bit.ly/aedevents
2017 AED/AEM Equipment economic forum September 12 - 14, 2017 | Loews Chicago O’Hare Hotel Equipment Economic Forum brings together the industry’s top thought leaders and executives to discuss current and future challenges for equipment distributors and manufacturers. Topics such as market conditions and customer confidence will give you the chance to discuss financial issues that could arise in both areas and how they could affect your organization in the future. Political initiatives and insights will be presented, giving you foresight about the rising topics of conversation in government pertaining to dealers and manufacturers. Examining these topics with the top executives and thought leaders will broaden your horizons on these issues and give insight into the future of the industry.
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Engage With Industry Thought Leaders On Today’s Current Issues: • Two Days: The Equipment Economic Forum is an intensive two-day conference that is designed with your valuable time in mind. • 100+ Industry Attendees: Join your peer executives from the equipment industry to discuss challenges, threats and opportunities facing equipment distributors and manufacturers today and in the future. • 15+ Thought Leaders: The Equipment Economic Forum brings together the industry’s top thought leaders and executives to discuss current and future challenges for equipment distributors and manufacturers.
12/29/2016 10:57:38 AM
2/14/2017 9:43:49 AM
Due Diligence: Know the Person You’re Hiring By Troy Harrison Last time, we talked about conducting a winning first interview. A big part of the objective of the first interview is to break down the resume through detailed questions, making sure that the person in front of you is who they say they are. Even after your candidate clears the first interview, you’re still not done with the verification process. Now comes the phase that I call “due diligence,” that is, using readily available information to again verify your candidate. Due diligence comes in several parts: Criminal background check: You should always perform a criminal background check on each final candidate. It’s both human and natural to assume that someone who is an applicant for a professional job will have a clean background. It’s also an incorrect assumption, more often than most of us would care to know. I once had a five-year stretch of nothing but clean background checks on job applicants, and then had top candidates in three searches come up with felonies. What’s worse is that, even if their explanations were 100 percent true, it showed such bad judgment that I couldn’t possibly consider hiring them. Without a background check, if you hire someone with a felony on their record and they commit more crime while working for you, you can be liable in a court of law. For instance, you hire someone with a burglary conviction and then they steal from your client. Please note that I am not instructing you not to hire someone with a past felony – there are numerous factors including age, situation, etc., that can be mitigating – but make sure that you do what you do with full information. Some jurisdictions have implemented “ban the box” legislation that bans asking a prospective employee, prior to hiring, if they have a felony. Check with your lawyer on this one, but my understanding is that it’s still legal pretty much anywhere to make the job offer contingent upon passing a background check. You should also do a sex offender check for reasons that should be obvious. There are numerous companies out there that will do this for a reasonable price; my favorite is Validity Screening – find them at www. validityscreening.com. ▶ Reference check: “Aw, Troy, it’s useless to check references. They’ll just put down people who will say good things about them.” Yes, you’d think, wouldn’t you? And again, you’d be wrong. I always checked references in my searches. I called dead people. I called people who didn’t have good things to say. In fact, I called one person who said, “I have no idea why you’re calling me. I physically hate the guy and I’d punch him in the mouth if he was in front of me.” He was serious. Here’s where it’s helpful to understand numbers. Forty percent of all hires are made without checking references, even when they’re requested. So if you can’t find someone to say nice things about you, you can still put down three names and have a 40 percent shot at the job – not bad odds if you’re wildly unsuccessful. Don’t be that person’s victim. Request business references. Former bosses are the gold standard, former coworkers and customers are second, and there is no third. Then call them. Ask good, detailed questions about the person and their performance on the job. You’re looking for no negative references and at least two positives (you might, from time
to time, not be able to get hold of one reference). I’m also asked a lot about “name, rank, and serial number” references. That’s where you get the person’s title and dates of employment. Two things apply here. Normally that’s a response you get from HR, not from a supervising manager. Nobody gets into legal trouble for bragging on a past employee. Don’t use HR for your references. Second, if you get this type of a reference from a past supervisor, that’s a signal that something is wrong. Ask one followup question: “Would this person be eligible for rehire?” If the answer is “no,” or even a hesitation, you have a problem. Remember, you need your applicant to have at least a 2-and-0 record in references, if not a 3-and-0 record. If you don’t get that, pass. ▶ Employment history: Again, companies like Validity will call and verify employment history (this is where you do call HR), or you can do it yourself. You’ll probably find that it’s cheaper to outsource it. Unlike reference checking, all you’re looking for here is to make sure that the resume is a reflection of their actual work history. ▶ Education credentials: Here’s where it gets a little sticky. You might be tempted to disregard the “education” section on the resume if your job doesn’t require a degree. Don’t. Remember, one of the major red flags in any hiring process is a lack of truthfulness.
