October 2013
www.cedmag.com
Our Leader’s Legacy
Plus:
n AED update on State
AED salutes Toby Mack, whose vision and leadership have magnified dealer policy priorities in Washington and Ottawa.
Dealer Protection Laws n ESOP as succession solution n Dealer gets $100 grand back on 2012 premiums 1_Oct_Cover_KP.indd 1
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Contents
Winner 2012 Journalism Award Construction Writers Association
october 2013 Vol. 79, No. 10
Editorial Team
Executive Editor and Director of Programs Kim Phelan kphelan@aednet.org
Features
from the cover
We are a better association because of Toby Mack.
Contributing Editor Joanne Costin pr@aednet.org
Editor’s Note 7
Two very smart guys worth listening to
Graphic Production eva Belmonte design@aednet.org eva@neggie.net
On the Numbers 47
What rental is doing to the market share mindset
Columnists
Garry Bartecki AED Vice President of Finance Christian Klein AED Vice President of Government Affairs and Washington Counsel Eli Lustgarten ESL Consultants Jerry Randecker & Chris Sitter Jordan-Sitter Associates
Business Outlook 49
Legislated Relationships 18 AED releases its 2013 edition of the State Distributor Laws publication – charts provide dealers and manufacturers with state-by-state rights and responsibilities at a glance.
AED pays tribute to Toby Mack, who, at the end of this month, steps down from his position as AED’s president and CEO after 24 years of leadership.
Washington Insider 53
departments
Inside AED 8 Groundwork 12 Industry Beat 14 Advertisers’ Index 55 Dealer Data 56
Vice President–Sales/ Publisher David W. Gordon 800-388-0650 ext. 334 dgordon@aednet.org
Advertising Sales Manager Albert J. Ramirez 800-388-0650 ext. 311 aramirez@aednet.org
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Aftermarket 51
A devastating impact on productivity
Here’s how advocacy happens.
Advertising Contacts
600 22nd Street, Suite 220 Oak Brook, IL 60523 630-574-0650 fax 630-574-0132 www.aednet.org
If we could only get politics out of the way.
Our Leader’s Legacy 28
Ron Slee R.J. Slee & Associates
Production Manager martin cabral 800-388-0650 ext. 313 mcabral@aednet.org
Columns
From the Chairman 5
Plus: The Pros and Cons of the ESOP Exit Strategy 36 You might be surprised how an Employee Stock Ownership Plan can work when the owner is ready to cash out but doesn’t have a successor.
Keeping a Stern Eye on Sales 40 Sales Manager Tom Stern, from Chicago-area John Deere dealer West Side Tractor, shares methods and views in these interesting times.
Dare to Prepare 32 Part 2 of our three-part workforce series
A Closer Look: Avoid the Sting of ‘Affordable Care’s’ Coming Rate Increases 44
October 2013 | Construction Equipment Distribution | www.cedmag.com | 3
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From the Chairman President & CEO - TOBY MACK Associated Equipment Distributors Oak Brook, Ill.
The End of a Great Era
Executive Vice President & COO Robert Henderson Associated Equipment Distributors Oak Brook, Ill.
Thanks to Toby Mack, AED is poised for long-term strength and public policy influence.
Officers
Chairman - mike quirk Wagner Equipment Co. Aurora, Colo. Vice Chairman - Tim Watters Hoffman Equipment Co., Piscataway, N.J. Sr. Vice President - Don Shilling General Equipment & Supplies, Inc. Fargo, N.D.
Vice President - Rick van exan Toromont Industries Inc. Concord, Ontario Vice President - whit perryman Vermeer of Texas Inc. Irving, Texas Vice President of Finance Michael D. Brennan Brandeis Machinery & Supply Co., Louisville, Ky. Past Chairman - Larry Glynn CMW Equipment St. Louis, Mo.
At-Large Directors ron barlet Bejac Corp. Placentia, Calif.
Paula Benard C.N. Wood Co., Inc. Woburn, Mass. Gregg R. Erb Erb Equipment Company, Inc. Fenton, Mo. Dennis J. heller Stephenson Equipment Inc. Harrisburg, Pa. Mike Rooney Thompson Tractor Co., Inc. Tarrant, Ala. Michael J. Savastio Groff Tractor & Equipment, Inc. Mechanicsburg, Pa.
Regional Directors Bruce A. Bowman Upper Midwest Reg. Star Equipment, Ltd Des Moines, Iowa
gary frelick Western Canada Reg. Douglas Lake Equipment Langley, BC Patrick McConnell, West Reg. Clyde/West, Inc. Portland, Ore. christopher palmer Northeast Reg. Wood’s CRW Corp. Williston, Vt. Mark Romer, Southeast Reg. James River Equipment, Inc. Ashland, Va. Jeffrey Scott Rocky Mountain Reg. Intermountain Bobcat Salt Lake City, Utah Rick Van Exan Eastern Canada Reg. Toromont Industries Ltd. Concord, ON gary D. Vaughn South Central Reg. OCT Equipment, Inc. Oklahoma City, Okla.
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By Mike Quirk
On October 31, we will mark the end of an era at AED. Toby Mack, our president and CEO, will be stepping down from the position that he has held for nearly 24 years. He has served our association well through calm and turbulent times while keeping a “steady hand on the rudder,” a fitting description in keeping with his unwavering Navy discipline. I remember Toby’s early days with AED. He would visit our local Colorado Equipment Distributors group at least once a year to give an update on AED activities and priorities. Just as important, though, it gave him the opportunity to spend quality time with our members in the field and hear the important issues affecting the industry. These meetings were always likely to generate ideas that, over the years, have become the foundation for the rich tradition of service to the member companies that AED serves. A frequent byproduct of these exchanges was the development of fertile friendships between Toby and so many of the people in our membership. Toby has been a tireless champion of our industry. He has been equally committed to the success of the small, local businesses that were the bulk of our membership to the industry’s major companies. Like many of us, he has had to endure the challenges of consolidation and severe economic cycles that require difficult decisions and decisive leadership. Unlike most of us, he has done this while working under the direction of an ever-changing, all-volunteer board of directors. (Albeit these boards have been exemplary in every regard!) In the face of it all, AED has continued to build strength and capacity with the help of his vision and guidance. A lot has happened in these last 24 years. One example is The AED Foundation, which, under Toby’s direction, has emerged as an impressive force to address the industry’s critical skills shortage. AED has had to remain nimble. We have
seen market swings and trends evolve. Rental has become a core competency; energy and other natural resource development have provided new opportunity across North America; and technology continues to add productivity and complexity to the products and services that we provide our customers. With the help of AED, the equipment distribution model remains as strong as ever. The value added by the dealer remains the great differentiator Toby’s foremost passion has been best demonstrated by the growth of our powerful advocacy presence in Washington. Through perseverance and successful coalition building AED has become a seasoned, respected and effective lobbying advocate for our industry. Our membership considers this one of the most important missions of AED, and we have seen the steady growth and development of these forces over the years to the impressive position we hold today. Additional efforts are underway in Ottawa and the provincial and state capitals to leverage our resources and local influence to a greater degree at these increasingly important levels. Under Toby’s direction, AED has grown into one of the leading trade associations in stature, credibility and integrity. These are all hallmarks of our industry and represent the individual and collective characteristics of our membership. It has been my pleasure to know him, work beside him, and be represented by him for so many years. I wish him continued good fortune, health, and success in all future endeavors. He is leaving AED in great shape and well positioned for the future. We are a better association because of his long and capable stewardship.
Mike Quirk (mquirk@wagnerequipment.com) is vice president of Operations at Wagner Equipment Co., Aurora, Colo.
October 2013 | Construction Equipment Distribution | www.cedmag.com | 5
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Editor’s Note
Taxes, Twinkies and Train Wrecks U.S. Chamber’s chief economist (and Summit keynoter) says tax reform will only be effective if paired with one important ingredient. By kIM pHELAN
Lately, I’ve been reading a book by Arthur C. Brooks titled, “The Road to Freedom: How to Win the Fight for Free Enterprise.” It’s an excellent read because it equips the reader with something mere facts and figures about the economy don’t – especially when you’re confronted with someone making the emotional case for wealth distribution. Brooks argues that you just can’t refute the emotionally charged reference to a woman living out of her car by citing economic drivel. Instead, he says, better to unapologetically communicate that free enterprise is the reason all people have more opportunity around the world; free enterprise, not big government programs, are the reason poverty has greatly declined by 80 percent globally over the last 40 years. Brooks is president of the American Enterprise Institute in Washington – you may have seen the entertaining illustrated and narrated YouTube video that has been circulating around this year, “Don’t Eat Your Dog – The Moral Case for Free Enterprise.” It was actually that eight-minute clip that caused me to order his book, so I’d recommend you just Google that and hear what he has to say. In the book, Brooks describes a cool classroom exercise he conducted when he was a professor at Syracuse University, which he created as a real-life application lesson for his “politically progressive,” wealth-distributionfavoring students. Actually, he calls it a thought experiment, and it effectively tested their often-vocalized view that “it is not fair the rich in America have so much more than the poor. Fairness,” says Brooks, “was their rationale for income redistribution.” Halfway through the course, Brooks
observed disparities, as most educators engaged in the conversation about tax likely do, among students who were reform, recognizing that the U.S. tax working hard, doing assignments and code’s complexity and unpredictability studying, and those who weren’t. Obviundermine economic growth. Regalia ously, the hard workers were rewarded couldn’t agree more, but he takes it a with more points on quizzes, tests and bit further. papers, etc. Their less motivated peers, “Tax reform must be done in conjuncwell, not so much. tion with spending restraint,” he adds. So here’s what he did. Without both, I’d say that’s like an He proposed the class skim off 25 hour on the treadmill followed by a diet percent of the points earned by the top of Twinkies. You want to lose weight? half of the class and distribute them Exercise and eat smart. And if you want among the students in the lower half to ignite economic growth, you have to of the grading spectrum. tax more rationally and spend less. So brilliant. Regalia is very concerned about the “The students were in unanimous ticking time bomb of America’s entitleagreement that this was a stupid idea. ment spending, which, he says, is our Redistributing points earned on the “greatest driver of spending.” He states basis of hard work and merit, simply so a chilling reality in one of his recent that students who didn’t study could blogs: “These programs will be reget a higher grade, would be completely formed by design or by default.” Either unfair. Even students at the bottom Congress can begin tapping the brakes thought the scheme was idiotic.” on spending or do nothing and wait for the inevitable train wreck when Treadmills and Twinkies Social Security and Medicare run out of This anecdote was top of mind as I money. Those are the only choices. considered an article authored by U.S. Families and businesses understand Chamber of Commerce Chief Econothat when times are lean, they have to mist Martin Regalia on the Chamber’s find ways to skinny down, even though freeenterprise.com website. Earlier it’s hard. “It’s time for Washington to this year, Regalia pointed out this painful follow suit,” says Regalia. fact: “American families and employ I agree. ers are keenly award of the deep cut And just so you know, you’ll have a chance to hear Martin Regalia in that the government is taking out their person at the AED Summit on Jan. household incomes and hard-earned 16 in Houston. Get a good seat that profits – especially during the slowest ecomorning – he’s going to be terrific. By nomic recovery since the Great Depression.” Regalia continued, “...when taxes the way, registration is now open at go up, the rate of economic growth aedsummit.com. goes down,” but nevertheless “many in Thanks for reading. Washington are hungry for even more Kim Phelan (kphelan@aednet.org) tax revenue.” is the executive editor of Construction “The truth is, we can’t tax our way Equipment Distribution and director of out of our fiscal mess,” says Regalia. AED’s team in Washington is actively programs for AED. October 2013 | Construction Equipment Distribution | www.cedmag.com | 7
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Inside AED
The Inspiring Dr. Ben Carson Keynotes at Summit Sign up for AED’s convention at aedsummit.com and don’t miss this memorable presentation in Houston on Jan. 17. Retired neurosurgeon Dr. Ben Carson isn’t ready to give up on America yet. Author of the New York Times best seller “America the Beautiful: Rediscovering What Made This Nation Great,” and Summit keynoter on Jan. 17, Dr. Carson will offer AED members a thought-provoking exploration of what led America to rise to the pinnacle among nations, seemingly overnight. Dr. Carson asks if we are ready to discard our unique attributes for the sake of political correctness? He calls America’s obsession with “PC” a danger that threatens the values and principles that produced outstanding characteristics like honesty, compassion, hard work, innovation and decency. In an interview, Dr. Carson explained his objectives. “I want to help create an atmosphere where people learn how to work together,” he said. “Not be stifled by a wet blanket of political correctness.” Dr. Carson was thrust into the national spotlight in February this year, after a speech he made at the National Prayer Breakfast, standing just a few feet away from President Obama. Conservative commentators praised the speech as “speaking to power.” A Wall Street Journal op-ed stated Dr. Carson may not be “politically correct, but he’s closer to correct than we’ve heard in years.” At the AED Summit, Carson will offer common sense approaches to the issues of education, the deficit, health care and taxes. He believes that America’s best days are still ahead, but to get there as a nation we must address tough issues facing our country.
