August 2017
CED
Construction Equipment Distribution Published by AED: Business Fuel for a More Profitable Dealership
2017 Mid-Year Business Outlook AED’s 2017 Mid-Year Business Outlook shows members are ahead of the curve
n A Closer Look On target with TARGIT
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n Emerging Leader For Gus Wilson, the equipment industry runs in the family
n New Member Spotlight
Mustang Cat celebrates 65 years with a new AED membership
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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.
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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.
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contents CED Magazine | August 2017
vol. 83 no. 8
www.cedmag.com
>> FEATURES
20
On Target with TARGIT
36 New Member Spotlight
Mustang CAT, one of AED’s newest dealer members, is celebrating its 65th year in the heavy equipment industry. Located in Houston, Mustang CAT is an authorized Caterpillar dealership for Southeast Texas, offering sales, rentals and service for the brand’s robust line of heavy equipment products.
2
50.00%
9.09%
22
9
11
40.91%
100% 90%
Responses
80% 70% 60% 40%
9 / 24
50%
Skipped: 0
30% 20%
Total
Had to lay off employees since Jan. 2017
Increased new staff since Jan. 2017
No change or only replaced employees who left
10% 0%
Answer Choices
Had to lay off employees si...
No change or only replace...
Q7 In the first half of this year, have you increased or reduced the number of people employed by your dealership?
2017 AED Midyear Business Report Survey
Despite high hopes at the start of 2017 with a new administration in Washington, D.C., members of the Associated Equipment Distributors (AED) reported in the recently completed Mid-Year Business Outlook Survey that the “Trump effect did not materialize.”
Answered: 22
Mid-Year Business Outlook
Increased new staff since...
30
SurveyMonkey
Software company offers ways to compile the right data — TARGIT to put it simply, is in the business of helping companies perform better by putting the right data in their hands.
38
Emerging Leader
The heavy equipment business is a family affair for Heavy Machines, Inc.'s CFO, Gus Wilson.
August 2017 | Construction Equipment Distribution | www.cedmag.com | 3
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contents CED Magazine | August 2017
EDITOR'S DESK Sara Smith, Editor in Chief CED Magazine ssmith@aednet.org
vol. 83 no. 8
I
am pleased to announce that Construction Equipment Distribution (CED) Magazine has won its first editorial award, a 2017 APEX Award for Publication Excellence. APEX 2017 – the 29th Annual Awards for Publication Excellence – is an international competition that recognizes outstanding publications from newsletters and magazines to annual reports, brochures and websites. According to the APEX 2017 judges, “The awards were based on excellence in graphic design, quality of editorial content and the success of the entry in conveying the message and achieving overall communications effectiveness.” AED would like to thank everyone who has helped support the magazine by reading, generating content and sharing thoughts and ideas to help make CED the award-winning publication it is today.
Sara Smith, Editor in Chief ssmith@aednet.org
>> EDITORIAL
>>INSIDE
Editor in Chief SARA SMITH ssmith@aednet.org
Western dealers: Solutions to your technician shortage are plentiful.
AED's improved report makes it even easier to evaluate performance.
Business War Games help dealers gain a "big picture" perspective.
Is yours helping or hurting performance improvement?
Our need to embrace emerging opportunities.
The AED Foundation developing certification program to help dealers identify qualified technicians.
Today's tech advancements in the construction equipment industry.
Five digital marketing stats that may surprise you.
AED's policy agenda moves forward despite congressional inaction.
Become a customer service champ.
Sentry Insurance's tips for reducing workplace harassment.
Design and Layout KRIS JENSEN-VAN HESTE kjvanheste@gmail.com
>> WRITERS Heidi Bitsoli Freelance writer Christine Corelli Christine Corelli and Associates Daniel Fisher AED Government Affairs Brian Gareau Brian Gareau, Inc. Karen Algeo Krizman Freelance writer Brian Shanahan Shanahan Design Inc. Eric Stiles Sentry Insurance
>> ADVERTISING Vice President 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
16 >> Regional Report 22 >> Cost of Doing Business Report 24 >> Business War Games 40 >> Culture
42 >> Rethinking Leads 44 >> NEW!
46 >> Tech Connect
48 >> Digital Marketing 50 >> Capitol Corner
52 >> Customer Service
56 >> AED's Preferred Provider
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 © 2017 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 | August 2017
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GO ANYWHERE. DO ANYTHING. Empower your customers to conquer even the most inaccessible jobsites imaginable with the Terramac family of crawler carriers. Thanks to their rubber tracks, these machines boast a low ground pressure that protects sensitive ground conditions. Both the RT9 and RT14 are easily customizable with a range of attachments from hydroseeders to welders, while the RT14R offers a dump bed and 360-degree rotation for precision even in confined spaces. Each carrier is backed by our highly trained service and support professionals, so you’ll stay up and running no matter how difficult the job. Visit Terramac.com to learn more about joining the Terramac dealer network.
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>> FROM THE CHAIRMAN
WES STOWERS
Building A Winning Team Culture Leadership is a developed skill – an ongoing journey, not a destination.
A company earns and maintains its company must back them up by honoring reputation, good or bad, by how each any commitment made. individual member of its team conducts A healthy organization must have processes himself or herself every day. This reputation designed to make “doing the right thing” is earned, not bestowed. A company with more than just a stated core value. It must a long-established reputation for fair and be a subconsciously habitual and expected ethical conduct can still irrevocably destroy behavior. Integrity is non-negotiable. A years of trust and goodwill with a customer, company must apply this yardstick in all of its a supplier or an employee through just one dealings, whether with customers, suppliers ethical lapse by a single individual. Therefore, or employees. This requires accountability it is essential that a company provides every at all levels to accept responsibility for one’s member of its workforce own mistakes. Mistakes with a clear vision of the happen, and there must A healthy company’s mission and be a commitment to an ingrained sense of organization must turn mistakes into a individual purpose and mentoring and learning accountability. opportunity. have processes Most high-performing Leadership is a designed to make companies have a team developed skill – an culture, where the ongoing journey, not a “doing the right members understand their destination. The example own responsibilities, work we set and how we for a common goal and thing” more than just lead directly impacts take pride in the team’s the future of our own a stated core value. organization: success. A successful team is defined by the ▶ It is not about “I” strength and combined effectiveness of its and “me”; rather it is about “us” and “we.” players. Therefore, it is critically important ▶ An effective leader walks the talk, leads to maintain high standards when hiring from the front, is a servant to the team and and promoting, to assess roles where an empowers its members. individual’s strengths can be optimized, to ▶ The organization’s core values must provide the necessary training and resources be established at the top and consistently they need to do their jobs, and then to get supported throughout all levels of leadership. out of their way. Empowered teams achieve ▶ Lead by example. spectacular results. Delegate responsibility ▶ Never walk by a problem without taking and authority to the appropriate level, action, for that sets a new and lower standard provide clear expectations and effectively that will be even harder to correct in the mentor your talent. future. No matter how good one’s products ▶ Confront the facts head-on, and never or services, mistakes will happen and shoot the messenger. products sometimes fail. Problem situations ▶ Provide recognition on an ongoing can provide golden opportunities for the basis, enabling people at all levels within the company to demonstrate its true character. organization to better identify the role that Words are empty when they are not backed they play in its ongoing success. up by action. Employees must be empowered When the members of a team believe they to make on-the-spot decisions to effectively are winners, they perform like winners, and address problems without delay, and the success builds upon success.
WES STOWERS is the 2017 chairman of Associated Equipment Distributors and President & CEO of Stowers Machinery Corp. August 2017 | Construction Equipment Distribution | www.cedmag.com | 7
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>> FROM THE PRESIDENT
BRIAN P. McGUIRE
Grow Your Dealership By Investing in Leadership Development Bring out the best in your staff through the many opportunities available from AED throughout the rest of the year.
Developing your next generation of leaders and keeping your current leadership trained and educated is a key component of the continuing success of your dealership. Why should you invest in the leadership of your company? Since leadership has such a large impact on any organization, fostering its success is important. Here are some reasons why having effective leadership impacts your organization: First, investing in leadership development will help make your dealership more successful. Having knowledgeable, effective and hardworking leaders brings a lot of value to a dealership. Leadership development spurs knowledge of techniques that can build success, and the positive effects of having a trained team of leaders will make a noticeable difference. Your dealership will likely find that you are meeting your objectives and making better decisions within each department when you focus on your internal leadership. Investing in leadership development will create a more engaged workforce. Some of the statistics out there regarding positive worker engagement are staggeringly low, which means there is room for growth. Leadership development can help your team understand your dealership’s mission and vision for
the future, which gives them a better perspective on their particular jobs. Showing employees how their jobs support the greater good of the company will help keep them engaged and motivated day-to-day. Also, when you invest in your employees through leadership development, turnover rates tend to fall and retention increases. You have more ability to retain those employees who you feel have strong futures, are good at what they do and are especially beneficial to the dealership. This also means you won’t have to spend time searching for the qualified workers you need to fill a position. Although investing in your staff can be time-consuming and sometimes costly, it is clearly an important part of creating a successful environment. Investing in your workforce now will generate payoffs for your dealership for years to come. The time you spend on your employees is always time well spent. Bring out the best in your staff through the many opportunities available from AED throughout the rest of the year. Take your team’s leadership to the next level, or gain ideas on how you can be the most effective leader possible. Visit bit.ly/aed-events to find an upcoming event that will fit your team’s needs.
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
ROBERT K. HENDERSON AED Executive Vice President & COO
JASON K. BLAKE AED Senior Vice President & CFO
>> OFFICERS
>> AT-LARGE DIRECTORS
>> REGIONAL DIRECTORS
WES STOWERS Chairman Stowers Machinery Corp. DIANE BENCK Vice Chairman West Side Tractor Sales Co.
JAMES P. COWIN Cowin Equipment Co., Inc.
MICHAEL D. BRENNAN Senior Vice President Bramco, LLC
Modern Group Ltd.
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. MICHAEL VAZQUEZ Southeast Reg. MECO MIAMI Inc. DAVID PRIMROSE Western Canada Reg. Finning Ltd.
CRAIG DRURY Vice President Vermeer Canada Inc
PAUL FARRELL GAYLE HUMPHRIES JCB of Georgia STEVE MEADOWS
RON BARLET Vice President Bejac Corporation
Berry Companies, Inc.
JOHN C. KIMBALL VP of Finance Kimball Equipment Company
Heavy Machines, Inc.
WHIT PERRYMAN Immediate Past Chairman Vermeer Texas-Louisiana DENNIS VANDER MOLEN Foundation Chairman Vermeer MidSouth Inc.
JAMES A. NELSON KENNETH E. TAYLOR Ohio CAT
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ANY JOB. ANYWHERE.
ARDCO AMT: Goes Off Road. Stays On Task. The ARDCO Articulating Multi-Purpose Truck (AMT) offers a new concept in jobsite flexibility. A modular platform can be customized to tackle countless applications, while a rugged design allows the AMT to attack any terrain, from urban construction sites to extreme off-road locations.
One machine. For any job. Do it all with the ARDCO AMT.
ARDCOMFG.COM
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>> AED INSIDER AED Onboards a New Summer Internship Program Meet Katie Kremer, AED’s Marketing and Communications Intern My name is Katie Kremer and I am a sophomore at Carthage College, a liberal arts school in Kenosha, Wis. During my first year, I became heavily involved in student life, becoming part of a sorority and a couple of other clubs, and I even landed a job on campus. I am pursuing a degree in marketing with a minor in writing, as I’ve developed a passion for each. After finishing my freshman year at Carthage, I went into the summer knowing I had the time to work on myself while advancing toward the main area of study for my future career. Managing both an internship and classes a few times a week has been taxing, but I am willing to push through because I understand the hard
part is only temporary, and the best is yet to come. I have been fortunate enough to have the opportunity to work as a marketing and communications intern at a highly respected company, Associated Equipment Distributors. AED has Kremer provided me with the tools and direction I need to develop my drive and potential, and to get a jumpstart on my career and a closer look into what the marketing and communications environment is really like in a business
setting. I have just begun to understand that I am gaining a whole new level of knowledge and experience here at AED—something that might be of greater significance to me than any practice from one year of college. Working with the AED team has steadily increased my ability to write professionally and communicate with other companies and businesspeople. I took a shot in the dark and hit the target, and I sincerely could not be more grateful. I send my thanks to the AED staff for welcoming me with open arms and free donuts on Fridays. My involvement with the AED team so far has been one of mental growth, critical thinking and training for the real world; I cannot wait to witness all that is to come.
AED Letter to the Editor Program Gains Traction At the beginning of 2017 AED launched a targeted letter to the editor program in small to medium daily newspapers, designed to highlight critical local infrastructure issues. The premise of the program is to call out specific instances where infrastructure, including roads, bridges, dams and other public works, are failing and to prevail upon federal elected officials to take action in the form of support for broad transportation and infrastructure legislation in Congress. To date, letters from AED President & CEO Brian McGuire have been published in seven states, including the following: The Daily Telegraph – Alton, Ill., The Daily Nonpareil – Council Bluffs, Iowa, Winona Daily News – Winona, Minn., Berkshire Eagle – Pittsfield, Mass., Sandy Springs Patch – Sandy Springs, Ga., Palmetto Business Daily – Charleston, S.C., and The Hanford Sentinel – Hanford, Calif. Combined, these publications have circulations in excess of 100,000 readers. “We feel it’s important to be on record highlighting the serious deficiency in infrastructure funding affecting all corners of the nation,” Mr. McGuire stated. “We decided to micro-target small local newspapers because we know these letters show up in Members of Congress’ daily clips. Feedback from this program has been tremendous.” If you have critical infrastructure failings in your area that should be highlighted, please contact AED’s Vice President of Government Affairs Daniel Fisher at dfisher@aednet.org.
Coming Soon: Certify Your Technicians By the industry, for the industry: The AED Foundation is launching a new program developed by a task force of technical experts from equipment dealers, manufacturers and technical colleges. Show your technicians that you promote benefits of continuous improvement and high performance standards through The AED Foundation’s new certified technician program! For more information, turn to page 44.