One of the most common areas for candidates to falsify is in education; they might claim a degree that they don’t have, or even a school attendance that didn’t happen. You can usually check these credentials through the registrar’s office, or again, you can have an outside firm check them. Don’t neglect this. ▶ Credit check: I only mention this to advise you not to do it. First of all, legally speaking, credit checks only have validity when dealing with a position such as a CFO or controller, where they are dealing directly with the company’s finances. Second, credit reports tend to be wildly inaccurate, and denial of employment based on them is a quick path to a lawsuit. I don’t check credit and I advise you not to. ▶ Other info: Check driving records if you provide a car or car reimbursement; I’d also advise doing drug testing. If you’re thinking that’s a lot of information to gather, you’re right, and we haven’t even talked about social media. But the right candidate will pass all of these checks. Don’t take shortcuts, and you won’t have anything to regret later.
TROY HARRISON is the author of “Sell Like You Mean It!” and “The Pocket Sales Manager” and is a speaker, consultant, and sales navigator. He helps companies build more profitable and productive sales forces with his cutting-edge sales training and methodologies. For information on booking speaking/training engagements, consulting, or to sign up for his weekly e-zine, call 913-645-3603, email Troy@TroyHarrison.com, or visit www.TroyHarrison.com. 44 | www.cedmag.com | Construction Equipment Distribution | March 2017
lity
register online bit.ly/aedevents
2017 FINANCIAL/HR SYMPOSIUM April 26-28, 2017 | Hyatt Regency Miami | Miami, Florida Over the course of this day-and-a-half conference, attendees will have access to a variety of educational learning sessions with topics that include next-generation recruiting for technicians, legal must-knows for financial executives, what to do if you get audited and more! Each year attendees walk away with an abundance of information to take back to their dealership — register to see what all the buzz is about!
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STRATEGIES FOR SUCCESS
Top Three Reasons You’ll Want To Attend This Year’s Financial/HR Symposium LEARN. This annual symposium is designed to update financial and human resource dealer professionals on important issues that impact their areas of responsibility. INTERACT. Don’t miss the opportunity to interact, talk, ask questions and have group discussions on industry-related issues and topics with your peers. DEVELOP. Financial and human resource professionals will gain insight and industry-specific tools through our special educational sessions, such as dealer tax opportunities, innovative work methods, how does your company look to potential employees, banking trends and more!
1/27/2017 8:53:52 AM
>> EQUIPMENTWATCH INTELLIGENCE
How Have Changes in Economic Factors Impacted Costs? By Dahshi Marshall Twice a year the economic factors that impact ownership and operating costs are updated. We took a look at each of them to determine the differences from the first half of 2016 to the first half of 2017. Taking a look at changes in economic trends over the past year can give heavy equipment owners and operators a good idea of the costs they can expect to incur from owning and operating their fleets. Between First Half 2016 and First Half 2017, economic factors that impact heavy equipment ownership and operating costs have decreased by 7 percent on average. Equipment owners and operators can expect to incur lower fuel costs, as the price of diesel has decreased 23 percent on average
nationwide and gasoline prices have decreased 12 percent. The mechanics’ wages factor, however, goes against the grain and has increased over the past year. The increase in mechanics’ wages may be due to the extra knowledge required to maintain Tier 4 equipment. It also points to the likelihood that heavy equipment owners and operators can expect to see higher field repair and overhaul costs in the coming year. To measure the impact that these economic factors will have on ownership and operating costs in regard to specific heavy equipment assets in your fleet, log on to EquipmentWatch.com and use the Internal Charge Rate Calculator.
REGIONAL SNAPSHOT: NORTH CENTRAL U.S.
North Central U.S. At The Heart Of Nation's Agriculture By Sam Giffin For our regional snapshot, EquipmentWatch takes a closer look at the northern states, consisting of the NorthCentral region of the United States and including parts of the Census Bureau’s West and Midwest regions. As we progress south from our last Regional Snapshot, we encounter Region H, the Northern States. These six states, ranging from Idaho in the west to Minnesota in the east, are similarly dependent on agricultural production and the energy sector. As we start the new year, we examine Region H in this recurring Regional Snapshot. Since December 2015, EquipmentWatch has collected approximately 436,549 observations from the resale channel for the states in Region H (listed at the bottom of this article). Over the last 13 months, all but two of the top equipment types available for sale in these states have been agricultural equipment. Wheel tractors comprise the largest individual equipment type for this region, with almost 20 percent of the entire data set. Combines, corn headers and balers round out the agricultural equipment in the top six types. Skid steer loaders and
4-WD articulated wheel loaders are the only yellow iron to make the list. The lack of other major earthmoving construction equipment in the top six list was surprising. Although crawler-mounted hydraulic excavators held the 8th spot
KEY TAKEAWAYS
FOR DECISION MAKERS
FINANCE: The Northern region remains a strong bastion of agricultural output, and the resale channel is unlikely to dramatically change composition anytime soon. in the list of most common equipment types, agricultural equipment like auger headers, planters, mowers/shredders and sprayers rounded out the top 20 most popular types of equipment. Since the top equipment types consist of less than 25 percent construction equipment, Deere’s place as the dominant brand in this data was not unexpected. Drago held over 6 percent of market share of used corn headers in this region, edging out New Holland and Massey Ferguson. Looking to skid steer loaders, Caterpillar remains a popular brand, but both Case and New Holland have a much higher market share in the northern states than in other comparable regions.
