September 2014
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Contents
Award Winning
SEPTEMBER 2014 Editorial Team Executive Editor and Director of Programs KIM PHELAN kphelan@aednet.org
Vol. 80, No. 9
FEATURES
FROM THE COVER
You’re going to have your own personal AED concierge.
Contributing Editor JOANNE COSTIN pr@aednet.org
Editor’s Note 7 Leaders go side by side, inch by inch with their people.
Graphic Production EVA BELMONTE design@aednet.org eva@neggie.net
On the Numbers 47 Top 3 things you must do to get where the ball is going.
Columnists GARRY BARTECKI Financial Consultant to the Construction Equipment Industry CHRISTIAN KLEIN AED Vice President of Government Affairs ELI LUSTGARTEN ESL Consultants RON SLEE R.J. Slee & Associates
COLUMNS
President’s Message 5
Right of Way - A Dealer’s Story About Fighting No-Growth Environmental Extremism 20 Mike Thompson went to battle for the sake of his customers when Alabama’s Northern Beltline got logjammed by industry antagonists.
Mechanic’s Truck Still the Field-Service Mainstay 24 A look at the unique role technicians play in the life of the dealership, and the technologies and trucks on which they rely.
Just So You Know – an occasional guest column 49 Sales pro Jeffrey Gittomer says grammar matters.
Aftermarket 51 Supervision on the shop floor with ‘the little pod that could’
Washington Insider 53 Join the new Action Advocacy Group to lead AED’s stronger charge on D.C. policymaking.
Advertising Contacts Vice President–Sales/ Publisher DAVID W. GORDON 800-388-0650 ext. 334 dgordon@aednet.org
DEPARTMENTS Inside AED Groundwork Industry Beat Advertisers’ Index Dealer Data
Advertising Sales Manager ALBERT J. RAMIREZ 800-388-0650 ext. 311 aramirez@aednet.org Production Manager MARTIN CABRAL 800-388-0650 ext. 313 mcabral@aednet.org
600 22nd Street, Suite 220 Oak Brook, IL 60523 630-574-0650 fax 630-574-0132 www.aednet.org
Industry Witnesses &RUSRUDWH 6KXIÁH 30
Don’t Get Burned on Buyouts 38
Meet some of the industry’s new movers and shakers, and see where they’re aiming to take their companies next.
There are lots of ways for a rental purchase arrangement to go south, and they’re mostly preventable with a well prepared written agreement.
8 12 14 55 56
Plus: Best Practices: How One Dealer Helps Move the Needle in Washington, D.C. 44
September 2014 | Construction Equipment Distribution | www.cedmag.com | 3
President’s Message President & CEO - BRIAN MCGUIRE Associated Equipment Distributors Oak Brook, Ill. Executive Vice President & COO ROBERT HENDERSON Associated Equipment Distributors Oak Brook, Ill.
OFFICERS
Chairman - TIM WATTERS Hoffman Equipment Co., Piscataway, N.J.
Vice Chairman - DON SHILLING General Equipment & Supplies, Inc. Fargo, N.D. Sr. Vice President - WHIT PERRYMAN Vermeer Equipment of Texas, Inc. Irving, Texas Vice President - RICK VAN EXAN Toromont Industries Ltd. Concord, Ont., Canada Vice President - WES STOWERS Stowers Machinery Corp. Knoxville, Tenn. Vice President of Finance MICHAEL D. BRENNAN Brandeis Machinery & Supply Co., Louisville, Ky. Past Chairman - MIKE QUIRK Wagner Equipment Co. Aurora, Colo.
AT-LARGE DIRECTORS
TODD BACHMAN Florida Coast Equipment, Inc. Boynton Beach, Fla. RON BARLET Bejac Corp. Placentia, Calif. DENNIS J. HELLER Stephenson Equipment Inc. Harrisburg, Pa.
LARRY R. MILLER Kelbe Bros. Equipment Co. Inc. Butler, Wis. MITCH NEVINS Four Seasons Equipment, Inc. Houston, Texas MIKE ROONEY Thompson Tractor Co., Inc. Tarrant, Ala.
REGIONAL DIRECTORS
RYAN GREENAWALT Midwest Reg. Alta Equipment Co. Wixom, Mich.
TODD HYSTAD Western Canada Reg. Vimar Equipment Ltd. Burnaby, B.C. PATRICK W. MCCONNELL West Reg. Clyde/West, Inc. Portland, Ore. CHRISTOPHER PALMER Northeast Reg. Wood’s CRW Corp. Williston, Vt. GILES POULSON Rocky Mountain Reg. Faris Machinery Co. Commerce City, Colo. JAY RODES, Southeast Reg. Wilson Equipment Co. Lexington, Ky. RICK VAN EXAN Eastern Canada Reg. Toromont Industries Ltd. Concord, Ont. GARY D. VAUGHN South Central Reg. OCT Equipment, Inc. Oklahoma City, Okla.
At Your Service AED’s new regional managers will give members a consistent, caring contact to enhance your experience with the association. BY BRIAN MCGUIRE
We’ve just concluded a fantastic Leadership Academy out here in the Chicago area, and I want to thank all the AED members who value their companies and their future leaders enough to invest in this important professional development experience. The staff and I truly enjoyed the privilege of getting to know all 50 of the “rising stars” who attended, because in the business of association management, there’s really nothing more gratifying than to provide networking and learning opportunities and then actually watch as professionals come together and form and strengthen relationships. You’ve known all along that the equipment distribution industry is all about relationships, and those created among distributors themselves are extremely important in the life of an executive. Relationships are really important to the life of AED, too, and for that reason we are launching a major initiative that is going to enhance every member’s experience with this association. As I travel around the U.S. and Canada, some members have communicated to me a feeling of disconnection with the association. They want to see and hear from AED on a more consistent, regular basis, and also see ways that their employees can plug in, as well. Some members have the vague realization that AED is more than just a few seminars a year, but they can’t really get their arms around what exactly AED offers and what the benefit is to them. So, I asked myself, what if we developed a way for members to feel more connected and engaged with AED. And the first priority with such a program would have to be ease of use. It would have to be effortless for AED members and yet so effective that it would compel members to dive in more actively with their time and resources. The answer, I believe, lies in our new Regional Managers. Under the direction of Mike Dexter, three young RMs (two new hires and AED’s former Membership Manager Ben
Yates) are going to be deployed throughout North America starting in January to cover their assigned territories of responsibility, calling on you, the members of this association, for the purpose of building a relationship, listening to what’s going on in your company, and bridging the gap between your needs and AED’s solutions. But let me be clear – we’re not sending a sales rep to your door. Our RMs are tasked with increasing the “touch” that you have with AED, to connect and work with you at a local level and build grassroots government affairs involvement, increase your connections with local educational institutions, and help you better tap the resources available to you through this association. They’re our boots on the ground, and you can read a little more about who they are on page 8. In my experience, engaged members lead to more satisfied members. But there’s even more to be gained here. As the RMs fan out across the states and provinces meeting and listening to members, we will also be able to effectively identify future leaders of the association – we can match personnel from member companies for participation in our various councils, task forces and committees. We can identify future board members, too. You’re going to have to the opportunity to talk with a representative from the association and give us your firsthand input about the challenges you’re facing in your business, and what AED’s opportunities are to help you meet them. Stay tuned – we’re making positive strides to increase the value of your AED membership. And if you’ve got an idea, please share it with your Regional Manager, or call me at AED: 630-574-0650. BRIAN MCGUIRE (bmcguire@aednet.org) is president and CEO of Associated Equipment Distributors.
September 2014 | Construction Equipment Distribution | www.cedmag.com | 5
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Editor’s Note
Is Being the Boss the Same as Being the Leader? Whether implementing a change or fixing a problem, people respond when they know you care and want them to succeed. BY KIM PHELAN
The first video clip Ryan Morrison played got me choked up. I expect by now you’re getting tired of hearing about what makes Kim cry, especially after that puppy story two issues ago. Sorry. But hey, this time it’s sports, so hang in there with me. First of all, Ryan Morrison’s workshop called “The ABCs of Leadership” on the closing morning of AED’s Leadership Academy Aug. 27 was so amazing that I decided in the 11th hour to change my topic this month and share a small piece of his program with you. Ryan is a VP and professional trainer with Traver Technology, an ADP company whose clients are mostly in the automotive industry. So, Ryan plays this scene from a movie I haven’t seen: “Facing the Giants.” We see a high school football team sitting on the grass at afternoon practice, and they’re speculating on their odds of beating their Friday night opponent. The biggest guy on the team, Brock, has little confidence in their ability to win; in this scene, he and another guy, Jeremy, are speaking their minds and the coach isn’t going for the defeated attitude, so he calls Brock to his feet. He’s like, “What? Am I being punished now?” Coach says, “Not yet,” and he proceeds to tell Brock, a husky linebacker (I think), that what he’s gonna do is give him the death crawl (feet and hands) to the 50-yard line, but with a catch – he’s going to carry Jeremy on his back. The other catch: The coach ties a bandana blindfold on the kid. Why? So he doesn’t quit early or get dis-
couraged, says coach. The one thing the coach demands from him (repeating the request about three times): You’re going to give me you’re very best. The kid consents. And so it begins. Brock gets down on his knees, Jeremy curls himself on top of the larger boy (back to back) holding on near his shoulders, and the defiant player assumes the death crawl position and moves out. It’s not a huge deal at first. He’s a big, strong kid. He can take it. But very soon it’s a burden, and then it becomes desperate. He’s aching, he’s screaming, he’s agonizing, and every second he’s at the end of what he’s got. And the coach? Well, he’s next to the kid every inch. He’s even on the ground, yelling encouragement, coaxing the next ounce of effort, moving beside this kid and guiding him with his voice. “Don’t you quit on me!” And here’s what else is happening: The camera flashes over to the rest of the team who are watching, at first with big smirks and laughter, and then with dumbfounded gapes. One gets to his feet, then another, and another, till they’re all standing, taking unconscious steps toward the spectacle, watching in silent astonishment. When at last they’ve reached the goal and Brock collapses, face in the ground, the coach removes the blindfold and says, “Look where you are – you’re in the end zone. You just carried a 140-pound kid on your arms across this whole field...You are the most influential player on this team; if you walk around defeated, so will they.”
What Kind of Leader Do You Want to Be? The lights came up and we talked about that coach’s leadership attributes. First in my mind is that he recognized immediately who the peer leader was and he won him over by stretching him to his outer limits – in front of the whole team – and made sure he succeeded. He also affirmed that kid and practically crawled on the ground beside him for the last 30 steps. Privately, he praised him, too, and told him he needed him. A little bit later, Ryan explained that leadership is something you win one on one, and one by one. Every interaction a leader has with his or her team (employees) is going to move the meter in one direction or the other. He emphasized the supreme importance of getting to know people individually and at a personal level. “I can point and throw a bone and get you to do tricks but not develop you,” he said. And, he added, one of hardest truths of effective leadership is, “You have to genuinely care about people.” That’s what I’ll leave you with today. I’m pretty sure that every act of caring we demonstrate both privately and publicly with people will make a difference in their work and their lives. Thanks for reading.
KIM PHELAN (kphelan@aednet.org) is the executive editor of Construction Equipment Distribution and director of programs for AED.
September 2014 | Construction Equipment Distribution | www.cedmag.com | 7
Inside AED
New Regional Managers Get Face-to-Face with Members Michael Dexter heads team focused on membership engagement at the local level.
AED Regional Managers Michael Dexter Senior Regional Manager and Director of Engagement
Valentina Gabriel Regional Manager
Phil Riggs Regional Manager
Ben Yates Regional Manager and Manager of Membership Services
“We expect the regional managers to spend at least Like all of our members, when the recession of 60 percent of their time in the field,” said Dexter. “We’ll 2008 hit, AED was forced to scale back its efforts. Hiring be meeting with individual members as well as local AED regional sales managers was one of the initiatives that groups to get to know them better and to assist them in didn’t get off the ground. But AED management believes advancing AED’s advocacy efforts on both the national the time is right to put in place a structure that will and local level.” increase engagement with AED at the local level. For example, if a local dealer or local group wants to The goal is for each AED member firm, including dealhost an elected official, the AED regional manager will be ers, manufacturer and other allied members, to have a there to provide assistance. At his or her fingertips will be new first point of contact: a regional representative. Four a wealth of additional AED resources. regional managers will cover the U.S. and Canada based By putting an emphasis on local activities, AED hopes on already established geographic regions. The investment to increase member engagement and therefore retention. in staff is being made to improve overall engagement and In addition to organizing congressional state and local member satisfaction with AED. visits from legislators, AED regional managers are charged “You can’t depend solely on telecommunications to with increasing awareness for programs such as The AED communicate with dealers,” said AED Executive Vice Foundation’s workforce initiatives and promoting other President Bob Henderson. “It’s sometimes difficult for AED activities and events. members to articulate their needs, but with more eyes Among the familiar faces on the team of four regional and ears in the field, we hope to take what we learn and managers is Ben Yates, who will also continue to perform come back and design programs, products and services responsibilities as membership director. New faces include that better match those needs.” Dexter, as well as Regional Managers Valentina Gabriel Leading up the team is Senior Regional Manager and and Phil Riggs. Director of Engagement, Michael Dexter, who, prior to “Instead of going to AED’s website and calling joining AED, worked in a similar role for the Technology a general number about a particular topic, members & Manufacturing Association. Dexter brings a wealth of can call Phil, Valentina, Ben or Michael,” said Henderson. experience to the role and will guide the other regional “They will be the new faces of AED to members.” managers as they begin to reach out to members within “We welcome the opportunity to meet face-to-face their territory. with your team in the coming year to learn how we can bring more value to your membership,” added Dexter. Proposed New Members Look for an announcement informing you of your new Glimmer regional manager in the coming weeks and a visit to Naperville, Ill. your territory to follow. Thanks in advance for the warm welcome we know you’ll extend. This list is published each month as required by AED bylaws. Comments on the applicants should be directed to AED President and CEO Brian McGuire 800-388-0650, ext. 326.