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>> AED INSIDER AEM/AED Forum: Drivers of the Industry Set for Next Month
Those in attendance at the upcoming AEM/ AED Forum: Drivers of the Industry event will be afforded the opportunity to learn about a number of current industry drivers and issues facing the heavy equipment industry today. Slated for September 12-14 in Chicago, the three-day event offers industry executives and senior-level managers access to a wealth of sessions that will provide details on how these drivers and issues will impact their businesses directly, allowing them to gain valuable insights on how to maximize their profit opportunities and position themselves for long-term success. Held annually, the forum is designed to bring manufacturers and distributors together to discuss the challenges, threats and opportunities both groups are currently facing, as well as what will influence them in the future. Industry executives and senior-level managers who attend will get a look at what’s new with building, roads, energy, oil, rental and more. Without further ado, here are 12 things attendees can learn by going to this year’s AEM/ AED Forum: 1. What issues matter most to other
manufacturers and distributors – All seminars provide valuable information, but the AEM/ AED Forum will allow manufacturers to share opinions with one another and their distribution. OEMs require input from both their and other manufacturers’ distributions, who have direct access to end users, and they will have a wealth of opportunities to solicit that input at this event. 2. How committing to innovative disruption can create new value and wealth for a business – Disruptive innovation expert Luke Williams will share how taking resources that are available to a company and rearranging them can have a
transformative impact on its bottom line. 3. What economic issues will directly impact the construction industry – Wells Fargo Managing Director and Senior Economist Anika R. Khan will highlight how residential and commercial construction, capital spending, jobs and wages, productivity, materials price movement and market indexes will affect the industry as a whole in the coming months and years. 4. How telematics is changing the way business is conducted and improving professional relationships – An OEM, a dealer and an end Continued on next page
Technology Driven. People Focused.
Dealer Information Systems Corporation
800.426.8870
www.discorp.com
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>> AED INSIDER Continued from previous page
user will each share the value that machine data provides them, and they will examine just how telematics is changing the customer experience for the better. 5. What government initiatives and legislation will directly impact manufacturers and dealers – AEM Senior Vice President of Government and Industry Relations Nick Yaksich and AED Vice President of Government Affairs Daniel Fisher will provide updates on all of the developments and happenings in Washington, D.C., that are relevant to the industry. 6. How the current supply, cost and effect of crude oil, natural gas and petroleum will affect the equipment industry – The American Petroleum Institute (API) will highlight key drivers behind the energy market and provide details on where current natural gas production stands, as well as whether demand is expected to be high or low. 7. What challenges manufacturers and distributors face, and what they can do to overcome them – Larry Kaye of Script International will share how cooperation between both the manufacturer and the dealer can lead to a pipeline of revenue for both parties. 8. What challenges lie ahead for manufacturers – Industry leaders will share their perspectives on such issues as the political landscape, cybersecurity, workforce development and the speed of technological change. 9. What key drivers are behind the utility market – The C Three Group’s Jean Reaves Rollins will provide an analysis of the utility segment, including distribution and transmission forecasts from 2017 market data. 10. What issues are impacting dealers’ businesses most directly – Distributors will disclose their firsthand experiences and insights on these issues, and how improving products and services are helping better meet customers’ needs. 11. Why increasing the supply of the skilled workforce is such a growing challenge for the equipment industry – An initiative innovator, a manufacturer and a dealer will share their perspectives on how to most effectively address this issue of critical importance. 12. What returns and impacts manufacturers should expect from mobile field service – Ray Thomas of MSI Data will share a case study that indicates how being equipped with the latest in technology ensures a competitive edge and repeat customers, given that the performance of field service programs can be a major driver of both revenue and profits.
Take on the fairways to support the future!
Before you attend the AEM/AED Forum: Drivers of the Industry, take your drivers to Eaglewood Resort. Join us for a day on the green to support The AED Foundation and its mission to construct paths to opportunity for the construction equipment industry. Register for Forum, put together your foursome and tee off for techs! Fairways for the Future Day: Tuesday, September 12, 2017 Time: Tee times start at 10:00 a.m. Location: Eaglewood Resort & Spa, 1401 Nordic Rd. Itasca, IL 60143 Price: $150 per person Included with the price: Scramble format (four-player teams), green and cart fees, lunch and course prizes for challenges (longest putt, lowest team score, longest drive and closest to the pin) Contributions to The AED Foundation are tax-deductible to the extent of the law. The AED Foundation is a 501 (c)(3) educational foundation.
Congressman Tom Suozzi (D-NY) visits AED Member Jesco Inc.
Congressman Tom Suozzi (D-NY) recently visited AED member Jesco Inc.’s Deer Park, N.Y., facility to learn more about the construction equipment distribution industry and the policy that impacts dealerships. Suozzi is in his first term in the U.S. House of Representatives and serves as the vice chairman of the Problem Solvers Caucus, which is a bipartisan group of 22 Democrats and 22 Republicans who are attempting to form a bloc to deliver key votes for tax reform or infrastructure spending. He told host Anthony Falzarano, Jesco’s VP of sales, that he thinks transportation investment has a really good chance of being funded from a tax on repatriated corporate profits of U.S. companies. Another issue that struck a chord with the congressman was the shortage of skilled technicians. He recently had an op-ed published in The Wall Street Journal entitled When the Welders Came to Capitol Hill, in which he advocates for the increased awareness of trade programs and apprentices. Falzarano explained to the congressman the vital role technicians play in the dealership, noting the importance of uptime for contractors and the complexity of today’s machines.
Congressman Poe Visits Bell Dealer FSEI in Houston, Texas
It’s not an everyday thing to get a visit from a congressman, but it happened to Four Seasons Equipment Inc., one of our Bell Dealers, on July 5. Texas Congressman Ted Poe, second district Houston, came to FSEI’s main office in Houston and discussed current legislation and his outlook for Congress this year. The meeting was arranged by Associated Equipment Distributors, the trade association government affairs office, on behalf of Representative Poe. The congressman spent 40 minutes discussing what is going on in Washington, including healthcare, infrastructure spending, tax reform and the Perkins Act Reauthorization Bill. He is very optimistic that healthcare and tax reform will get done this year, something we all want to happen. He then toured the facility for 20 or 30 minutes and posed for a few photos. Overall, it was a great visit with a representative who definitely understands the business and the people in the country and his district.
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>> AED INSIDER >> INDUSTRY NEWS IN MEMORIAM AED’s 1987 President, Keith F. Franz, 87 Keith F. Franz, age 87, Town of Polk, (Slinger, Wis.) passed away June 14, 2017. Keith was born on July 9, 1929, in Waukesha to the late Delbert “Doc” and Ruth (Schmid). He graduated from Washington High School-Milwaukee in 1947 and attended college at UWM and Marquette University. Keith owned Boehck Equipment Co. from 1982 until it closed in 2001. Keith is survived by his wife Mary and four children: Warren (Nancy) Franz, Luanne (Rick) Fahl, Carolyn (Gary) Wignall and Owen (Stephanie) Franz. Keith was chief of the Cedar Lake Fire Department and past president of the Washington County Fire Chiefs, International Fire Buff Associates, Society for the Preservation and Appreciation of Antique Fire Apparatus of America, the Milwaukee Fire Bell Club, Fire Museum Network, the Venerable Fire Collection, Boehck Equipment Company, and Associated Equipment Distributors. Keith served as Executive Secretary of the Wisconsin State Fire Chiefs Association. He was active in the Masonic Lodge, the Scottish Rite, and DeMolay. He served on the board of the Cedar Lakes Conservation Foundation, the Milwaukee Fire Historical Society, and the Wisconsin Automotive Museum. In addition, he was an active member of the Friends of the Maltese Cross and his church. Online condolences may be left at www.eernissefuneralhome.com.
Congressman David Joyce Visits AED Member Gibson Machinery AED member Gibson Machinery LLC met with Rep. David Joyce on June 28 at their Cleveland, Ohio, facility for a tour of the dealership and to discuss tax reform, infrastructure, and career technical education.
There’s a sense of pride in doing the job right. We’ve been treating our customers like family for over 100 years and we’re ready to do the same for you! Call Michael or Elise to discuss an equipment finance program for your customers: 1.800.247.1922
Michael McElroy
Elise Linn
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>> INDUSTRY NEWS Letter to the Editor: Help Economy By Keeping Like-Kind Exchange AED member letter published in St. Louis Post-Dispatch, July 11, 2017 Tax reform is shaping up to be the centerpiece of the 115th Congress. That much, we know. The details, not so much. Here’s what we do know: The Trump administration’s broad-strokes plan has two components: tax cuts and a simplification of the tax code. Simplification of the code and elimination of unfair loopholes are noble intentions. But we should be careful to not sacrifice critical provisions of the tax code that stimulate the economy. Take Section 1031 of the tax code, the like-kind exchange. The manufacturers of equipment that builds our infrastructure like bulldozers and excavators, the dealers who sell them, and the builders who put them to use all rely on this essential part of the tax code to help grow their businesses.
Importantly, the like-kind exchange isn’t a loophole: It has long been enshrined in the tax code. Companies use like-kind exchanges to defer taxes on gains realized through the sale of business assets, like fleet vehicles, as long as they reinvest those gains in replacement assets. This is crucial, because like-kind exchanges do not eliminate taxes owed. Taxes are paid on the gain when the business sells the replacement asset in a conventional sale. This helps alleviate high up-front costs for many small businesses. A farmer or small manufacturer can sell old equipment to help fund upgrades without taking a tax hit. Taxes are eventually paid. Like-kind exchanges are a win-win for
the country. Businesses rely on them to expand, which ripples out to millions of service providers and manufacturers connected to them. Elimination of Section 1031 will require current operating capital to be redirected to tax payments, reducing the capital available for job creation and reinvestment in the communities. Far from a special loophole, economists consider the like-kind exchange a smart lever for growth. Congress should too, and maintain this critical provision in its current form. Carrie Roider CEO, Erb Equipment Co. Source: http://www.stltoday.com/opinion/mailbag/help-theeconomy-by-keeping-the-like-kind-exchange/article_03e3e010f020-5300-becf-e16ba8398b32.html?utm_medium=social&utm_ source=email&utm_campaign=user-share
Felling Trailers Partners with Schools to Spark Interest in Manufacturing In 2011, when Ben Myhre was hired for a welding position at Felling Trailers, he never imagined that six-and-a-half years later he would be teaching a weld training course to classrooms of fellow employees and high school students. In early 2016 Myhre was approached by Felling Trailers ownership and asked to take part in the creation of the company’s Weld Training Center. “Since Ben joined the Felling Trailers manufacturing team in 2011, he has displayed strong leadership skills with his coworkers on the shop floor and determination to improve on training operations,” said Paul Radjenovich, Felling Trailers’ VP of operations. Ben recently received his Certified Welding Inspector certification from the American Welding Society, which will play a key part in his continued instruction. Felling Trailers’ Career Development Program and Careers in the Community Felling Trailers Weld Training Center, housed in a recently acquired property, connects to the southeast corner of its Sauk Centre location. It was here that Myhre worked with Byron Emery, a Dakota County Technical College welding instructor, to create the curriculum and the welding lab. The state-of-the-art welding lab consists of six welding booths, an instructional booth, and a small classroom adjacent to the lab. “Byron and I created the entire process. We pooled our experience together both on the job and in the classroom and came up with a curriculum that was driven toward processes and operations within Felling Trailers,” said Myhre. Later Myhre worked with Jake Fisher, an industrial technology teacher at Sauk Centre High School, to create a structured curriculum for high school students based on Felling Trailers’ welding curriculum. The training course is an 80-hour course, with 25 percent classroom work and 75 percent lab work. One of Myhre’s first classes was taught to fellow employees. “I had a great mix of students in the first run. All of the students had some
welding experience, and some had more than others. One thing is for certain: none of them had any formal training in welding. They all were super eager to learn. The high school kids came in with a much higher technical knowledge base, with the majority of them having previously completed welding courses in school.” The course starts with a review of the basics of welding. “We review the basics of gas metal arc welding to create training that breaks down the ins and outs of welding. The course is designed to give a real-world look at the manufacturing industry in central Minnesota, as well as what it takes to perform at a high level in the industry,” Myhre said. “I am in charge of the grading process. The grading process is pass or fail. We perform destructive testing on the welds to ensure they meet a tight set of standards.” When asked about the hardest and the easiest parts of being an instructor, he replied, “I will start with the hardest. I feel the hardest thing to do is stand there and watch people struggle with their welding techniques. Welding requires repeatability. Repeatability takes time. I give them the tools they need to succeed, and they refine them through practice. The best part of my job is when people lift their hood smiling, and look at me and say, ‘This is the one, Ben.’” According to Brenda Jennissen, CEO of Felling Trailers, “Manufacturing skills are vital to our success, and it is our desire to ensure Sauk Centre Public Schools continues to offer quality manufacturing education. We enjoy giving the industrial tech students tours of our facility each year, and we wanted to do more. We wanted to see what we could do to help students see and experience the opportunities in their backyard. Our mission for this program is to provide high school students and employees with the skills and tools needed to succeed in our growing manufacturing business through career experiences that are both hands-on and real-world.“ For more information, visit www.felling.com or call 1.800.245.2809.