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Together, they comprise 23 percent of all manufacturers of these top six equipment types. Although seasonality is often a major determinant of price trends for agriculture-heavy regions, seasonal patterns in these equipment types are much harder to discern. 4-WD articulated wheel loaders and balers have maintained stable or mildly increasing asking prices over the last 13 months, but corn headers, combines, skid steer loaders and wheel tractors have all witnessed slight decreases in asking prices in the same time span. The first quarter of 2016 brought a great deal of variance to average asking prices, but these fluctuations settled by the middle of the second quarter. Over the last decade, the energy sector was the primary driver of the used equipment markets in this region. However, as prices for petroleum products plummeted and hit a plateau at less than $50/barrel for crude, most of the major earthmoving and drilling equipment in the area was liquidated or left the used market. Agricultural equipment took over as the dominant force on the resale channel for used heavy equipment and will likely remain in the top spots for the next few years.
2017
register online bit.ly/aedevents
2017 Washington fly-in April 4-6 | The Liaison Capitol Hill |Washington, D.C.
The Construction Equipment’s Top Advocacy and Public Policy Event AED’s Washington Fly-In is one of the only events for the equipment industry where attendees gain valuable intelligence about emerging threats and opportunities facing their companies and the sectors they serve. Join us for important visits with Members of Congress and their key staff on Capitol Hill, advocate for the industry, get up to speed on the issues impacting your company, and connect with other industry leaders to discuss critical items that will influence lawmakers.
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YOUR GUIDE TO SUCCESS Takeaways you’ll bring back to your dealership: Hear and gain insight directly from policymakers about infrastructure, tax and regulatory issues that affect your company. Network and discuss with sector leaders who understand that what happens in Washington, D.C. has a huge impact on equipment markets and dealer costs of doing business. Attendees will gain an exclusive insider perspective on how to strategically affect key government decisions. Fly-In is an exclusive forum to elevate the industry’s issues on the national stage, move the ball forward on infrastructure, tax and regulatory policy and show elected leaders that distributors are an engaged political force.
1/27/2017 8:49:38 AM
CAUTION:
YOUR REPUTATION By Christine Corelli
UNDER CONSTRUCTION DAILY T
he customer rules! You’ve heard it before, but it warrants repeating. Every single encounter the customer has with your dealer organization must be undeniably superior to that provided by any of your competitors. If you can make this a goal and achieve it, your result will be a reputation for World-Class Customer Service, and the highest levels of customer loyalty. You will also have the ability to obtain higher levels of customer advocacy where your sales, parts, and service departments will obtain more referrals, your company will benefit from customer advocates’ powerful word-of-mouth advertising, and you will see results where it counts: in your bottom line.
Start on the Inside
To obtain that great reputation takes time, energy, persistence, planning and employee involvement. Start with how your dealership performs internally. Take these steps: 1. Communicate and involve. Instruct every manager to hold a team meeting. Remind them to begin this meeting and every meeting by expressing appreciation for their employees’ hard work. Ask them to tell them that although the company’s delivery of service is very good, it must be far superior to that of your competitors. State that their involvement in continuous improvement is key. Explain that you will begin by improving how you serve each other, and that their involvement and teamwork will be required. 2. Create service excellence teams. Establish small “service excellence” teams, with employees from different departments who will come forth with ideas to improve in these areas: customer service, teamwork, productivity, communication, internal customer service and employee morale throughout your company. Let each team select their own leader, and have that person communicate with other branches to identify and share best practices they have in each area. The smaller and more nimble you can make your teams, the better. Think about it. Would you rather sit in a room full of 25 people working on something, or would you rather sit in a room with five? It’s much easier to get ideas across and be productive, and it’s so much more rewarding, when you’ve created something in a smaller group. In reality, larger groups can drain the creativity from that body of people and marginalize their efforts. 3. Compile the data. Collect the ideas and begin to implement the best ones. Too much change all at once is not effective. Identify the following: ▶ Three practices you will put into place to improve in each area for the remainder of the year ▶ Three areas employees are to focus on for continuous improvement 48 | www.cedmag.com | Construction Equipment Distribution | March 2017