Passionately delivered, it’s a message that has resonated with audiences nationwide. Rise From Poverty Dr. Carson’s personal story is equally as compelling as his approach to the nation’s problems. Chronicled in the original TNT movie, Gifted Hands: The Ben Carson Story, Dr. Carson ascended from poverty-stricken Detroit to directorship of pediatric neurosurgery at Johns Hopkins Hospital in Baltimore, Md., where he gained notoriety for his part in successfully separating Siamese twins joined at the back of the head. Raised by a single mom, Dr. Carson struggled with grades, a horrible temper and low self esteem until his mother, with only a third grade education, challenged him and his brother to read two books a week and produce written book reports. She taught him what he believes was one of the most important lessons of his life, “that the person in life who has the most to do with what happens to you – is you.” Dr. Carson inspires people to use their God-given talents to improve their lives, communities, country, and the world. Don’t miss this unforgettable special event at the 2014 AED Summit in Houston, Texas. AED Summit is the one industry event that is focused completely on dealers and their suppliers, providing three-days of opportunities to build relationships and gain ideas to take your business to a whole new level. Visit aedsummit.com for details, online registration and hotel reservations.
Proposed New Members Anaconda USA Inc. Bellingham, Mass.
Linxworks Solutions Woodland Hills, Calif.
Terramac LLC Elburn, Ill.
This list is published each month as required by AED bylaws. Comments on the applicants should be directed to AED President Toby Mack at 800-388-0650 ext. 326 or jtm@aednet.org.
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Inside AED
mark your
calendar
For information on any of these upcoming events, visit www.aednet.org or call 800-388-0650. Oct. 8 - Webinar: Constructive Coaching – Take the Time to Build a Better Team 2 p.m. CDT | Presented by Barry Himmel Oct. 10-11 - CFO Conference | Oak Brook, Ill. Oct. 22 - Webinar: Parts Management – Tele-selling 11 a.m. - Noon CDT | Presented by Ron Slee Oct. 22 - Webinar: Parts Management – Basic Inventory Control | 2-3 p.m. CDT | Presented by Ron Slee Oct. 23 - Webinar: Parts Management – Warehousing 11 a.m. - Noon CDT | Presented by Ron Slee Oct. 23 - Webinar: Parts Management – Pricing 2-3 p.m. CDT | Presented by Ron Slee Oct. 24 - Webinar: Resolving Conflict in the Workplace and Customer Situations 10-11:30 a.m. CDT | Presented by Christine Corelli Oct. 29 - Webinar: Service Management – Inspection 11 a.m. - Noon CDT | Presented by Ron Slee Oct. 29 - Webinar: Service Management – Work Order Processing | 2-3 p.m. CDT | Presented by Ron Slee Oct. 30 - Webinar: Service Management – Labor Rates 11 a.m. - Noon CDT | Presented by Ron Slee Oct. 30 - Webinar: Service Management – Service Organization | 2-3 p.m. CDT | Presented by Ron Slee Nov. 5-7 - The Four Pillars of the Sales Profession for Dealers | Dayton, Ohio | Presented by Don Buttrey Nov. 11-12 Parts Management Unit I: When It’s Right (WIR I) Chicago, Ill. | Presented by Ron Slee Nov. 13-14 Service Management Unit I: When It’s Right (WIR I) Chicago, Ill. | Presented by Ron Slee
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Nov. 20-22 - Leadership Academy Featuring Disney Institute | Orlando, Fla. www.aed-leadership.com
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Groundwork Officers
Chairman Chris Pera Eastern HighReach Company, Inc. Horsham, Pa.
Vice Chairman A. Roy Kern Equipment Corporation of America Coraopolis, Pa. President Bob Henderson The AED Foundation Oak Brook, Ill. John Crum Treasurer Wells Fargo Equipment Finance, Inc. Pittsburgh, Pa. Immediate Past Chairman Walter Berry Berry Companies, Inc. Wichita, Kan. AED Board Representative Whit Perryman Vermeer Equipment of Texas Irving, Texas Executive Director Steve Johnson The AED Foundation Oak Brook Ill.
Directors
Gary Bridwell Ditch Witch of Oklahoma Edmond, Okla. Mike Festing-Smith NORTRAX, Inc. Tampa, Fla. Mike Hayes Komatsu America Corporation Rolling Meadows, Ill. Timothy Kramer Kramer Ltd. Regina, SK Dr. Wayne Longbrake Former Dean, Penn. College of Technology Williamsport, Pa. Sonja Metzler Ohio CAT Broadview Heights, Ohio Kenneth Silverman Volvo Construction Equipment Shippensburg, PA Mark teel Caterpillar, Inc. Peoria, Ill. Keith Tippett Kirby-Smith Machinery, Inc. Oklahoma City, Okla.
Together, the Equipment Industry Can Solve the Skills Gap Investing this year in The Foundation is really investing in yourself. You are probably aware of the growing skills gap in the heavy equipment industry, as evidenced by tens of thousands of unfilled technician jobs. Unfortunately, many school counselors are still pushing universities instead of trade or technical programs. This means that students aren’t aware of the diesel/equipment technology college programs that many AED member dealers support. Fewer tech students also means added competition with programs like welding, auto body and auto mechanics. While you might have enough qualified technicians now, how about in six months, a year, or even five years down the road? Do you have the time, effort and capital to train someone from scratch or would you rather hire someone who has already been trained and accredited to meet your specific needs? The AED Foundation is dedicated to developing school and industry partnership programs with input from AED-affiliated dealers, manufacturers, technical colleges and volunteers. We are working hard to solve the technician shortage. Today, 28 post-secondary colleges are affiliated with The AED Foundation through 39 AED Accredited and Education Alliance diesel/ equipment technology college programs. All are OEM or general equipment technology programs offering-four year or two-year
associate degrees in Science or Applied Science. More than 500 students are graduating from these programs each year. The process of accreditation ensures high quality candidates that meet AED-member needs. During the average time of one to three years that it takes to accredit schools, AED volunteers and staff work more than 580 hours to ensure standards are implemented properly, consulting with schools on the phone and conducting on-site visits. We are constantly seeking out additional schools to accredit so we can shrink the growing skills gap. However, we can’t do it alone. AED Accredited schools needed dealer involvement, which leads to better student enrollment, placement and resources. Please be par t of the solution. As the AED Foundation kicks off the 2014 Annual Campaign, one of the most common questions we have to answer is “Why should I invest in you?” The answer is: you’re not really investing in us; you are investing in your business and its future. To invest in your future, call Rebecca Rakers at 630-468-5113 or e-mail rrakers@ aednet.org for a pledge form. Your taxdeductible donation will allow us to continue to serve your needs. All investors are prominently recognized for their generosity through listings in CED magazine and on the Investor Boards at AED Summit.
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Industry Beat
Final Phase of U.S. Chamber-Sponsored Study Details Jobs Created by Shale in Manufacturing Sector
Latest volume of IHS Report also shows that increased regulations on shale could hamper job growth. The third and final phase of a comprehensive study co-sponsored by the U.S. Chamber’s Institute for 21st Century Energy demonstrates that the impact of shale energy production on America’s economy goes well beyond the energy industry itself – but it could be in jeopardy if the U.S. adopts more restrictive policies or regulations. “Volume Three of America’s New Energy Future: The Unconventional Oil and Gas Revolution and the U.S. Economy,” produced by the leading independent global energy research firm IHS, focuses specifically on manufacturing, chemical and other “downstream” activities. The study shows that shale supports nearly 377,000 jobs in these areas, in addition to the 1.7 million jobs supported by shale energy development – for a total of 2.1 million jobs. “The final phase of the IHS Study confirms that shale is making a positive impact across our economy,” said Karen Harbert, president and CEO of the Energy Institute. “The
study shows that shale energy development increased the real disposable income of the average American household by more than $1,200 in 2012, providing further evidence that energy is America’s true stimulus, creating more jobs than any other industry today.” Overall, $216 billion will be invested in downstream activities like manufacturing and midstream activities like transportation from 2012-2025 as a result of shale. Manufacturing output is expected to increase by $258 billion in 2020 and $328 billion in 2025, while increased industrial production is projected to generate $180 billion per year in additional net trade. Combined with jobs related to producing shale energy, shale will be responsible for 3.9 million jobs by 2025, and produce $1.6 trillion in government revenue – if new regulations don’t hamper shale energy production. All three phases of the study are available at: www.energyxxi.org/shale
Appeals Courts Deny NLRB Requests to Rehear Poster Rule Case
Short-Haul Exemption Clarified in Complex HOS Rules
On Sept. 4, the U.S. Court of Appeals for the D.C. Circuit became the second court to deny a request by the National Labor Relations Board (NLRB) to review a decision to invalidate the NLRB’s August 2011 “Notification of Employee Rights” rule. Under the rule, employers would have been required to display a poster in their workplace that contained a biased and incomplete list of employee rights under the National Labor Relations Act (NLRA). The D.C. Circuit’s denial came less than a month after the U.S. Court of Appeals for the Fourth Circuit denied a similar request on Aug. 12. A three-judge panel for the D.C. circuit invalidated the notice posting rule May 7, primarily on the grounds that it violated free speech rights afforded to employers under the NLRA. The fourth circuit court ruled June 14 the NLRB exceeded its authority when it adopted the rule but said it did not need to address the free speech issue because the NLRB clearly lacked the authority to promulgate the rule in the first place. The Associated Builders & Contractors participated in oral arguments against the rule in the D.C. Circuit appeals court in September 2012, stating it would force some six million employers around the country to communicate a pro-union message to their employees for the first time in the history of the NLRA. ABC also argued the board cannot show that Congress expressly or implicitly delegated authority to issue the rule and that it violates the plain language of numerous provisions of the NLRA Act, including Section 8(c), which states “expressing of any views shall not constitute or be evidence of an unfair labor practice.”