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August 2017 | Construction Equipment Distribution | www.cedmag.com | 15
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Western Dealers:
Solutions to Your Technician Shortage Are Plentiful... Top-to-Bottom Commitment Required T
ime and time again I’m hearing that the biggest challenge dealers face is filling technician positions. I have experience with various resources that dealers are committing to in overcoming this challenge. I’m here to help you – and to inform you that there are many opportunities to do more from a recruiting and development perspective. Focusing on the western United States (Colorado,
REGIONAL REPORT
Phil Riggs
Wyoming, New Mexico, Montana, Utah, Nevada, California, Oregon, Washington, Alaska, Hawaii, Arizona and Idaho), I’ll break down some of these opportunities that are available to you. All I ask is a couple of things. First, that you keep in mind that to be successful, your company must have buy-in from everyone in the business, from the parts counter to the dealer principal. Second, that for those of you who struggle to find technicians for your branch locations, make sure you have someone there locally who is making it a priority to recruit. Let me help you, as your regional manager, to address this issue head-on, bringing industry together on this noncompetitive issue and working together to solve it. Are you partnering with colleges that offer diesel programs, and are those programs AED Foundation-Accredited? Oregon and Washington: Opportunities exist for dealers to work with Linn-Benton Community College and Lane Community
College in Oregon (both AED Foundation-accredited). Join their advisory boards, have your service managers make regular visits with students, offer scholarships and internships. One college that is not AED Foundation-accredited is Centralia College; they are looking for more dealer involvement and are willing to improve their curriculum to your standards if you express your willingness to support the program and help them achieve AED Foundation Accreditation. California: Long Beach City College is starting a six-week preapprenticeship program in late 2017 to prepare students for a more rigorous curriculum and to help identify potential candidates for employers. Miramar College is looking for more dealer involvement in their diesel program and would like to explore AED Foundation accreditation. College of Alameda is also looking for more dealer involvement. Rio Hondo College currently offers certificates in various courses related to heavy equipment technology, but industry needs to vocalize their concerns to the facility if dealers want to see it taken to the next level of quality. Existing AED Foundation-Accredited programs include Reedley College and San Joaquin Delta College. Arizona: Several AED members have found Central Arizona College to be a great resource for new hires. They are AED Foundation-accredited and have a large facility. Consider donating a piece of equipment or introducing yourself on a regular basis to the students enrolled. Mesa Community College is also expected to achieve AED Foundation Accreditation. Take a look at Yavapai College near Prescott as well, for their diesel program. Colorado: Dealers in Colorado have joined forces to support Community College of Aurora’s diesel program and have implemented an outstanding apprenticeship-like structure for all dealers to participate in. They have seen great results and have recently formed an industry advisory board. Their next step is to work with the college to get them the resources needed to bring the content up to industry standards and broaden their recruitment efforts.
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Alaska: Alaska Vocational Technical Center (AVTEC) is currently AED Foundation-Accredited and is a great avenue for dealers in the state of Alaska to start a recruiting program. Montana: Expected to achieve AED Foundation Accreditation in 2017, Montana State University-Northern in Havre, Mont., provides an excellent diesel program. Join their advisory board and talk to them about how you can get more involved. If your state is not mentioned here, let me know. I know of plenty of other colleges throughout the western states that are available to work with. Have you googled high schools in your area that offer auto/diesel classes? Even though many of these classes are no longer being offered, you may be surprised how many are still out there. Search, call the instructor, ask if you can come by twice a year with a piece of equipment to show off. Next step – work with them to offer concurrent enrollment at a local college’s diesel program. The sooner students can complete their education, the sooner they will be a highly productive member of
your service team. Did you know AED and The AED Foundation also have guidelines for high schools to align their classes with what our industry is looking for? Call
Call me for information on high schools in your state or for details on how to begin building a partnership with them. me for information on high schools in your state or for details on how to begin building a partnership with them. Does your company have a written sponsorship agreement and recruiting materials? I have plenty of collateral material for your dealership’s use: career brochures that we can brand for you, videos about careers in the industry, sample templates for sponsorship agreements, and countless contacts for you to discuss best practices
with. I can even work with you and other dealers in the area to host an industryspecific construction equipment career day to generate awareness about career opportunities at your dealership and help you find potential hires. But what about vetting experienced technicians in the hiring process? The AED Foundation offers technician assessments for new hires and existing employees, consisting of 160 multiple choice questions in English or Spanish that you can use to determine the skill sets of potential hires and existing employees. Developed to help you identify strengths and weaknesses, these assessments have been known to save dealers many headaches as well as lost time and money. At the end of the day, you’ll need a long-term plan to tackle this – even when business is down. Figure out what your dealership’s needs are and work with The AED Foundation to make it easier along the way. Don’t forget to call or email me with any questions: 630-465-3622 priggs@ aednet.org.
PHIL RIGGS is AED'S Senior Regional Manager. Reach him at priggs@aednet.org and 630-574-0650, ext. 5128.
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Benchmarking Reports
UPCOMING EVENTS Register online at bit.ly/aedevents
Cost of Doing Business AED Member Price: $595 Non-Member Price: $1,190 The AED Cost of Doing Business Report (CODB) provides members with the most up-to-date comparative financial performance information. This report, available exclusively through AED, provides information that enables dealers to evaluate their operating results. Participating dealerships receive a free copy of the published report as well as access to reporting tools.
Contracts AED Member Price: $595 Non-Member Price: $1,190 The AED Contracts Report is newly updated for 2017 and provides a simple guide to help manufacturers and dealers negotiate distribution contracts which balance the needs and interests of both parties. It provides general information about the purpose and effect of some of the most common and important clauses unique to equipment distribution agreements, and addresses clauses that are often at the center of dealer-manufacturer disputes.
Rental Market AED Member Price: $595 Non-Member Price: $1,190 More than 50% of all new machines sold are being put into rental fleets— what does this mean for your dealership? The NEW AED Rental Market report will help members understand rental trends and form strategies for their dealerships.
AEM/AED Drivers of the Industry
September 12-14, 2017 | Loews Chicago O’Hare, Rosemont, IL Drivers of the Industry is an intense 2-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.
Parts Manager Development Seminar- Level 2
September 26-27, 2017 | Hyatt Regency St. Louis at The Arch, St. Louis, MO This seminar will give you the tools to take your parts department to the next level. Understand the importance of parts merchandising, tracking successful marketing, and how to serve large customer markets. (Level 1 course completion not required)
Service Manager Development Seminar- Level 2
September 28-29, 2017 | Hyatt Regency St. Louis at The Arch, St. Louis, MO Make your service department more efficient. Topics include understanding the importance of selling maintenance programs, how to serve large customer markets and developing incentive programs. (Level 1 course completion not required)
Ottawa Briefing
October 23-24, 2017 | Fairmont Chateau Laurier, Ottawa, ON, Canada AED’s annual Ottawa Briefing is the major event for equipment industry leaders to learn about policy issues affecting the construction, energy, farming, and mining equipment industries in Canada. Hear from a range of
top-tier speakers about how government programs affect equipment demand and dealer costs of doing business while building relationships with government officials and influencing federal policy.
Advanced Rental Management Seminar
October 12-13, 2017 | Hyatt Regency Cleveland at The Arcade, Cleveland, OH This seminar is for those individuals and dealerships primarily focused on strategically growing rental revenues. Examine the financial risk associated with growing a rental fleet, understanding the key operational processes and monitoring/ measuring methods that yield high performance. Breakout discussions help leverage knowledge and experience.
Branch Manager Seminar
November 9-10, 2017 | Hilton Phoenix/ Mesa, Mesa, AZ This program is designed to address all the skill sets, processes, techniques, and even the time management skills needed to become a top-performing branch manager: financial goals, recruiting and hiring, operational efficiency and customer service.
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H EAVY E QUIPMEN T A N ALY TICS Complete company insight
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Bring your existing data models into TARGIT Decision Suite and set data free to decision makers in every department. End users get a single, cohesive solution for all of their data, no matter where it comes from. Newsflash: your data is imperfect. TARGIT Decision Suite helps validate data between systems. Shed light on current gaps and discrepancies, and rely on TARGIT to keep your data quality consistently high going forward.
“With the ability to integrate automated alerts and user-specific view and edit permissions, we are able to manage our business without the need to be glued to a screen all day long.” BRYCE P UCK ETT G ENERAL MANAG ER OF RENTAL S AT K I RBY-S M I TH
D E L I VER I N G I N S I G HT TO S O M E O F T HE M O ST R E SPECTE D N A M E S I N T HE I N DUST RY
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On Target with TARGIT Software company offers ways to compile the right data
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By Heidi Bitsoli ARGIT, to put it simply, is in the business of helping companies perform better by putting the right data in their hands. The software company offers training, programming and guidance to help businesses keep track of important information which can in turn be tailored to their needs. TARGIT focuses on verticals, targeting specific needs, whether working with wineries in Napa Valley, with airports, or with the construction equipment industry. “TARGIT offers business intelligence (BI) and analytics, with reporting dashboards and analysis that they can look at on their mobile devices. We pull data from any source system,” says Kyle J. McNerney, director of partner & industry solutions. It can be either internal or external data, company-specific information or information gleaned from social media. Wherever and whenever details are needed or wanted, TARGIT’s Decision Suite software can be customized. Fleets, financials, parts, services and more can be monitored and analyzed with a few quick keystrokes on a computer or a couple of swipes on a smart device. A manager can pull data for his or her location just as easily as a CEO can bring up company-wide info. The material can be used to troubleshoot weak spots or underscore points of strength. TARGIT states on its website (www.targit. com): “It’s helping companies perform better by enabling more and faster data-driven decisions throughout the entire organization. It’s empowering people with insight. It’s your data, your world, your challenges, and your vision.” Rapid access to data shows best practices so performance can be improved. For fleets, management can view key performance indicators (KPIs) for rental data and analyze inventory status, overviews and revenue. Sales information can target one customer, compare company locations, or be filtered by department and rolling sales.
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Financials deviate from manual reporting and Excel spreadsheets and instead offer current ratio, debt-to-equity, and return on assets. Benchmarks can be set to show whatever is overor under-performing. Parts and services shows how and when parts are being used, reveals inventory turnover, and shows utilization and maintenance data. TARGIT, established in 1996, is based in Denmark, with several locations in the United States. It is truly a global company, with more than 6,000 customers and a platform in 19 languages. TARGIT’s website is peppered with testimonials, including those raving about how it has helped companies improve ROI and those offering praise for its instructors. McNerney says the software developer works with companies both large and small, as in a dealer with a handful of locations. “TARGIT can scale to their needs,” he says. With smaller companies they offer a Cloud subscription model that TARGIT maintains, but larger companies also have use for TARGIT, although they likely have the IT staff on hand to install and run TARGIT themselves. For those without in-house IT, “We provide training with TARGIT University. We can send a trainer or do it virtually, or clients even have the option to come to Tampa to learn to utilize the programming.” The software can be used by anyone in the company, from sales to accounting to the technical staff. “We just did something with Kirby Smith where we have all their machines on file on a map inside of TARGIT, so they can see where all their machines are. We can plot where everything is.” In this type of setup, maintenance records can be compared so machinery can be proactively maintained. This kind of information can help keep a project on schedule. And because it’s so easy to access, a manager or executive can even get alerts on their mobile phone wherever they are, whether they are traveling on business or in the office.