▶ Three ways management can better support their teams and improve morale Make sure all managers make noticeable efforts to do their part. If they don’t, employees may interpret promises as “lip service.” Every dealer should make every effort to provide an atmosphere where people enjoy coming to work each day. 4. Make employees feel they are part of a team. There are many ways to make people feel connected to a business and a team. Activities outside of work are great. Asking individual team members for their opinions is helpful, too. Taking a different employee to lunch each week is another way. Many dealers publish a monthly newsletter with simple business and teamwork messages their employees can identify with. One very smart dealer often uses a sports analogy to drive home messages of teamwork. One of their newsletters had this message: “In sports, the playbook is what the team uses to direct and make sure everyone knows what is going on. The playbook is a set of guidelines, or let’s say procedures, that each player studies and knows. With one or two words, a play can be called out and everyone knows what needs to be done. In business, your playbook may not look the same, but it functions in a very similar way. If each team member does not know their position or where they fit into the plan, then the players and the play will become confused. Everyone plays a strong role and everyone is important to us.” The newsletter gives recognition to a different manager and team each month. A photo in the newsletter had this inscription below it:“Fortunately, when it comes to determining the best tech suited for a position, Steve does an excellent job assigning techs to repairs as well as getting the new techs the skills they need to perform by directing seasoned techs to work directly with them. That’s how this team functions. They are a great team! Meet the team responsible for repairing the equipment we provide our customers.” Another dealer has regular team-building sessions when business is slow. They role-play to display poor customer service. A classic was when their service manager demonstrated poor service by pretending to tell a customer, “Why don’t you talk to someone who cares?” And, “How could you be so stupid?” The laughs energize the team. Then they demonstrate how to treat customers the right way. While many might consider role-playing in this manner as cornball, they actually look forward to it. Another way to make employees feel they are a part of a team is to involve them in creating a simple list of do’s and don’ts that will improve internal customer service and prevent problems. “Do over-communicate with departments and salespeople.”
“Do demonstrate willingness to help your team members.” “Do help in the warehouse if you have time.” “Do keep the service area clean.” “Do make every effort to put every part away before leaving.” “Do keep the salespeople informed of any important information from their customers.” “Do display the same sense of urgency to serve each other as we do for customers.” “Don’t pass off a problem to someone else unless you are sure the person is handling it.” “Don’t leave a machine that is not safe. Lock out and tag out if necessary.” “Don’t fail to forward field calls fast.” “Don’t turn down business unless you are sure we can’t provide it.” These are just a few examples. Your teams will come up with more. 5. Break down barriers to true teamwork. Does territorialism exist between your departments and branches? Do the branches operate as business silos? Do they compete with each other instead of collaborate? Is there conflict between individuals, teams, or managers that has not been resolved? Do you have unproductive or negative employees who pull down the rest of the team? Do your employees feel undervalued? Do you display favoritism? Is there a manager who talks down to employees? All of these are barriers to teamwork. Break them down. No dealer owner or manager can afford any of these situations. 6. Empower? What?! Enable First! So much has been said about empowering employees to solve problems. But you can’t empower them until you enable them. The way to enable your team is to invest in training. Far too many dealers look upon training as an expense, instead of an investment in the future of their business. Making sure you hire certified technicians is important, but the soft side of service is equally important. You simply can’t assume people know how to make a connection with new customers, provide great service, handle difficult customers and situations, and demonstrate teamwork unless they are trained. 7. Ditch “employee.” Progressive companies no longer refer to staff as “employees.” They are referred to as “colleagues,” “team members,” or “associates.” All of these imply a level of respect for the individual and can impact your reputation. Another term you may want to ditch is “customer satisfaction.” Satisfaction isn’t enough. Strive for customer loyalty and advocacy. Developing a reputation for superior customer service involves a great deal more, but taking these steps will get you started. Just be sure you get the good rep. Reputation, that is.
CHRISTINE CORELLI (www.christinespeaks.com) is the author of six business books. She is a conference speaker and workshop facilitator who has worked with numerous equipment manufacturers and dealers and has been a popular speaker at numerous AED events. Reach her at 847-477-7376. March 2017 | Construction Equipment Distribution | www.cedmag.com | 49
The Future of Equipment Distribution:
Rent-to-Rent Required!