On Aug. 7, the Federal Motor Carrier Safety Administration (FMCSA) clarified the classification of “short-haul” truck drivers. These individuals were carved out from the 30-minute break rule in the recent decision by the U.S. Court of Appeals for the D.C. Circuit, upholding the Hours of Service (HOS) regulations that took effect on July 1. FMCSA’s guidance document explains that the short-haul operations exemption will apply to drivers (commercially and noncommercially licensed) who operate within 100 air-miles of their normal work reporting location, as well as noncommercially licensed drivers who operate within a 150 air-mile radius of the location where they report for duty. The 30-minute break requirement under the HOS provisions dictates that any nonexempt driver must take an off-duty break for at least 30 minutes every eight hours of driving. Despite the FMCSA’s clarification on the short-haul driver exemption, the HOS rules remain complex and cumbersome to navigate. AED is coordinating with construction industry colleagues and key lawmakers on Capitol Hill to determine next steps.
14 | www.cedmag.com | Construction Equipment Distribution | October 2013
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Industry Beat
In the News
Wagner Equipment Co. Hosts Congressman
U.S. Rep. Mike Coffman (R-Colo.) visited the headquarters of Wagner Equipment Co. on Aug. 30, fielding questions with more than 100 employees. AED’s 2013 Chairman Mike Quirk, (left) vice president of Operations at Wagner, took the opportunity to provide Coffman with a printed copy of AED’s Legislative Agenda.
Wagner, the Caterpillar dealer for Colorado and New Mexico, has fostered an ongoing relationship with the congressman and this was his second visit at the Aurora, Colo., facility in the Denver metropolitan area. Over the course of more than six years, Wagner has hosted Rep. Coffman, as well as several members of Congress from both sides of the aisle, including a presidential candidate. “We do not openly endorse any candidates but do try to make their positions on issues of importance known and how it affects our business, our employees and our customers,” said Quirk. For information about setting up a congressional visit to your company, please contact AED Senior Director Government Affairs Daniel Fisher at dfisher@aednet.org.
U.S. Secretary of Commerce Penny Pritzker Visits Vermeer Corporation
Commerce Secretary Penny Pritzker (center right) recently visited with Mary Andringa, president and CEO of Vermeer Corporation in Pella, Iowa, to discuss ways to strengthen the economy and grow jobs. The early August visit included a tour at Vermeer’s manufacturing facilities and parts center of Vermeer Corporation and was part of Pritzker’s “listening tour” with businesses and thought leaders around the country.
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Industry Beat
AED has selected WTP Exchange for the third year in a row, as its Preferred Provider for Like-Kind Exchange (LKE) services. WTP Exchange is an affiliate company of WTP Advisors, an awardwinning global tax and business advisory firm, also recently named to the Inc 5000 list of America’s fastestgrowing private companies for the third year running. Attachment manufacturer Woods Equipment Company, a division of Blount International, Inc., announced a supplier partnership with Cabela’s Incorporated, the outfitter of hunting, fishing and outdoor gear. Woods will supply implements to complement Cabela’s new “Wildlife and Land Management (WLM)” product category. In the initial phase, Cabela’s and Woods are conducting a test market at the Cabela’s store in Sidney, Neb. Later in 2013, the test will roll out in additional markets, including Arkansas, Connecticut, Louisiana, Minnesota, and Texas.
Road Machinery LLC opened a new branch in Pico Rivera, Calif.
specialized trailer tanks for liquid and solid storage and containment solutions. Its tank trailers are sold to specialist independent tank rental companies for a variety of end markets such as petrochemical, waste management and oil and gas drilling.
This is the second new California branch opening in the last two years. Road Machinery has six locations within California with a seventh Central Valley location scheduled to open in fall 2013. Jesco is now a full-line BOMAG equipment distributor representing all products from tampers and plate compactors to road building equipment and landfill compactors, in its full territory. In recent years, Jesco expanded beyond its three New Jersey locations, opening two facilities in New York , four in Maryland and one in Delaware.
Dynapac’s complete product line of rollers, pavers and planers is now available at the new APCO Equipment dealership in Williston, N.D. Expanding upon its original location in North Las Vegas, APCO opened its second branch on April 1, 2013.
Manitex International has acquired Sabre Manufacturing, a Knox, Ind.-based manufacturer of
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October 2013 | Construction Equipment Distribution | www.cedmag.com | 17
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Legislated Relationships
State Dealer Protection Laws
AED releases its 2013 State Equipment Distributor Laws compilation. By Crystal Maguire and Christian Klein
Equipment distributors and manufacturers operate in a complex legal environment. Merely being successful in the business of selling, renting, and servicing equipment is no longer enough to guarantee a company’s survival. In order to protect their business, responsible owners and employees must keep a constant eye on product liability, employment, workplace safety, contract, and environmental issues. The 2013 AED State Equipment Distributor Laws publication is compiled every two years by AED’s Government Affairs Office and sheds light on one important legal area affecting distributors: state laws governing the relationship between equipment distributors and manufacturers. State equipment dealer protection laws will always be controversial. Supporters argue that there is an imbalance in the bargaining relationship, that dealer contracts are controlled by the manufacturers, and that protective statutes are needed to ensure a minimum code of fairness for both parties. These proponents urge that without legislative relief, substantial legal and financial risks are inequitably shifted to dealers. Opponents of the statutes argue with equal passion that legislative action in this area represents inappropriate and unnecessary government meddling. They contend that the vast
majority of dealership agreements are fair for both parties and that restricting a manufacturer’s ability to freely choose the best dealers for their products can hamper efforts to improve the quality of their distributor networks and customer service. Finally, they argue that entering into a dealer contract is a purely voluntary act on the part of both parties; if a distributor does not like the contract’s terms, he or she can always refuse to sign it and find another manufacturer’s product line to carry. Both sides of the argument have merit, but regardless of your position on dealer statutes, one simple fact is undeniable: The number of state dealer laws throughout the country is steadily increasing. The first edition of the publication, published in 1990, contained 43 statutes from 38 states. This edition contains more than 70 statutes from the 48 states that currently have some law on the books affecting equipment dealermanufacturer relations. As of the summer of 2013, only Hawaii, the District of Columbia, and New Jersey had not enacted dealer laws specific to the equipment industry. There are many ways for equipment manufacturers to market their products, including company stores or franchises. However, historically, none of these have proven to be as effective and consumer-sensitive as independently controlled and operated
distribution outlets. Legislatures should take great care before intervening in this successful free market process. Because of the deep divisions that exist over dealer statutes, AED’s longstanding policy is to maintain neutrality on the issue of their enactment. Thus, the compilation does not constitute an endorsement of any particular statute or, indeed, of a legislative solution to the inherent challenges in the complex relationships between manufacturers and dealers. This work is designed solely to inform AED’s membership about developments in dealer protection legislation around the U.S. and give all in the equipment industry a better sense of their rights and responsibilities under the law. The publication is current as of June 2013; states that adopted or amended statutes since the last edition include: Kentucky, Mississippi, New Hampshire, and South Dakota. The biennial publication includes each state’s distributor laws, the legislative history for each law, Web links to online resources, and summaries of court decisions that interpret the statutes. The book also includes a chart summarizing the major provisions of each state’s dealer statutes including whether a statute requires good cause for termination, requires manufacturers to repurchase equipment from terminated dealers, or requires manufacturers to give dealers advance notice of termination. (Chart is reprinted in
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s
State Dealer Protection Laws
this issue on pages 20-27.) The analysis also indicates whether states allow manufacturers to terminate distributors immediately without advance notice or requires manufacturers to give distributors time to correct the problem that led to termination. Finally, the chart points out whether a statute establishes procedures to govern requests by distributors to transfer their dealerships to family, employees, or third parties, or has special provisions regarding return of surplus parts or dealer warranty work. Dealer member companies that choose to utilize the publication as a reference should note that while the authors have made every effort to ensure the accuracy of the information contained in the publication, the chart and the reprinted statutes are provided merely to give distributors and manufacturers a basic sense of their general legal rights and responsibilities. It is distributed with the understanding that AED is not engaged in rendering legal, accounting, or other professional services. If you require legal advice, consult a competent professional. The publication is made available as a PDF only and is provided complimentary to AED member dealers – watch for an e-mail with download instructions. Member manufacturers and service suppliers may purchase the publication for $795; nonmembers can order it for $1,095. Visit aednet.org/products. n
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Christian A. Klein is vice president of Government Affairs and Washington counsel for AED, and a managing member of the law firm of Obadal, Filler, MacLeod & Klein, P.L.C. in Alexandria, Va.
Crystal Maguire is director of Government Affairs and associate counsel for AED, and managing associate of the law firm of Obadal, Filler, MacLeod & Klein, P.L.C.
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State Dealer Protection Laws
KEY TO ABBREVIATIONS A = Agricultural Equipment ATV = All Terrain Vehicle
State Law Analysis State
Citation
Dealers Covered by Statute
Good Cause Required for Termination
Not Ter Req
Ala. Code §§ 8-21A-1 to 8-21A-13, the “Tractor, Lawn and Garden and Light Industrial Equipment Franchise Act”
FT, LG, LI, excludes RCM and FO
Yes
Yes,
Ala. Code §§ 8-21B-1 to 8-21B-15, the “Alabama Heavy Equipment Dealer Act”
HE, MA, C, I, MT, M, FO, excludes A, H, LS, LG, LI Some exclusions for SLDs.
Yes
Yes,
Alaska Stat. §§ 45.45.700 to 45.45.790
All, excludes manufacturers with 50 or fewer employees
No
No
Arizona
Ariz. Stat. §§ 44-6701 to 44-6709, the “Arizona Equipment Dealers Act”
A, LS, LI, U, excludes EM, HC, M, FO
Yes
Yes,
Arkansas
Ark. Code §§ 4-72-301 to 4-72-311, the “Farm Equipment Retailer Franchise Protection Act”
F, MA, U, I, LG, OP, excludes MV
No
No
Cal. Bus. & Prof. §§ 22900 to 22927, the “Fair Practices of Equipment Manufacturers, Distributors, Wholesalers, and Dealers Act”
LG, LC, A, FO, LS, I, C, M, U, MH
Yes
California
Yes, for day for
Colorado
Colo. Rev. Stat. §§ 35-38-101 to 35-38111, the “Colorado Farm Equipment Fair Dealership Act”
A, LI, U, OP, H, LS, FL, excludes EM, HC, M, FO
Yes
Yes,
FU, FO, LI, C, F, LG, excludes SLD of I, FO, C
Yes
Yes,
Connecticut
Conn. Gen. Stat. Ann. §§ 42-345 to 42-354, the “Farm, Forestry, Yard and Garden Equipment Dealers and Suppliers Act” Del. Code Ann. tit. 6, §§ 2720 to 2727, the “Equipment Dealer Contracts Act”
C, F, I, OP, with inventory of $50K+ and provides repair services
No
Yes, (90 case
None
None
None
Non
Fla. Stat. Ann. §§ 686.40 to 686.418, the “Agricultural Equipment Manufacturers and Dealers Act”
A, excludes ORC, M, U, I
Yes
Yes,
Fla. Stat. Ann. §§ 686.60 to 686.614, the “Outdoor Power Equipment Manufacturers, Distributors, Wholesalers, and Servicing Dealers Act”
OP
Yes
Yes,
Ga. Code Ann. §§ 10-1-730 to 10-1-740, the “Georgia Multiline Heavy Equipment Dealer Act.”
