Cover Story Chris Aiello
How is Business? As we wind down 2022, in writing this month’s column, I felt compelled to reflect on something that stuck with me from a keynote speaker from an event I recently attended. The speaker had everyone in attendance stand up and instructed all of us to respond to his question with one word. The question he asked was, “How is Business?” Then with great exuberance, the entire audience responded with, “UNBELIEVABLE!” That certainly set the tone for his presentation and audience engagement, but also the past year or two really has been unbelievable for almost all of the dealers that I have spoken to. As we approach the New Year and your KPI goals are achieved, projects completed, and end-of-year meetings and celebrations bring excitement for the year to come, however, the wrap to this unbelievable year may also bring uncertainty for what is to come. Discussions around whether there will be a recession in the coming year or whether we’re already in a recession definitely put a damper on things. Nonetheless, I hope you all are able to celebrate all the unbelievable things that happened for you and your businesses in 2022. Some of your business plans for 2023 might include consolidation or merger and acquisition activity. Another MHEDA Trend for 2023 touches on this topic states, ‘Business valuation and succession planning will take on more importance as owners consider retirement and consolidation continues.’ This trend sets as a perfect segue of what I want to get into in this month’s column. The fine line between the manufacturer and dealer relationship, especially as our industry continues to see more and more mergers and acquisitions in forklift dealerships. The OEM and dealer relationship is a mutually beneficial relationship. The OEM relies on the dealer/distributor to populate the market with the sale of their products. The dealer also provides local customers with parts, service, and both technical and after-sale support for these products. The end-user customer’s lift truck needs are continually evolving. OEMs 4
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December 2022
work alongside their dealer networks to assist the dealer as needed, some examples include but are not limited to assisting with financing, process warranty-related inquiries, addressing any safety concerns, etc. Any OEM that I speak to will tell you that their dealer/distributor network is the key to their success. Nonetheless, as we transition to 2023, I believe the lift truck industry is currently segmented into these categories: Factory Stores, Independent Distributors, Mega Dealers, and Third-Party Service Providers. Let us examine each: Factory Stores The rising trend of more OEM factory stores in the industry can be a direct result of independent distributors faced with the problem of succession planning. The owners or dealer principals do not have a succession plan in place; meanwhile, the factory cannot find a suitable buyer to buy said dealership, so the dealer ends up buying it and converting it into a factory store. As mentioned earlier, the OEM factory relies on the dealer to populate the market with the sale of their products. If the dealer does not have a succession plan in place, the OEM does not want to lose their share of that particular market the dealer is operating in, therefore the OEM purchases the dealership and converts it to a factory store. In addition, the appeal to the OEM to purchase the dealership is the parts and service revenue that a dealership generates. This revenue protects the factory and flattens out the peaks and valleys of a crazy marketplace. Parts and Service revenue help a dealership weather the storm during an economic downturn. Independent Distributors My column’s predecessor Dave Baiocchi once said as it relates to the independent distributor: “Independent dealers are a necessary component of the material handling industry.” As more and more OEM factory stores continue to enter the market, one of the main differences to note when comparing a