8 | www.cedmag.com | Construction Equipment Distribution | September 2014
(continued on page 10)
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Inside AED
AED Leadership Academy Called ‘One of the Best Ever’
The 50 attendees of the AED Leadership Academy took home great applications and memories from the two-day event Aug. 26-28 at Eaglewood Resort near Chicago.
Pictured left to right: The conference kicked off with a relaxed cocktail reception on the patio overlooking the ninth hole of Eaglewood’s beautiful golf course. Later, attendees enjoyed a barbeque buffet and live music. During Ryan Morrison’s “ABCs of Leadership” workshop on Thursday, groups huddled for periodic brainstorming sessions and shared their best ideas with the large group, including easy and free ways to meaningfully reward employees. Wednesday night, the 50 attendees and a few spouses
and staff took a trip to downtown Chicago for a three-hour boat party on the Chicago River that included architectural narration, music, open bar and full buffet dinner. The evening concluded on Lake Michigan with a close-up fireworks display over Navy Pier. A panel discussion with dealer execs discussing business succession issues was one of the most talked about sessions – AED extends a big thanks to (left to right) Mark Harbaugh from DitchWitch Midwest, Larry and Jeff Miller from Kelbe Brothers, and Denny and Corey Vander Molen from Vermeer MidSouth.
MARK YOUR
CALENDAR
For information on any upcoming AED events, visit www.aednet.org or call 800-388-0650. Executive Events to Note Sept. 18-19, 2014 AED/Infor Executive Forum
Rosemont, Ill. Feb. 10-13, 2015 2015 AED Summit & CONDEX
Orlando, Fla. April 22-23, 2015 The AED Foundation Financial Symposium
May 5-6, 2015
Sept. 11
Oct. 7
Webinar: Creative Cost Saving Strategies Under the Affordable Care Act (ACA)
Webinar: Delivering an Exceptional First Impression for Receptionists and Others
Noon CDT Presented by Brian Wohlfeil Sept. 23 Webinar: Run Your Territory Before It Runs You: Time Management for Sales Professionals -
10-11:30 a.m. CDT Presented by Don Buttrey
AED Washington Fly-In
Sept. 25
Aug. 25-27, 2015
Webinar: Protecting Your Dealership’s Data
2015 AED Leadership Academy
Upcoming 2014 Webinars & Seminars Sept. 9 Webinar: Techniques For Creating Effective E-mails
10 a.m.-11 a.m. CDT Presented by Barry Himmel
10-11 a.m. CDT Presented by Ed Becker and Jim Foote Oct. 1-2 Test Drive: The Business War Game for Distributor Executives
Burr Ridge, Ill. | Presented by PriSim Business War Games
10 | www.cedmag.com | Construction Equipment Distribution | September 2014
10-11 a.m. CDT | Presented by Barry Himmel Oct. 21 Webinar: Service Management – Inspection
11 a.m.-Noon CDT | Presented by Ron Slee Oct. 21 Webinar: Service Management – Work Order Processing
2-3 p.m. CDT | Presented by Ron Slee Oct. 22 Webinar: Service Management – Labor Rates
11 a.m.- Noon CDT | Presented by Ron Slee
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Groundwork OFFICERS
Chairman A. ROY KERN Equipment Corporation of America Coraopolis, Pa. Vice Chairman DENNIS VANDER MOLEN Vermeer MidSouth, Inc. Jackson, Miss.
President BOB HENDERSON The AED Foundation Oak Brook, Ill. Treasurer JOHN D. CRUM Wells Fargo Equipment Finance Pittsburgh, Pa. Immediate Past Chairman CHRISTOPHER PERA Highway Equipment Company Zelienople, PA AED Board Representative WES STOWERS Stowers Machinery Corp. Knoxville, Tenn. Executive Director STEVE JOHNSON The AED Foundation Oak Brook Ill.
DIRECTORS
GARY BRIDWELL Ditch Witch of Oklahoma Edmond, Okla. JOHN COSGROVE Central Power Systems & Services, Inc. Liberty, Mo. MIKE HAYES Komatsu America Corp. Rolling Meadows, Ill. TIMOTHY KRAMER Kramer Ltd. Regina, Sask. DR. WAYNE LONGBRAKE Former Dean, Penn. College of Technology Williamsport, Pa SONJA METZLER Ohio CAT Broadview Heights, Ohio DAVID REILLY John Deere Construction Equipment Moline, Ill. KENNETH SILVERMAN Volvo Construction Equipment Shippensburg, Pa. MARK TEEL Caterpillar, Inc. Peoria, Ill. M. KEITH TIPPETT Kirby-Smith Machinery, Inc. Oklahoma City, Okla.
Job Skills Gap Requires a Collective Effort Video on career and technical education can help spread our message As an industry-driven organization, we at The AED Foundation receive a lot of information from AED members about important industry and workforce development issues, and we love hearing from you. Recently, one dealer forwarded us a video link to: “Success in the New Economy,” a 10-minute excellent synopsis of the skills gap and education in the future. (Direction and motion graphics by Brian Y. March; written and narrated by Kevin Fleming. Citrus College in Glendora, Calif., supported the production to help a broader audience begin to understand preparation for tomorrow’s labor market realities.) You definitely want to watch this and use it in your own student recruitment efforts. Check it out at http://vimeo.com/67277269. Addressing the nation’s skills gap matters to our industry, which is running out of well-qualified service technicians. But fixing the gap is difficult because it requires a fundamental shift in the public’s
perceptions of: (1.) career and technical professions as viable and rewarding alternatives; (2.) post-secondary education options and associated financial returns (short and long term); and (3.) structure of the future economy and its impact on what jobs are and will be in high demand. Our model for technician workforce development and AED Accreditation is a “community-based, school-to-work” strategy that harnesses collective efforts of equipment dealers, technical college(s) and other industry stakeholders working together to meet mutual needs. Our goal is to help students, their peers, parents, career counselors, and other decisioninfluencers understand the great career options of the equipment industry. AED Accreditation for college diesel/ equipment technology programs is driving change and success all over the country. Won’t you join us? Contact Steve Johnson at 630-468-5134, sjohnson@aednet.org.
New Webinars in September Techniques for Creating Effective E-mails
Sept. 9, 10-11 a.m. CDT Much of your communication with customers and colleagues involves electronic interactions. As these interactions could potentially be around forever, they need to be effective and professional. Learn best practices for creating effective e-mails and other electronic communications. Presented by Barry Himmel, Signature Worldwide.
Barry Himmel
Protecting Your Dealership’s Data
Sept. 25, 10-11 a.m. CDT When it comes to information security, dealerships have many areas of high risk. It is essential that you have an updated plan to protect customer data. Join hosts Ed Becker and Jim Foote from ADP as they discuss the following topics with guest security experts: Why do data Ed Becker Jim Foote thieves target dealerships? What does it mean to have an active security plan, and why does your dealership need one? What are the costs of a breach for small to medium-size businesses? Register today for these webinars at www.aednet.org/events. For more information on all professional training opportunities for your team, contact Rebecca Lintow at 630-468-5113, rlintow@aednet.org.
12 | www.cedmag.com | Construction Equipment Distribution | September 2014
Whether you make ’em or sell ’em, it’s not child’s-play
Business Training for Grown-Ups For Manufacturers.
For Dealers. Serious business seminars combining computerized simulations with classroom lectures and discussions.
PriSim.com/CED
Industry Beat
Congress Avoids Highway Fiscal Cliff
AED Pushes for Long-Term Fix in Lame Duck Session
On Aug. 8, President Obama signed legislation (H.R. 5021) to keep highway and transit construction money flowing to the states through May 2015. Congress put the bill on the president’s desk with just hours to go before the federal Highway Trust Fund (HTF) was set to fall off a fiscal cliff. The HTF patch passed by the House and Senate has been a top AED priority for many months. The federal highway program alone supports more than $2.4 billion in equipment market activity and an estimated 4,000 dealership jobs around the country (and those numbers do not include all the state highway and transit construction activity induced by the federal contribution). The good news is that the federal highway program isn’t going to collapse in the middle of the busy summer construction season. The bad news is that Congress has once again kicked the can down the road rather than dealing head-on with the fact that current HTF revenues are inadequate to support annual federal surface transportation spending. “While we’re relieved that H.R. 5021 is now law, this isn’t a moment to celebrate,” said AED President and CEO Brian McGuire. “By waiting until the last minute to solve a problem we’ve known for years was coming, Congress brought the highway program and the construction industry to the brink of disaster.” The extension debate wasn’t without controversy or drama. The Senate’s version of the patch – which was broadly supported by leading transportation advocacy organizations, including AED – would have forced Congress to revisit highway funding during the lame duck session in December. However, House GOP leaders were ultimately able to force the Senate to agree to the House version because of a $2 billion drafting error in the Senate bill and by running out the clock. The final House vote on the bill did not take place until hours before the start of the August
recess. The Senate was left with the choice of passing the House version or letting the highway program collapse. “We hope this exercise has underscored to everyone on Capitol Hill that the Highway Trust Fund is in dire shape and needs additional revenues, be it from a gas tax increase or some other source,” McGuire said. “Providing the infrastructure that allows the economy to function is a core obligation of the federal government. Now it’s up to Congress to fulfill that obligation and put the HTF back on the road to longterm solvency.” Extending funding and program authorization through May 2015 means that we will be fighting the same battle again next year in a potentially more difficult political environment (a debt ceiling fight, many new members of Congress unfamiliar with HTF issues, [possibly] the inevitable chaos associated with a new party in control in the Senate, and the start of the presidential campaign season). However, AED and its allies will keep pressure on for Congress to consider a long-term fix during lame duck. For that to happen, we need your help. Keep talking to your members of Congress and congressional candidates about how the uncertainty surrounding federal infrastructure programs is affecting your company, employees, and customers. And stand by for action as things start to heat up later this year. If you have questions or comments about AED’s work on the highway bill, do not hesitate to reach out to AED’s Washington Office at aeddc@aednet.org, 703-739-9513.
JCB’S ‘2014 Mud Run’ and ‘Dig the Ride’ Raise Over $100,000 Steve Vernon, vice president of Finance and Thom Peebles, vice president of Marketing for JCB recently presented a check for $100,500 to The Lady Bamford Center’s children, staff and the executive director of Wesley Center, Tammy Mixon. Money was raised through JCB’s third annual Mud Run and first-ever Dig the Ride cycling event at the company’s North American headquarters in Savannah, Ga. The event attracted more than 2,000 runners, riders, and spectators. Operated by Wesley Community Centers of Savannah, the Lady Bamford Center provides education and social skills development to children from six weeks to five years of age with priority admission to children from homeless and low-income families, as well as children with physical, mental or emotional challenges. (continued on page 16)
14 | www.cedmag.com | Construction Equipment Distribution | September 2014
Industry Beat
Case Brings ‘Dire States’ Tour to Texas Case Construction Equipment partnered with the Texas Good Roads and Transportation Association and ASCO Equipment to bring its Dire States initiative to Texas in support of Proposition 1 (the Texas Transportation Funding Amendment). The amendment, which would direct an estimated $1.4 billion annually from oil and gas tax revenues in the state’s Rainy Day Fund, will be on the Nov. 4 ballot and support investment in new highway/transportation construction and maintenance. The July tour which included seven events in three days, featured Infrastructure Expert Dan McNichol and his 1949 Hudson, as well as speakers from Texas Good Roads and other partner associations throughout the state. “Infrastructure investment is a proven economy builder and this amendment is a much-needed shot in the arm for infrastructure investment in Texas,”said Kirby Carpenter, strategic account manager, ASCO Equipment.
Kirby Carpenter
‘Build Ontario’ Plan Unveiled With Historic Infrastructure Investment The newly re-elected government’s robust plan to build Ontario up was outlined in a Speech from the Throne before the 41st Parliament of Ontario on July 3. Ontario Premier Kathleen Wynne gave the speech, which included details of the government’s comprehensive plan to strengthen the economy, create good jobs and invest in infrastructure. “Our government has put forward a comprehensive plan that will help Ontario realize its full potential,” said Wynne. “We will lead from the activist center, and invest responsibly to support our talented workforce and ensure hardworking people can retire in dignity and security. We
will build Ontario up with new roads, bridges and highways to connect our communities, so they can all prosper. And we will continue to build a positive climate for business that attracts investments and creates jobs now and for the future.” The government’s plan to build the modern infrastructure Ontario needs includes a historic investment of more than $130 billion over the next 10 years in public infrastructure, including hospitals, schools and transit. It will include two dedicated transit and transportation infrastructure funds totaling about $29 billion, and a $1 billion commitment to strategic transportation infrastructure in the Ring of Fire.