HE (MLD), excludes MV &F
Yes
Yes,
Ga. Code Ann. §§ 13-8-11 to 13-8-25
T, F, A, H
Yes
Yes,
Ga. Code Ann. §§ 13-8-31 to 13-8-45
F, FT, A
Yes
Yes,
None
None
None
Non
B = Backhoes C = Construction Equipment CB = Commercial and Business Equipment CPE = Construction Power Equipment EM = Earth Moving Equipment EX = Excavating F = Farm Equipment
Alabama
FK = Fork Lifts FL = Floriculture Equipment FO = Forestry Equipment FT = Farm Tractor
Alaska
FU = Farm and Utility Tractors H = Horticultural HC = Heavy Construction Equipment HE = Heavy Equipment HIMH = Heavy Industrial Material Handling I = Industrial Equipment IC = Industrial Construction Equipment IM = Industrial Maintenance Equipment IPE = Industrial Power Equipment IT = Industrial Tractors L = Loaders LC = Landscaping LG = Lawn and Garden Equipment LI = Light Industrial Equipment LM = Lawn Mowers LS = Livestock and Grazing Equipment M = Mining Equipment
Delaware
MA = Machinery MC = Motorcycle MH = Material Handling Equipment
District of Columbia
MLD = Multi-line Dealer MPE = Maintenance Power Equipment MT = Maritime MU = Maintenance/Utility
Florida
MV = Motor Vehicles OP = Outdoor Power Equipment ORC = Off Road Construction Equipment RCM = Road Construction and Maintenance SLD = Single Line Dealer SN = Snowmobile T = Tractors
Georgia
TR = Trucks U = Utility Equipment UT = Utility Tractors YG = Yard and Garden Equipment
Hawaii
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ause d for tion
State Dealer Protection Laws
Notice of Termination Required
Buy-Back Requirement
Immediate Termination Available
Time Required to Correct Deficiencies
Special Provision Regarding Transferability
Special Provision Regarding Return of Surplus Parts
Special Provision Regarding Warranties
Restriction on Waiver of Statutory Protection
Yes, 90 days
Yes, within 90 days of termination
Yes
Yes, 6 months
Yes
Yes
Yes
Yes
Yes, 120 days
Yes, payment due within 90 days of return
Yes
Yes, 90 days
Yes
No
No
Yes
No
Yes, request must be made within three months of termination
Yes
None
No
No
No
Yes
Yes, 90 days
Yes
Yes
Yes, 60 days
Yes
Yes
No
Yes
No
Yes, payment due within 60 days of return
Yes
No
No
No
Yes
No
Yes, 180 days for non-SLD, 90 days (generally) for SLD
Yes, payment due within 90 days of return.
Yes
Yes, 60 days
Yes
Yes
Yes
Yes
Yes, 180 days
Yes
Yes
Yes, 180 days
Yes
Yes
Yes
Yes
Yes, 120 days
Yes, payment due within 45 days of return
Yes
No
Yes
No
Yes
Yes
Yes, 6 months (90 days in some cases)
Yes, request must be made within 90 days of termination; payment due within 60 days of return
Yes
No
No
No
Yes
No
None
None
None
None
None
None
None
None
Yes, 180 days
Yes, request must be made within 60 days of termination
Yes
Yes, 180 days
Yes
Yes
Yes
Yes
Yes, 90 days
Yes, request must be made within 60 days of termination
Yes
No
Yes
Yes
Yes
Yes
Yes, 120 days
No
Yes
Yes, 75 days
Yes
No
No
Yes
Yes, 90 days
Yes, request must be made within 60 days of termination
Yes
Yes, 90 days
Yes
Yes
Yes
Yes
Yes, 60 days
Yes, request must be made within 60 days of termination
Yes
No
Yes
Yes
Yes
Yes
None
None
None
None
None
None
None
None
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State Dealer Protection Laws
State Law Analysis State
Notice of Termination Required
Citation
Dealers Covered by Statute
Good Cause Required for Termination
Idaho Code Ann. §§ 28-23-101 to 28-23-113
F, A, MA
No
No
Yes, mad term
Idaho
Idaho Code Ann. §§ 28-24-101 to 28-24-108
A, H, LS, OP, ATV, I, C
Yes
Yes, 90 days (except for failure to penetrate the market)
No
Illinois
Ill. Comp. Stat. §§ 815-715/1 to 815-715/11, the “Illinois Equipment Fair Dealership Law”
F, OP, C, ATV, MC, I
No
No
Yes
Ind. Code §§ 15-7-7-1 to 15-7-7-17
F, T, U, I, C, excludes MV
No
No
Yes, mad term
Iowa Code §§ 322D.1 to 322D.7
F, ATV, SN, MC
No
No
Yes, day
Iowa Code §§ 322F.1 to 322F.9
A, C, I, U, OP
Yes
Yes, 90 days
Yes,
Kan. Stat. Ann. § 16-120
F, OP, LG
No
No
No
Kan. Stat. Ann. §§ 16-1001 to 16-1007
F
No
No
Yes, day
Kan. Stat. Ann. §§ 16-1201 to 16-1208, the “Kansas Agricultural Equipment Dealership Act”
F, FT
Yes
Yes, 90 days
No
Kan. Stat. Ann. §§ 16-1301 to 16-1312, the “Kansas Outdoor Power Equipment Dealership Act”
OP, used in I, C, U
Yes
Yes, 90 days
Yes, day
Kan. Stat. Ann. §§ 16-1401 to 16-1412, the “Kansas Lawn and Garden Equipment Dealership Act”
LG
Yes
Yes, 90 days
Yes, day
Kentucky
Ky. Rev. Stat. Ann. §§ 365.800 to 365.840
F, T, U, I, LG, H, FL, C, EX
Yes
Yes, 90 days
Yes, day
Louisiana
La. Rev. Stat. Ann. §§ 51:481 to 51:490
F, C, HI, MH, U, LG
Yes
Yes, 90 days
Yes, day
Me. Rev. Stat. Ann. Tit.10. §§ 1285 to 1298
FU, FO, I, C, F, LG, excludes ATV, MC
No
Yes, 120 days
Yes, with tion day
Me. Rev. Stat. Ann. Tit.10. §§ 1361 to 1370
A, F, CB, MA, excludes MV
Yes
Yes
No
Md. Code Ann., Com. Law §§ 19-101 to 19-305, the “Equipment Dealer Contract Act”
C, F, U, I, OP, ATV, MC, SN
Yes
Yes, 90 days, in limited instances
Yes, term 30 d
Mass. Gen. Laws Ch. 93G, §§ 1 to 11.
F, FU, FO, LI, YG, excludes SLD of I, FO, or C
Yes
Yes, 120 days
Yes, day
Mich. Comp. Laws Ann. §§ 445.1451 to 445.1460, the “Farm and Utility Equipment Act”
F, FU, A, H, LS, FO, LG, C, MH, EM
Yes
Yes, 90 days
Yes, of r
Minn. Stat. Ann. §§ 325E.05 to 325E.067, the “Minnesota Agricultural Equipment Dealership Act”
A
No
No
Yes, day
Minn. Stat. Ann. §§ 325E.05 to 325E.067, the “Minnesota Agricultural Equipment Dealership Act”
F
Yes
Yes, 90 days
No
Minn. Stat. Ann. §§ 325E.068 to 325E.0684, the “Minnesota Heavy and Utility Equipment Manufacturers and Dealers Act”
HE, U, M, FO
Yes
Yes, 90 days
Yes, day
Indiana
Iowa
Kansas
Maine
Maryland
Massachusetts Michigan
Minnesota
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Buy Req
State Dealer Protection Laws
Buy-Back Requirement
Immediate Termination Available
Time Required to Correct Deficiencies
Special Provision Regarding Transferability
Special Provision Regarding Return of Surplus Parts
Special Provision Regarding Warranties
Restriction on Waiver of Statutory Protection
Yes, request must be made within 90 days of termination
Yes
No
No
No
No
No
No
Yes
Yes, 90 days
Yes
No
Yes
Yes
Yes
Yes
No
No
No
Yes
Yes
Yes, request must be made within 90 days of termination
Yes
No
No
No
No
No
Yes, payment due within 60 days of return
Yes
No
No
No
No
No
Yes, within 90 days of return
Yes
Yes, 60 days (18 months in some cases)
Yes
No
No
Yes
No
No
No
No
No
Yes
No
Yes, payment due within 60 days of return
Yes
No
No
No
No
No
ys
No
Yes
Yes, 60 days
Yes
No
No
Yes
ys
Yes, payment due within 60 days of return
Yes
Yes, 60 days
Yes
No
No
No
ys
Yes, payment due within 60 days of return
Yes
Yes, 60 days
Yes
No
No
No
ys
Yes, payment due within 60 days of shipment
Yes
Yes, 60 days
No
No
Yes
Yes
ys
Yes, payment due within 60 days of shipment
Yes
Yes, 60 days
No
No
No
No
ays
Yes, request must be made within 30 days of termination; payment due within 45 days of return
Yes
No
Yes
No
Yes
Yes
No
Yes
Yes, 6 months
No
No
Yes
Yes
ys, in tances
Yes, within 90 days of termination. Payment within 30 days of receipt
Yes
Yes, 60 days in limited circumstances
No
No
Yes
No
ays
Yes, payment due within 45 days of return
Yes
No
Yes
No
Yes
Yes
ys
Yes, payment within 90 days of receipt
Yes
Yes, 90 days
No
No
No
Yes
Yes, payment due within 60 days of return
Yes
No
No
No
No
No
ys
No
Yes
Yes, 60 days
No
No
Yes
Yes
ys
Yes, payment due within 60 days of return
Yes
Yes, 90 days
Yes
No
No
Yes
on
days for to ate the )
ys
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State Dealer Protection Laws
State Law Analysis State
Citation
Dealers Covered by Statute
Good Cause Required for Termination
Notice of Termination Required
Buy Req
Mississippi
Miss. Code Ann. §§ 75-77-1 to 75-77-19
F, I, OP, MA, U, ATV
Yes
Yes, 90 days
Yes, day
Mo. Ann. Stat. §§ 407.753 to 407.756
IPE, MPE, CPE
Yes
Yes, 90 days
No
Mo. Ann. Stat. §§ 407.838 to 407.848
F
Yes
Yes, 90 days
No
Mo. Ann. Stat. §§ 407.850 to 407.885
F, LG, IPE, MPE, CPE, OP
No
No
Yes, day
Mo. Ann. Stat. § 407.307
F, IM, CPE, OP
---
---
---
Mo. Ann. Stat. §§ 407.895 to 407.898
OP, excludes mfg with <50 and dealers with <5 employees
Yes
No
No
Mont. Code Ann. §§ 30-11-701 to 30-11-713
F, I, C, MV, TR, MC, SN
No
No
Yes, day
Mont. Code Ann. §§ 30-11-801 to 30-11-811
F
Yes
Yes, 90 days
No
Mont. Code Ann. §§ 30-11-901 to 30-11-909
C
Yes
Yes, 90 days
No
Neb. Rev. Stat. §§ 69-1501 to 69-1504
F
No
No
Yes, day
Neb. Rev. Stat. §§ 87-701 to 87-711, the “Equipment Business Regulation Act”
A, FO, I, H, LS
No
Yes, 90 days
Yes, day
Nev. Rev. Stat. Ann. §§ 597.112 to 597.118.