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AED’s Improved Cost of Doing Business Report Makes It Even Easier to Evaluate Financial Health data we’re getting from this report is valid and very By Megan Mattingly-Arthur Associated Equipment Distributors (AED) recently useful.” released their annual Cost of Doing Business Report AED distributed the survey to its members in March (CODB). Long considered the most up-to-date 2017. Participants were able to provide their information comparative financial performance information available, via a new streamlined reporting system that allowed them the 2017 AED Cost of to upload their responses Doing Business Report through the AED member Purchase your CODB Report today at portal or submit them in a features a user-friendly bit.ly/codb17 format with more graphs Microsoft Excel spreadsheet. and easy-to-understand The new reporting system guidelines for evaluating allowed for even more business performance and detailed results, including identifying improvement in-depth analysis of balance opportunities. sheet, return on investment, 2017 AED “This year’s report has income statement, financial Cost of Doing been completely revamped,” and productivity ratios. Business Report said AED's CFO and “AED members who take Senior Vice President Jason (Based on 2016 Operations) the time to go through and AEDNET.ORG Blake. “We put together a fill out the survey each year lot of the same data (that will have historical results was included in previous year over year,” Blake said. reports), but made it more “This isn’t just a one-time user friendly.” thing where they can go in Prepared by Columbus, and look. Instead, as they Ohio-based survey research continue to add data, going and analytics firm Industry forward, they’ll be able to see Insight Inc., and designed their progress, as well as the with input from AED progress of their competitors staff, the report compares and partners. The history financial ratios and tool is really valuable. I'm not operations information, aware of any other tool like with data divided by line this in our industry. It adds a of business, sales volume, lot of value for our members.” region (based on climate) AED will continue to work and rental emphasis. The to improve the Cost of Doing Business Report each 2017 AED Cost of Doing Business Report also features year, according to Blake: “In the future, there will be a special section for high-profit responders, based on additional information that we’ll include, such as how return-on-assets performance. “It’s a really quick and easy way for dealers to evaluate dealers compare to each other from a manufacturer’s and compare their results with the results of other standpoint – that’s something we’ve never done before. members who participated in the study,” Blake said. “AED We’re constantly evaluating and trying to look at things members who participated can log on, see their results differently so that we can include even more useful and compare their business’s performance to the overall information.” The 2017 AED Cost of Doing Business Report is industry’s, as well as other businesses in their category. available for $595 for AED members or $1,190 for The information gives dealers valuable insight on how their business is doing compared to their partners and nonmembers. AED members who participated in this year’s survey will receive a free copy and will have access competitors.” The 2017 report is based on 2016 operations and to the web portal reporting tools. For more information, or to purchase the 2017 AED compiled from survey responses submitted by more than Cost of Doing Business Report, call Liz McCabe at 630100 AED distributor members. “We had an approximately 20 percent participation 468-5132, email lmccabe@aednet.org or visit aednet.org. AED is also on Facebook at Facebook.com/AEDSocial rate for this year’s Cost of Doing Business Report, which is very, very good for a study like this,” Blake said. “The and Twitter @AEDSocial. 22 | www.cedmag.com | Construction Equipment Distribution | August 2017
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S S E N I S BU AMES G R A W Business War Games Help Dealers Gain A Big-Picture Perspective
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they go back to their real-world dealership.” By Megan Mattingly-Arthur he AED Foundation recently hosted its ninth annual Equipment Each Business War Games seminar ends with scoring and prizes Dealer Business War Games event at the Hilton Rosemont for teams that break records, such as the group from Linder Industrial Hotel near Chicago. Presented by PriSim Business War Games, the Machinery, who broke a record for return on assets. two-day educational seminar featured lectures, computerized business “As we grew the simulated business and increased the profits, simulations, strategy discussions and analysis exercises designed to we invested heavily back into the business, adding floor space and help attendees improve their real-world business skills. upgrading the facility,” said Landers. “Through inventory control we “There are four main things that we cover in all our classes: building were able to maintain the balance of equipment and parts inventory general business acumen, strategic thinking, financial acumen, levels to support our sales forecast without overstocking the dealership. leadership and teamwork,” said PriSim Business War Games Partner We worked to pay off our short-term debt, and at the end we had a lot David Semb. “We teach these concepts through very interactive, of cash on hand so we paid out dividends to our investors.” highly experiential training courses that use computerized business Having run business war games for 20 years, PriSim is constantly simulations.” looking for ways to improve the experience. The company’s latest During the seminar, attendees are broken up into teams that are addition to the seminar is a physical finance board game that helps tasked with running competing heavy equipment dealerships. The participants better understand how money flows through a company. simulation lasts for four rounds, each of which represents a sixmonth period during which the participants make all the decisions for that dealership with the goal of maximizing their profitability and market share. The Equipment Dealer Business War Games provides training that’s invaluable for those looking to improve their performance in the construction equipment industry, whether they’re company executives, members of a dealership team or dealership department managers. Gene Landers, general parts manager for Linder Industrial Machinery’s Carolinas region, and David Strickland, general parts manager for Linder Industrial Machinery Florida, attended the 2017 war games after hearing great things Congratulations to Linder Industrial Machinery for breaking a new world record for return on assets! from colleagues in their dealerships Frequent additions and tweaks to the program mean that the who’d attended the seminar in previous years. “A group from our dealership had gone before, and they felt that it Equipment Dealer Business War Games hold value even for those would be beneficial for some of our other managers to go,” Strickland who have previously attended. “I’d love to attend another war games seminar if my supervisor said. “We were just hoping to get a better glimpse of the ‘big picture’ of will let me,” Landers said. “I highly recommend it to anyone that is how the dealership operates.” “I primarily have a parts department background, so my hope was to contemplating attending one.” Equipment Dealer Business War Games participants often leave the come away with a better understanding of how the other departments operate,” said Landers. “After taking the seminar, I now have a better seminar feeling like a million bucks, and sometimes the experience understanding of some of the issues that the other departments go can be just as satisfying for Semb and Hernandez. “It’s great to help people who aren’t as experienced in the world of through on a monthly basis, as well as how an issue in one department finance understand that it’s the language of business – and that anyone will affect the sales of another department. I think knowing these can speak that language, you don’t have to be an ‘old finance guy,’” issues will help our parts department to better help both our service Semb said. “The ‘aha’ moments are one of my favorite things about and sales departments accomplish their goals.” this work. It’s very gratifying to see people have those ‘aha’ moments The Equipment Dealer Business War Games offers more than just simulations and hypotheticals. Participants learn important skills about some aspect of finance.” “When the participants talk about finally seeing the ‘big picture’ of and strategies that they can take home and use in their real-world the business, now that they understand finance, and are excited to take businesses. “We also have analysis exercises that participants do – and not the strategies and tools that they’ve learned back to their real-world just for their simulated company,” said PriSim Business War Games businesses, that’s my favorite part of what we do,” said Hernandez. For more information on PriSim Business War Games, visit their Vice President Max Hernandez. “Participants have time to reflect and analyze their own company and put together a plan – identifying one website at www.prisim.com. PriSim Business War Games is also on or two weaknesses or opportunities – that they can implement when Twitter and YouTube.
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▶ THE AED FOUNDATION DONOR PROFILE
BLS Enterprises Building
LASTING CONNECTIONS By Heidi Bitsoli Barry Stoughton founded BLS Enterprises Inc. in 1986, inspired and spurred on by a passion for problem solving. Now, more than three decades later, BLS has thrived and grown, and is led by Barry’s son, Matt Stoughton, who serves as president and owner of the Bensenville, Ill., construction equipment provider. Barry is still around, serving as “world ambassador" by attending trade shows and seminars. BLS pledges to keep its customers on track with their construction needs, aiming to provide quality and cost-effective equipment, by “building lasting solutions.” It all started when Barry Stoughton, then a math teacher, was speaking with a contractor who wished he had a better, tougher track pad for his asphalt paver. Stoughton had some history with polyurethane products, and he put two and two together. The result was polyurethane track pads, which lasted longer and wore more evenly than traditional rubber pads. In the years since it started as a project in the family’s spare bedroom, BLS has grown its TUFPADS product into a 17,000-square-foot headquarters, with a team of engineers and sales staff intent on providing a quality product. Today BLS offers both polyurethane and rubber track pads, Bridgestone rubber tracks, and undercarriage parts. Products are manufactured in a facility in Lake Geneva, Wis. Their aim is to offer quality parts that are designed to perform, and to offer customers a solid investment that will serve them well over the lifetime of the product. Matt assumed the roles of president and owner in April 2016, when his father stepped down. He’s worked in many facets of the company over the years. As a youngster he stuffed envelopes, and moved up from there, taking on everything from accounting to marketing. BLS has been involved with The AED Foundation for many years. As Stoughton says, there is strength in numbers and networking. BLS often supports The AED Foundation by participating in the annual live auction that takes place at Summit..
Your donation fuels the work that allows The AED Foundation to develop a dealer model for success. The future of dealerships depend on how we come together to build our industry's workforce. Thank you, BLS Enterprises, for investing in the future of our industry! To contribute to The AED Foundation annual campaign, visit bit.ly/2017aedfcampaign. “The AED Foundation has been a great organization, and they’ve been doing a lot for the development of the workforce,” Stoughton says. “The dealer network is a huge part of our business.” The Foundation's commitment to workforce education is a huge advantage of membership. Even though “we’re running an office, and not (necessarily) hiring tradesmen,” says Stoughton, education and advocacy are vital components of what The Foundation offers. “It’s hard to find good and talented people across the board.” As a result, anything that can be done to improve workforce development and nurture current and future generations is essential to the industry. “Other members have challenges finding the right skill sets and talents. There’s a
downstream and upstream effect.” Training programs are essential to the industry, and specific to the organization and the bigger picture. Going to trade shows and sponsoring events (for both AED and The AED Foundation) is important for growth and success, he agrees. Engaging employees with training only benefits companies and the industry. “Training employees helps them understand what their goals are and helps keep them more invested.” That’s a win for all. Membership helps develop that. “There are so many learning opportunities with seminars, and it’s been growing a lot,” thanks to The AED Foundation’s continued development. Stoughton particularly enjoys attending the Leadership Conference and has gone for the last three years. “It’s a great opportunity for the younger generation – and more – to get involved.” There, one can network, enjoy advocacy, study the economic outlook, or find help and advice on running a business. “We’ve met other owners," he says. "My wife and I have both made friends” at conferences and events. “In general, we’ve been impressed with The AED Foundation– both the direction it’s taking and the leadership. It’s a great organization to be a part of.”
26 | www.cedmag.com | Construction Equipment Distribution | June 2017
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n a x ts o l u ti o n.c o m X APT Corporation 5301 Blue Lagoon Drive, Suite 200, Miami, FL 33126 USA | Phone: (305) 744 5901
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Stepping Away from the Dealership
Can Help You Gain New Perspective A
s I’m sure you would agree, there often just aren’t enough days in the week to get ahead on your day-to-day tasks. Even so, when the CED team and I traveled to Washington, D.C., to attend the Association of Media and Publishing’s Annual Meeting, I learned how beneficial it is to take the time to gain this type of professional development experience. The conference gave us the opportunity to hear from other associations about best practices for creating a standout publication, as well as marketing tools and ideas for how to best reach you, our members. Many sessions were collaborative and provided attendees the chance to bounce ideas off each other. The variety of topics was great, since many of us on the team wear several hats within AED. More than anything else, this conference showed the team and myself that we are moving By Katie Howell forward in the right direction with our magazine and our communications to members. Our main goal is to reach as many of you as possible to let you know not only what is happening in AED’s world, but also in the construction equipment industry as a whole. It’s good to know that we are on the correct path in relation to what other associations in the United States are doing. I can’t express how important it is for members to take time out of their schedules to attend conferences, seminars, networking events or any programs that bring together people in the same industry. Being in a collaborative learning environment where you can also network with your peers is one of the biggest benefits of attending these events. If you’re looking for an AED event to meet fellow construction equipment professionals, we have multiple options that allow you to network with colleagues and that provide you with information and tools to bring back to your dealership. The upcoming AEM/AED Forum: Drivers of the Industry conference, from September 12 to 14, is the best place for executives to meet with AEM’s manufacturer members to discuss business challenges on neutral ground. Forum attendees can look forward to discussions on ways to deliver more value to customers, preventative equipment maintenance, telematics and monitoring data, as well as an update on state and federal government initiatives and legislation that could potentially have an impact on the industry. It’s also never too early to think about the 2018 Summit & CONDEX, taking place at The Mirage in Las Vegas from January 15 to 19. Our Summit is the only event that focuses on dealerspecific education, and with seven learning tracks, every attendee will find something to fit their educational needs. With many construction equipment industry manufacturers and service firms exhibiting at CONDEX, and with networking events for attendees, we invite you to stack the odds in your favor with AED in Las Vegas, at what is sure to be another exciting Summit. Visit aednet.org/aed-events to find out about these and other upcoming events. AED aims to provide you with the best conference and professional development experiences, so you can be confident that the time you take away from the job is absolutely worthwhile. KATIE HOWELL is AED’s Marketing and Communications Coordinator. Reach her at khowell@aednet.org and 630-468-5142.
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You're guardedly
OPTIMISTIC. You're WORRIED about finding
TECHNICIANS. MARGINS are good. That's what members told us in
AED'S MID-YEAR BUSINESS OUTLOOK SURVEY 30 | www.cedmag.com | Construction Equipment Distribution | August 2017
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2017 AED Midyear Business Report Survey
SurveyMon
D
By Karen Algeo Krizman Q1 Compared to Spring 2016, are your espite high hopes at the current midyear TOTAL REVENUES for start of 2017 with a new administration in Washing2017: ton, D.C., members of the AssociatAnswered: 22 Skipped: 0 ed Equipment Distributors (AED) reported in the recently completed Mid-Year Business Outlook Survey More than 10% that the “Trump effect did not lower materialize.” “The issue is, Trump gets elected and there’s a lot of discussion about 1%-10% lower jobs, infrastructure spending and things he’s going to do,” said Ron Barlet, president of Californiabased Bejac Corporation and The same Executive Officer on the AED Board of Directors. “You see a little bit of optimism, but then reality sets 1%-10% higher in, and funding those projects and getting Congress to do something is not going to happen as quickly as he More than 10% says it is.” higher In Barlet’s case, Bejac Corporation is diversified enough that he was 0% 10% 20% 30% 40% 50% 60% 70% 80% among the 25 percent of survey 2017 AED Midyear Business Report Survey respondents who actually recorded a slight increase in total revenue over the first part Answer of 2017Choices compared Q3 Compared to this time last year, how are Responses to last spring. your midyear 2017 GROSS MARGINS 13.64% “We expanded to More industrial than 10% lower doing? business, which is like waste transfer 31.82% lower stations, and we’re 1%-10% very heavily Answered: 22 Skipped: 0 into recycling and The green waste,” 13.64% same Barlet said. “We’re less dependent 27.27% on contracting – highway work, 1%-10% higher Down more than 5% homebuilding – than we used to be.” 13.64% More than 10% in higher With Congress bogged down the attempt to repeal Totalthe Affordable Down 1%-5% Care Act and a Russian cloud hanging over Trump’s White House, 35 percent of the AED members who responded to the mid-year survey Flat said they weren’t so lucky, reporting a decline in total revenue of 1 to 10 percent compared to spring 2016. Up 1%-5% All that coincided with a report released by the U.S. Commerce Department in late May that showed construction spending fell 1.4 Up more than 5% percent between March and April to a seasonally adjusted annual rate 0% 10% 20% 30% 40% 50% 60% 70% 80% of $1.219 trillion. The decline came after the feds had issued an upward revision of $1.236 trillion in March, following growth in construction Answer Choices Responses spending each month between 4.55% Down more than 5% January and March. “The Trump effect had pretty 9.09% Downa1%-5% nice uptick wave right at election 1 / 24 40.91% Flat time and up to the inauguration,” Up 1%-5% Up more than 5%
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90%
90%
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100%
40.91% August 2017 | Construction Equipment Distribution | www.cedmag.com | 31 4.55% 7/26/17 12:35 PM
year Business Report Survey
SurveyMonkey
Q4 Are current midyear results for your dealership on target with your projections last fall? Answered: 22
Skipped: 0
Yes
No
17 AED Midyear Business Report 20% Survey 0% 10%
30%
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80%
Q5 Knowing what you know half-way into 2017, how do you expect Q3 and Q4 2017 Responses GROSS REVENUES to perform in these 45.45% areas compared to the last half of 2016? Answered: 22
54.55% Skipped: 0
New Equipment Sales
Used Equipment Sales
Rental
Parts Sales
5 / 24
Service Sales
0%
10%
Expect increase
20%
30%
40%
Same as 2016
50%
60%
70%
Expect decrease
80%
said Vermeer MidSouth President Dennis Vander Molen, who is also chairman of The AED Foundation. “There was a lot of hype, but much of that hype hasn’t come to reality yet. And pardon the pun, but he (the president) can ‘Trump’ things, but the fact is, Congress has to go along with it first.” Only 15 percent of survey respondents saw an increase greater than 10 percent in total revenue for the first part of the year, while an equal percentage said revenue stayed the same. For another 10 percent of respondents, total revenue fell more than 10 percent. New equipment sales took the biggest hit, with 30 percent of survey respondents reporting that midyear gross revenues were down more than 10 percent over spring 2016, while gross revenues from used equipment sales were about the same as last year at that time, according to 40 percent of survey respondents. SurveyMonkey 90% 100% Instead of buying new or used equipment, consumers are opting to rent. Gross revenues through May for rentals were 1 to 10 percent higher for 35 percent of survey respondents compared to spring 2016. Half of the respondents said rentals represent 1 to 20 percent 10 of their business, while 45 percent said it consists of 20 12 to 40 percent. Short-term 22 projects and accompanying uncertainty about the future are why rentals are all the rage right now. “There are jobs that are shorter-term projects,” Vander Molen explained. “Somebody’s got a two- or three-month job and they don’t know what’s on the other end of that. They’re more likely to rent than to purchase.” Given the situation in Washington these days, it makes sense to rent instead of purchase, Barlet believes. “Fundamentally, I think one of the biggest problems you see in the economy, and I think this starts in Washington, is the failure to put together any kind of long-term anything,” he said. “You don’t have a longterm tax bill. Health care is obviously being questioned and debated. The tax code is a mess. The problem is if you don’t know what the future looks like, how do you make two and three and four and half a million equipment purchases, only to find out two years later, ‘Boy, that was not a smart investment.’ So the incentive really is to rent.” With renting, the risk is put back on the equipment distributors. “I think it’s a little bit of, ‘Hey, is all this stuff really going to come true? I’m not sure, so I’m still going to rent,’” said John Shearer, of 4 Rivers Equipment in Colorado. “The end user is just trying to put the risk back on the dealer instead of taking it on himself. If the economy does start to falter, they just bring it back and drop it off in our lot.” For Vermeer MidSouth in particular, Vander Molen said growth in the telecom industry, where much of its 90% 100% work has been focused, has started to soften, leading to more equipment rentals instead of outright purchasing by its customers.