Commercial Construction Solid, Institutional Construction Lags Due to the weather-related slow start in the nonresidential building market during the first part of the year, and the prolonged weakness in the institutional sector, the American Institute of Architects Consensus Construction Forecast, a survey of the nation’s leading construction forecasters, is projecting that spending will see a 4.9 percent increase in 2014 – down from the previous estimate of 5.8 percent, with next year’s projection holding at 8 percent. “The institutional market has been a drag on the overall
recovery for the design and construction industry for the last few years, and until we see state and local governments ramp up spending for new education, healthcare and public safety structures there likely won’t be a widespread acceleration in spending for the entire industry,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “But we continue to have an optimistic outlook for the commercial and industrial sectors both for the rest of this year and into 2015.”
Congress Make Progress on Workforce Programs In July, House of Representatives overwhelmingly approved the Workforce Innovation & Opportunity Act (WIOA) (H.R. 803), 415-6. It awaits President Obama’s signature to become law. WIOA eliminates duplicative workforce programs, streamlines many of the burdensome requirements that hamstring existing outdated workforce systems and allows for increased incumbent worker training. Additionally, the legislation will provide greater flexibility to state, local and regional boards to tailor services to an area’s specific 16 | www.cedmag.com | Construction Equipment Distribution | September 2014
employment needs. While modest in scope, the legislation takes important steps toward addressing worker shortages and ensuring the federal government is using limited resources to give future employees in-demand skills. While the federal government should be doing more to address this economy-wide crisis, Congress has taken a step in the right direction by overhauling skilled worker programs and updating the Workforce Investment Act (WIA), which was enacted in 1998.
Industry Beat
New Study Shows Importance of Diverse Energy Supply pay attention to our electricity mix and start protecting A new study supported by the U.S. Chamber’s each and every source.” Institute for 21st Century Energy and produced by global “EPA’s proposed rules on new and existing power research firm IHS underscores the threat America’s power plants will significantly reduce our coal-fired supply faces from policies that seek to limit our diverse generation, prevent the construction of new array of sources. While the U.S. currently coal-fired power plants, and could even threaten benefits from a wide range of electricity ergy IHS En natural gas in the future,” Harbert continued. sources, federal regulations and a narrow e of US lu “Other federal policies and state mandates focus on renewable energy and natural gas a V e Th Supply promote renewable production, while placing will threaten our diversity. If the two most Power ity Divers nuclear energy at a competitive disadvantage vulnerable sources of energy – coal and even though it also is an emissions free nuclear energy – which provide almost 60 power source.” percent of our electricity, are removed from The IHS study, titled “The Value of our supply it could result in over 1 million US Power Supply Diversity,” finds that jobs lost and a reduction of over $2,000 in from 2010-2012, retail power prices for annual household disposable income for every consumers would have been 25 percent household. higher and wholesale power prices would “The federal push to eliminate coal and favor have been 75 percent higher without some technologies over others could turn a significant contributions from coal and major strength of our nation – a diverse supply nuclear resources. In addition, electricity rates of electricity resources – into a big vulnerability,” would have been far more volatile. said Karen Harbert, president and CEO of the U.S. Chamber’s Energy Institute. “This new IHS study should For more information and to read the study, visit www. energyxxi.org/power-diversity. serve as a wake-up call to policymakers and consumers to ihs.co
m
14 July 20
IN THE NEWS The IRS released draft forms that employers will use to report on health coverage they offer to their employees, also known as information reporting requirements under the Affordable Care Act (ACA), which become effective for the 2015 calendar year. Employers with 50 or more full-time employees and full-time-equivalent employees as well as employers that self-insure are encouraged to learn more about the draft reporting forms by viewing an analysis prepared by Littler Mendelson, P.C. Stakeholders are invited to submit comments on the draft forms. The IRS anticipates that the reporting forms and instructions will be finalized later this year.
Briggs & Stratton Corp. announced it has signed a definitive agreement to acquire U.S. based Allmand Bros., Inc. Founded in 1938 and based in Holdrege, Neb., Allmand is a leading designer and manufacturer of high quality towable light towers, industrial heaters, and solar LED arrow boards. Allmand has sales of approximately $80 million. Briggs & Stratton will acquire all of the outstanding shares of Allmand for approximately $62 million in cash, subject to customary due diligence and working capital adjustments. The transaction is expected to close mid-September. Terramac LLC, a manufacturer of innovative rubber track crawler carriers announced the addition of two new dealers to its expanding dealer network. Lyle Machinery, Richland, Miss., will cover Alabama, the Florida Panhandle, Mississippi and Northern Louisiana. Vermeer Texas-Louisiana, with
corporate headquarters in Irving, Texas, will represent the company in Texas and southern Louisiana. Edward Ehrbar, Inc. has formed a new business unit with “Ehrbar” becoming an operating division of Komatsu America Corp. Principals Patrick J. Ahern and Matthew J. Ahern will continue to serve in their present capacities as president and executive vice president respectively. Edward Ehrbar, Inc. will continue to operate under its founding name. Established in 1903, Ehrbar is headquartered in Yonkers, N.Y., with branch locations in Holbrook and Long Island, N.Y., as well as Danbury, Ct. Ajax Tool Works has launch a new website (www.ajaxtools.com) which provides unique product search features as well as 3D renderings of each item. Registered distributors will be able to log in and review customer-specific information. (continued on next page)
September 2014 | Construction Equipment Distribution | www.cedmag.com | 17
Industry Beat
Douglas Lake Equipment, headquartered in Surrey, BC, recently joined the LiuGong North America dealer network. This marks the first full line offering for the dealer. Douglas Lake Equipment will carry LiuGong equipment at three branches
including Surrey, Quesnel, Kamloops. Pictured: Blair Gourlay and Todd Sevrens at DLE Surrey Branch in British Columbia.
Rick Retherford has been named Charter Software’s new director of IT and Development.
AED HONORS 25-YEAR MEMBERS
Pat McConnell, AED West Region Director, (left) presents a 25-year member award to Randy McIntyre, president of DIS Corp.
AED Executive Vice President Bob Henderson (center) presents a 25-year member award to Screen Machine President Steve Cohen (left) and Vice President Doug Cohen.
Burris Equipment President Barry Heinrich (left) receives a 25-year plaque from AED Membership Manager Regional Manager Ben Yates.
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Public Policy
Right of Way
A Dealer’s Story About Fighting No-Growth Environmental Extremism Cat dealer Mike Thompson chose action – against powerful, well-funded groups with media sympathy – for the sake of his customers. He urges all dealers to stand up for what’s right in their regions, too. BY MIKE THOMPSON
Editor’s Note: We learned about Mike Thompson’s struggle when AED President and CEO Brian McGuire visited the Birmingham, Ala.-based Cat dealership this spring – Mike’s passion about the importance of standing up against selfappointed environmentalism spurred a conversation with the editor that resulted in the following narrative as well as a firsthand account at the AED/Infor Executive Forum this month, on Sept. 18. Please don’t miss the chance to learn more by talking to Mike in person – register for this dealer stakeholders event at www.aednet.org. The Coalition For Regional Transportation (CRT) is a group that is solely focused on improving infrastructure and transportation in the Birmingham metro area. It originally organized under the authority of the Birmingham Business Alliance (local Chamber) but it became a separate nonprofit organization in 2008 and is autonomous in its activities. We are composed of equipment dealers, banks, insurance companies, utilities, the Home Builders Association and a paid executive director, consultants, and attorneys. I joined this group over four years ago and much effort and progress have occurred. We have been successful to date because of our singular focus to beginning our adopted project, the Northern Beltline. It is a 52-mile interstate that would serve many communities north of
20 | www.cedmag.com | Construction Equipment Distribution | September 2014
our city. As this article is published, we have only let one section of this road, a two-mile stretch through the most mountainous area north of town. This stretch connects two north-south Alabama highways and will open in 2016. The entire interstate project is forecast to let all construction in 25 years. The greatest challenge for our project going forward is federal funding. We are fortunate to be designated an Appalachian Development Highway through the 13-state Appalachian Region Commission. This was formed by Congress to build infrastructure in these states to accelerate the economies in each state. Most other states have completed their interstates, but Alabama chose to concentrate their efforts elsewhere until now. The second and equal enemy of our project is the environmental community. River Alliances, River Keepers, River Societies and Environmental Centers are all titles of groups that value no-growth in our region. They are all run individually but many times form alliances to oppose major projects. Years ago, I saw a list of 80 such groups throughout my state. From Day 1, these groups opposed the Northern Beltline. These groups are well funded and use our court system and the local media to achieve their mission. For the most part, our local media is completely in the camp of the no-growth groups. Our local media sees no benefit in infrastructure improvement and want to
Public Policy
work with the no-growth groups to force our population into light rail, walking paths, bicycle paths and buses. Alabama has a low density of population in our major cities and these transportation systems do not work. But these no-growth groups don’t care and will not change their message of “no more new roads.” Meanwhile, the media completely ignores the facts and continues to push the no-growth agenda. For that reason, we fought our battle without any help from the media. We tried to change our media’s opinion but have given up. No pro-growth or pro-economic voice can be found among our media, so we no longer ask for their help. We do react to media requests but have no expectation of support. Legal Savvy The “no-growths” have hoards of attorneys. They use our courts to stall or kill new projects by suing any and all parties who are involved in a project. Their attorneys know the law and use it to their benefit. One no-growth group boasts on their website they have stopped 14 new highways in nine Southern states. There is no doubt in my mind that our court system is their No. 1 battleground. You must be prepared to employ the necessary talent to fight them in the courts. Pro-growth attorneys are critical in your fight for more infrastructure. On the Northern Beltline, the no-growth groups filed two separate lawsuits in two district federal courts. One suit was about the U.S. Corp of Engineers permit. The other challenges the Federal Highway Environmental Impact Study Reevaluation. So, we were dealing with two federal judges in two major cities of Alabama. We were fortunate to have the lawsuits combined, although this took six months. Also, we were fortunate to get the more conservative judge, because the staff of the second judge had close ties to one major no-growth group. The Reevaluation lawsuit is still ongoing, but the federal judge denied the request for injunction related to the Army Corps permit. I am amazed one federal judge could and may still stop this interstate. The no-growth groups asked to halt the beginning of construction but the judge said no; they had failed to give sufficient reasons. The lawsuit is always in the back of our minds. The no-growth groups rely on each other, their vast array of attorneys, the media, governmental bureaucracy, governmental apathy, federal and state lines of authority, and time to advance their will. Who Are the No-Growth Groups? These groups are well funded, show up at any event, talk nice to the camera, and then go sue any party to stop a project. They hide behind a moral mask of clean air and clean water and care nothing about the people in our
community. They will not compromise and will either stop a project or lose the fight. After then winning or losing, they will go back to their contributors and receive more dollars for future fights. They will threaten our governmental leaders and spread falsehoods to further their agenda. The no-growth groups have a direct line to the EPA. They share information and collaborate in major projects with the EPA to kill growth. In the end, ALDOT had been responsible in its planning, and the Corps gave its approval. Although the EPA didn’t like the Corps’ approval, they chose not to join the fight and our road was bid and then started. It was two great days when both happened. Then, to my surprise, I learned one no-growth met extensively with our Department of Transportation to collaborate on the Northern Beltline. Our DOT willingly increased construction costs by $60 million by adding more bridges, more holding ponds and a more narrow cut through the mountains. They also added severe penalties for contractor mistakes. Fool Me Once? ALDOT believed they were dealing with a major environmental group and this collaboration would end any complaints or concerns from other environmental organizations. They were tricked. This major group backed out on their endorsement of the Beltline and their board voted to be neutral on the project. This allowed other no-growth groups to continue the fight. When asked why ALDOT did not take back these promises, the answer was: The plan had been submitted and any change (continued on next page)
September 2014 | Construction Equipment Distribution | www.cedmag.com | 21
Public Policy
(“Right of Way” continued from page 21)
would cause additional years of delay. So, ALDOT had to live with its promises while the no-growth groups could back out and be “neutral.” We have counseled ALDOT not to be tricked again and they agree. They now know that no one group speaks for all of them. But, as a whole, these groups believe our current laws are not tough enough. Their vision is for every rain drop to be captured where it falls. They are terrified of post-road construction because they believe the government will not hold the land developers to our current laws. So, they claim their rivers are “fragile” to activate their base support. When challenged on rivers being fragile, they admit their concerns are not chemical but sediment. So, they are worried about our streams and rivers getting dirt in them. And their answer is to stop all construction to limit the possibility of extra sediment. Thirty years ago, I would not swim in our local river, the Cahaba; today I would. These groups give no credit to how much better our environment is; they simply want to stop any new construction by claiming all construction hurts our environment. They are wrong. Also, these no-growth groups will argue against any project for nonenvironmental reasons. They created studies that showed only 1-3 percent of our traffic through downtown Birmingham would use the Beltline. This is nonsense! They argued different road projects were more important in our county and so the money should be better spent elsewhere. They argued the total cost of the project simply was too high and not a good investment. They also argued all the landowners adjacent to the project would get rich with future development. So when all environmental concerns were addressed by ALDOT, the no-growths simply turned to other arguments to try and stop the road.