F
Yes
Yes, 180 days
Yes, day
N.H. Rev. Stat. Ann. §§ 357-C:1 to 357-C:16
FT, UT, FO, I, C, F, YG, Excludes SLD
Yes
Yes, 90 days (180 days in some cases)
Yes, day
New Jersey
None
None
None
None
Non
New Mexico
N.M. Stat. Ann. §§ 57-23-1 to 51-23-8, the “Franchise Termination Act”
F, FU, IT
No
No
Yes, day
New York
N.Y. Gen. Bus Law §§ 696-A to 696-I
F, A, LG, MU
Yes
Yes, 90 days
Yes, day
North Carolina
N.C. Gen. Stat. §§ 66-180 to 66-188
F, C, U, I, OP
No
Yes, 90 days
Yes, term
N.D. Cent. Code §§ 51-20.1-01 to 51-20.1-05
HC
Yes
No
Yes
N.D. Cent. Code §§ 51-07-01 to 51-07-26.1
F, MA, LG, TR, MV, TR
Yes
Yes, for MV and TR only, 90 days
Yes, day
Ohio Rev. Code Ann. §§ 1353.01 to 1353.06
F, C
Yes
Yes, 180 days
Yes, day
Okla. Stat. Ann. tit. 15, §§ 244 to 251, the “Fair Practices of Equipment Manufacturers, Distributors, Wholesalers and Dealers Act”
A, F, FU, IT, OP, LG, LC, M, ATV, FO, C, I, U, limited applicability for SLD
Yes
Yes, 180 days (2 years for failure to meet reasonable standards and performance objectives)
Yes, day
Or. Rev. Stat. Ann. §§ 646A.300 to 646A.322
F, A, LG, OP, LS, H
Yes
Yes, 90 days
Yes, day
Missouri
Montana
Nebraska
Nevada
New Hampshire
North Dakota
Ohio
Oklahoma
Oregon
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State Dealer Protection Laws
Buy-Back Requirement
Immediate Termination Available
Time Required to Correct Deficiencies
Special Provision Regarding Transferability
Special Provision Regarding Return of Surplus Parts
Special Provision Regarding Warranties
Restriction on Waiver of Statutory Protection
ys
Yes, payment due within 60 days of shipment
Yes
Yes, 60 days
No
No
Yes
Yes
ys
No
Yes
Yes, 60 days
No
No
No
No
ys
No
Yes
Yes, 60 days
No
No
No
No
Yes, payment due within 60 days of return
Yes
No
No
No
Yes
No
---
---
---
Yes
---
--
---
No
Yes
No
No
No
No
No
Yes, payment due within 60 days of return
Yes
No
No
No
No
No
ys
No
Yes
Yes, 60 days
Yes
No
No
No
ys
No
Yes
Yes, 60 days
Yes
No
No
No
Yes, payment due within 60 days of return
Yes
No
No
No
No
No
ys
Yes, payment due within 90 days of return
Yes
Yes, 60 days
Yes
Yes
No
Yes
ays
Yes, payment due within 60 days of shipment
Yes
Yes, 60 days
No
Yes
Yes
Yes
ys (180 me
Yes, payment due within 90 days of termination
No
Yes, 180 days
Yes
No
Yes
Yes
None
None
None
None
None
None
None
Yes, payment due within 60 days of return
Yes
No
No
No
Yes
No
ys
Yes, payment due within 60 days of return
Yes
No
Yes
Yes
Yes
Yes
ys
Yes, within 90 days of termination
Yes
Yes, 60 days
No
No
Yes
Yes
Yes
Yes
No
No
No
No
No
V and 0 days
Yes, payment due within 30 days of “final settlement”
Yes
No
Yes
No
Yes
Yes (applies only to MV, TR)
ays
Yes, payment due within 90 days of return
No
Supplier must give dealer opportunity to submit remedial plan
No
No
No
No
ays (2 ailure asonards rmance )
Yes, payment due within 90 days of return
Yes
Yes, 60 days
Yes
No
Yes
Yes
ys
Yes, payment due within 90 days of return
Yes
Yes, 60 days
Yes
No
Yes
Yes
on
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State Dealer Protection Laws
State Law Analysis State
Citation
Dealers Covered by Statute
Good Cause Required for Termination
Notice of Termination Required
Buy Req
Pennsylvania
73 Pa. Cons. Stat. Ann. §§ 205-1 to 205-10, the “Pennsylvania Fair Dealership Law”
A, H, FL, T, L, F, LS, B, LM, excludes IC and ATV
Yes
Yes, 90 days
Yes, day day
Rhode Island
R.I. Gen. Laws §§ 6-46-1 to 6-46-12, the “Rhode Island Equipment Dealership Act”
FU, FO, I, C, F, YG, excludes SLD of I, FO, and C
Yes
Yes, 120 days
Yes, day
S.C. Code Ann. §§ 39-6-10 to 39-6-180, the “Fair Practices of Farm, Construction, Industrial, and Outdoor Power Equipment Manufacturers, Distributors, Wholesalers, and Dealers Act”
F, C, I, OP, excludes cranes, SLDs of C and EM and MLDs of OP
Yes
Yes, 180 days
No
S.C. Code Ann. §§ 39-59-10 to 39-59-130
F, MA, U, I, YG
No
No
Yes, term due
S.D. Codified Laws §§ 32-39-1 to 32-39-4
A, excludes ORC
---
---
---
S.D. Codified Laws §§ 37-5-1 to 37-5-18
MV, TR, MC, FT, I, C, F, OP, SN, ATV, excludes SLDs and dealers with $100 million+ gross sales from some provisions
Yes
No
Yes, day
Tenn. Code Ann. §§ 47-25-1301 to 47-25-1314
F, C, U, I, OP
Yes
Yes, 90 days
Yes, day
Tenn. Code Ann. §§ 47-25-1801 to 47-25-1808
F, C, U, I, OP
---
---
---
Tex. Bus. & Com. Code Ann. § 57, the “Fair Practices of Equipment Manufacturers, Distributors, Wholesalers, and Dealers Act”
A, C, I, M, FO, LC, OP, excludes ATV
Yes
Yes, 180 days, 90 days for single-line dealer agreements
Yes, day
Utah Code Ann. §§ 13-14A-1 to 13-14A-9
F, U, LI, YG, excludes HI, C
No
No
Yes, day
Utah Code Ann. §§ 13-14B-101 to 13-14B-105, the "Uniform Equipment Dealers Warranty Reimbursement Act."
A, C, U, I, OP, LG
---
---
---
Vt. Stat. Ann. tit. 9, §§ 4071 to 4082, 4083 to 4100
F, FU, FO, I, U, YG, excludes SLD of I, FO, C
Yes
Yes, 120 days
Yes, day
Va. Code §§ 59.1-352.1 to 59.1-352.10
F, C, U, I, OP
Yes
Yes, 90 days
Yes, day
Va. Code §§ 59.1-353 to 59.1-363, the “Heavy Equipment Dealer Act”
HE (with some additional qualifications) used in C, I, MT, M, FO, excludes F
Yes
Yes, 120 days
No
Wash. Rev. Code Ann. §§ 19.98.008 to 19.98.913
F, OP (if dealer primarily sells F)
Yes
Yes, 90 days (one year in some cases)
Yes,
W. Va. Code Ann. §§ 47-11F-1 to 47-11F-8, the “West Virginia Farm Equipment Dealer Contract Act”
F, C, I, OP with inventory of $25K+ and provides repair services
No
Yes, 6 months
Yes,
Wisconsin
Wis. Stat. §§ 135.01 to 135.07, the “Wisconsin Fair Dealership Law”
All, excludes MV
Yes
Yes, 90 days
Yes
Wyoming
Wyo. Stat. Ann. §§ 40-20-101 to 40-20-123, the “Wyoming Fair Practices of Equipment Manufacturers, Distributors, Wholesalers and Dealers Act”
ATV, LG, A, I, C, U, SLD has different coverage in some cases
Yes
Yes, 180 days (90 days for SLC)
Yes, day
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
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State Dealer Protection Laws
Buy-Back Requirement
Immediate Termination Available
Time Required to Correct Deficiencies
Special Provision Regarding Transferability
Special Provision Regarding Return of Surplus Parts
Special Provision Regarding Warranties
Restriction on Waiver of Statutory Protection
ys
Yes, payment due within 90 days of termination or 60 days of return
Yes
Yes, 60 days
No
No
No
No
ays
Yes, payment due within 45 days of return
Yes
No
Yes
No
Yes
Yes
ays
No
Yes
Yes, in some cases
Yes
No
Yes
Yes
Yes, within 90 days of termination and payment due within 30 days of return
Yes
No
No
No
Yes
Yes
---
---
---
---
---
Yes
---
Yes, payment due within 60 days of return
Yes
No
Yes
No
Yes
Yes
Yes, payment due within 60 days of return
Yes
Yes, 60 days
No
No
No
Yes
---
---
---
---
---
Yes
---
Yes, payment due within 90 days of return
Yes
Yes, 60 days
Yes
No
Yes
Yes
Yes, payment due within 60 days of return
Yes
No
Yes
No
No
Yes
---
---
---
--
---
Yes
---
ays
Yes, payment due within 45 days of return
Yes
No
Yes
No
Yes
Yes
ys
Yes, payment due within 30 days of receipt
Yes
Yes, 60 days
No
No
Yes
Yes
ays
No
Yes
Yes, 75 days
Yes
No
No
Yes
ys (one me
Yes, within 90 days
Yes
Yes, 60 days
Yes
No
Yes
Yes
nths
Yes, within 90 days of return
Yes
No
No
No
No
No
ys
Yes
Yes
Yes, 60 days
No
No
No
No
ays (90 LC)
Yes, payment due within 90 days of receipt
Yes
Yes, 60 days
Yes
Yes
Yes
Yes
on
ys
ays, r dealer ts
October 2013 | Construction Equipment Distribution | www.cedmag.com | 27
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Tribute
Our Leader’s Legacy Through downturns, floods and hostile regulatory environments, Toby Mack has held the helm of AED with steady hand and forward thinking. By Kim Phelan
In the hieroglyphics of association acronyms, there’s one professional who is a fluent master in the language – aka business – of association management, and for his many accomplishments Toby Mack scores an E for excellence. Whereas he began his career in association work with the EIA (Electronic Industries Association), at the end of this month he is stepping down from his post as AED president and CEO to take up the chief executive position at the EEIA (Energy Equipment and Infrastructure Alliance). Not only has Toby doubled the Es on his business card, he’s also shouldering important work that will continue to benefit AED members. Or perhaps, after 24 years of AED leadership, Toby’s extra E could also signify execution, for in that time, with the AED Board of Directors as his compass, he has both navigated the organization through numerous challenging cycles and has successfully built and expanded its infrastructure, helping to shape AED into the prominent industry-supporting and advocacy leader that it is today. It was November of 1989 when Toby officially came on board at 615 W. 22nd St., AED’s headquarters built in 1964, overlooking the wooded, scenic Salt Creek – later to become his flooding nemesis. While he was CEO of the National
The AED staff, based in Oak Brook, Ill., gathered for a commemorative photo with Toby in mid-September.