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“Most of the infrastructure is in place,” he said. Q7 In the first half of this year, have you “Several years ago we knew that this time was going increased or reduced the number of people to be coming. We just didn’t know when. There have employed by your dealership? been a couple of other utility companies that have Answered: 22 Skipped: 0 come into the fray. I think they actually kept it going for a little while longer in the last couple of years, but I think people like AT&T aren’t funding their outside Increased new plants. They were getting government monies last year staff since... and this year that’s really, really dried up.” Another sector that is even softer, according to Vander Molen, is forestry. No change or “The forestry business, with cheap natural gas, with only replace... cheap oil – that whole wood industry continues to be very, very soft.” Had to lay off John Shearer, who is a regional director for AED’s employees si... board, pointed out that unstable crude oil is also playing a part in Rocky Mountain region 2017consumers AED Midyear Business Report Survey20% SurveyMonkey 0% 10% 30% 40% 50% 60% 70% 80% 90% 100% opting to rent instead of buy. Don’t expect that market to settle anytime soon, Q9 What departments are in greatest need either. For the week of June 19, the U.S. Energy Answer Choices Responses of added people (check all that apply): Information Administration (EIA) said crude stocks 40.91% 9 Increased new staff since Jan. 2017 increased by 118,000 barrels while production levels Answered: 9 Skipped: 13 fell by 100,000 barrels per day – the largest decline inreplaced employees who left 50.00% 11 No change or only weekly output in almost a year. 9.09% 2 Had to lay off employees since Jan. 2017 Service With customers reluctant to invest in capital assets, Total 22 dealerships are seeing pushback by manufacturers who want their products rented out if they can’t be sold. Parts As a result, dealers are offering products for rent that typically could only be purchased, such as specialty equipment and machinery with attachments. Equipment Sales “I think that until you have a good feeling for what the economy is going to look like, and certainly the tax Product incentives, I just think it’s easy to kick the can down Support Sales the road and say, well, I’ll rent,” Barlet said. “In a lot of businesses where you’re questioning the future, I don’t Rental think there’s anything wrong with that.” Dealers remain hopeful, though, and are hedging 0% Survey 10% 20% 30% 40% 50% 60% 70% 80% 90% SurveyMonkey 100% Midyear their bets in the rental market, with2017 55 AED percent of Business Report survey respondents saying their rental business is split equally between rent-to-rent (RTR) and rent-to-sell Q10 How many total employees do you Answer Choices Responses (RPO). currently have? 88.89% 8 Service Compared to last spring, gross revenue also increased Answered: 22 Skipped: 0 1 to 10 percent in parts and service sales forParts 40 percent 22.22% 2 of AED members who responded to the most recent 11.11% 1 Equipment Sales 10 or fewer Mid-Year Business Outlook Survey. 22.22% 2 Product Support Sales Barlet believes that this is due to a “tremendous amount of old equipment in the marketplace.” 22.22% 2 Rental 11-25 9 / 24 “I think the replacement cycle has Total been delayed, Respondents: 9 whether due to conservatism or whether due to uncertainty about what the economy is going to do,” 26-50 Barlet said. “I think there’s a tremendous amount of pent-up demand. A lot of us really shouldn’t panic.” 51-100 Mid-year gross margins didn’t budge for 40 percent of survey respondents, who said they were flat compared to spring 2016. 101-300 That actually might be a good thing for the majority of dealers, with 50 percent of respondents saying they have not had to cut back on the number of employees More than 300 in their companies. Another 45 percent have been 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% able to hire more employees. Likewise, 70 percent of August 2017 | Construction Equipment Distribution | www.cedmag.com | 33 Answer Choices
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10 or fewer
0.00%
11-25
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AED Midyear Business Report Survey
Q13 How would you characterize how rental works at your company? Answered: 22
Skipped: 0
All or mostly rent to...
All or mostly pure rent to...
About half RPO, half RTR
Don't do much rental
Midyear Business Report0% Survey 10%
20%
30%
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Q14 What percentage of your business does rental (of any kind) represent?
Choices
or mostly rent to sell/rental purchase option (RPO)
Answered: 22
Skipped: 0
or mostly pure rent to rent (RTR)
out half RPO, half RTR
1-20
n't do much rental
20-40
40-60
60-80
80-100
0%
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20%
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40%
50%
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Responses 50.00%
15 / 24
45.45% 0.00% 4.55% 0.00%
80%
all respondents said they have not had to close any business branches, and 20 percent were actually able to SurveyMonkey open new branches. Among the dealers who responded, 25 percent said they anticipate increasing their investment in new equipment by more than 10 percent in the second part of this year compared to the second part of 2016. However, an equal percentage of dealers expect to reduce their investment in new equipment by 10 percent or more during that same period. The majority of survey respondents (55 percent) have no plans to diversify their equipment lines this year. Instead, they’ll stick with what they know. Despite the fence straddling, optimism remains high across all business areas, with 60 percent of respondents saying that even knowing what they know halfway into 2017, they expect gross revenues to increase in new and used equipment sales, rentals, and parts sales during the second half of the year. Dealers are also anticipating a 70 percent increase in gross revenues in service sales. More than half of the survey respondents (55 percent) are holding out hope that residential construction SurveyMonkey 90% 100% will rebound, despite stumbling after a decent start in January. Close behind that is anticipated growth in commercial construction (50 percent). Dealers also Responses are banking on infrastructure funding to eventually materialize, 18.18% 4 with 60 percent of survey respondents anticipating much of that funding leading to growth in 31.82% 7 business related to highway construction and repairs. 50.00% The big11question, however, is when the money will start flowing from the federal faucets again. 0.00% 0 “If they22 could fund an infrastructure bill and a highway bill permanently, I think it would have a huge impact,” Shearer said. “But until they get past travel bans and health care, it’s just going to be nothing but turmoil. Then the Russian thing – if they start hearings, everything is going to come to a screeching halt and nothing is going to get done in D.C.” Barlet doesn’t think dealers should expect to see an end to the turmoil anytime soon. “A lot of people who look at it from a practical standpoint say it’s probably 2018, best case scenario, when money really flows down to the contractor level and we actually see some activity,” he said. “You know, 90% 100% it’s like jumping a little bit ahead and saying, ‘Hey, I’m going on vacation.’ Well, great, you’re excited about your vacation, but if you’re not going on vacation for 12 months, it’s a little early to be jumping for joy. And 11 the problem. I think we have the Trump I think that’s bump, the 10optimism, which is more subjective; but the objective part of it in terms of real dollars and real spending is 0yet to be seen. Will that be seen in the next three quarters? My guess is probably not.” 1 There are ways around the federal logjam, however, 0 as Barlet and other California dealers are seeing for themselves.22 “California passed their own gas tax, a pretty hefty, multibillion multiyear tax to fix their infrastructure – especially related to highways – that starts being
34 | www.cedmag.com | Construction Equipment Distribution | August 2017
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collected in November,” he said. “I think we’ll see more Q15 What market sector do you see the activity, especially in California, but I know a lot of most growth for your business (check all states are doing that. They’re getting tired of waiting that apply)? for the feds, and so they’re doing public-private type Answered: 22 Skipped: 0 projects.” Barlet, for one, is also holding out hope that midForestry year elections will bring new blood to Washington. “I think the mid-term elections might hold an Energy opportunity because people are sick of what they’re Production seeing in Congress. I think if you could get a stronger majority on one side or the other, maybe you could in Highway fact get the votes for some long-term infrastructure and long-term tax code improvements.” Aggregate Whether the mid-term elections bring new lawmakers and a break in the federal logjam, or whether states Residential Construction continue efforts to bypass Washington, the lack of skilled service technicians continues to shackle the industry. Commercial Construction Of the respondents to the mid-year survey, 75 percent said their business’s biggest challenge was finding skilled Utilities labor, and 88.89 percent of respondents said their service departments were in greatest need of additional people. Energy “I’ve talked to quite a few dealers who said Production... manufacturers have included three years of warranty and three years of maintenance,” Barlet said. “The dealers Recycling have told me candidly that they can’t get out there to do the service. They simply don’t have the manpower.” Waste Industry experts say the skilled labor shortage will probably get worse before it gets better, but giving up is Industrial Segments not an option. “You’ve got to try multiple fronts; and like a baseball Municipals team, you’ve got to create a farm club,” said Barlet. “You’ve got to start bringing in players that can make Other (please it up to the front lines. You can’t just wait around specify) anymore.” 0% 10% 20% 30% 40% 50% 60% 70% 80% In the case of Bejac Corporation, the company is 2017 AED Midyear Business Report Survey actually in the process of opening its own training facility to groom technicians. Other businesses, Answer Choices Q17 Please check the category that best including Vermeer MidSouth and 4 Rivers Equipment, describes your annual revenues from 2016: are teaming up with local colleges and highForestry schools to entice students into the industry. Answered: 22 Skipped: 0 Energy Production The need for skilled technicians is only expected Highway to increase as older workers retire and as more in the Under $5 million Aggregate industry adopt the use of telematics software. Right now, though, the majority of respondents to the MidResidential Construction $5 million to Year Business Outlook Survey (65 percent) said they’ve $25 million 17 / 24 seen no impact on revenue generation by telematics. “There are a couple of issues with telematics,” $25 million to $75 million Vander Molen explained. “One is that it’s not going to be much of a revenue generator for a stand-alone $75 million to segment (think small businesses). The other thing is $150 million that the marketplace really has not accepted the value of telematics yet.” $150 million It’s a different story for owners of larger fleets, which to $300 million is why the demand for skilled technicians is so pressing. “There’s no quick fix, but there is an opportunity Over $300 million for dealers to get involved with their local community colleges,” Vander Molen said. “If their voice is silent, 0% 10% 20% 30% 40% 50% 60% 70% 80% that’s exactly what they’re going to get back: silence.”
90%
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2
22.73%
5
54.55%
12
40.91%
9
50.00%
11
90%
100%
August 2017 | Construction Equipment Distribution | www.cedmag.com | 35 Answer Choices
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5
NEW MEMBER SPOTLIGHT
Mustang CAT Celebrates 65 Years By Megan Mattingly-Arthur Mustang CAT, one of AED’s newest distributor members, is celebrating its 65th year in the heavy equipment industry. Located in Houston, Mustang CAT is an authorized Caterpillar dealership for Southeast Texas, offering sales, rentals and service for the brand’s robust line of heavy equipment products. The company also offers power systems, on-highway trucks and technology solutions. Throughout its long history, Mustang CAT has distinguished A neon sign at the company's headquarters itself from the competition in a dates to 1957. number of ways. “What sets us apart from other dealers in our territory is our outstanding customer service, dedicated, hardworking employees,
robust inventory, large rental fleet and parts availability that’s better than the competition,” said Sam Tucker, Mustang CAT’s general manager of machinery sales. An extensive product line, fantastic employees and excellent service aren’t the only things that distinguish the company. Mustang CAT is family owned and operated. It was cofounded in 1952 by Sam Tucker’s great grandfather and grandfather and is currently led by his father, Brad Tucker, who serves as the company’s president. When the time came for Sam to choose a career, he felt right at home at Mustang CAT. “Mustang CAT is a family-owned business, and being the fourth generation, I get to work alongside my father, which is a special thing,” Sam said. “Working here in the summers and after college, I was really drawn to the business. I opened my mind to it, got into it and love it. We’re involved with so many types of businesses in our territory and it’s exciting.”
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ears With New AED Membership In the years since the company’s founding, Mustang CAT has grown from having a single location in Houston to nearly 20 locations throughout Southeast Texas. The company currently has heavy equipment sales, parts and rental locations in Beaumont, Bryan/ College Station, Channelview, Conroe, El Campo, Freeport, League City, Lufkin, Missouri City, Nederland and Tomball. When it comes to Mustang CAT’s success, its dedicated workforce is another important piece of the puzzle. The company boasts approximately 700 employees. “We have wonderful employees at Mustang CAT,” Tucker said. “Most of the employees have been here longer than 20 years and, over time, many have become friends and practically family.” To bring even more great people into
the company’s workforce family, Mustang CAT holds open interviews each Friday for experienced heavy equipment and diesel/ natural gas industrial engine and generator technicians. Mustang CAT has garnered numerous awards and accolades throughout the years. In 2015, it was ranked as the 10th top private company in Houston by the Houston Chronicle. In 2017, Mustang CAT joined AED, just in time for the company’s 65th anniversary. Tucker said they particularly look forward to taking advantage of The AED Foundation’s online educational materials. “AED is a great association with a lot of other fellow dealers in it,” Sam Tucker said. “We’re looking forward to getting more industry information. I also like the
educational aspect of AED and The AED Foundation. We’re always training and developing our people, and this will be a good resource for managers and others in the company. And, of course, the networking opportunities that AED provides are a great asset.” Mustang CAT has spent the last 65 years as a leader that finds solutions for its customers’ tough problems, and the company has achieved success in its stated mission to work as a team, engage and empower employees, create loyal customers and deliver financial returns. With more than six decades of industry experience, it will be interesting to see just what Mustang CAT does next. For more information on Mustang CAT, email nextcat@mustangcat.com or visit www.mustangcat.com.