Part 1 in a three-part series from a presentation at the 2017 AED Summit. CHICAGO, ILLINOIS
JANUARY 10–13, 2017
By Larry Kaye ccording to the recent AED Cost of Doing Business Survey 2016, the typical dealer is challenged with improving their gross profit margin (GPM). This is a year-over-year issue and ranges from 20.5 percent to 21.8 percent over the last five years. By and large, the GPM on sales remains just under 12 percent nationally, and while the GPM on parts (27.4 percent) and service (53.5 percent) remains strong, the revenue volumes in parts and service are in slight decline year over year. The annual survey has two classifications of dealers: the typical or average dealer and the highperformance dealer. With virtually the same exact revenues, and experiencing many of the same issues with the parts and service business, the high-performance dealers are twice as profitable as the typical dealers
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(see Figure 1). With closer study, you will discover the difference is in their revenue mix and their commitment to rent-to-rent. As a dealer, there are many things you do not have control over that create pressures on your gross profit margins. For instance, you don’t control the dealer net price, or what the market is willing to pay for that type of machine. You don’t control the used equipment prices. You can’t control the pricing or value proposition of your competitors. You do have some influence over the machine population in your territory, aka market share. So, exactly what do you have control over? What is it that you can do to penetrate the market with your machines and do it profitably? The parts and service business is somewhat of an annuity if you can manage machine population in your favor. If not, your two most profitable departments will suffer. It is time to adapt your business to a rapidly changing market. The good news is that you can re-engineer the profitability of your business like the high-performance dealers. Re-engineering your business model goes to the core of how you are going to make money in the future. This requires investment and changing your asset allocation. Where is your investment now? What is the upside potential of having large inventories of new machines that have a relatively fixed GPM? The alternative is a strategic investment in a rental fleet which has very attractive GPMs and huge upside potential. If you study the following illustrations of revenue mix, you can observe the different outcome that is created by less dependency on sales efforts with a shift toward rental revenues. In Figure 2, you will notice that the first four lines are all
associated with selling new and used machines along with rent-to-sell revenues. These activities account for 69 percent of the business, but only account for 44 percent of the profit. Dealers continue to try to achieve market share through sales of new and used machines; however, this singular approach will continually put pressure on operating profits for the company and cannot keep pace with growing rental fleets by competitors. You need a sustainable solution for profitability and growing market share. Looking at Figure 3, you will notice that rental revenue represents 11.9 percent of the revenue mix for a high-performance dealer, while contributing 19 percent to the company profits. Growing the rental fleet will take tremendous pressure off the sales staff, which you can see also allows them to operate at better gross profit margins, 13 to15
percent instead of 12.6 percent. The question then becomes, “How do I get from 4 percent rental revenues to 11 percent?” Rental for most dealers is a very reactive play. They are tiptoeing into the rental business not quite convinced that they want to take the financial risk. Without a complete understanding of the financial risk and total impact on the dealership, rental will continue to be a reactive play rather than a strategic one. Rental revenues are directly proportional to fleet availability – if you don’t have it readily available then it is impossible to rent it. With this understanding, then, to get from 4 percent rental revenues to 11 percent would require increasing the rental fleet 200 to 300 percent! In Part 2 of our series we will explore the risks associated with rent-to-rent. March 2017 | Construction Equipment Distribution | www.cedmag.com | 51
Everyone’s in Sales!
So Make Sure You Build A Sales Culture in Your Business By Todd Cohen f you’re reading this, then you are in sales. Everyone is part of a sales culture, whether they are in the “C” suite or a member of the legal or administrative department, whether they own their business or are the receptionist in a Fortune 500 company. A sales culture means that everyone’s in sales. Does this mean that all employees have to stop doing what they’re doing and make some cold calls? Nope. A sales culture means that each and every employee – regardless of title or tenure – understands that they have a profound impact on a customer’s decision to say “yes.” Put simply, everyone’s in sales because everyone needs to sell themselves well to succeed! Every Conversation and Interaction We Have Is an Opportunity to Sell Our Skills, Our Knowledge, Our Ideas or Ourselves. Every single conversation is a bona fide selling moment. Conversations are the opportunity to make an impression that begins to build or continue a relationship. There is no such thing as a lost conversation or one that does not count. Every single interaction you have means you have about 7-10 seconds to engage someone in a way that makes them want to know more or continue the conversation. Once this is understood and thought of proactively, you can comprehend that you are constantly selling yourself. There are two types of salespeople: the ones who self-identify as being in sales and everyone else. The latter are the “nonprofessional salespeople” (NPSP). People are exercising the basics of sales far more often than they think. From lawyers to the owners of the local fast food restaurant, they are all in sales. Then there are the people in companies who need to sell something internally. One common example that comes to mind is someone engaged in research who has a great idea that needs funding to make it happen. It has to be sold to the bosses! We’ve all used and heard the term “it has to be sold” or “we need buy in” when referring to something internal to our companies or in our personal lives. Regardless of how you see yourself, here is the point that needs to be firmly and unequivocally understood: Telling people that they are in sales usually provokes two types
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of reactions, the first being “Yep, I agree.” The second reaction is “Nope, not me – I’m not in sales.” The latter is sometimes said with a slightly confused look, but the intent is there. Everyone is exercising the fundamentals of sales far more often than they think. It is also a fact that some nonprofessional salespeople will vehemently deny this entire concept because of fear that they have to “sell” something, which they don’t want to do. The older guard of the NPSP’s did not have to sell as we think of it today. Business came by referral and word of mouth. Oh, the times have changed!
is as much a salesperson every day as the professional salesperson. The only difference is that a professional salesperson is getting paid to sell. The NPSP gets what they want by selling themselves, their ideas and passions, and as a result good things happen. Sometimes those good things are monetary, like a raise. Your proactive recognition that you sell all the time leads to good things. Selling is not something that requires people to stop what they are doing and do something different. It is not a mode change. It is rooted in solid relationshipbuilding and developing trust. It is not unlike complex solution selling that we sales professionals experience all the time. In other words, selling is “don’t do anything different, think differently about what you do.” What you do every day impacts and influences people in many different ways— and that’s sales! Things do not happen magically in a vacuum. You need to get out there and sell yourself and your ideas so you can get what you want, need and deserve! Some great advice is just to relax, be natural and listen to your target “buyer.” If you get wrapped up in thinking too much about it then you will have some (big) challenges. Listen, ask questions and see how you can help. Have your facts ready and make sure they are right. “Facts don’t lie.” Facts help the selling process for everyone.