Electronic Distributors Association, Toby became acquainted with his predecessor, P.D. (Bud) Hermann, through association executives’ networking circles, and Hermann put Toby’s hat in the ring to be his successor. Actually, Toby’s first AED event was the 1989 summer Board Meeting, and he was formally introduced to the membership at the 1990 Annual Meeting in Chicago, with outgoing AED President and President of Ohio Machinery Tom Taylor presiding. Hermann remained on for a few months to make the transition smooth – then Toby got to work. A Formal Strategic Planning Process One of Toby’s earliest tasks proved to be one of the most lasting in impact. He realized quickly that the association had for many years operated without a formal strategic plan – instead, every incoming volunteer president would identify his own half-dozen or so objectives, which became the focus of association endeavors for that man’s term of office. Needless to say, “it didn’t work so well,” said Toby. “It created an environment where the senior elected officer could steer the organization according to his own beliefs about what AED should be doing.” Together with Jay Paradis, then president of Brandeis Machinery & Supply, who would be AED President in 1994, Toby initiated a formal planning process that resulted in AED’s first strategic plan, as well as a protocol for ongoing renewal, challenge and update every three years. “We started from scratch, hired a facilitator, and at the summer Board Meeting in 1994, we went through three days of developing a strategic plan for the association,” said Toby. “It was a key inflection, giving us a lot more consistency and allowing us to focus on our strategic objectives over longer periods.” The reset and renewal process has been a healthy exercise for AED Boards ever since. “It’s great to sit together as a board and talk about what we should be doing, but what you really need is data,”
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Tribute
Toby added. “You need to take a deep, deep dive into what your members are thinking; what are their needs, challenges, threats and opportunities; where are they coming from, and combine that with overall industry trend data and forecasts.” So, to complement and really guide the Board’s strategic planning work, Toby launched an extensive research process to gage member priorities. And when AED began taking the pulse of the membership, a clear and consistent message was heard, strongly signaling what would be a chief legacy achievement for the association: an expanded role in public policy advocacy. The Necessity of Advocacy By the late ‘90s, it became increasingly evident that AED members were gravely concerned about regulation and government policy, particularly with infrastructure investment. For a few decades, Tony Obadal had been “AED’s guy in Washington,” but with limited assets to truly affect outcomes in Washington on behalf of equipment dealers. That was to change dramatically. Obadal had hired young law-school grad Christian Klein, and when the senior attorney retired in 2000, Toby saw Christian as a natural successor with the skills, energy and effectiveness around which AED could significantly raise its game in Washington. “So we gave him the ball and Christian became the AED’s ‘boots’ in the capital. Christian is good at his craft. He delivered some critical early results, and we started building a track record, a reputation for effectiveness, and a highly respected voice.” Driven by continuous member demand for more emphasis on public policy, as well as growing prospects in 2008 that new and greater challenges would likely be coming from a new occupant in the White House, Toby and Christian recognized, “We’d better raise our game,” Toby recalled. “We’ve got a whole lot more coming at us and we’d better get ready.” Another round of strategic planning and member research yielded more of the recurrent call for greater AED focus on impacting highway and regulatory policy, tax policy, and other issues vexing dealer businesses. Although the Great Recession was still smothering the industry, the AED Board decided to double down on AED’s lobbying muscle. The DC team needed more manpower and Klein hired Daniel Fisher in 2009. Swimming Upstream “In that period when we were both resource-constrained and trying to ramp up our policy apparatus,” Toby reflected, “and the rest of our world was struggling, AED members were fighting for survival – and right in the middle of all that, the flood hit!” Pounded over the decades by an increasing number of “100-year” floods, the AED headquarters finally succumbed to foot-high waters that overtook the offices in July of 2010.
Toby married Marti DeGraff in January 1981, and it was a match made in association heaven. While Toby was building his career as an association executive he met his bride-to-be while she was executive director at a residential facility for emotionally disturbed teens. Marti founded the Illinois Association of Childcare Workers, and went on to become CEO for the National Association of Nurse Recruiters and CEO for the Marketing Research Association.
But Toby saw the silver lining even in that devastating storm cloud. Relocating the staff to the second story of an office building next door, Toby realized significant savings for the association, as renting proved to be far less costly than upkeep of a 40-plus-year-old, flood-weary building. He saw an opportunity to redirect those savings for further advocacy advantage. “I came to the Board with a proposal on how to increase our public policy footprint,” Toby explained. “So I said, ‘I think we can gain more leverage by having me spend much more of my time in Washington.’” The Board agreed, and Toby set up a small office on Pennsylvania Ave., joining a host of DC-based association CEO peers at the coalition table, and significantly magnifying AED’s presence and voice on Capitol Hill. Shale Energy and Powering Up the Equipment Industry Over the past 12 months, with the Board’s encouragement, Toby has spearheaded the formation of the Energy Equipment and Infrastructure Alliance (EEIA), of which AED is a founding member. The purpose of the organization is to provide research-based and federal and community-level advocacy in support of the shale oil and gas industry, which has proved to be a life-boat for construction equipment distributors in geographies where shale oil and gas development has been thriving and energy infrastructure is being built. “EEIA has a unique voice advocating for good energy policy from the vantage of the economic contributions of the supply chain – equipment dealers and manufacturers, contractors and materials suppliers,” Toby said. Representing the wide base of suppliers and workforce that support the shale energy industry, EEIA, under Toby’s (continued on next page)
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Tribute
(“Our Leader’s Legacy” continued from page 29)
full-time leadership going forward, will be the third-party voice that can make an economic case that oil and gas companies can’t make on their own. One of the first tasks of the new organization will be conducting a major study seeking to measure the economic and employment impact of the oil and gas supply chain. And one of EEIA’s first major theatres of operation will be in Colorado, where a strong “fracktivist” movement is threatening to put a hydraulic fracturing ban on the state ballot in November 2014. “The public has to be assured that (1.) fracking won’t impair water and air quality, and (2.) that the economic advantages are overwhelmingly positive,” Toby said. “The problem is, there are strong forces that oppose fossil fuel consumption of any kind. They are channeling their focus and resources on Colorado for a major showdown.” EEIA will be an active force in the debate, rallying local suppliers, including equipment dealers, in the heated battle for hearts and minds of the public. Lessons and Achievements Over the course of a decade spent in constructing a powerful advocacy engine for AED, Toby says a key lesson he’s gained has to do with keeping your focus squarely on the issues and not letting debates get personal. Paraphrasing the words of a British diplomat, Toby said, “There are no friends and there are no enemies, there are only interests. And it’s so true – when you’re working in Washington, you have to be very cognizant that your opponent on one issue may be your best friend on another. You never burn a bridge.” As effective as Toby has been in developing AED on the public policy front, advocacy and the strategic planning
After withstanding a handful of major floods over the years, AED’s headquarters succumbed to high water on July 23, 2010, and was subsequently condemned by the Village of Oak Brook, Ill. It is scheduled to be torn down this fall, and the scenic property will become a park.
P.D. “Bud” Hermann (left) retired in 1989 after ensuring a smooth change of the guard for AED – Toby was officially introduced to the membership at the 1990 convention in Chicago.
upon which it was built are not his only achievements. Another big area of industry need is education and workforce development, and to answer that challenge, Toby and a few other visionary AED leaders spearheaded the creation of The AED Foundation, which was chartered in 1991. Just prior to his arrival at AED, an exploratory committee had determined that a foundation was not needed. But Toby said, “Let’s take another look at this,” and incoming 1991 AED President Earl Harbaugh, then president of Ditch Witch of Illinois/Wisconsin, strongly agreed, and together they made it happen. Today, The Foundation provides industryspecific professional education for dealer management personnel, as well as industry-leading strides in workforce development through AED Technical Standards, communitybased dealer-school relationships, and school accreditation. Under Toby’s watch, AED brought Canadian members into the association beginning in January 2010. Expanding our coverage to include Canadian members was “one of the best moves we’ve made as an organization,” he said. Toby has maintained high standards for leveraging technology, which has been critical in the dissemination of association, public policy, and industry information and getting member input. Also during his tenure, the Executive Forum was created in 1999, bringing a C-level strategic emphasis to AED’s array of educational and networking events. And through numerous downturns, including the Great Recession of 2008, the effects of which still plague the industry, Toby has managed the fiscal affairs of AED with careful stewardship. “Through the peaks and valleys we’ve been able to keep the association in a solid financial position,” he said. “One of the things I’m leaving my successor [not yet selected] is a very strong balance sheet.” In fact, AED’s only debt is one of gratitude to Toby Mack for his exemplary leadership and accomplishments for the association and the equipment industry. Thank you, Toby. n
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“Having a lender that understands this industry is important – to me and my customers.”
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3/1/13 12:46 1:49 PM 3/24/13 PM
Dare to Prepare Training
Fact: Lower job preparedness is becoming the norm – and it’s up to us to equip our current and incoming personnel at every level. Our customers are counting on it. By Ron Slee
This is Part 2 of a special threepart series. Last month, we looked at the subject of technicians and the challenges we face in attracting, developing and retaining them. This month, I want to touch on everyone other than management and supervision in the Product Support group. That covers the office support personnel in the service department, the parts office personnel, the warehousing group, the in-store selling group in parts – counter and telephone – as well as the product support sales team. So, we’re talking about a lot of people. We’ve established that technical schools don’t get the attention they deserve in a society that pushes for everyone to have a university education. I also pointed to universities’ deficiencies in terms of preparing students for a work life.
But let’s drop down in the education chain to the high schools that feed the universities, technical schools, and much of business directly. First, some straightforward statistics from “The Condition and College and Career 2013” (this report can be found at www.act.org) – 25 percent of all 2012 ACT-tested high school graduates met all four ACT College Readiness Benchmarks, meaning that just 1 in 4 were academically ready for college coursework in all four subject areas. In 2013, 26 percent met the ACT College Readiness Benchmarks in all four subjects, so the 2012 results were not an abnormality. By the definition used by ACT, this means those who are ready for university will have a 75 percent chance of obtaining a C grade and 50 percent chance of receiving
a B. That is quite a lot to digest, I suspect. The end result is that the new workers – coming from high school, technical schools or universities – are not a finished product. They require training and development, as we all did and do. But the level of capabilities leaves a lot to be desired, and it calls for some actions on our part. As time passes, we will be dealing with a lower level of job preparedness from the school systems. Businesses that adapt to this fact and develop programs and tools to assess and develop employee talent will succeed. Others will not. Flashback I remember starting in the equipment business. I was hired on a one-year contract to fix a problem. I received (continued on page 34)
32 | www.cedmag.com | Construction Equipment Distribution | October 2013
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Join our HYDREMA family!
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Training
(“Dare to Prepare” continued from page 32)
one-on-one training one day each week from a senior partner in a national consulting firm for about three months. I know it is unusual, but I am intending to point out what my employer did to ready me for the work at hand. Within three months, I attended a one-week product training school at the manufacturer. Within six months I had an additional two weeks with two senior managers with the manufacturer, who were subjectmatter experts. I took night classes at university to fill gaps in my knowledge for the work involved and followed several selfstudy programs. I was very fortunate to have had an enlightened employer and this continued throughout my time with them. I am very grateful to this day. How do you rate on training and developing your personnel for their work? Do you have a specific skill-set definition for each job function? Do you have a learning program for each employee? Do you have regular and scheduled discussions with each employee on the level of competence that they have with their jobs? Do you prepare each employee for the next step in his/her career? Does each employee have a career path? Do you have an education reimbursement program? Peter Drucker, one of the world’s foremost thinkers on business and management, posited that one of the strongest business opportunity and growth areas in the 21st century was going to be adult re-education. I don’t think he contemplated that there would be a business opportunity to supplement the public high school education system, as seems now to be necessary. But he clearly suggested that business was going to have to get involved with the education systems to get the skills and knowledge they need from educational institutions.