Another view of the project’s early work through hilly terrain.
22 | www.cedmag.com | Construction Equipment Distribution | September 2014
The first shovels of dirt have been turned, signaling the beginning of construction on the long-awaited Northern Beltline.
An Enemy We Can Beat I did not know the true nature of the no-growth groups when I joined CRT four-and-a-half years ago. These groups are the newest enemy and potentially greatest foe of equipment distributors and our customers. You have to engage in your local communities and face them head on. They can be defeated, but it takes time, money and focus. I mentioned governmental apathy. Under our previous governors, the DOT had no desire to build this interstate. The department had received all federal permits to start this road in 1997 and chose not to begin. This inaction caused the authorization of the original Environmental Impact Study (predecessor to the ‘Reevaluation’) by the federal highways administration in Washington to lapse. Our group called on Washington and through our efforts got the road reauthorized. It took six years for Alabama and Washington to perfect this document, which went from 306 pages to 1,480 pages. So, governmental apathy caused huge delays in our start. I learned the environmental review process starts over every three years if work does not begin. And the requirements grow more difficult because of regulations every year. My message to you is to be sure your transportation department wants to do the project. If not, you are dead in the water. They must work for the project or they can hide behind all local, state and federal rules and regulations or lack of funds to stop a project. Alabama was fortunate to elect Governor Robert Bentley three years ago. He set the tone with his appointment of John Cooper and his department followed his orders. We were also fortunate to have all of our senators and congressmen in favor of this interstate. Our Washington team kept our project alive as budget cuts were administered. Our federal elected officials were all in our camp and critical to our success. Be sure yours are also.
Public Policy
Get the Right Person, Right Data Our board four years ago was not very effective because none of our members had the time to advance our project. Our answer was to hire an executive director. We were fortunate to find and hire an accomplished lady for this job. She is tasked to cover all of our activities: Monthly meetings with ALDOT Meeting with all elected officials to derive and sustain proclamations of support for the project Rally the public for any public hearing Assist in recruitment for new members of CRT Create a website and furnish materials to publish Publish an annual report of the previous year’s result. Hold press conferences as needed Talk to all media (TV, radio and print) Publish articles Other activities as needed You can see this job is critical. She has over 40 separate proclamations of support and is our liaison with a great many elected officials. Her total dedication and talent have gotten us to where we are today. You must have an individual to drive your organization and work all the details. This expense must be incurred and is of value to you if you have the right person. Early in our process, our group believed we needed to understand the economic benefits this new interstate would provide to our community. Although it was expensive, we commissioned a prestigious local university to study and publish its findings. The findings of economic impact were incredible and exceeded our expectations. We used this study and promoted it at civic clubs and town hall meetings. The no-growth groups commissioned their own study, which contradicted our study. But even their study showed us how good this new interstate was for jobs and development. My message to you: Seek help outside to provide data for your fight. This study completely drained our resources three years ago but gave us the one data source to sell our project to elected officials and the public. I recommend you do the same on major projects. We also have seen other benefits of being zealots for this interstate. We have become a resource to the governor and the DOT. They have requested our help in three other major metropolitan areas of Alabama for other projects that are facing opposition from the no-growth groups. We are now planning to clone our group throughout the state to help in each area. Our belief is that we can replicate our growth strategy by forming distinct groups in each community. The difference from years ago is that we have a seat at the table given to us by the governor. We are on his side, and he knows we will be an asset in achieving his plans.
Track What They’re Doing Outside of this major initiative for more infrastructure, our group also follows the efforts of the no-growth groups in meetings and the media. These groups are not used to having people who disagree with them show up and debate their agenda. It is fun, and we now expect to see each other at every public event. We are fighting these same individuals representing the same no-growth groups on new coal mines, quarries, major developments, flood zones, new roads and bridges and, of course, the three major projects mentioned above. One no-growth group reported it has 88 current lawsuits. I have no doubt they will oppose fracking if it comes to Alabama. The saddest part of all this is the waste. We are spending time and money to fight a foe when our environment is truly being taken care of by our local and national government. We are all true environmentalists if we follow the laws. We ensure clean air and clean water for future generations. If these no-growth groups would really chase the true lawbreakers, I would support them. But they don’t. They fight legitimate and lawful activities that will improve our quality of life. I will not call them environmentalists. I call them no-growths because that is their mission. Our fight continues. Our CRT will stay together to advance the Northern Beltline. We will continue to fight all the no-growths through every section. We have only won one battle. We have not won the war. Bottom Line: Show Up My request to you is as old as time: Show up. Join groups that support growth and join groups that oppose these no-growth groups. Even offer to lead them. If no group exists, start one. Do not trust your local chamber to lead this effort. Many large chambers are inclusive to any groups in their membership. Many no-growth groups join their local chambers and their members quietly kill economic development by voting no in committee meetings. Everyone in your group must be a zealot or your plans will be watered down or killed. Know and control all membership in your groups. Meet with your local officials and be supportive. Put your money to work for your customers. I don’t believe I have ever done more for my customers in my 37-year career. This effort is exactly what I should be doing, and I am going to continue this fight until I retire. I hope you will join me. Thank you. MIKE THOMPSON is the dealer principal at Thomson Tractor, the Caterpillar dealer based in Birmingham, Ala.
September 2014 | Construction Equipment Distribution | www.cedmag.com | 23
Mechanic’s Truck Still the Field-Service Mainstay
A Closer Look
But genuinely smart service will always be in the capable hands and minds of this unique breed of employee. BY TOM VAN DUSEN
You’ve got your laptop, flash drives, and your iPads, all of them incorporated at some level by the contemporary heavy equipment industry into delivering speedy, reliable customer field service. You’ve got your all-encompassing Customer Relationship Management system that relies on the latest technology to organize, automate and synchronize sales, marketing, service and technical support. Equipment industry field service has come a long way, baby! It has certainly become much “smarter.” However, the key component is still priceless – old-fashioned human input. No matter how smart the services become, they still need qualified people to manage them, although it sometimes seems more like a case of technology managing the people. But that crucial human component is poised to suffer a serious setback. The skilled worker shortage affecting many jobsites across the North American construction industry is about to take a piece out of the most fundamental ingredient of closing and keeping major equipment customers: Speedy, dependable field service as delivered by 24 | www.cedmag.com | Construction Equipment Distribution | September 2014
fully-equipped, technologically wired custom conveyances. They’re the dealer workhorses that take the repair and maintenance shop out to clients stranded in remote jobsites. But the machines don’t work alone. They’re part of a team that equally depends on highly skilled and motivated technicians. Together, finely tuned man – or woman – and machine can prevent frustrated customers from climbing the walls when requiring maintenance and repairs to get the job back in gear. “It’s all about minimizing downtime and maximizing uptime,” said Jeff Shaw, sales manager for Curry Supply out of Martinsburg, Pa., one of a half dozen service truck manufacturers and dealers operating across the U.S., into Canada and South America. Since the 1990s, huge improvements have been made to the trucks themselves, the on-board equipment available and particularly the safety aspect, Shaw points out. “In the past, when it came to mechanics trucks, the safety level often flew under the radar.” Disturbingly, the industry is about to lose “thousands” of (continued on page 26)
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Field Service
equipped to meet a given dealer’s requirements. Larger units can be outfitted with cranes and other lifting devices, telematics systems, and air-compressors. An increasing volume of repairs and upgrades these days veterans of field service largely through attrition, with only are conducted away from the dealer’s shop. It’s simply the a partial understanding of where essential replacements most cost-effective, efficient way to keep complex machinery will come from. on the job. The impending shortage has the industry working in “If you’re mining in Peru, taking a machine in for service tandem with the U.S. educational system to establish new isn’t a likely option,” Clark notes. Curry’s proficiency in the field service training programs and to pinpoint the raw business has been recognized in various ways, including talent necessary to fill them. through the Pennsylvania Governor’s ImPact Award for Along with technical ability, these programs will highlight the importance of safety, says service industry kingpin 2014 given to the company in June for demonstrating consistent job growth. Bruce Bunting. While locating talented technicians to keep its trucks out Echoing Shaw, Bunting, who is an industrial product in the field is the dealer’s responsibility, the availability and specialist with Knapheide Industries Ltd., emphasizes proficiency of human operators is fundamental across the that safety today is much more than a buzzword: “Safe entire industry. operations make more money by reducing downtime. When a customer pays $1 million for a piece of equipTechnicians in a hurry have to understand you can’t use a 7,000-pound crane to do the job of a 14,000-pound crane.” ment, he expects a $100,000 service truck to arrive at his door within a reasonable period of time if something goes Highly skilled service representatives aren’t a dime wrong, Bunting observes. No dealer should risk losing that a dozen. They’re a special breed, often more qualified, creative and dedicated than shop mechanics, quick on their sale and the ability to maintain a satisfied customer by not being able to follow through on service. feet and equally nimble between the ears. A fleet of service trucks can be a substantial investment, Another key ingredient is personality-plus. The field tech be it one or two for a smaller company to as many as 500 has to work the customer as well as the ailing machine. In for the biggest dealers. the field, in the heat of the moment, there’s no handy PR A fully equipped service truck is a thing of beauty, says department backing him up. “A great shop mechanic doesn’t necessarily make a great the admittedly biased Bunting. Pulling the picture together are the field techs, self-starters who don’t mind long hours field mechanic,” said Bunting, whose personal lineage in the equipment industry dates back to his great-grandfather. and making on-the-spot decisions. They function well in the isolated locations where they’re often called to get The largest supplier of service truck bodies on the conticrucial equipment back on track. They can handle – even nent, Knapheide’s history in supporting the industry goes embrace – all kinds of conditions including working in the back even further – 166 years. rain, cold and snow. Keep on Truckin’ Field service trucks are the financial backbone of the The ability of the company to evolve into new technobusiness and their operators are the essential front line of logy and new products has made and kept Knapheide responders, Bunting concludes. an industry leader, Bunting maintains. Covering 480,000 square feet, the company’s Quincy, Ill.- plant houses the Harnessing Smart Technology most sophisticated manufacturing processes. Kim Prevost agrees on the importance of the human The assortment of bodies coming off the Knapheide component and that a drastic technician shortage is line ranges from dump and forestry vehicles to water imminent. She’s director of Business Development for EBS and mechanics’ trucks. Practicing what it preaches, the Mechdata Corp., a software firm that’s dedicated to speedcompany’s own customer support center prides itself ing up the process for field service representatives through in delivering a wide range of post-sales service, from the latest in technological advancements. distributor training on product installation to preventive Prevost blames the industry for not doing more to maintenance education. attract younger generations into the field service business Along with the mechanics’ trucks, Curry has a similar in an era when so many career options are available. The line, including fuel and lube trucks, winch trucks and family connection is being lost, she says, with young vacuum trucks. Quick service when required is part of the people not necessarily following in the footsteps of their package. Diagnostics are channeled through computerized parents into similar careers, be they lawyers or service linkages and deciphered via on-board wireless screens; mechanics. troubleshooting can be done remotely. “In many cases, prospects don’t even know jobs are Like Curry, Knapheide supplies basic trucks that are available in our industry,” Prevost maintains. “We haven’t (“Mechanic’s Truck Still the Field-Service Mainstay” continued from page 24)
26 | www.cedmag.com | Construction Equipment Distribution | September 2014
Field Service
tried hard enough to make our jobs attractive, and to promote our wages and benefits that are comparable to the nonspecialty auto industry.” Like all other industry suppliers, EBS Mechdata – celebrating its 50th anniversary this year – has a major stake in the field service network. EBS offers a wide range of technological components from laptop USBs to mobile apps designed to increase field service efficiency and reduce drive time, getting the customer back on the job as quickly as possible. Adoption of the latest technical advancements is often directly related to the dealership’s size and revenues, Prevost explains. However, smart support isn’t totally out of the reach of smaller, family-operated equipment businesses and their customers. Prevost cites EBS Mechdata’s new “Customer Self-Service Portal” – CSSP – about to be fully released to the market. The mobile application is designed to work exclusively with the EBS Customer Self Service Portal, and the app allows customers of dealers using EBS’ Next for Windows and the CSSP to create, change, and cancel requests for equipment service or support tickets from an iOS device with their servicing equipment dealer. For an investment of $10,000, the purchaser receives unlimited 24-7 service support and updates, saving a lot of time right across the board. As always, time is money. She clarifies that it isn’t a must to become tech-savvy today in order to get service. The telephone is still a useful instrument for those uncomfortable with the latest gadgets and systems; however, familiarity with technology is likely to speed up the process. She notes a certain status aspect to modern service technology – bragging and promotional rights for companies that come from being fully connected. Customers are genuinely impressed when they discover a dealer offers all of the latest in technological support, helping to close the sale and increase profitability. 7KH (IÀFLHQF\ (GJH Andrew Bradley agrees. He’s field service dispatcher with Atlantic Tractors and Equipment based in Halifax, Canada. In fact, says Bradley, efficient field service can be used to lure sales from dealers specializing in other lines. Bradley says Atlantic’s fully equipped fleet of 35 field service trucks can reach 90 percent of its Cat customers the same day. Other dealers aren’t always able to meet that commitment. “We find ourselves called to help out owners of other brands. We use the opportunity to make the pitch that they might want to try out a Cat.” Service can be a very hectic part of the business, says Bradley whose company is present all across Atlantic Canada. It even has one technician dedicated to maintaining Cat-built generators on offshore drilling rigs
reached by helicopter. “Sometimes there’s nothing in the morning and suddenly 30-40 service calls in the afternoon.” Atlantic’s technicians and their trucks are scattered throughout the territory, putting them closer to customers. Earning $40 an hour with experience – an excellent wage in the region – they’re highly trained and versatile, capable of plugging in a laptop and fixing a computer glitch or tackling a problem with the assortment of wrenches and spare parts they carry with them. Some procedures such as specialty testing and specialty tooling must be done at the shop. “They have to be good,” Bradley said. “Some machines we service have as many as seven computer systems running everything from the engine to transmission and steering.” While Atlantic Tractors isn’t currently facing a mechanic shortage, it’s always on the lookout for new recruits, Bradley says. The latest skill sought is remote GPS diagnostics. On the opposite side of Canada, Garry Frelick, president of Douglas Lake Equipment in Kamloops, British Columbia, specializing in Kubota, acknowledges the arrival of GPS applications as the beginning of a technological revolution. The change is most pronounced in farm machinery that can virtually operate itself these days. “You set your onboard computer systems, put your feet up, and the tractor or combine plows or harvests the field on its own, row after perfectly straight row,” Frelick said. “While people are still necessary, human error has been almost eliminated.” Machines that can perform more tasks with minimum human intervention are welcomed in part because there seem to be fewer skilled operators available, Frelick notes. While construction equipment toiling on rough, confined terrain doesn’t have the same self-directed options as farm machinery, GPS has been a godsend in that arena as well, particularly when it comes to tracking the “health” of equipment, and not just performance levels and maintenance dates. “Because of remote monitoring, dealers and owners of modern equipment know where their machines are at all times and whether or not they’re idle or working,” Frelick said. “Employees can no longer park their machines for an hour to take a nap. Big Brother is always watching.”