August 2017 | Construction Equipment Distribution | www.cedmag.com | 37
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>> EMERGING LEADER
For CFO, The Heavy Equipment Business Is
A Family Affair Gus Wilson and company focus on making hard work easier
By Megan Mattingly-Arthur Gus Wilson joined the accounting team at Heavy Machines Inc. 10 years ago, after working as a public accountant for more than a decade. Joining the business has worked out well for Wilson, but what attracted him to a career in the heavy equipment industry in the first place? It turns out that, for Wilson, working in the equipment industry runs in the family. “My grandfather started Heavy Machines Inc. in 1972, and after working in public accounting for a decade, I was Gus Wilson asked to join the business.” Now, as the company’s CFO, the 39-year-old manages key banking relationships, secures and monitors employee benefits like health insurance and 401ks, oversees all accounting functions and company audits, and works
38 | www.cedmag.com | Construction Equipment Distribution | August 2017
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to ensure that accounting processes are as streamlined as possible. His favorite thing about his work with Heavy Machines? “I enjoy the day-to-day challenges of the industry, and seeing our employees and customers succeed,” said Wilson. Headquartered in Memphis, Tenn., Heavy Machines offers new, used and rental equipment for the construction, demolition, forestry, mining and scrap material handling industries, among others. Customers can find a wide array of heavy equipment – including excavators, wheel loaders, dozers, material handlers, log handlers, compactors, grinders, crushers, shredders, attachments, and more – from some of the industry’s leading brands, such as Liebherr, LinkBelt Excavators, KCMA, LeTourneau, Sakai, Diamond Z, Rottne, Global Crane/Zoom Lion, Rotobec, Furukawa, Kinshofer, ASV, Wacker Neuson and the newest Yanmar. Heavy Machines Inc. also provides industrial welding and AC/DC motor repair services in select markets. Growing up around the business, Wilson has had a front-row seat for Heavy Machines’ impressive growth throughout the years. The company has grown from a small operation into a regional powerhouse, thanks in part to its strong focus on customer service, specifically in making customers’ hard work just a little bit easier. “Heavy Machines, Inc. has grown from a small operation representing one manufacturer in 1972 to a multi-line dealer across eight locations serving the South and New England,” he said. “During this time we have delivered quality products and service to thousands of customers across many different industries. Our focus is, as always, on making hard work easier.” In addition to its headquarters in Memphis, Heavy Machines also has locations in Gray, Tenn. (near Knoxville); Covington, Ga. (near
Atlanta); Sorrento, La. (near New Orleans / Baton Rouge); Mobile, Ala.; Birmingham, Ala.; Shreveport, La.; and Skowhegan, Maine. According to Wilson, Heavy Machines’ dedicated employees, many of whom have been with the company for more than a decade, are just one of the many things that set the company apart from the competition. “Heavy Machines Inc. has a history of attracting and retaining some of the best employees in the industry,” he said. “The average employee has been here for 15 years, and the longest a person has worked here is 45 years. Our employees care about our customers and have been given the resources and support to ensure all their needs are met.” When he’s not working to streamline accounting processes or to ensure that customers’ needs are met, Wilson enjoys a variety of pursuits. “At home I enjoy the outdoors, the gym and friends. My job includes a lot of travel and I always look forward to exploring new cities. I always try to check out the art, the food and the sights when I’m on the road. I also enjoy volunteer work here at home.” Heavy Machines Inc. is a longtime AED member, which has given Wilson the opportunity to take advantage of a number of The AED Foundation’s educational and networking offerings throughout the years. “Heavy Machines Inc. has been an AED member for more than 30 years,” he said. “I enjoy the events provided by AED for the education, industry insights, and the networking and relationship building among my peers.” For more information about Heavy Machines Inc., visit their website at www.heavymachinesinc.com. August 2017 | Construction Equipment Distribution | www.cedmag.com | 39
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ORGANIZATIONAL
CULTURE I B
s Yours H elping or Hur ti ng Performa n c e Improve ment?
usiness results fell well short of expectations again. As people leave the meeting some are perplexed, others are frustrated – and a few are angry. Significant time, money and resources had been dedicated to executing your dealership strategy. But, unfortunately, one fundamental element was inadvertently overlooked: organizational culture. It is, in simple terms, the accepted or perceived way we do things here. Your organization’s culture By Brian Gareau ultimately influences how individuals in an organization think, feel, act, interact, and react. Manage organizational culture or it will manage you. But how could something so foundational be missed? Here are four common ways: 1. Blind spots. We tend to see what we expect to see. It’s human nature. We also tend to establish routines, so we talk to, run ideas by, and ask questions of the same people. These behaviors create natural blind spots. 2. Beliefs. Beliefs are powerful. When we believe something, no proof is necessary. But the opposite is also true – if we don’t believe something, then no proof is enough. A very common excuse used by some leaders who believe business culture is intangible or significantly less valuable than things like new assets, processes, and technology is “Remember, we are different.” 3. Sophistication bias. Author Patrick Lencioni describes it this way: “We believe that differentiation and dramatic improvement can be found only in complexity – not something simple and straightforward.” 4. Passive engagement. When asked, people confirm their agreement with and commitment to strategy execution and changes needed. But their actions and behaviors are much more compliant than
committed. They do the mandatory basics. There’s
little proactivity, extra effort, or willingness to address resistance. Still not convinced? Consider these research findings on business culture and the impact of the human factor on business performance: ▶ “As much as half of the difference in operating profit between organizations can be attributed to effective cultures.” (Harvard Business School – Haskett) ▶ “Companies with effective culture stand to outperform unremarkable competitors by a margin of 20 to 30 percent.” (Harvard Business Review) ▶ “Nine out of ten of the key barriers to the success of change programs are people-related.” (PwC) ▶ “Some 85 percent of a company’s assets are related to intangible capital like knowledge and human talent.” (Brookings Institute)
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▶ "96 percent of respondents say some change to their culture is needed.” (Strategy&)
Areas to Focus Your Efforts
Edgar Schein, a former professor at MIT, said, “There is no right or wrong culture, no better or worse culture, except in relation to what the organization is trying to do and what the environment in which it is operating allows.” So, bottom line: start with your business strategy. What individual and collective behaviors do you need consistently done to make your business strategy a reality? What behaviors and habits would enhance your brand, reputation, business performance, and overall work environment? One practical way to look at this is by brainstorming and making a list of all the actions and behaviors about which your organization would quickly and consistently say, “That’s not how we do things here.” Your employees make hundreds of decisions each day on their own. Whether these decisions are big or small, all are important and should be guided by your culture. For example, would any of the following be tolerated in your organization? Walking by someone doing an unsafe act and not addressing it ... Delaying the sharing of information with a customer because they would be upset ... Deviating from procedure because it’s believed no one really follows it ... Filtering information going to upper management because it isn’t what they want to hear ... Skipping a few process steps in favor of work volume ... Remember, leaders get the behaviors they model and tolerate. Is your organization consistently reinforcing strategically aligned behaviors? Next, focus on what specific behaviors must be reinforced. These behaviors should describe what right looks like in your dealership, based on its values, and should answer four basic questions: 1. What is the right thing to do? (aligned with both goals and values) 2. What is the right time to do it? (timeliness) 3. What is the right way to do it? (following prescribed policies, procedures and processes) 4. What is the right reason to do it? (compliance, commitment or norm) One major challenge with many organizations’ values is that they are described at the 50,000 foot level. Very few employees, if any, are going to disagree with the importance of high-level values like integrity, customer service, quality, teamwork, and innovation. But I guarantee that your employees will have different definitions of what exact behaviors are needed. In fact, it’s very common to hear employees say they are living the company’s values but someone else isn’t. Ideally, values need to be viewed and documented via specific behaviors from unique perspectives in the organization. Why? Because it’s hard to walk a general talk, or measure it. One practical technique I use with my clients is the Values Funnel. This process helps flush out and provide clarity on a small number of specific behaviors that individuals, departments, or functions are accountable for achieving. For example, what specific behaviors is your dealership looking for regarding teamwork between the sales and service departments? What does customer service specifically look like at the parts counter when a customer is upset? What does integrity look like when frank, not filtered, feedback needs to be
given to address an individual’s performance issues? Bottom line: get values right and culture will follow. A third key focus area with business culture is organizational cultural processes (OCPs). There are 12 people-related processes that must inform, teach, and reinforce desired behavior. Here’s a quick summary: ▶ INFORM processes – Communication; Policies; Processes; Measurements ▶ TEACH processes – Onboarding; Leadership; Formal Learning and Development; Decision-Making ▶ REINFORCE processes – Selection; Performance Management; Recognition; Reward But too often these OCPs get neglected, delegated or derailed. Too many organizations do the following: ▶ Go out of sequence. For example, processes that inform must be done before those that reinforce. ▶ Skip, shortcut, substitute, or simply treat OCPs as HR transactions rather than important interactions between employee and leader ▶ Delegate OCPs to HR exclusively instead of also holding all leaders accountable for successful execution ▶ Declare victory too soon. Changing behavior is hard work. In fact, research indicates a behavior has to be reinforced a minimum of 21 times before it becomes a new habit. When OCPs are not properly managed, inconsistent messages and behaviors creep in. There is a lack of clarity as to “how we do things around here.” Confusion, frustration, doubt, and poor choices create waste and underperformance. Finally, there’s measurement. Based on more than 15 years of studying and assessing organizational effectiveness, performance, and business culture on five different continents, I believe that for any organization there are three critical people-related elements that must be measured, with timely feedback provided and actions taken. All of these impact performance. 1. Employee perceptions and beliefs. Measurement of this is traditionally done through employee surveys, which provide a snapshot of factors like safety, quality, customer service and engagement. 2. Organizational cultural processes (OCPs). This measurement should focus on the existence, understanding, and consistent execution of organizational processes that INFORM, TEACH, and REINFORCE. A self-assessment audit tool can be used here. 3. Overall business culture. Unlike a survey, a cultural assessment is a “full physical,” looking for which behaviors are producing desired and undesired outcomes – and then what is potentially causing these behaviors to be tolerated or reinforced. Cultural assessments are done less frequently than traditional surveys. They are ideal when performance has stalled or major change is about to take place. Your dealership’s organizational culture matters. It guides behavior and the decision-making of the entire workforce every day. If you are looking to drive purposeful consistency, it demands intentional attention. Are you doing the right things to manage your culture? Is your culture helping or hindering higher performance?
Consultant and author BRIAN GAREAU specializes in strategic, tactical, and practical solutions to engage and accelerate high performance. To learn about Brian’s services and find more articles and resources visit: www.BrianGareauInc.com. August 2017 | Construction Equipment Distribution | www.cedmag.com | 41
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Rethinking L
Our Need to Embrace E
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g Leads:
ce Emerging Opportunities By Ethan Smith Equipment Trader Before online ads and targeted emails, before telemarketing and robocalls, sales often involved door-to-door salesmen and saleswomen traveling across the country, pitching to strangers. It was the coldest call imaginable, but also the only way to develop a hard lead outside of a customer physically entering a store or dealership. As technology has developed, phone calls and emails have each, in turn, become accepted across industries as important methods for generating and nurturing leads. Phone calls and emails expanded our notion of what could be a lead. This historic shift should serve as a reminder that our conception of what constitutes a lead should not be set in stone. Our consumer base will continue to change how they search for and purchase products, requiring dealers to adapt as well. It is time to once again broaden our perspective and embrace an emerging class of leads. The emerging class of leads is still taking shape, but it is made up of various online features. According to research firm Forrester, most of today’s buyers conduct most of their research online before making a purchase, and they make significant progress down a sales path – some as far as 90 percent – before even contacting a vendor. The growing population of self-directed buyers is why you need new strategies to help leads – or individuals who are close to becoming leads – find their way to your dealership. Two emerging features that are very likely to translate into leads for your business are Map-toDealership and Website Referrals.
Map-to-Dealership
Providing navigation to your dealership through an online widget is literally leading someone right to you! If a user is trying to physically get to your dealership, they’re not just a shopper, says Charles Bowles, the Director of Strategic Initiatives at Equipment Trader. “They’re far down the sales funnel and are close to being buyers. They have likely already found a vehicle and are looking to purchase, or seriously compare models for a purchase.” Consumers who use Map-to-Dealership features are leads! An online map to your dealership should be embedded on every page
of your business’s website, and on any vendor web page that sells or advertises your product.
Website Referrals
A website referral is a link that connects an online user to your site. Ensuring that website referrals are placed on each relevant page of your vendor’s site, your social media accounts, and any other site to which you have access, should be a priority. Consumers who click on them are specifically looking into your business, though their potential for becoming hard leads will depend on your website design. According to Bowles, “Website referrals from online marketplaces turn into many hard leads. But for referrals to be effective, you need a good website, or they’ll just come back to us to find a different dealer.” Your own website should be professional and articulate and should offer options for consumer engagement. The best websites use progressive lead profiling, which personalizes contact options based on the user’s current place in the buying cycle. With your website equipped to develop leads, website referral links become an essential part of your lead generation.