Back to Basics So what do our employees have to know? Obvious things come to mind. It sounds elementary, but they must be able to read. Twenty years ago, when setting up a technical training system with the Community Colleges in California, we had to add a remedial reading program because the candidates were not able to read and comprehend the front page of a newspaper after graduating from high school. The same was true for basic arithmetic functions. Can all of your employees read and perform basic mathematics? I am sure you think the answer is yes, and I truly hope that this is true. Think back to the story of Dexter Manley, professional football player for the Washington Redskins, who after graduating from college, was not able to read. We need to have a starting point; a list of basic skills that everyone has in the company. Just imagine how demotivating and discouraging it would be if you didn’t understand the work at hand and were afraid to say so. Then, we need to develop skills to improve the productivity of each employee. This is a combination of training programs, mentorships, individual responsibility and initiative, and self-study programs. In the Service Department, we should have a set of mechanical skills for each technician, as well as the degree of difficulty and skills required for each job. With service it is a little more straightforward in that the manufacturers provide a “road map” of training required. They make the job convenient and easy for the dealer to be able to have each employee trained and able to perform their jobs as required. We don’t have anything similar for the office functions, or in-store selling, warehousing functions, or outside sales positions. There are companies serving the industry, such as Caliper, that have offered testing and interviewing services for years to determine how well an individual fits the requirements for the job. They are able to
point out shortfalls in the skills to help dealers make good hiring decisions. This service should be used for the incumbents on the job, as well as new hires. We need to keep growing our skills and abilities in order to continue contributing to the growth and effectiveness of the business to satisfy customers. Don’t forget, there are also specific skills required by our manufacturers, such as warranty filings and protocols. Also, there are specific trainable skills on the use of manufacturer supplied software and systems; purchasing, emergency orders, returns, electronic catalogues and the like. There is a lot to consider. Who is charged with the responsibility for developing and maintaining this material in your company? Human Resources is an important function in the dealership, handling job descriptions, performance standards, job prerequisites, performance reviews, personality profiles and the like, all required in the world in which we work today. There is also a level of government reporting and compliance issues to which we must pay attention. Room for Improvement Let’s consider some specific areas in the dealership where training can improve processes and overall outcomes for employees and customers. In the warehouse, we need to have knowledge of warehousing systems, picking and packing and shipping tools in order to operate effectively. In the early 1970s the dealership that I was working at operated at a rate of about 15 part numbers picked per employee per hour. With different facility layouts and systems we were able to take that rate to over 90 part numbers picked per employee per hour. That is a very significant increase in productivity that was achieved from training, as well as system requirements developed by knowledgeable people. Do your warehouse employees know how to place parts? It is not just a case of looking for an empty
34 | www.cedmag.com | Construction Equipment Distribution | October 2013
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Training Glynn General Extended Protection Plans Your Competitive Advantage in a Competitive Market
location. What are the safety rules for locating parts according to the height off the ground and the weight? Who is responsible for monitoring compliance? These are important things to know and comply with. Safety is a critical element in any job. In the parts office, how about expediting methods, inventory control rules – when to stock and deduct from stock and the dramatic impact this has on inventory levels. With the current technology and lead times now normally at one week, inventory turnover should be well in excess of 12 times a year. Where do you stand? Translating that into time, with a lead time of seven days and a turnover of 12, you would have 24 days of safety stock. That should be sufficient, don’t you think? Do your parts personnel have the skills and knowledge to be able to implement this type of concept? Have they had specific training on inventory control? What about the work environment? What is the lighting like? What are the foot candle readings at the work station? What is the lighting like in the warehouse? Errors and fatigue are directly impacted by the work environment. Look at the advances in LED lighting, which not only provides good work light but extends the life of the product and reduces electrical needs dramatically. On the counter and on the telephone there are critical skills that are required. Along with understanding all the systems for your business and your manufacturer, these folks have to have selling skills, product knowledge, and competitive knowledge. How often do you offer selling skills training to the instore personnel? Have you ever offered sales training? Then there is product knowledge. This means features and benefits, works and wears of the products you sell. How often do you have training sessions for all of the parts employees? I normally recommend eight 90-minute sessions every year for all parts employees, with a breakdown of: one half-hour on product,
one half-hour on process, and one half-hour on whatever is important at the time. Often, I have employees themselves put on the product training. There is something very special about the preparation done by an employee when they know they will be presenting to their peers. They want to get it right. Then we come to the Product Support sales team. They need all of the above training, as well as specific salesmanship training. And they need negotiating skills. Opportunity is the meeting point of preparation and perspiration. But it’s no sweat when people have the skills, knowledge, tools and training. Training is not a one-off event. It is ongoing. But the responsibility is shared – learning and knowledge are matters of personal responsibility. Good training and continual learning create “walking assets.” There’s so much to be said for reading. In our training classes I always ask for a show of hands about individuals reading business books. The number who have never read a business book – something that will help them professionally – is astounding. Too many people think that when they leave school their learning stops. But that’s when real learning should begin! Experts agree: There is a direct correlation between employee satisfaction and customer satisfaction. Employee satisfaction comes from knowing what to do and having the tools and the systems available to do it – it couldn’t be more clear. And companies that get that will be the winners. The time is now. n Ron Slee (ron@rjslee. com) operates a consulting firm that specializes in dealership operations (R.J. Slee & Associates, est. 1983) and a management and operational training business (Quest, Learning Centers, est. 1994). You can find more specifics at www.rjslee.com, or follow him on Twitter: @RonSlee or his Blog: learningwithoutscars.com.
Glynn General Benefits n GGC’s underwriting partner is AmTrust International which is A rated by AM Best with over 100 years of collective underwriting experience in the Construction and Agricultural Equipment global markets. n GGC has over 27 years of experience administrating extended protection plans. This ensures competitive premiums while also providing fair and reasonable claims reimbursement. n GGC’s knowledge and experience allows for the creation of tailor made programs to meet any need you may have. n An internet accessible administrative system that is efficient and user friendly. n GGC reimburses parts at customer list price and labor at shop rate on all approved claims. n GGC’s program provides peace of mind for your customer knowing that their equipment is protected.
Coverage Types/Coverage Terms n GGC offers extended service protection plans for New and Used Equipment n Power Train, Power Train + Hydraulics, and Full Machine n Used Equipment terms available from 3 months to 2 years n New Equipment terms available from 2 years to 5 years
GGC’s Administrative System via the Web n GGC offers superior administrative capabilities via the internet through our user friendly website: www.glynngeneral.com. n Immediate turnaround of quotes. n Confirmation of the terms and conditions for all available service contracts. n Efficient enrolling of units with automatic invoicing. n User friendly claims processing resulting in satisfactory claims reimbursement. n Account access allowing for constant monitoring of your warranty program.
Contacts in your Region GGC administrative/claims office located in St. Simons Island, Ga Vice President Operations Slade Rowland 912-638-4320 Vice President Sales Rick Stacy 404-791-9382 Eastern Territory Manager Greg Schultz 678-697-2715 Midwest Territory Manager Ryan Carter 847-226-6265 Western Territory Managers Jeremy Cockroft 970-946-8132 Brian Freitag 970-946-8133
October 2013 | Construction Equipment Distribution | www.cedmag.com | 35 ggc_ad.indd 1 32_Slee_Feature_KP.indd 35
12/9/11 2:01 PM 9/26/13 3:27 PM
Ownership
When family members aren’t interested in taking over ownership, an Employee Stock Ownership Plan could be a viable alternative. By Joanne Costin
At age 75, energetic Bruce McFadden, president and CEO of ICM of America, isn’t slowing down. But he’s starting to prepare for the day when he won’t be heading his construction equipment dealership with seven locations in Arkansas, Alabama, Mississippi, Oklahoma, Tennessee and Texas. McFadden’s sons, Mark and Chris, who also work in the business, prefer equipment sales roles to running the company, so this dealership owner has his eyes on an Employee Stock Ownership Plan (ESOP) that will enable him to take a lesser role in the company, get some equity out of the business and travel. In the next five years, McFadden hopes that his company will be at least 50 percent, if not 100 percent, employee-owned. An ESOP is an employee benefit plan that provides employees with ownership in the company. ESOPs are required by law to invest primarily in the securities of the sponsoring
employer. Second, an ESOP is unique among qualified employee benefit plans because it is permitted to borrow money from the company. The ICM of America scenario isn’t that unusual among family-owned businesses, according to Andrew Gibson, regional managing partner with BDO. “In a lot of situations the kids are in the business but they don’t want to own the company.” Other examples of AED dealerships that are 100 percent employee-owned include Modern Group and Vermeer of Texas-Louisiana. Now that the economy is on the upswing, many baby boomers are looking for a way out. “They may have missed a chance to sell the business in 2005-2006,“said Todd Marsteller, president of Stellar Partners. “They are not going to miss another chance.” Gibson believes a dealer should thoroughly examine all his options for exiting a business, including selling to a strategic buyer, an IPO, a financial
buyer, a management buyout, private equity firm or ESOP. “We look at the feasibility of all those options,” said Gibson. “For dealerships there are not usually more than one or two.” McFadden is no stranger to an ESOP. He first formed one in 1984, and two years later used it to borrow money to buy out one of his partners. Employees currently own 20 percent of the company. He first became intrigued by the idea of an ESOP from one of his contractor customers who sold 100 percent of his company to employees. McFadden was also inspired by other successful employeeowned companies in construction such as Peter Kiewit Company. “Their people work harder than the little family-owned construction companies because they have part of it,” said McFadden. “I still dream of this being an employee-owned business that not only covers four or five states in the South, but grows according to (continued on page 38)
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Ownership
(“The Pros and Cons of The ESOP Exit Strategy” continued from page 36)
whatever the employees want it to do.” Marsteller says owners often have a desire to keep the business in the community and they stand a better chance of doing that with an ESOP. Some owners may want to continue on in some role at the company, while others want to be completely removed. Gibson added, “Dealers need to have full understanding of what the reality looks like after the transaction.” This includes how the company will manage the debt moving forward. According to J. Michael Keeling, president of The ESOP Association, there are approximately 10,000 companies nationwide that are employee-owned in varying degrees. The vast majority are privately held, and the number has held steady over the years. Not all ESOPs are 100 percent employee owned, but the portion of stock is growing. Among ESOP Association
ESOP Fables Debunked No. 1: The company has to open up its complete financial records to employees. It is a common misconception that ESOP companies must disclose their financial statements, officer salaries, share ownership structure, and other information to ESOP participants. There is no requirement to do so. Most ESOP companies provide some form of financial disclosure and are required by law to provide individual benefit statements to shareholders. Few provide information on salaries. No. 2: Employees will control the company. Establishing an ESOP does not mean a company has a democratic business model. Company leadership can and should remain in place. While in nonpublic ESOP companies voting rights on shares allocated to ESOP accounts must be “passed through” to ESOP participants for votes on major corporate matters, other decisions can be voted by a named fiduciary or designated in the plan. No. 3: I don’t have the right type of company for an ESOP. ESOPs are available to companies small and large, public and private. More important is that the business has strong cash flow, a history of increasing sales and profits, and is willing to provide employees with equity. No. 4: It’s too expensive to set up an ESOP. It’s true there is legal work at the onset to form an ESOP, annual costs for evaluation and for additional reporting. However, these costs are typically less than perceived and offset by the significant tax benefits of an ESOP.