Companies With a Sales Culture Do Better
How Nonprofessional Salespeople Sell Sales fundamentals take place in non-sales settings constantly. Conversing, handling objections, networking, building relationships, listening and helping are all selling motions. The fundamental skills of selling are the same skills that you use every day in some fashion. Most of the time you don’t realize it, and when it’s pointed out, the usual reaction is, “Hey… I’m not in sales” or “Sales…that’s not my job!” It cannot be said often enough—when you talk, you sell. It’s the same act. When you speak, people form an impression very quickly, and that is a selling activity. So the NPSP
Companies with a sales culture have one indelible quality that defines them: every single person knows their role and not just what their title implies. Selling is a complex process, and it is no longer a linear relationship between the salesperson and the client. There is not a sale that could happen without the help and input of many people around the organization. Everyone has a systemic role and everyone does something that helps a customer say “yes.” People thinking “sales, not my job” are people who will keep the company mired in mediocrity because they think that selling is something else that they have to do in addition to their job. The point is that their job is sales and what they do is vital to the company for engaging and closing more customers.
TODD COHEN, CSP, is an accomplished and sought-after speaker, sales culture expert and author of “Everyone’s in Sales” and “Everyone’s in Sales; STOP Apologizing.” For more information or to book Todd Cohen for your next meeting, please visit www.ToddCohen.com. 52 | www.cedmag.com | Construction Equipment Distribution | March 2017
>> LIKE-KIND EXCHANGE
STEVE CHACON
Combining Like-Kind Exchanges with Trade-In Treatment Reducing/ eliminating tax risk can only occur through early and careful planning with the entire team, including the tax advisors, the dealers, and the equipment owner’s qualified intermediary.
By Steve Chacon, Accruit Obtaining income tax benefits through use of a like-kind exchange (LKE) requires adherence to various requirements under Internal Revenue Code Section 1031. Although structured in a variety of ways, common LKE formats include the following: ▶ Simultaneous like-kind exchanges, or swaps ▶ Delayed like-kind exchanges, also known as forward exchanges The simultaneous like-kind exchange format should be structured as a true trade, with the ownership transfers occurring simultaneously. If structured correctly, this swap format does not require the use of a qualified intermediary (QI) to be considered a valid LKE. Swaps can also incorporate trade-in treatment, allowing a permanent reduction/ elimination of sales tax liabilities related to the acquisition of replacement property. Absent a swap, equipment owners can still seek Section 1031 treatment through the delayed exchange format. A properly structured delayed like-kind exchange represents a pathway to converting what normally would be a taxable sale, and future purchase, to a tax-free exchange of properties between the exchanger (equipment owner) and the QI. A typical delayed exchange occurs over a 180-day time period and generally disqualifies the equipment owner from sales tax reductions through trade-in treatment, as the buyer of the relinquished property is generally not the seller of the replacement property. It is important to note that the federal law governing like-kind exchanges is focused strictly on income taxation, while sales tax law is typically a state and local matter. However, through careful planning, it is possible to combine the benefits of trade-in treatment with like-kind exchange treatment. For owners of heavy equipment this combination can typically be done through two different approaches: standard trade-ins and dealer pass-through transactions.
Standard Trade-Ins
Most equipment owners have participated in tradein transactions with an equipment dealer. Generally speaking, in order to qualify for sales tax reduction the trade-in must follow a simple two-stage process: ▶ Legal ownership of the old equipment must transfer from the customer to the dealer
▶ Legal ownership of the new equipment must transfer from the dealer to the customer The negotiated value of the old equipment is used as a credit against the purchase price of the new equipment. Furthermore, sales tax is calculated on the excess value of the new equipment over the negotiated value of the old equipment, allowing a permanent reduction/elimination of sales tax liabilities related to the acquisition of replacement property. Coincidentally, simultaneous transfers of equipment represent the “oldest and purest form of exchange”1 and can qualify for income tax deferral as an LKE under Section 1031. If the transfer is structured correctly, the transaction will not require the use of a QI to complete the LKE. However, equipment owners and tax advisors should take caution in conducting LKEs without the use of an intermediary. QIs represent a safe harbor against various delays in ownership transfer or structural missteps that the participating parties may take.