TOM VAN DUSEN JR. has written for daily and weekly newspapers in Canada for more than 40 years. A freelancer based near Ottawa, Ont., his specialties include the general economy, politics, agriculture and the environment. He can be reached at 613-445-3407, tomvandusen@sympatico.ca.
September 2014 | Construction Equipment Distribution | www.cedmag.com | 27
Suppliers
Industry Witnesses &RUSRUDWH 6KXIÁH
Mike Rhoda CEO SANY America
Michel Denis CEO Manitou Group
Enter the new CEOs. At least eight construction equipment manufacturers and related businesses have welcomed new leaders in the past 12 months. Liebherr, Doosan Infracore Construction Equipment, and Sany America kicked off the corporate shuffle midyear through late 2013, and it continued into 2014 with new leaders being appointed at Manitou, Volvo Construction Equipment and CAT Auction Services. Then in July, Ritchie Brothers Auctioneers announced its change at the top. Whether hired to continue a path of success or to orchestrate a turnaround, the new CEO faces myriad decisions. The task at hand is greatly influenced by the CEO’s background. Of the eight new CEOs mentioned here, most are company insiders. While insiders typically focus on learning the role of the CEO, outsiders must quickly grasp the industry, products, competitors, customers and culture. However well orchestrated, any change in leadership results in a degree of uncertainty among everyone from the board of directors to management, suppliers, dealers and customers. What is the new CEO’s vision for the company? Will the company hold the same core values? What new offerings will there be? These are all questions
Gary Trettle President & CEO CAT Auction Services
Of the many newly appointed leaders throughout the CE industry, CED spoke with three about their first-year moves and plans for the future. BY JOANNE COSTIN
best answered sooner rather than later. Communication itself can be a challenge for new CEOs as they work within an increasingly global environment. For this article, three new CEOs in the construction equipment industry offered some perspective on the first few months in their new position: their biggest challenges and opportunities and an interesting look at what dealers and end-users can expect in the future. Rhoda Aims for Successful Execution and Brand Building While technically Mike Rhoda is not a Sany-insider, he’s definitely an industry-insider, having held executive positions with Doosan Infracore Construction Equipment, Volvo Construction Equipment and Ingersoll Rand prior to being charged with leading Sany’s North American operations. Working 12 of the last 16 years in Asia, Rhoda recognized Sany’s potential in North America. Long before he interviewed for the CEO position, he had the opportunity to meet the chairman and visit Sany’s manufacturing and R&D centers. “The more I saw, the more potential I saw,” he said. According to Rhoda, the positives include a great manufacturing base, a good strategy, ambition and the (continued on page 32)
30 | www.cedmag.com | Construction Equipment Distribution | September 2014
Suppliers
(“Industry Witnesses Corporate Shuffle” continued from page 30)
strength of the China marketplace that will allow them to become a more global company.
According to CEO Mike Rhoda, Sany America’s first two compact excavator models (Sany SY16C Sany SY35U) introduced at CONEXPO-CON/AGG have been well received in the market. “The success on the earthmoving side has been really gratifying,” said Rhoda. “The increase in dealer partners, the reaction to the product, and enthusiasm for the product – a lot of that came through at CONEXPO.”
Achieving success in the U.S. and North America isn’t a new goal for Sany. “The chairman believes the success of Sany in North America is critical to the achieving success and acceptance of Sany everywhere in the world, “said Rhoda. To achieve it Rhoda knows the company will have to execute with good products and customer support. “This organization gets it,” he added. Expect new products to be a significant part of Sany’s growth over the next three to five years in North America. Rhoda says plans are in motion for a new line of road machinery – including pavers, compactors, graders, as well as rotary drills, dozers, wheel loaders, and crawler based-telescoping boom cranes. Sany will also introduce telematics GPS technology on their machines in the near future. “Telematics GPS is the single technology platform to bring value to our partners, our customers, our dealers and ourselves and will remain that way for the next 20 years,” said Rhoda. Dealers are seeing the value in Sany. Ten new dealers have been added since January, increasing the total number of dealers to 30. That kind of growth brings some challenges and Rhoda is determined to create a single team that can work smoothly with dealer partners. Since coming on board, Rhoda has directed his attention to correcting some product support issues on the crane side of the business. He also understands he needs to increase brand awareness for Sany in North America.
“At this point it’s execution,” said Rhoda. “That means product support, more dealers, more products, and all of those things combining to raise the profile of the brand in North America.” Denis Restructures Manitou with a New Emphasis on Service Michel Denis found the outside view of Manitou Group appealing enough to want to take on the CEO role in January 2014. What he saw was a global company with a reputation for product innovation and family owners who believed in managing for long-term success. Denis applied his experience in the trucking industry and B2B markets while delving into the Manitou business to determine his first moves. He met with many employees, dealers and customers before identifying anything that needed fixing. “There were many positives – the quality of the product and the dedicated employees,” said Denis. “However, I realized that there was no coordination regarding service and no participation of customer expectations.”
Michel Denis (center) joined Manitou Group in January and announced a reorganization of the company into three business units in April.
The solution, announced in April, was a reorganization of the company into three divisions – two focused on products and one on service. The Material Handling and Access (MHA) division manages the French and Italian production sites manufacturing Manitou-branded telehandlers, rough-terrain and industrial forklifts, truck-mounted forklifts and aerial work platforms. The Compact Equipment product division (CE) centers around the development and production of Gehl and Mustang skid-steer loaders, track loaders, articulated loaders and telehandlers. Lastly, the Service & Solutions (S&S) division includes service activities in support of sales such as financing, warranty contracts, maintenance contracts, as well as after-sales (parts, technical training, warranty (continued on next page)
32 | www.cedmag.com | Construction Equipment Distribution | September 2014
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Suppliers
Changing Direction
(“Industry Witnesses Corporate Shuffle” continued from page 32)
management) and services to end users (geo-location, user training, advice). “I changed it to have the production people focusing on production, and the service people focusing on the services around the machine,“ explained Denis. Denis says the response to the reorganization among dealers has been positive, because the organization is now better aligned with customer needs. “The dealers are asked every day by their customers to optimize the production of the machine, to finance it, to have spare parts to increase the availability of the machine. “Now we will have to demonstrate it month after month and give our dealers the best solutions to help their customers.” While some aspects of the service division will be managed globally such as financing and warranties, dayto-day service support for U.S. dealers will be local (U.S.) for a quicker and more professional response. According to Denis there is room to grow the number of dealers, particularly for the Manitou brand in the U.S. because the target markets of agriculture and mining are not as familiar with telehandlers as the construction
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market. Dealers with relationships in agriculture and mining would be a good fit. “We are expecting big growth in this product in the next few years, but the market is still relatively small,” added Denis. In addition to expanding services, a challenge for Gehl and Mustang will be increasing market share from its current 7 percent level. For Manitou dealers, the challenge is to educate the market and change the current thinking about material-handling solutions. Denis is pleased with the company’s growth in North America over the past two years. Gehl and Mustang sales activity in the first half of 2014 reached its highest level since Manitou purchased the Gehl and Mustang product lines in 2009. Total sales for the first half were up 10 percent over 2013 – a good sign for the new CEO.
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Suppliers
Trettel’s Out to Prove Cat Auction Works Gary Trettel had the advantage of a smooth transition when he moved into the CEO role for CAT Auction Services. In January, he left his position as general manager/CFO, to succeed Rick Albin, who serves as executive vice president and holds a position on the board of directors. “The beauty of what I have here is the strength of the CAT network,” said Trettel. “There are members of our board who are great mentors.” Privately held, Cat Auction Services entered the market in 2008, as a partnership between five Caterpillar dealers. The idea was to provide a way for CAT customers to maximize their profit through a regional auction house. As time went on, interest grew from other dealers as well as CAT corporate, and in 2012 the structure of the company was changed to allow participation from both. That allowed the company to greatly expand its footprint, tapping into more customers and expertise. With no permanent auction sites, overhead is low, and flexibility high. The goal is to host larger regional events throughout the lower 48 states. Trettel says he’s pleased to see that business expansion is coming through growing acceptance by consigners and an expanding global buyer base. “The value that consigners realize is really what is key to them,” said Trettel, “Over the past few years we’ve
CAT Auction Services CEO Gary Trettel stands before the LeaderBoard at an Orlando, Fla., auction. The LeaderBoard displays exactly the same information to onsite and online buyers.
been able to show where we fall in line. We have a highly competitive product.” While acknowledging that metrics show an increasing number of online buyers, Trettel believes the market still greatly prefers the live auction format. “While they may buy online, a lot of those people are coming to kick the tires in advance of the sale.” (continued on next page)
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Suppliers
(“Industry Witnesses Corporate Shuffle” continued from page 35)
Geographic expansion won’t be the only source of growth. “The future buyer is a high-tech user and I don’t think we are delivering everything we could there. There are more tools we can deliver for the buyers electronically.” One of the company’s challenges is connecting with contractors regardless of the brands of equipment they own. Competition is fierce in the auction industry. “The No. 1 initiative is showing people what the brand can do, and it’s not just CAT,” said Trettel. As the CEO monitors supply and demand for used machines, factors that may affect pricing include aggressive return of leased machines, the growing rental inventory, and 30 percent fewer potential buyers for Tier-4 machines worldwide. He also believes telematics data will have a great impact on the auction industry as well. “Today the ability to go in and kick a tire is huge for the industry, but it will eventually be replaced with performance data, history and programs that can match that up to the current status of machines. That is what the next level of buyer is going to demand,” he predicted. “We’ll need to deliver that.” “We are going to leverage our network to continue our global expansion,” said Trettel. “We have an extremely strong offering of complimentary services that makes us (CAS) an easy platform to do business with for both buyers and sellers.” A key initiative of Trettel’s is listening to customers and responding to their needs. Now that he’s calling the shots, he’s ready to deliver.
More New Industry Leaders These new presidents and CEOs hope to make their mark on their companies in 2014 and beyond.
JOANNE COSTIN is a freelance writer and marketing consultant focusing on the construction industry. She can be reached at (847) 358-1413 or jcostin@costincustom.com.
36 | www.cedmag.com | Construction Equipment Distribution | September 2014
Scott Park President and CEO Doosan Infracore Construction Equipment Date Appointed: November 2013 Prior Position: Global Vice President of Strategy, Manufacturing Strategy and Total Quality Management Former Employers: Volvo CE Martin Weissburg President Volvo Construction Equipment Date Appointed: January 2014 Prior Position: President of Volvo Financial Services Former Employers: Great Dane Financial, Woodard LLC Arjun Mirdha President and CEO JCB North America Date Appointed: January 2014 Prior Position: Chief Operating Officer Stated with JCB: 1996
Ravi Saligram CEO Ritchie Bros. Auctioneers Date Appointed: July 2014 Former Employers: Office Max, ARAMARK, Intercontinental Hotels Group, S C Johnson Wax
Peter Mayr President Liebherr Construction Equipment Co Date Appointed: July 2013 Prior Position: Managing Director Started with Liebherr: 2001
Rental
Don’t Get Burned on Buyouts
What every equipment lessor needs to know about rent-to-own agreements and lease/rental purchase options. BY JAMES WAITE
A True Story An equipment owner/lessor in North Carolina leases equipment under a master lease agreement to a local business in two segments. In the first, the lessee (customer) leases approximately $25,000 worth of equipment (identified on Schedule 1 attached to the master lease) on a two-year term. Schedule 1 sets forth a buyout option price equal to the anticipated fair market value of the equipment at the end of the lease term. Later, the owner leases an additional $155,000 worth of equipment to the same customer. The additional equipment is identified on a new schedule (Schedule 2), which provides for payments over a five-year period, and a buyout option price of one dollar. The master lease states that the attached schedules create “operating leases” (not “capital leases”) and are “noncancelable” until their terms expire. In case the second lease is somehow viewed as a “disguised loan,” however, the owner files a UCC-1 Financing Statement with the Secretary of State 23 days after the customer takes possession of the additional (Schedule 2) equipment.