Your Call to Action
Yes, direct contact through in-person, phone, or email communication will continue to be the most obvious method of finding, developing, and closing leads. Yet just as cold calls are increasingly ineffective, our mindset about leads needs to evolve with our changing world. Today’s growing population of self-directed consumers, who increasingly research and purchase products on their own, are online door-to-door buyers. Your business needs to be ready to open the door when they knock by implementing Map-to-Dealership, Website Referrals, and other online features that make up an emerging class of leads. These features translate into very real consumer engagement and sales; they are leads! Embracing new types of leads can help ensure you have every opportunity to successfully increase your sales. Sources: www.blogs.forrester.com/lori_wizdo www.marketo.com/lead-generation/ www.newfangled.com/the-digital-lead-development-ecosystem/
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The AED Foundation Is Developing A New Certification Program to Help Dealers Identify Qualified Technicians 44 | www.cedmag.com | Construction Equipment Distribution | August 2017
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By Megan Mattingly-Arthur he construction equipment industry’s technician shortage can make it difficult for dealers to identify, hire and retain the workers they need to provide top-notch service. With technicians in such short supply, hiring managers may have to get creative to attract technicians to their dealership and create a positive working environment that entices them to stay. “In order to attract qualified technicians, dealerships need to offer an inviting workplace where the facilities are clean, modern and attractive, and the culture of the personnel, management and leadership focuses on team-building skills and creating a sense of family and purpose,” said Dennis Vander Molen, Chairman for The AED Foundation and President of Vermeer MidSouth Inc. Many dealerships are in urgent need of technicians, but the construction equipment industry requires precision and a specialized skill set. The advances found in today’s heavy machinery make it more important than ever for technicians to be highly qualified and well trained in the latest equipment technology. Oftentimes, this requires technicians to take advantage of professional continuing education courses. “Continuous education is vitally important to a technician’s career path in order to develop new skills and meet the demands of the marketplace and evolving equipment, which has become very complex,” said Vander Molen. “There are very precise electronics integrated into today’s heavy equipment machinery. Technicians need to know Tier 4 engines and onboard computers and how they’re compatible with each other.” However, even when technicians are available to interview for a position, hiring managers can have trouble determining if the applicants truly possess the skills necessary for the job. Fortunately, The AED Foundation is in the process of developing a certification program for technicians that aims to make it easier for dealers to find the highly trained workers they need. “The AED Foundation Technician Certification program is being developed to give both technicians and dealerships an opportunity to distinguish themselves in our industry,” said AED’s Vice President of Foundation Operations Steve Johnson. The certification program, which will consist of an online skills assessment for technicians – as well as interview guidelines for dealership hiring managers – is expected to be implemented in the fall of 2017.
T
AED’s CFO and Senior Vice President Jason Blake anticipates that the program will provide added value for AED members. Thanks to the Certified Technicians program, technicians will have a credible and tangible way to show their expertise in heavy equipment technology, while dealers will be able to show that they have a workforce that’s highly trained and certified – potentially giving both technicians and dealerships a significant market advantage. “The Certified Technicians program will recognize qualified technicians who have the skills and knowledge, but don’t really have anything validating that they’re able to do the job,” Blake said. “This certification will include a test verifying that these technicians have excellent knowledge of construction equipment technology. Technicians can use the certification on their resumes, and our members who are trying to hire good, qualified technicians can see the certification and really be able to ‘check that box’ as they’re going through the interviewing process.” According to Blake, The AED Foundation's Certified Technicians program will include a secondary component that recognizes candidates who score exceptionally well: “Starting sometime in 2018, we’ll pick one certified technician from each region, based on their scores and the interview process, to recognize in 2019 as ‘Technicians of the Year.’” It’s a fun way to recognize that we have some great technicians out there and to help our members validate the skills of technicians applying for positions in their dealerships.” The highly anticipated AED Foundation Certified Technicians program is just one of many actions The AED Foundation has taken in an attempt to combat the construction equipment industry’s skills gap and technician shortage. According to Vander Molen, the Foundation’s hard work is beginning to pay off – at least on a local level. “Locally, in the last couple of years, we’ve had some progress in improving – though not closing – the skills gap,” he said. “In my area (Jackson, Miss.), we have a vocational community college on its way to becoming an AED Foundation-Accredited school. The college is already putting out high quality, welltrained students and the marketplace is already enjoying some results because of it.” For more information on The AED Foundation’s professional education resources or developing technician certification program, visit their website at aedfoundation.org. The AED Foundation is also on Facebook and Twitter. August 2017 | Construction Equipment Distribution | www.cedmag.com | 45
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Tech Connect: Learn About Today's Technology Advancements in the Construction Equipment Industry 46 | www.cedmag.com | Construction Equipment Distribution | August 2017
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I
By Katie Kremer
The discovery and innovation of new products, perspectives and connections is gradually aging the architectural and construction industries as we know them.
t’s no secret that this year holds the promise of new technologies, including data analytics and machine-learning automation. Advancements in the construction-industry world are making the complicated processes of manufacturing more effective and efficient. Although the construction business is seemingly slow in evolving, the promotion of products generated as a result of these new technologies is quickly mushrooming, allowing businesses to keep up with the newest tech trends. It is essential to maintain an upto-date knowledge of the inner workings and foundations of these products, to ensure the highest rate of performance and success as a business. Some of these products, such as telematics, offer artificial intelligence (AI) that allows machinery to make decisions based on its “perceptions.” This new aspect of technology is on the rise and controls organization service and management by combining aspects of informatics and telecommunications. A telematics device attaches to a piece of machinery and sends signals to the owner, communicating information regarding the performance of the equipment piece. Before telematics, equipment owners often were not aware of issues right away, allowing those problems to absorb the profit needed to maintain the bottom line. Not only can telematics improve equipment utilization, but it could also improve the profit and success rate of manufacturers and owners of machinery. The growth of AI has led to the creation of visual and augmented realities. Visual reality (VR) is very focused on the safety and training essential for the construction industry. Its presence is felt more in the design area than at the construction site itself. Augmented reality (AR) is geared toward the construction site. These novel upgrades permit the perspective to be shifted from human-fallible, physical operations toward the idea of artificial intelligence. VR and AR technologies have the potential to enhance collaboration, identify errors, and prevent mistakes that can be financially hindering and detrimental to a company.
With advanced technologies being based mainly out of the field, another perspective must be considered when moving forward in the tech industry. 3D modeling is architectural software that is angled from an aerial viewpoint, typically in the form of a drone or satellite. These devices generate field and site images from the sky, rather than from ground level, allowing the accurate reconstruction of topography to aid in the execution of complex projects. Consumers are more likely to gravitate toward designs that display 3D visualizations because the design can be communicated easily from a computer and displayed to multiple people at one time. This format makes it easier to comprehend the more intricate and in-depth technologies. Another form of progressive technology is a concept described as modular construction. Through this process, the units designed for projects are “pre-engineered,” meaning the parts of the structure are already designed and built beforehand. The units then are combined and assembled with each other. The resulting structure still meets the standards and durability requirements of the industry. This form of construction appeals to companies and industries that desire an easier and cheaper alternative for large and expensive projects. This type of progression in the industry indicates we are well on our way to the future of construction. The support and publicity that modular construction is garnering encourages the growth of the construction industry toward a more economically reasonable future. The discovery and innovation of new products, perspectives and connections is gradually aging the architectural and construction industries as we know them. These highly anticipated tools are bringing new ideas to the table and are catalysts for the development of new vision and concepts. No longer will humans of the modern world refer to blueprints and handwritten instructions, but rather computer-based automations and electronic mechanizations. The implementation of these instruments paves the way for a technology-connected future.
KATIE KREMER is AED's Summer intern. Katie is a sophomore at Carthage College studying marketing. She can be reached at marketing@aednet.org.
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e’ve all been swimming in the digital marketing pool for several years and feel pretty confident that we’ve got this down, yet we’re still surprised by some of the things we learn. It’s easy to get caught up in the statistics related to the latest marketing tactics—is video trending this month, and how do B2B businesses take advantage By Brian Shanahan of the considerable social media heft of Facebook, Instagram, and Snapchat? But for those of us who need to deliver serious leads and business awareness for the companies who trust us, there are just five areas of digital marketing that matter: Engagement, Conversion Rates, Net Promoter Score, Time on Site / Bounce Rates, and ROI. Let’s take a look at some surprising stats for these heavyweights and why we should pay attention. 1. Engagement: 71 percent of consumers who have had a good social media service experience with a brand are likely to recommend it to others. (source: www.dreamgrow. com/21-social-media-marketingstatistics/ ) Tracking traffic for post views and blog visits is important, but when 48 | www.cedmag.com | Construction Equipment Distribution | August 2017
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Digital Marketing Stats That May Surprise You people are commenting—and even better, recommending your business—you really know you’re winning the engagement game. Creating shareable content is critical for businesses regardless of the industry because of the power it has to encourage people to interact with their brand. Great content will create voluntary brand ambassadors whose contacts will be more inclined to engage with you, too, based on the recommendation of trusted colleagues. 2. Conversion Rates: Only about 22 percent of businesses are satisfied with their conversion rates. (source: https:// www.hubspot.com/marketing-statistics ) One of the most important metrics in digital marketing is the conversion rate, which indicates the number of customers and prospects taking action on your website. When less than a fourth of businesses are happy with their conversions, it’s definitely time to take a look at your offers, articles, campaign strategies and more, to drive more engagement and get that number higher. 3. Net Promoter Score: The average American company scores less than +10 NPS, while the highest performing
organizations are situated between +50 and +80. (source: https://www.checkmarket. com/blog/net-promoter-score/ ) Quite simply, a net promoter score indicates whether or not your customers would recommend your business to people they know. It’s surprising to see that the average company falls so low on the NPS scale, indicating that research followed by authentic solutions and relevant website content are in order. 4. Time on Site / Bounce Rates: 53 percent of mobile site visitors leave a page that takes longer than three seconds to load. (source: https://www.thinkwithgoogle. com/marketing-resources/datameasurement/mobile-page-speed-newindustry-benchmarks/ ) Without a doubt your customers are more and more mobile, meaning they’re using phones to access your website 30 to 50 percent of the time. Given that the average time it takes to completely load a mobile landing page is 22 seconds, people leaving a site before it’s fully loaded puts a lot of pressure on marketing efforts. Better mobile speed is clearly critical, but it’s also important to create website content, offers
and other assets that engage visitors and encourage them to stay. 5. ROI: 40 percent of marketers struggle to prove the ROI of marketing activities, and 28 percent are trying to secure enough budget. (source: https://blog.hubspot. com/marketing/state-of-inbound-stats ) Managers find tracking and making sense of their marketing metrics a challenge. This year, 63 percent of marketers admit that their top challenge is generating enough website traffic and leads. This problem is followed by 40 percent who struggle with proving the ROI of marketing activities and 28 percent who are trying to secure enough budget to fund needed initiatives. All three of these top challenges are metrics-driven. Without the proper tools to consistently deliver accurate metrics, these areas will continue to be a struggle. As we move into the balance of 2017 and into the next year, it will be interesting to see how well some of these marketing challenges are resolved and if they can be removed from the “surprising stats” category because of positive marketing initiatives for customers and growing sales.
BRIAN SHANAHAN is president of Shanahan Strategy, Inc., a marketing and web development agency based in San Mateo, Calif. With over 20 years’ experience, Shanahan Strategy helps manufacturers, distributors, and dealers evaluate and set strategic plans to grow sales. Services include growth strategy, lead generation, web development, content marketing, and consulting. To learn more, visit http://www.shanahanstrategy.com/ or call 650-393-5966.
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AED’s
POLICY AGENDA Moving Forward Despite Congressional Inaction D
CAPITOL CORNER Daniel Fisher
The Trump presidency is still in its infancy, but his administration has taken several steps that should improve business conditions while Republicans on Capitol Hill get their act together.
espite having a majority in the House and Senate and occupying the White House, Republicans are finding it difficult to move the party’s agenda on Capitol Hill. The Affordable Care Act (“Obamacare”) repeal effort has proven difficult to complete, and at least temporarily has halted progress on the GOP pro-business agenda. Nonetheless, the Trump administration, through executive action, has made substantial progress on issues important to the construction equipment industry. Almost immediately after taking office, President Trump delivered on the promise to reduce the regulatory burden on businesses. One of his first executive orders required federal agencies to revoke two rules for each one they want to issue. It’s also evident that the Trump administration doesn’t plan on issuing very many costly rules, which is welcome news to a business community that was plagued with onerous and burdensome mandates throughout the Obama administration’s regulatory onslaught. The Trump presidency is still in its infancy, but his administration has taken several steps that should improve business conditions while Republicans on Capitol Hill get their act together. Here are a few areas in which President Trump has acted to undo burdensome mandates from the Obama administration while removing obstacles that had been preventing policies supported by the business community:
▶ Environmental regulations. One of the hallmarks of President Obama’s climate change agenda was the Clean Power Plan, which sought to cut electricity carbon emissions 32 percent below 2005 levels by 2030. The set of rules, aimed at regulating power plants burning fossil fuels, significantly favored “clean” and renewable energy sources. Due to increased costs, this was a major concern for the energy sector and residential and commercial energy consumers. The plan was in legal limbo as industry and numerous states challenged the constitutionality of the Environmental Protection Agency’s (EPA) action. However, on March 28, Trump issued an executive order ordering the EPA to withdraw and rewrite the clean power regulations, effectively undoing the Obama administration’s Clean Power Plan. ▶ Energy development. Long delayed, the Keystone XL pipeline project became a symbol of the battle between industry and environmental groups for much of President Obama’s White House tenure. Despite his own State Department finding that the project would have minimal negative environmental effects while providing significant economic and national security benefits for the country, President Obama rejected the cross-border permit needed for construction. Following an executive order issued days after his
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inauguration to revive the review process, on March 24 President Trump announced his administration’s formal consent to the pipeline’s completion. The president also rescinded a moratorium imposed by the Obama administration on the sale of coal leases on federal lands. ▶ Labor rules. The Department of Labor and the National Labor Relations Board (NLRB) were particularly active during the Obama administration. NLRB decisions and actions, including the “ambush election” rule (that dramatically shortened the required time between announcement of workplace elections over whether to form a union and the actual vote) can’t be reconsidered until the Senate confirms President Trump’s nominees to the board. However, the Labor Department recently acted to rescind its controversial “persuader rule,” which required companies to disclose nearly all interactions between employers and hired experts (including attorneys) providing advice that directly or indirectly “persuades” employees how to exercise labor rights. The rule expanded the disclosure requirements to any actions, conduct or communications undertaken to directly or indirectly affect an employee’s decisions regarding union representation or collective bargaining rights. On June 12, Secretary of Labor Alexander Acosta announced the Trump administration will rescind the regulation, a significant victory for the business community and champions of attorneyclient privilege. Congressional dysfunction doesn’t mean the construction equipment industry’s policy agenda comes to a halt. In fact, AED has scored several victories through engagement with the Trump administration on issues where congressional action is unnecessary. To chalk up major wins in Washington requires Congress to move legislation, but the Association and the broader business community have been given some muchneeded regulatory relief by the executive branch until lawmakers can get the ball rolling on infrastructure investment, tax reform and workforce development legislation. DANIEL FISHER is AED's vice president of government affairs. He can be reached at dfisher@aednet.org and 202-897-8799.