Dealer Pass-Throughs
As is often the case, the equipment owner may not be satisfied with the dealer’s trade-in value on the equipment, or the dealer is wary of taking on used equipment as inventory. As a solution, dealers often offer their clients “pass through” structures through the use of a third party auctioneer. Instead of taking the equipment as an indefinite part of their inventory as a trade-in against the purchase of new equipment, the dealer will arrange for its acquisition, immediate consignment, and sale at auction. After disposition, the dealer can eventually receive the sales proceeds and immediately offset the cost of the new equipment, awarding trade-in treatment and permanently reducing their customer’s sales tax liability. Note that in a properly structured pass-through, the dealer actually acquires and then consigns the equipment at auction, then sells the new equipment directly to the customer. If structured correctly, this pass-through structure can benefit equipment owners in two major ways: ▶ Larger sales tax reduction – through higher trade-in value through open-market sale ▶ Like-kind exchange treatment – through coordination with an accommodator (the QI)
Continued on Page 55
STEVE CHACON, CPA, CES, is Vice President of Exchange Service Operations, Accruit. March 2017 | Construction Equipment Distribution | www.cedmag.com | 53
First Impressions Count:
Is your website mobile-friendly and fast? By Brian Shanahan s our mothers always said, “First impressions matter!” Whether applying for a job or meeting a client for the first time, we all know the importance of appearing at our best. Most dealerships and manufacturers go to great lengths to attract and engage customers as they walk through the door. The same concept holds true for your website. Mobile-friendliness and site speed (page load time) are two crucial factors in making a great first impression online. In today’s digital world, your website is the foundation for your sales and marketing efforts. A properly built and top-performing site is critical to your brand, your reputation, and your ability to attract and engage both customers and employees. We are not just talking about good design. Other essential factors need to be considered, such as content, backlinks, architecture, HTML, usability, site speed, mobilefriendliness, trust, social, and features that encourage visitor engagement and time on the site.
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Google’s Guidelines Matter
Google’s bots are constantly crawling your site and tracking hundreds of factors that impact your ranking in search results. Although Google does not publish all these factors, they do publish some, and studies have uncovered many others. With Google’s search engine market share continuing to grow, you cannot afford to ignore their guidelines. According to Search Engine Journal, Google’s search market share in August 2016 was 85.52% (desktop: 79.88%; mobile: 94.53%).
Mobile-Friendly – Ensure a Positive Experience
Although it varies by industry, most B2B websites get at least 30 percent of their visitors on mobile devices. This number is significant and is increasing – desktops are actually in decline. In today’s multi-screen mobile world, if your website is not mobilefriendly, you’re essentially closed for business to over one third of your visitors. Additionally, Google’s algorithm is known to favor mobile-friendly websites and often penalizes those that aren’t, with lower rankings. The two primary considerations for a mobile-friendly website are: ▶ Site structure is responsive and readable on all mobile devices (phone, tablet, laptop and desktop). ▶ Site loads quickly (less than two seconds) on mobile devices and meets Google site speed criteria. Fact: People are five times more likely to leave a site if it isn’t mobile-friendly. (Source: Google)
Site Speed – Don’t Drive Visitors Away
As mentioned above, when Google crawls your site, it judges its worth according to many factors. One of the other important factors is site speed, a measurement of how long it takes between the time someone clicks on your link and when the page is loaded and visible. If your site is optimized, it should take a second or less to load most pages. However, if elements of your pages load slowly, visitors will be stuck waiting, which is unacceptable. Site visitors are very impatient; if your page takes more than three seconds to load, the odds are they will click the back button and vanish. Research by Google shows that you will lose 40 percent of your visitor traffic if your pages take longer than three seconds to load, especially on mobile devices. That’s a lost prospect or customer, creation of a negative impression, and ultimately, lost revenue. Not only is this bad for business, but Google tracks page speed, and they will likely lower your search ranking due to slow-loading pages. Fact: Nearly 50 percent of all visitors will leave a mobile site if the pages don’t load within three seconds. (Source: Google) Takeaway: Test your site at testmysite.thinkwithgoogle.com, website.grader.com or gtmetrix.com. Identify areas that score poorly, and prioritize a plan to make improvements. If you don’t have the in-house resources, hire an experienced web agency to assist your team. First impressions matter, both in person and online. In today’s digital world, it only takes a few seconds to tarnish your reputation or lose a customer. Don’t be shortsighted. Just like facilities, tools and people, building and maintaining a professional web presence for your company is a serious investment in your future. BRIAN SHANAHAN is president of Shanahan Design Inc., a marketing and web development agency based in San Mateo, Calif. To learn more visit www.shanahan-design.com or call 650-393-5966. 54 | www.cedmag.com | Construction Equipment Distribution | March 2017
Like-Kind Continued From Page 53
When using pass-through transactions, extreme care should be taken by equipment owners looking to combine trade-in treatment with likekind exchange treatment. Before any sale or purchase occurs, owners should consult with their tax advisors and communicate their intended goals clearly – sales tax reduction and income tax deferral.