Two years later, the customer files bankruptcy. The owner files a “Motion for Relief From Stay” with the bankruptcy court seeking to repossess its equipment. The customer’s lender (bank), which had previously taken a blanket security interest in all of the customer’s property, disputes the owner’s claim with respect to Schedule 2. The bank claims that its interest is superior to the owner’s with respect to the $155,000 worth of equipment. Who won? Answer Is? Answer: The bank! The owner cannot repossess its $155,000 worth of equipment; that equipment is now part of the bankruptcy estate, to be administered in favor of the customer’s creditors, which may or may not ultimately allow the owner to recover some portion of its $155,000 loss. If you’re like most people, the first question that comes to mind is: How did that happen? Didn’t the owner still “own” its equipment? The answer, at least under the Uniform Commercial Code, is: No. (continued on page 40)
38 | www.cedmag.com | Construction Equipment Distribution | September 2014
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Rental
(“Don’t Get Burned on Buyouts” continued from page 38)
How Can This Be? Transforming an Apparent Lease into a Loan. The answer can be found in the Uniform Commercial Code (“UCC”). As the bankruptcy court noted, UCC § 2-103 provides that a [putative] lease will be deemed a “disguised security agreement” (in effect, a “loan secured by collateral”) if, among other things, it is not subject to termination by the lessee (customer), and . . . the lessee has an option to become the owner of the goods for no additional consideration or for nominal additional consideration [for example, a $1.00 buyout] upon compliance with the lease agreement (remember, this issue did not exist with respect to Schedule 1 because it called for a “fair market value” buyout).
1.
2.
Determining Whose Loan is Superior. After the court determined Schedule 2 was really a “disguised loan” rather than a lease, it had to decide whose loan (the owner’s or the bank’s) took priority. Ordinarily, a “purchase money security interest” in specific equipment (like the interest of the owner) would be superior to the bank’s more general “blanket lien”
interest. But, unfortunately for the owner, UCC Article 9 required the owner to file its UCC-1 Financing Statement of public record within 20 days after the customer took possession. Failing that (the owner didn’t file its UCC-1 until the 23rd day), the interest of a “prior perfected security interest holder” (i.e., the bank) wins. (Remember, the bank had previously filed its “blanket lien” on all of the customer’s property). What’s To Be Learned Moving Forward? Buyout options and rent-to-own arrangements are becoming much more common in the equipment industry, as sellers and customers continue to look for the most attractive financing alternatives. But, as the above story highlights, offering buyout options of any kind can be perilous for equipment owners. Here are a few things equipment owners/lessors should bear in mind before entering into these agreements:
1.
Dollar Buyouts. A lease with a dollar buyout option will virtually always be deemed a “disguised financing” (meaning the customer will be considered the owner from the date of taking possession). This isn’t necessarily always a bad thing, but it likely won’t be viewed as a true “operating” lease from either a legal or a tax perspective. If you do offer dollar (or other nominal consideration) buyout options, take the necessary precautions, and always file a properly completed UCC-1 Financing Statement immediately (typically, at your Secretary of State’s office).
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Market Value Purchase Options. A lease with a market value buyout option stands a better chance of being viewed as a true operating lease, but remember, the UCC includes several other factors (such as a lease term that extends through the remaining economic life of the equipment) that could transform an apparent operating lease into a “disguised financing” (loan) arrangement.
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Short-Term Lease/Option Models: Using an ordinary short-term (e.g., hourly, daily, weekly or monthly) rental agreement and simply offering to apply a percentage of the rent paid to the ultimate purchase price has become a popular model for many dealers and rental operators. A fair amount of caution is still warranted (continued on page 42)
40 | www.cedmag.com | Construction Equipment Distribution | September 2014
Rental
(â&#x20AC;&#x153;Donâ&#x20AC;&#x2122;t Get Burned on Buyoutsâ&#x20AC;? continued from page 40)
here, however, as weâ&#x20AC;&#x2122;ve encountered a wide range of issues, including: Â&#x201E; If the customer rents the same piece of equipment five times, is the customer entitled to apply some or all of the prior rentals (and if so, how far back?) to the purchase price, or just the current rental? Â&#x201E; What happens if the customer fails to pay timely rent for a portion of the rental term and then claims the right to apply its prior rentals to a purchase (For example, does a breach nullify the option, and if so, permanently? Or, does curing the breach revive the option?) Â&#x201E; What if the customer actually pays more in rent than the original value of the equipment (and then remembers the purchase option). Is the customer entitled to a refund upon exercise? Â&#x201E; What if the customer claims to have notified the owner of the customerâ&#x20AC;&#x2122;s exercise of the verbal (but not written) option? Â&#x201E; If the option is properly exercised, is the customer required to pay the balance of the purchase price immediately, or is the customer entitled to some form of delayed payment plan/financing? Â&#x201E; Do the same protections for the owner/lessor that were included in the lease document apply to a sale (remembering that UCC Article 2 covers sales, while Article 2A covers leases)?
4.
Business-Only Customers: Equipment owners/ lessors are usually well-advised to offer purchase options only to business customers, and refrain from offering them to individual (non-business) consumers. Lengthy federal and state disclosure requirements, and potential penalties for noncompliance, make consumer lease/purchase transactions too burdensome for most equipment rental operators. To that end, lessors are generally wise to include the following statement in any lease/purchase agreement: â&#x20AC;&#x153;The equipment is being obtained by the lessee solely for business purposes, and not for any personal, family or household use.â&#x20AC;?
5.
Other Possible Effects. Finally, as one might guess, purchase options can give rise to a number of other legal and financial issues, including: Â&#x201E; Lenders: If rented equipment is sold, particularly from a dedicated rental fleet, will the ownerâ&#x20AC;&#x2122;s lender object? Will the lender willingly provide the necessary lien release(s)? A quick review of your loan agreements (if any) should reveal whether your lender has agreed to permit periodic sales of equipment and provide lien releases (Note: Be sure to check both specific purchase money financing documents as well as any â&#x20AC;&#x153;blanket lienâ&#x20AC;? documents).
42 | www.cedmag.com | Construction Equipment Distribution | September 2014
Insurance: Requiring the lessee to maintain general liability, property damage (at full replacement value) and workersâ&#x20AC;&#x2122; compensation insurance is the usual starting point. Sophisticated customers may want to negotiate some of the more important details such as deductibles, coverage limits or even a self-insured retention. Some may also demand that they be responsible for insuring only the actual value or buyout price of the equipment as of the date of any loss (Note: The latter is most often the case when the buyer has negotiated a specific early buyout price). Â&#x201E; Taxes: Both sales/use tax and income tax considerations should also be carefully considered. Â&#x2021; 2EYLRXVO\ LQFOXGLQJ D SURYLVLRQ LQ \RXU UHQWDO FRQWUDFW requiring the lessee/customer to pay all sales, use, transfer, import/export, value added (particularly if equipment is going overseas), environmental and other taxes, fees, fines, imposts, duties and related charges is generally a good idea. Â&#x2021; 6HSDUDWHO\ ZLWK UHVSHFW WR LQFRPH WD[ HIIHFWV FKDUacterization and â&#x20AC;&#x153;dual-useâ&#x20AC;? issues (based on whether the equipment was purchased with the intention of renting or selling it) are still being worked out by the IRS, but the tax effects of characterizing equipment as either â&#x20AC;&#x153;inventory for saleâ&#x20AC;? or â&#x20AC;&#x153;rental fleetâ&#x20AC;? can be substantial (among other things, rental property is generally depreciable and eligible for 1031 exchanges, while inventory is not), making good planning in this area critical. One suggestion commonly being considered is using different entities (a â&#x20AC;&#x153;salesâ&#x20AC;? entity, and a â&#x20AC;&#x153;rentalâ&#x20AC;? entity) to clarify the distinction. Â&#x201E;
Conclusion: To sum it up, what seems like a simple transaction (a sale of leased equipment) turns out to be laden with very real and potentially expensive risks. Fortunately, once identified, most are relatively easy to deal with (but much more so before purchase options are granted to customers). If you offer purchase options on leased equipment, or plan to do so in the near future, now would be a good time to seek both legal and tax advice. Rent-to-own agreements and purchase options can be excellent selling tools, but donâ&#x20AC;&#x2122;t let their apparent simplicity fool you. Â&#x201E; JAMES R. WAITE, ESQ. is a business lawyer with over 20 years in the equipment rental industry. He authored the American Rental Associationâ&#x20AC;&#x2122;s book on rental contracts, and represents equipment lessors throughout North America on a wide range of issues, including negotiating and drafting rental contracts, as well as buying, selling and financing rental companies and their equipment. He can be reached at (866) 582-2586, or by e-mail at j.waite@wwlegal.net.
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How One Dealer Helps Move the Needle in Washington, D.C.
Best Practices
Whit Perryman, CEO, of Vermeer TexasLouisiana met with Rep. Louie Gohmert (R-Texas) during the AED Washington Fly-In held in April 2014
Whit Perryman’s no frills advice on political advocacy. BY JOANNE COSTIN
It was December 1995 when Whit Perryman, CEO of Vermeer Equipment of Texas Inc., realized the importance of getting to know elected officials personally. He headed to Washington, D.C., to meet with several representatives with the purpose of protecting financial incentives associated with Employee Stock Ownership Plans (ESOPs). “It was then I realized how important it really was to get to know my representative personally,” said Perryman. He came away from his experience with two observations. The first is that e-mails and letters can easily be misdirected or overlooked; and second is that congressional staffers play a huge role in the political process. On that trip, Perryman successfully met with his representative as well as with then Rep. Dick Armey (R-Texas), who was the U.S. House majority leader at the time. “I realized even a small company like ours could make a difference,” said Perryman. There’s a saying on the Hill: “Don’t tax you, don’t tax me, tax that man behind the tree.” – Russell B. Long. When Whit Perryman first heard this phrase quoted by a local congressman, it stuck with him. The message is clear – don’t complain if you didn’t come up here and fight for your cause. “Our industry is small when compared to the whole business climate,” said Perryman. “If we aren’t fighting for our causes, our voices won’t be heard.” Perryman’s actions speak to his commitment to inform lawmakers about the needs 44 | www.cedmag.com | Construction Equipment Distribution | September 2014
of our industry. For dealers ready to take action, Perryman offers some sage advice. His Model 1. Get them back home. While Perryman is a regular at AED Washington Fly-Ins, he finds visits back home equally effective as trips to the nation’s capital. He isn’t shy about inviting local congressional representatives to the dealership’s locations. At least seven or eight stores out of 12 have hosted visits. “Congressmen like face time with constituents,” he said.
Whit Perryman intoduces Texas Congresman Roger Williams, a former auto dealer, on Day 2 of the 2014 AED Washington Fly-In.
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Best Practices
“The laws they create have a real impact on your employees and your employees represent important votes.” This fall, before November elections, is a perfect time to schedule a visit. A dealer visit could include a meeting with senior management, a tour of the facilities and most important to the representative: an opportunity to address and interact with employees. No fancy lunches, AV equipment or expertise is needed; just a willingness to make a few calls and get your point across with elected officials. 2. Leverage AED’s political program.* The reality is that political campaigns are expensive and by financially contributing to campaigns you build relationships. AED’s Political Action Committee (PAC) allows equipment distributors to speak with a common voice in the political process by helping to elect federal candidates who share the political goals of the equipment industry. Perryman wants to see the AED PAC double in the next few years. Over time, he has changed his thinking about PACs and believes AED’s PAC allows our Washington staff to be more effective. “Now when I call up there and go to meetings, lawmakers know AED and our industry,” said Perryman. AED helps identify individuals on key committees that will make a difference to our industry and solidifies those
Micky McCalib, sales representative, Vermeer Texas-Louisiana and Rep. Mike Conaway (R-Texas) during a visit of the Midland, Texas, branch.