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Be A
Customer Service Champ “A
By Christine Corelli
chieving Excellence in Customer Service" is a report on the best customer service providers. They are considered as “Customer Service Champs” because they repeatedly make the list. Gary Tucker, the former Vice President of Global Services at J.D. Power and Associates, once explained how winners are selected: “To be good in any industry, it makes sense to look at the best practices across industries. Every day, customers interact with companies from a myriad of industries. Invariably, they compare the quality of these service experiences. Industries and companies should be doing the same if they expect to keep pace in today’s increasingly competitive environment.” Companies that have received the J.D. Power Customer Service Champion designation are among the top five percent of over 800 evaluated companies based on their performance in five key areas. These are identified as the “J.D. Power 5 Ps:” People, Presentation, Price, Product, and Process. Interestingly, the J.D. Power Customer Service Champions not only excel within their respective industries, but also stand out when evaluated across multiple industries. Review these five companies that received the prestigious designation and determine smart strategies you can apply to your distributor business.
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Amazon.com—simply amazing
Amazon CEO Jeff Bezos has spent 20 years obsessing over being in complete command of every conceivable experience and interaction customers can have with his company. Amazon was never really a bookstore and Bezos’ much-hyped delivery scheme isn’t about drones. Amazon is about amazing customers. They’re so good at it that buying something with one click has set the bar for many companies. It’s focused on obtaining the loyalty and advocacy of customers who are now demanding instant information and ever-faster delivery. They are consistently seeking methods to approve the customer experience. Their website makes placing orders intuitive and shipment tracking incredibly simple. Recently, their stock value has reached its all time high.
USAA’s battle plan
This provider of financial services for military families has used remote technology and an intense focus on clients to stay in the top five on the Customer Service Champion list for many years. In almost everything it does, USAA places itself in the shoes of its often highly mobile customers, many of whom face unique financial challenges. This Customer Service Champion was the first bank to allow iPhone deposits. It routinely texts statement balances to soldiers in the field. Claim processing is smooth and easy and huge discounts are offered on car insurance while a client is deployed overseas. Training is lavished on all employees. Veterans accompany employees with non-military experience to training sessions where they dine on MREs (meals ready to eat), the same sustenance consumed by troops in the field. Employees try on vests and helmets. Each is handed a bona fide deployment letter to help them to internalize the feelings, reactions, and challenging financial decisions USAA’s clients face at high emotional times. This training prepares them for the family issues that arise when servicing customers. Employee satisfaction is a strong part of USAA’s culture. The company’s leaders are concerned about their employees’ problems. One of their guiding principles of leadership is: The employees’ problems are our problems. Employees aren't rushed through calls
with customers or evaluated on how fast they handle the inquiries. Customer service reps are “armed” with state of the art technology that allows them to view a history of all online screens any particular client has viewed on USAA's website. This helps the reps know what policies or business lines their clients may be perusing—and may be ready to buy. The mobile lives of USAA’s core clients— our troops stationed in distant locales and military families constantly on the move— have made this amazingly service-oriented company an innovator in the world of personal finance and a real champ in keeping its promises.
Apple Computer: The apple of many customers’ eyes
To receive a phenomenal customer service experience, or simply observe one, walk into any Apple store. You will see ready and willing staff anxious to serve Apple customers. Every Apple employee is highly knowledgeable and equipped to answer any question. The company’s sturdy computers, sleek devices and user-friendly software aren’t its only innovations. "Genius Bars" and roving in-store checkout clerks are just two ways the company has pioneered new approaches to customer service. iPhones have inspired other companies to create more customer-friendly apps for their own products. They have systems and procedures that work. All of these advances have helped to distinguish the Apple brand and differentiated its customer service, placing it on the list of “champs.” Their stock has soared, and they have become the first American company to have reached $800 billion market value.
Puttin’ on the Ritz
The Ritz-Carlton Hotel Company L.L.C. is considered by many business experts to be the epitome of customer service. The RitzCarlton Creed is well known and taught in many customer service seminars: “The RitzCarlton Hotel is a place where the genuine care and comfort of our guests is our highest mission. We pledge to provide the finest personal service and facilities for our guests who will always enjoy a warm, relaxed,
yet refined ambience. The Ritz-Carlton experience enlivens the senses, instills wellbeing, and fulfills even the unexpressed wishes and needs of our guests.” Every executive, manager, and employee lives and breathes the Ritz-Carlton Creed. Employees are instructed to leave a lasting impression on guests and to provide a flawless customer experience. Stay at a Ritz-Carlton and employees will greet you warmly and call you by name. You’ll also receive a fond farewell. “I’m looking forward to seeing you again,” or, “I can’t wait to do another event with you in the future.” The Ritz-Carlton has practices every business should have. They make every effort to ensure customers’ needs are anticipated and expectations are exceeded. They “empower” employees to make any dissatisfied customer happy. When an employee spots a service flaw in the system, he or she fills out an “Incident Defect Form.” The report is sent to management immediately. The hotel cross-trains employees so they can do double duty when needed. Back-office staff helps the front desk. This type of crosstraining, plus attention to detail, has kept Ritz Carlton on the Customer Service Champion list.
Cadillac’s style
Lexus has been a perennial favorite on the J.D. Power and Associates Customer Service Champion list. In some years, it has been among the top five Customer Service providers across all industries. But we can’t dismiss Cadillac’s reputation for service excellence. One reason is that since 2010, Cadillac has provided extensive and consistent customer service training throughout its organization. What Customer Service Champs have in common Commonalities among Customer Service Champs provide great insight. Let’s analyze ways these companies achieve such high levels of service and discuss how their service practices can be transferred to your distributor business. 1. All Customer Service Champion leaders make service excellence a priority and a strong part of their competitive strategy. The top executives in companies known for World Class customer service demonstrate their passion for service excellence. By example and by design, they make service excellence the highest priority. Do the same
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in your distributor business. Be relentless in the pursuit of a consistently great customer experience and you will become a formidable competitor. 2. Employees of Customer Service Champions believe in their company, have a sense of pride, are well trained are “engaged” in the company’s competitive strategy. The employees of these companies have a sense of pride about their company and their work. You can accomplish this in your distributor business through employee engagement, involvement and empowerment. Treat your employees as well as you treat your best customers. Like USAA, make their problems your problems. Actively encourage your people to share ideas and step forward to challenge the status quo. Go a step further; demand staff input and participation in finding new, better, and more efficient ways of providing great service. Recognize, reward and train them on customer service. Follow the examples of USAA and Ritz Carlton and have them walk in your customers’ shoes. Take them on job sites, in the fields and in warehouses. Explain what happens if a machine goes down and construction or production is held up. Explain how your customers’ livelihoods are compromised and how production can be held up. Recognize and reward people (both formally and informally) for their individual contributions in the workplace. Change the term “employee” to associate. Better yet, make your employees feel as though they are associates. Give them a stake in the company and bonus programs – even if it is a small amount of money. All of these are surefire ways to make people feel engaged. 3. Customer Service Champs examine the touch-points of customer contact to improve the overall customer experience. In his best-selling book, Moments of Truth, Jan Carlzon identifies moments of truth as “every opportunity to make a difference when in contact with customers.” The RitzCarlton calls it “defining moments.” Customer service trainers often hold sessions on Journey mapping. However you describe it, this can be a painstaking process, but it can also be fun if you do it in teams. Like the Customer Service Champs, seek ways you can make it easier to do business with you. Find ways to impress, delight, and wow customers. In your business, with your customers, no detail should be too small. Think of the Ritz Carlton or Apple Computer and the
feeling you get when you walk in. Instruct your staff to warmly greet customers when they walk in. Get to know your customers on a deeper level. Learn to know who they are, what they like and dislike, and what their expectations are. Proactively reach out to customers. In fact, overcommunicate. When a customer brings in their equipment, or any product that needs service keep him or her informed of your progress. Call if additional repairs are needed. Follow up after a machine is delivered and after a service is conducted. Send them text messages in the field. This communication not only helps to avoid problems and build relationships, but also demonstrates you CARE. State of the art technology enhances Champs’ ability to deliver exceptional service. You can’t serve customers exceptionally well without modern technology that enhances customer relationship management. Technology provides contact management databases, sends maintenance reminders, manages other customer service activity and anything critical to your business. Everyone who touches a customer for any reason should make an entry into the systems so that in one click, a person who is servicing the customer can pull up all pertinent information and history. State of the art technology is without a doubt, a key driver and tool for business success. All Customer Service Champs excel in the 5 Ps. People, Presentation, Price, Product and Process, the five J.D Power P’s are key to achieving excellence in customer satisfaction and advocacy. To be considered for the Champ designation, companies must outperform their competition in some or all of these core areas. Consider these examples of the five critical competencies that attract and retain customers.
People
Leading companies such as Ritz-Carlton depend on their people. Staff members at these hospitality service stars are not only service providers and friendly faces, but also problemsolvers for their guests. Create problemsolving teams in your business. Have office staff trained to jump in and help find a part if needed. Like Apple, make sure every person is knowledgeable.
Presentation
“Champs” know today’s customers place increased importance on how a company’s products or services are perceived. For equipment dealers make sure your staff, and especially Product Support puts you in the best possible light. Your facility is also part of
your presentation. When a customer walks into your dealership, looks at the service area, or warehouse it should shout cleanliness and orderliness. The outside of your facility should also be appealing.
Pricing
Many (but not all) Customer Service Champions offer great prices, but they know there’s more to the buying decision than price. Champs provide the best value, price and other factors considered. They know what’s important to the customer—the company’s image, its standing in the marketplace, the “package” it offers, and its reputation for dependable service. In your distributor business make sure your customers receives value-added for their money.
Product
Champs excel in delivering a consistent, trouble-free product. In the equipment business quality of product is a given. Equipment should be properly assembled and tested, but it’s Product Support that matters most.
Process
Today’s customers are time-driven and time conscious. As a consequence, they prefer companies that can offer them easy, effective, and fast customer service. That includes equipment buyers and especially customers who bring their machines in for servicing. Make sure your processes and procedures meet this important customer service standard. Like Amazon.com, make your website ordering fast and easy. Responsiveness is also key. Have enough service vehicles to go out on a job site to repair equipment. Be sure customers order all parts needed to do the job correctly. Process all orders by the end of the day. Double check order entries properly. Put all parts away at the end of the day so you can process orders quickly. All Customer Service Champs do more than deliver on what they promise; they exceed customer expectations. Most dealers create their own expectations of what customers want. Instead, follow these, and industry leaders that excel in customer service. Get close to the customer, make sure you meet expectations, and like these companies. Consistently deliver what you promise. Then, think of ways you have exceeded expectations in the past and new ways you can do so in the future. Exceeding customer expectations is one of best ways to ensure customer loyalty and be a customer service champ in your customers’ eyes.
CHRISTINE CORELLI is a conference speaker, columnist, and author of five business books, including the best-selling Wake Up and Smell the Competition and Capture Your Competitors’ Customers and KEEP Them. She has been a popular speaker at numerous industry events. To learn more, visit www.christinespeaks.com, or call 847-581-9968. 54 | www.cedmag.com | Construction Equipment Distribution | August 2017
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Sentry Insurance’s Tips for Reducing Workplace Harassment With the right workplace harassment policy – and a companywide commitment to the policy – you can make your business a safe, respectful, welcoming place for each of your employees.
Q: Since my dealership has a policy against workplace harassment, how could we have any issues related to employment practices? A: Having a policy addressing workplace harassment is an excellent starting point, but if your employees ignore it, are unaware of it, or inconsistently enforce it, you may still encounter issues. Solving this problem requires communicating with your employees to create a positive, harassment-free company culture. Here are some steps you can take to reduce workplace harassment at your business: ▶ Revise your policy, if needed, to clearly prohibit actions that could create a hostile work environment for any employees. Include specific procedures for reporting, investigating, and responding to alleged harassment. Inform your employees of the policy, and have each employee sign an acknowledgment that they’ve received the policy, understand it, and agree to it. ▶ Organize annual management staff training on the policy, emphasizing their responsibilities in the reporting, investigation, and response process.
▶ Establish written employment rules and termination guidelines that must be met before terminating an employee. If you’re considering terminating an employee, evaluate all available documentation to ensure the reasons for the termination are clearly and adequately supported. ▶ Make sure your guidelines include a process for actively alerting employees – and documenting the communication – when you identify issues with their performance or behavior, along with the specific actions the employee(s) must take to remain employed at your dealership. ▶ Consult with an attorney specializing in employment practices before executing a termination in which sensitive elements—such as age, race, or gender—could potentially factor in. ▶ Train all management staff on performance documentation and counseling requirements, and be sure to document the training. With the right workplace harassment policy – and a companywide commitment to the policy – you can make your business a safe, respectful, welcoming place for each of your employees.
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.
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