Taxpayers and Dealers Beware
Whether or not the equipment owner conducts a standard trade-in or a pass-through transaction, it is possible to reduce sales tax exposure and defer income tax liabilities at the same time. Owners of heavy equipment should never assume that a trade-in will automatically qualify as a like-kind exchange, or a like-kind exchange will automatically qualify as a trade-in. Dealer pass-through transactions can be especially risky, for both equipment owners and dealers. Sales and use taxing authorities have strict requirements that must be met to award an asset owner trade-in treatment. Likewise, income tax deferral through the application of Section 1031 requires separate compliance with various guidelines at the federal level. Failing to carefully analyze and apply the separate requirements can be disastrous, resulting in unforeseen tax liabilities, penalties and interest. Reducing/eliminating tax risk can only occur through early and careful planning with the entire team, including the tax advisors, the dealers, and the equipment owner’s qualified intermediary. 1 Long, Jeremiah and Foster, Mary. Tax-Free Exchanges under §1031. Thompson Reuters.
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1031 LIKE-KIND EXCHANGE SERVICES PwC and Accruit help more than 75 AED members put cash back in their businesses.
Like-Kind Exchange Services Like-Kind Exchange Services
Learn how we can help you. (866) 397-1031 info@accruit.com March 2017 | Construction Equipment Distribution | www.cedmag.com | 55
>> RISK MANAGEMENT
ERIC STILES
Don't Get Caught Unprepared: Twister Season Is Coming We’ve prepared the following best practices list to help protect your employees, buildings, equipment and inventory.
Q: When a tornado strikes, what’s the best way to ensure my employees are safe? A: When a tornado hits, it can cause devastating damage, injury and even death. We’ve prepared the following best practices list to help protect your employees, buildings, equipment and inventory. Preparing for a tornado ▶ Know your community’s tornado warning system: Make sure you and your employees are aware of its signal. ▶ Purchase a weather radio: Receive updates on developing or changing weather patterns in your area. ▶ Establish procedures: Make known your company’s tornado communication method. Make arrangements for employees in the field. ▶ Designate shelter: Identify and label shelter areas in your facility. ▶ Develop an evacuation plan: Move employees
away from lightweight modular offices or mobilehome-sized buildings. ▶ Conduct tornado drills: Familiarize your employees with designated shelter areas. ▶ Review your business continuity and recovery plan: Make any necessary modifications.
Know the difference: watch and warning A tornado watch is issued when conditions are favorable for a tornado. Prepare to take shelter and stay tuned to radio and television stations for additional information. A tornado warning is issued when a tornado has been sighted in the area or is indicated by radar. Take shelter immediately.
When a tornado strikes
When a tornado warning is issued, take shelter immediately – underground structures are ideal. If an underground shelter isn’t available, consider the following: ▶ Small interior rooms or hallways, without windows, on the lowest floor ▶ Rooms constructed with reinforced concrete, brick, or block, without windows ▶ Protected areas away from doors and windows Avoid seeking shelter in building sections with flat, wide-span roof designs.
After the tornado has passed
▶ Account for employees, check for injuries and provide medical attention. ▶ Check for safety hazards including gas leaks, blocked drains and downed power lines or trees. ▶ Check for facility damage. ▶ Document any damage with photos and written descriptions. ▶ Report your claim. ▶ Begin temporary repairs and salvage operations. ▶ Inform your employees and customers of business operational status, projected recovery and interim plans. As the endorsed P&C carrier for AED, Sentry Insurance offers great coverage options and services to meet your dealership needs. ERIC STILES is Sentry’s lead Account Executive responsible for maintaining the AED/Sentry relationship. 56 | www.cedmag.com | Construction Equipment Distribution | March 2017
Have a seat—we’ll steer you right Your insurance company should understand your risks—and your goals. With Sentry, great things happen when we learn what makes your dealership unique. That’s because we offer you custom insurance and related services—like smart risk management—to help you succeed now and over the long haul. Rely on us to dig in and do the heavy lifting, so you can invest more time bolstering your bottom line. Right By You
Let’s get the conversation started. Learn more about how we can help you manage costs and take advantage of opportunities at Sentry.com
Property and casualty coverages and safety services are underwritten and provided by a member of the Sentry Insurance Group, Stevens Point, WI. Individual life insurance, group and individual annuities and group products are issued and administered by Sentry Life Insurance Company, Stevens Point, WI. In New York, individual life insurance, group and individual annuities and group products are issued and administered by Sentry Life Insurance Company of New York, Syracuse, NY. For a complete listing of companies, visit sentry.com. Policies, coverages, benefits and discounts are not available in all states. See policy for complete coverage details. In New York coverage provided through policy form numbers: (Life insurance) 585-3000-01, 390-1000 (SLONY), 390-2003-SLONY; (Disability) 685-9000-31; (Dental) 785-7000; (Group Annuity) 840-300(NY); (Individual Annuity) 380-440. Short-term disability insurance is not available in New York. 73-710
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