Representatives from Vermeer Texas-Louisiana hosted Rep. Mike Conaway (R-28) at their Midland, Texas, branch in October 2013. Pictured from right to left: Micky McCalib, sales representative; Jason Rush, vice president, Rep. Mike Conaway (R-Texas); Whit Perryman, CEO; Drew Floyd, sales representative; and Eric Dudley, service foreman.
relationships through PAC contributions. Perryman also emphasized the importance of members participating in AED PAC check delivery meetings with congressional candidates. “Hand them a PAC check with a roomful of local dealers and that is powerful.” Vermeer Equipment of Texas Inc. is one of the few dealers with a PAC for employee-owners. A portion of the funds collected go toward the AED’s PAC while another portion goes toward supporting candidates who support ESOPrelated issues. The PAC fund generates from $6,000-$8,000 annually. “We encourage employees to get involved in the political process and to gain an understanding of their impact on our business,” said Perryman. 3. Have friends on both sides of the aisle. Perryman believes it’s smart to maintain relationships on both sides of the aisle to truly advance the needs of the industry. “You can’t get caught up in social issues,” said Perryman, “you have to narrow your focus to industry issues.” Republicans and Democrats alike are both in a position to impact dealers. Similarly, it is important to know what committees your representatives are on and what their interests are. According to Perryman, when AED asked him to testify before the House Energy & Mineral Resources Subcommittee about the positive impact of the oil and gas shale play on his business, prior relationship-building with a congressman helped AED’s cause. “When they look you in the eye and they remember seeing your people, your employees, and machines, you can make a big impact that way,” he said. 4. Attend the AED Fly-In. For Perryman, AED’s Washington Fly-In was instrumental in helping him forge relationships with national lawmakers for the first time. “At first I found it was difficult to get face time, but yet, as you follow-up and meet staff people, you find out it is not a whole lot different than the sales process in our industry,” said Perryman. AED’s Fly-In, held every spring, provides members with political and economic intelligence (continued on page 55)
September 2014 | Construction Equipment Distribution | www.cedmag.com | 45
On the Numbers
Top Three Ways To Improve Your Business It’s true that a good defense really is the best offense – listen up, because here’s where the ball should be going. BY GARRY BARTECKI
This month let’s not beat around the bush and get right down to three things you should be doing. 1.) You have just received a big, oversized letter in the mail from AED introducing our new approach to High Profit (aka Dealer 20) Groups – I suggest you take a few moments to read what is being explained and then ask yourself, “Do I really know how my business stacks up against my peers?” Or, “How much money am I really leaving on the table?” Or, “How do I find out what this place is really worth?” If you have been asking yourself any of these questions it is time to do something about it, and AED will help you find the answers. There is more to these 20-Group meetings than staring at comparative numbers and trying to figure out what they mean, and how one dealer beat the others regarding one line item. This new approach is going to be much more flexible, with as much communication available as you want. Not only will we compare operating results but other important areas of your business, including: Recognizing and managing risk Increasing the value of your business Methods to protect assets, both business and personal Nothing else available to you can deliver this type of tremendous benefit in terms of the future value of your business. 2.) Be prepared on the customer credit scene. There is no doubt that the construction business is picking up. While that is great news overall, there is some risk associated with this good news. Contractors probably took more of a
hit from the recession than dealers did. As a result, many went out of business and many of those that are hanging on find themselves with a weak balance sheet and basically no ability to borrow – meaning they have to restrict their cash expenditures to direct expenses related to job costs. While I am glad to see contractors bidding for and getting more work, I worry about two things: Are they bidding at rates that will make money? Are they taking on work they can’t afford to do without additional working capital? It is no secret that every dollar of sales requires some permanent capital – basically to cover the timing between paying for expenses and collecting for work done. Think of it this way: A contractor could sell himself into bankruptcy because he is experiencing a great recovery. Many contractors now find themselves in this position, and consequently dealers have to spend more time updating credit apps, doing credit checks, and stepping up the collection process to ensure they still maintain lien rights. Dealers may also want to update their credit applications and rental contracts. Laws keep changing, and being current with your contract terms helps if legal action becomes necessary to collect money. Management may want to pay a visit to customers whose business activity with the dealer is at a much higher level than last year. Find out why this is happening. How are bank relations? Ask how their backlog is faring and if they have the capital to handle it. Take your CFO with and see if they will share
their work-in-process and backlog lists, as well as other clues about their financial position. 3.) Like it or not you have to get a handle on the rental business. ARA just released a new survey that predicts that the secular shift to rental is expected to continue for many years. 85 percent of the respondents to the survey expect rental revenue to increase, with 49 percent expecting double-digit growth. 72 percent of the respondents expect to add to their rental fleets, with 39 percent expecting double-digit increases. 85 percent of the OEMs that responded to the survey expect increases of sales into the rental channel, with 53 percent forecasting double-digit growth. Again, like it or not, rental is altering the way your customers think, OEMs think, how pure rental companies think, and how dealers react in an effort to retain market share and brand loyalty. You have to figure out where you fit in this new environment because you are part it; then you have to decide what steps need to taken to meet your revised strategic plan. Managing this rental threat will be a big part of AED’s new High-Profit Dealer Group program – yet another reason for you to join a group that can help you get through this business maze your find yourself in. Looking forward to hearing from you. GARRY BARTECKI (gbartecki@ aednet.org) is founder of Dealer-Rental Success LLC, is a financial consultant to the equipment industry. He can be reached at 708-347-9109.
September 2014 | Construction Equipment Distribution | www.cedmag.com | 47
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Just So You Know – a Guest Column
How Have You Progressed Since the Third Grade? Your command of language affects your image and reputation more than you might think. BY JEFFREY GITOMER
Every one of you have given a in Luck!” The person who wrote it is to reality. speech, or written a paragraph or immediately perceived as an idiot and Reality: Your writing skills and your essay about what you did on your the e-mail is discarded as both disinspeaking skills need to be at a higher summer vacation while you were in genuous and poorly prepared. level of competence if you are looking grade school. Maybe I’m prejudiced, but I don’t to elevate your income to a higher level. You wrote about the lake, the moun- want to do business with someone Reality: Your reputation is the sum tains, or the week at the beach. Or you who can’t correct his or her own work total of your words and deeds – a gave a speech and your opening line in the simplest subject line of an e-mail. large portion of which can come from was, “What I did on my summer vacawriting and speaking. Speaking and writing are the tion.” And you held your own hands Reality: Your customer is more foundation of the two most important and nervously performed in front of likely to buy your message if they buy elements of your success: image and your peers. You were worried about into your passion. reputation. what they would think, but somehow Reality: You can gain an amazing Everyone wants to have a great you muddled through it. business social media presence if you image. Everyone wants to have a great Your essay was returned with all kinds reputation. combine your ability to write and your of red marks for punctuation, grammar, ability to convey a value message to Good news: You can influence and misspellings. Some of you pack rats your customers. both your image and your reputation may still have those early papers. Here’s my recommendation to you: with your consistent performance. I’m giving you this bit of nostalgic 1. Write a 500-word blog post I’ll ask my audiences, “How many reflection so I can issue you the once a week. Write about something of you would be nervous speaking following challenges: How have you you love. Write about something that in front of a group of 300 people?” progressed since then? How much Almost everyone raises his or her hand. may impact your customers. Write about better are your writing skills? How The real answer is, they are not nervous, something you have an expertise in. much better are your presentation 2. Speak in public once a week. they are not uncomfortable – those are skills? And how important are those A civil organization will be happy to symptoms. The real issue is they are skills to your sales success, your busiunprepared. They lack the experience, have you as their breakfast or lunch ness success, your social media success, the subject matter expertise, or suffer presenter. Speak on something you and your career success? love, speak on something others will from limited self-image or low selfWhat most people don’t understand esteem – or perhaps all four. value, speak on something in which you are an expert. is that their initial training forms the Sadly, many people are so glued to You will not reap immediate foundation of their present skills. Your the television every night set to witness rewards, but slowly, over time, your grammar, your ability to spell, your self- “other people’s drama.” We make image and reputation will emerge. confidence to be able to speak, and conscious choices to watch something That’s a reward that has nothing to do your overall character are formulated rather than to learn with commissions or earnings but has by your ability to communicate both something or do something. everything to do with the feeling of orally and in writing. Perhaps if you took a Dale Carnegie fulfillment. That’s a feeling I hope you Every one of you reading this is now course on public speaking or joined a get to experience. thinking, “Maybe I should have paid Toastmasters group you would be able more attention when my high school to become a confident presenter. English teacher was drilling in the Perhaps if you started your own blog JEFFREY GITOMER, is the author of The Sales Bible, Customer Satisfaction is difference between there, their, and you might be able to attract people Worthless Customer Loyalty is Priceless, they’re, or the difference between your with similar likes and values as they The Little Red Book ofSelling, and many and you’re. search the Internet. more. Visit www.gitomer.com or e-mail Think about the e-mails you receive Please do not confuse this column him at salesman@gitomer.com. with the subject line that says: “Your as a call to action. Rather it is a call September 2014 | Construction Equipment Distribution | www.cedmag.com | 49
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Aftermarket
The Little Pod That Could Supervision on the shop floor: a small but brilliant change for labor efficiency BY RON SLEE
Everyone knows about the Labor efficiency has been one of the shortage of technicians in our industry. specific goals for Steve. He has worked It is one of the most common stories I to develop inspection programs that hear when talking about growing the lead to standard times and structured service business. “We can’t do that, jobs. He has identified specific skills Ron, there aren’t enough technicians.” of technicians and has worked with Well, we also know that you can floor supervision to maximize the use increase your capacity by increasing of these specialized skills. But he has obtains 90 percent labor efficiency your labor efficiency. done something that is unique: He then they can invoice 1,584 per techBut before going into labor effihas put the technical supervision, the nician. If they obtain 80 percent then ciency I want to point out that there foremen, on the floor with the techniit is 1,408. Or at 70 percent it is 1,232. is going to be a continuation of a cians. What makes it unique is that he That is what is at play here: the reducshortage of technicians as well as has built a “pod” for the foreman – a tion of the lost labor due to inefficienall skilled positions throughout the small office on the floor. cies. Now let me point out that it is dealership. These shortages severely As you can see, the workstation is not the responsibility of the technician impact your ability to grow your sales, complete. There is a computer connecto provide labor efficiency. It is the and it will become a much larger tion and a phone. There is a chair problem going forward. This month, across so that private conversations can responsibility of the supervision. At 90 percent we lost 176 hours, more than at the AED/Infor Executive Forum, happen. There is glass all around so Edward Gordon, author of “Future there is good visibility to the workforce. four weeks of labor. At 80 percent it was 352 hours, almost nine weeks, Jobs,” addresses this specific situation Many, including Steve, have taken and at 70 percent it is 528 hours or and how to deal with it. We have to my advice for floor supervision, and more than 13 weeks. This is huge. be much more involved in creating the in every case labor efficiency has By putting the foreman on the skills that we require. With technicians, improved. floor, Steve and his team have we need to restart the apprentice succeeded in improving labor effiNow Back to the Beginning programs, establish more partnerships First, we have to define labor efficiency ciency to the degree that their capacity with the technical schools, work more based on actual eligible labor hours – has improved dramatically. This has closely with the OEMs, and develop deduct the vacations, the government happened even in the tightest labor programs for personnel development holidays, sick days, training and redo. market in the country. The time is now. that we can sustain. Let’s assume for this example that In North Dakota, at General there are some 1,600-1,800 hours of Equipment & Supplies, Don Shilling work that the technician provides after RON SLEE (ron@rjslee.com) is the founder and Steve Stafki are doing all of it. The of R.J. Slee & Associates, Rancho Mirage, all of the deductions. This is called pressure on the labor market in the Calif., celebrating more than 30 years in “Billing Efficiency” and runs around 85 North Dakota has been “extreme.” business in the United States, a consulting percent of the paid hours. That means Unemployment is in the low single firm that specializes in dealership operations. 85 percent of the hours paid are digits. Housing is short for all the Ron also operates Quest Learning Centers, available for the dealership to bill to employees necessary to support the a company that provides training services workloads. There is a serious challenge. customers or suppliers (warranty), or specializing in product support, and Insight internal departments. The 85 percent Don has forged relationships with the is the starting point for labor efficiency. (M&R) Institute, a company that operates local technical schools and worked and facilitates “Dealer Twenty” Groups. FolThat means that each techniwith the OEM to develop a deeper low Ron on Twitter: @RonSlee; and read his cian provides about 1,760 hours that relationship. Steve has focused on the blog at learningwithoutscars.com. the dealership can bill. If the dealer here and now.
September 2014 | Construction Equipment Distribution | www.cedmag.com | 51
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Washington Insider
Cultivating Our Grassroots, and Grasstops AED’s Advocacy Action Group will help distributors break through the noise on Capitol Hill BY CHRISTIAN KLEIN
In recent weeks we’ve sent invitations to join the AED Advocacy Action Group (AAG) to distributors around the country who have a history of supporting our Government Affairs Program. If you received an invitation, I hope you’ll accept. If you didn’t get one in the mail, consider this your invitation to be part of an exciting new project. The goal of the AAG is to improve equipment distributor political engagement by providing the organization, knowledge, and tools to make our members even more sophisticated participants in the political process. You’ve probably heard the term grassroots politics. It means people in the real world (i.e., outside Washington, D.C.) communicating with Congress to make noise about an issue. Grassroots are critical to legislative success. But grasstops – a term you might not have heard – are just as important. While grassroots activists are the soldiers in the army, grasstops leaders encourage, organize and direct others to get involved to influence specific policy outcomes. One lesson I’ve learned during two decades in politics is that both grassroots and grasstops are critical to success on Capitol Hill. Having well-reasoned policy positions and good data to support those positions are important. Having an effective lobbying team on the ground in the nation’s capital is vital. But you also need a well-coordinated network of top-level executives throughout the country who know how to personally engage lawmakers in their own states and districts about policy specifics, and, just as important, get others in the industry involved.
AED has a long record of success on Capitol Hill because we have a good base of grasstops leaders. But with more and more groups clamoring for attention and lawmakers inundated by e-mail, Twitter feeds, and Facebook posts, it’s become harder to break through and make our message heard. For us to continue to be successful – and become even more successful – we need to grow our grassroots and grasstops so we can communicate more effectively with more congressional offices in a more meaningful way. It’s with that goal in mind that we launched the AAG this summer. The AAG will be a network of dealers in every state who commit to consistently doing a handful of things that make a difference, specifically: Hosting facility visits. Politicians are constantly on the lookout for opportunities to be visible and engage with constituents “back home.” By committing to host candidates and members of Congress at their dealerships, AAG members will raise the visibility of their companies and our industry, and educate members of Congress about how the decisions they make on Capitol Hill affect distributors and their employees. Coordinating local grassroots activities. As any high school student will tell you, peer pressure affects behavior. AAG members will serve as a liaison between AED and their industry peers to encourage others to communicate with Congress and participate in equipment industry political activities. Attending the AED Fly-In and AAG Meeting. Knowledge is power. By coming to our Washington Fly-In in the spring and the AAG meeting
during Executive Forum (Sept. 17!), members will gain knowledge about the issues to be more effective advocates. They’ll also learn about politics and strategies to enhance their engagement. Media outreach. Members of Congress keep a close eye on the editorial pages of their local papers. By committing to submit letters to the editor and editorials, AAG members will raise the visibility of issues with lawmakers and affect how the local media reports those issues. Supporting AED’s political program. AED PAC helps elect candidates who share our collective commitment to strong federal infrastructure programs and pro-growth tax, regulatory, and energy policy. By committing to support AED PAC and delivering contributions to candidates, AAG members help build relationships between lawmakers, our national organization, and members at the local level. With federal highway and water construction programs in shambles, key tax provisions on the chopping block, the federal government rolling out a seemingly endless stream of new environmental and workplace regulations, and critical elections looming, the stakes have never been higher. AED’s success will depend, as it always has, on your willingness to get engaged. We hope you’ll answer the call and join the AAG. Just give me a call at 703-739-9513 or shoot me an e-mail at caklein@aednet.org. CHRISTIAN KLEIN (caklein@aednet.org) AED’s vice president of Government Affairs and Washington counsel. He can be reached at 703-739-9513.
September 2014 | Construction Equipment Distribution | www.cedmag.com | 53
New & Improved
Kubota’s New Hydraulic 6-in-1 Blade Offers Greater Productivity Kubota Tractor Corporation’s new Hydraulic 6-in-1 Blade for the KX040-4 Compact Excavator is available in the U.S. market exclusively. Operators can now tilt the blade to six different positions, making leveling and backfilling – even on inclines and uneven terrain – incredibly easy. The blade’s capacity has increased almost 0.75 cubic yards over the standard blade, and now enables six different positions: left-end up, right-end up, left-end forward, rightend forward, raised, and lowered. Just by moving the dozer lever, operators can angle the blade right or left to push soil aside while the machine moves forward, eliminating the need for repetitive right-angle positioning while backfilling trenches. The operator can command all six functions
simultaneously for more convenient landscaping, shaping and backfilling control. At 5 feet 10.9 inches wide, the blade impressively stretches across the entire machine width, even when tilted. The tilt function gives contractors the flexibility to shape foundation edges for runoff, and then complete the job with slopes and swales for ample water drainage and a professional look. For more information visit www.kubotatractor.com
JRB Rolls Out Newly Redesigned, HeavyDuty Construction Utility Forks Paladin Attachments new 200-500 class JRB Construction Utility Forks have been redesigned to include a lowered top cross tube for increased visibility and a larger three-inch-diameter tube for added strength. The new design features an improved center of gravity for better load management. A single hanger is featured on the 60-inch-wide frame for increased visibility and reduced weight. Drop-forged tines provide increased sturdiness and reduce material movement while it is being transported over uneven terrain. Wheel loaders may be turned into versatile heavy-duty forklifts to safely transport large loads of construction-related materials such as
pallets and pipes. To complete the size ranges covered, Paladin continues to offer its classic 100 and 600-900 models. JRB Construction Utility Forks are compatible with JRB’s Quick Hitch Mount and other industry quick coupler systems. Load capacities are rated beyond wheel loader lift capacities and are based on a 24-inch load center. The forks are available with manually adjustable tines or hydraulically actuated tines for side-to-side adjustments from the cab. Optional hydraulic side shift allows for precise material placement. JRB Construction Utility Forks are designed
with carriage widths ranging from 60 inches to 106 inches. Tine lengths range from 48 inches to 96 inches and tines are available in sizes ranging from two inches by four inches to four inches by eight inches. For more information visit www.paladinattachments.com
Miller Releases Enhanced SubArc Digital Series Equipment and Accessories The new SubArc Digital Series of power sources, interface controls and accessories from Miller Electric Mfg. Co. include digital control and communication electronics designed to improve weld performance and simplify the integration of the equipment in more advanced applications. The SubArc Digital Series offers a number of significant enhancements, including easier setup and operation and an improved flux delivery system that ensures continuous delivery of flux to the arc. The series combines the latest in digital process control technology with tested and highly reliable power regulation and the ease of use and reliability of a 54 | www.cedmag.com | Construction Equipment Distribution | September 2014
traditional machine — resulting in equipment that stands up to use in all heavy industrial applications. The product line includes two DC power source models — the SubArc DC 650/800 Digital and the SubArc DC 1000/1250 Digital — and one AC/DC model, the SubArc AC/ DC 1000/1250 Digital. The power sources have the capacity to handle Submerged Arc (SAW) and Electroslag (ESW) welding applications, from traditional DC single-arc to multi-wire tandem welding. For more information visit www.MillerWelds.com
Best Practices
(“How One Dealer Helps Move the Needle in Washington, D.C.” continued from page 45)
and creates a forum to discuss the issues with members of Congress. He also takes employees to Washington to speak to lawmakers because “legislators don’t just want to hear from CEOs.” Decisions they make will affect the jobs of everyone in the industry. Perryman encourages all dealers to help move the needle in Washington by attending the Fly-In. It’s the key event of the year for political advocacy and where you will have the help of many experienced dealers and AED’s Washington staff to help you become an effective national advocate. As a board member of AED, Perryman also helps shape the association’s agenda, and makes sure the association is focused on the right issues. “You underestimate how powerful your business can be,” added Perryman. “You’ll realize you can make a difference; and by the way, it’s a lot of fun.” 5. Get involved in a local group. The Dallas-Fort Worth AED local dealer group meets about three times a year and represents a broad
Setting Up a Local Visit Local visits help lawmakers understand what dealers do and their impact on the local economy. 1.) Work one or two months out to arrange a date. Congressmen typically have schedulers in both D.C. and back at their district office. Schedules are typically more hectic when Congress is in session, compared to when they are home. Contact AED’s Washington office or regional managers for assistance for help identifying your member of Congress. 2.) Be flexible. Schedules can change. Plan for about an hour-long visit. 3.) Be clear about the purpose of the visit and the issues you want them to talk about (AED’s Washington team can provide talking points tailored to your company and congressman’s committee assignments). 4.) Decide who will attend – employees, key customers, and suppliers are all potential audiences. Keep in mind space limitations. Groups can be as small as 10 or as large as several hundred. 5.) Allow time for lawmakers to address employees and Q&A. assortment of dealers. The group offers Perryman an opportunity to discuss common issues such as infrastructure, tax and regulatory policy with other dealers. A local lobbyist looks out for AED group members’ interests on the state and local level, while AED management visits the local group at least once per year. Rep. Roger Williams (R-Texas) is scheduled to attend the local group meeting on
Sept. 5 and AED members will present him with an AED PAC check. * AED PAC only accepts contributions from owners and senior executives of AED dealer member companies that have given prior solicitation consent approval in accordance with the Federal Election Campaign Act. For more information, contact AED’s Washington office at 703-739-9513 or aeddc@ aednet.org.
ADVERTISERS’ INDEX Association of Equipment Mgt. Professionals . . . . . . . . . . . 48
Loftness Attachments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
BidSpotter.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
PFW Systems Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Bobcat Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
PriSim Business War Games, Inc. . . . . . . . . . . . . . . . . . . . . . 13
Direct Capital Corporation . . . . . . . . . . . . . . . . . . . . . . . . . 40
Ritchie Bros. Auctioneers . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
e-Emphasys Technologies, Inc. . . . . . . . . . . . . . . . . . . . .28-29 eBS Mechdata, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 EPG Insurance, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 GE Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 HKX, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Sandvik Mining & Construction LLC . . . . . . . . . . . . . . . . . . 39 SANY Heavy Industry Co., LTD . . . . . . . . . . . . . . . . . . . . . . IFC Sentry Insurance Company . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Stewart-Amos Equipment Co. . . . . . . . . . . . . . . . . . . . . . . . 35
Hydrema Exports A/S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Sullivan-Palatek . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .IBC
Infor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Vacuworx Global, LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
John Deere Power Systems . . . . . . . . . . . . . . . . . . . . . . . . . 50
Wells Fargo Equipment Finance. . . . . . . . . . . . . . . . . . . . . . 11
Knapheide Manufacturing Company, The . . . . . . . . . . . . . . 15
XAPT Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . OBC
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 © 2013 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: 600 W. 22nd St., Suite 220, Oak Brook, Ill. Phone: 630-574-0650. Periodicals postage at Hinsdale, Ill. 60521 and other post offices. Additional entry, Pontiac, Ill. POSTMASTER: Send address changes to Construction Equipment Distribution, 600 W. 22nd St., Suite 220, Oak Brook, Ill. 60523
September 2014 | Construction Equipment Distribution | www.cedmag.com | 55
Dealer Data
June Construction Jumps 6 Percent Nonresidential building strengthened after pulling back in May; lift comes from the start of several large manufacturing plant projects. Year-To-Date Construction Starts Unadjusted Totals, In Millions $
Monthly Construction Starts Seasonally Adjusted Annual Rates, In Millions $ Nonresidential Building Residential Building Nonbuilding Construction TOTAL Construction
June 2014
May 2014
% Change
$549,692
$517,357
+6
Source: McGraw-Hill Construction, www.construction.com
Nonresidential Building Residential Building Nonbuilding Construction TOTAL Construction
6 Mo. 2014
6 Mo. 2013
% Change
$254,079
$251,654
+1
Source: McGraw-Hill Construction, www.construction.com
Monthly Sales Volume by Original Equipment Cost with Recovery %
The graph above illustrates sales of used rental fleet by the major North American rental equipment companies for the last 24 four months. Each monthâ&#x20AC;&#x2122;s equipment sale volumes are expressed as a percentage of the total original equipment cost (â&#x20AC;&#x153;OECâ&#x20AC;?) sold in the highest volume month, with December 2013 representing 100%, (e.g., total OEC sold in June 2013 was approximately 60 percent of total OEC sold in December 2013). Actual sale $ volume is illustrated as the blue component of each bar in the graph. The recovery (i.e., sales $ as a percentage of OEC sold) is indicated within the bar for each month (e.g., June 2013 sales $ recovery was 52.6 percent of total OEC sold).
Source: Rouse Asset Services. Contact Gary McArdle at gmcardle@rouseservices.com, (310) 363-7520
The Dirty Dozen - 8&& Ă&#x20AC;OLQJV RQ HDUWKPRYLQJ XQLWV Equipment Description Articulated Dump Trucks
JUN 13
JUL 13
AUG 13
SEP 13
OCT 13
NOV 13
DEC 13
JAN 14
FEB 14
MAR 14
APR 14
MAY 14
Grand Total
72
91
111
82
70
69
120
65
77
119
155
131
1,162
267
355
365
352
362
309
435
384
197
327
403
430
4,186
4
9
15
13
7
4
14
13
4
6
19
9
117
733
700
847
778
767
605
965
799
505
677
989
912
9,277
27
14
26
35
39
16
37
9
19
20
24
25
291
Mini Excavators
775
886
809
815
909
702
996
1,028
468
723
1,132
Motor Graders
112
110
88
105
121
97
110
83
85
125
107
134
1,277
15
6
7
6
6
1
6
3
8
3
16
13
90
Crawler Dozers Crawler Loaders Excavators - Crawler, Hydraulic Excavators - Wheeled, Hydraulic
Scrapers - Conventional
1,184 10,427
Skid-Steer Loaders
896
912
797
912
1,238
1,319
1,632
1,115
723
879
1,111
Tractor Loader Backhoes
294
400
383
366
369
290
418
431
246
411
399
380
Wheel Loaders < 80 HP
65
59
84
78
86
94
131
134
70
105
108
109
1,123
Wheel Loaders > 80 HP
440
522
467
518
590
563
865
552
372
507
670
648
6,714
3,700 4,064 3,999 4,060 4,564 4,069
5,729
4,616
Grand Total
Supplied by Equipment Data Associates, Charlotte, N.C.
56 | www.cedmag.com | Construction Equipment Distribution | September 2014
2,774 3,902
1,111 12,645 4,387
5,133 5,086 51,696
Diesel or Gas Powered 185 Construction Air Compressors
Industry Shows 2 Tools Sold with Every Portable AirCompressor
Large Portable Air Compressor Pressure Ranges 750 - 1800 cfm Industrial Air Compressors Range from 5 - 450 HP Sullivan-Palatek 1201 W US Hyw 20 Michigan City, IN 46360 PH: 219-874-2497 - 800-438-6203 www.sullivanpalatek.com
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