members, the average size of the ESOP is about 67 percent. According to Keeling, ESOPs have four key tax advantages. “With an ESOP transaction financed with debt, both the principal and interest are deductible,” he said. “An S-Corporation with an ESOP is a tax exempt trust, so you don’t pay tax on the ESOP’s share of the taxable income,” Keeling added. “Tax will be paid by individuals when they leave the company and get a distribution.” A 100 percent employee-owned S-corp. pays no corporate income tax. C-corporations can also deduct dividends from their taxes, and if the employees own more than 33 percent of the company, the seller doesn’t pay the capital gains tax, as long as they are invested in another U.S. company. Who’s Right for an ESOP? Because an ESOP often requires going into debt to ensure the business owner can cash out, businesses need to be in good fiscal condition. “At the end of the day, the company needs to be profitable and needs cash flow,” said Marsteller. Most employers with an ESOP have between 50 and 250 employees. “[With] under 25 employees it is going to be very difficult to finance a debt,” said Kneeling. The financials need to support the value of the company and what the owner wants to get out of it. Disadvantages to ESOPs include some substantial reporting requirements including annual valuations, audits by the IRS and Department of Labor (if you have more than 100 participants). More legal counsel is usually required. From the owner’s point of view, the valuation of the company is likely to be lower than what a strategic buyer would pay. “It is hard to sell 100 percent of your company to an ESOP and get all of your cash up front,” said Gibson. “It is more likely to [yield] a third up front.” Gibson suggests finding an advisor who can help guide you through the process but doesn’t believe it is any more difficult than any other sales option. Marsteller agrees that good financial counsel for the future profitability and cash flows of the business is key. One of the more common misconceptions is that becoming an ESOP somehow means the company will be managed in a democratic style. The reality is that the owner can set up the board and determine how the company will be operated. The trustee of the ESOP is responsible only for representing the interests of the employees. “I’ve had a lot of naysayers tell me not to do it, but I don’t discourage too easily,” said McFadden. One of the key tasks for McFadden and ICM in the near future will be finding someone to fill his shoes in the role of president and CEO. The current management team consists of McFadden, the sales and marketing manager, the CFO, and three of the better sales performers in the company. “Over the next three years we will find someone to be trained for the CEO job. I will move up to chairman of the board. I will help when they need me – providing guidance
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Ownership
and developing the leadership,” said McFadden. The past four years have been challenging ones for ICM of America, but McFadden is confident that within five years the ESOP will be expanded. Do ESOPs Perform Better? Intuitively, many businesses buy into the idea that employeeowners outperform their counterparts at nonemployeeowned companies. And researchers have provided some evidence that they do perform better. A 2012 paper published by the National Bureau of Economic Research concluded that “shared capitalist forms of pay are associated with high-trust supervision, participation in decisions, information sharing, and with a variety of positive perceptions of company culture. At the firm level, shared reward forms of pay are associated with lower voluntary turnover and higher return on equity (ROE). But it is the interaction between the mode of compensation and work practices and workplace culture that dominates the impact of shared capitalist pay on turnover and ROE. “Shared capitalism” is the researcher’s term for ESOPs. The researchers examined data from companies that applied to Fortune magazine’s list of the “100 Best Companies to Work for in America” from 2006 to 2008, and
it covers more than 300,000 employee surveys from all 1,300 corporations that applied. Douglas Kruse and Joseph Blasi of Rutgers also found that ESOPs appear to increase sales, employment, and sales per employee by about 2.3 to 2.4 percent per year over what would have been expected absent an ESOP. In this study, they obtained files from Dun and Bradstreet on ESOP companies that had adopted plans between 1988 and 1994. They then matched these companies to non-ESOP companies that were comparable in size, industry, and region. Of course, an ESOP is no guarantee of success. Difficulties can bring down any business regardless of ownership. When someone’s blood, sweat and tears go into a business, it’s understandable for them to want to see it continue – to grow and to prosper. However, at the same time, owners have a very real need to pull out some of the equity from the business. If it’s true that more and more family-owned businesses are having difficulty finding successors, you may be seeing more ESOPs in the future. n 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.
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Management
Keeping A Stern Eye on Sales Tom Stern, general sales manager at West Side Tractor, sat down with CED to talk about his views and methods in the business of selling equipment – and ultimately, taking care of the customer. By Dan Brown
Constant communication with the customer base is key to West Side Tractor’s long-term success, says Tom Stern, general sales manager at the John Deere dealership based in Naperville, Ill. In the last two years, West Side has implemented new modes of communication, primarily e-communications. The dealership actively uses several electronic media outlets to promote its sales and product support messages. With regularity, the company sends e-blasts out to customers and prospects, advertising used equipment, parts and service specials, new products and company news. West Side also has an active Facebook page with 1,000-plus followers, and YouTube is a staple medium for showing off product demonstrations, the company’s 50th anniversary celebration, and product promotions. “When you click on the YouTube link on our website homepage (westsidetractorsales.com), it gets you into 26 of these videos,” said Stern. “One demonstrates the John Deere 764 High-Speed Dozer
(with almost 200,000 video views). We’ve got another showing how we work with one of our suppliers on integrated grade controls for dozers. “With a growing used equipment fleet, we need to make sure the machines and attachments are updated daily and promoted effectively. We use an outside service called Machinery Trader that links to our website with all the current listings. We also have a similar database for lawn and garden equipment,” Stern added. “Customer feedback is very important to us,” he said. “On the website, we have a customer survey form available to submit testimonials, concerns, etc. We want to make sure that customers have found useful information [on the site], learned more about our company and feel that it is one more way to interact with West Side.” Compensation for Sales People West Side compensates sales people with a base salary and incentives based on gross margin that is acceptable
to company management. And the company offers specific incentives for certain used equipment. “We have what we call a Hot List of equipment that is machinery the company wants to move quickly,” said Stern. Sales people are given quotas, and they are reviewed twice yearly. “The sales people have some input on quotas,” Stern told CED, “but we also use that invisible guiding hand that says, “OK, is that territory going to be as hot as it was the year before? Or is it going to be hotter than the year before? You don’t want to have quotas out there that a guy can’t get to.” In a deal for multiple pieces of equipment, sales compensation works the same way it does for single pieces. West Side does not create special incentives – or disincentives – for sales people who do major deals. “A lot of times in multiple equipment deals the margin gets squeezed, and margin is how the sales people are paid,” Stern explained. Another factor that has squeezed (continued on page 42)
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Management
(“Keeping A Stern Eye on Sales” continued from page 40)
margins recently is the added cost that exhaust emission control equipment brings to the table. Interim Tier 4 has driven up the price of new equipment, and next year Tier 4 Final will do the same thing. “The market will not allow you to recover all of your costs,” Stern said. “There have been steps along the way, mandated by the Clean Air Act, that Deere and others have to comply with. They’ve added to the cost of equipment being sold at retail. All that research and development has been brought to the cost of new equipment, whether it’s from Deere or other manufacturers.” Not surprising, those added costs for the latest equipment have driven up the demand for less expensive used equipment. “Customers know that Final Tier 4 is coming,” Stern said. “They know there will be considerable increases in price. And they’re seeking out Tier 3 product – used equipment as a substitute for buying new – to avoid that increase in pricing. There is less and less Tier 3 equipment available, and that adds value to that particular With five stores covering northern Illinois and five stores spread over 68 counties in Indiana and three Michigan counties, West Side Tractor Sales is one of the most successful heavy equipment distributors in the Midwest. the company is a distributor for John Deere Construction and Forestry and in late 2010 acquired Holt Equipment Co. in Indiana – West Side has since doubled the number of its sales people.
level of engine emissions. And there has become a shortage of supply of certain used equipment.” Emissions controls costs are also driving the demand for rental equipment, Stern says. Another factor driving the rental market upward is that since the recession, many contractors have reinvented themselves and have diversified into newer lines of work. “Rental has become red-hot in the industry, and it has almost become an animal of its own,” Stern said. “It has changed the landscape over the past couple of decades. Most companies like West Side have used rental as a means to a sale. But now rental has become more of a short-term response for the contractor as he tries to sort out his own business model. For instance, the guy that dug basements during the housing boom has had to find some other work or he would be out of business. So he’ll rent equipment until he feels comfortable about the diversification he’s trying to make in his own business model.” We asked if Stern was seeing a lower level of rental conversions to sales. “I would say right now that the conversion rate at the end of the year is still very good,” he said. “Absolutely we convert a lot of rentals to sales.” Approach to Hiring When hiring new sales people, West Side asks candidates to take a personality assessment offered by a third party service called Caliper Corp. The company offers an assessment that measures a sales candidate’s answers to questions against a profile that is largely geared to people in the construction equipment industry. “There are many skill sets that a person needs to bring to a job, but Caliper measures their Ego-Strength,” Stern explained. “That is their ability to persuade someone to buy from them versus somebody else. Caliper has done a nice job of helping us. They do a wonderful job for the industry.” The Caliper test shows where a candidate’s weaknesses are as well as their strengths. “They measure a lot of different qualities, but they’re
really looking for an individual that has an Ego Strength that can take that rejection. A lot of people can’t handle rejection very well,” Stern continued. “It’s not necessarily money. Yes, that’s a big part of it. But if that person doesn’t enjoy convincing a person to buy from him or her over another competitor, it doesn’t work for very long. Fortunately, I was recommended by the assessment,” he added. “Customer at Risk” John Deere and its distributors use a concept called “customer at risk.” The idea comes into play when, for example, West Side is in danger of losing a customer to a competitor. “It could come over a number of different reasons,” Stern said. “An example of a customer at risk could come through a service dispute. It’s possible that a customer doesn’t really feel satisfied with a settlement that was reached.” If a customer is identified as being at risk, Stern says Deere and West Side both rally their respective management people to invite the customer to participate in meetings. “We want to give that customer the feeling that we are taking care of them,” he said. “There is a concept we promote called a Value Proposition. The three portions of that proposition are concepts adopted from Deere: productivity, uptime and low operating cost of the equipment.” Uptime is a very important part of that formula. When a machine goes down, West Side strives to do everything possible to put the customer back to work with that machine. “If there is a disagreement over the settlement, we get OEM management, distributor management involved, above the sales person level,” Stern said. “West Side is not interested in just that one sale. We want to sell people for a lifetime, if we can.” Stern says West Side has extended the customer-at-risk concept to “product at risk.” In that scenario, the distributor might identify a product that was sold to a customer, who is not buying it again. “They’ll buy other products around that
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Management
Building Relationships at an Open House To gain a bit of insight into what makes West Side Tractor so successful, we observed General Sales Manager Tom Stern working an open house hosted by the dealership to introduce a new four-wheel drive loader from John Deere. This new 644K loader is Deere’s first machine with a hybrid drive train. The loader’s diesel engine runs an electrical generator that in turn powers an electrical motor to drive the transmission. West Side Tractor invited customers from northern Indiana to attend the open house, which was held at the dealership’s store in South Bend, Ind. Deere provided one model of the 644K Hybrid for customers to operate, and two factory representatives were on hand to introduce the hybrid concept. Here’s how it played out. It’s 10 a.m. and customers begin drifting into the dealership – conversations over the product are starting with the factory representatives and West Side sales people. “The industry is going green,” says an enthusiastic Stern. “This is an important concept that we’re now selling to customers – the hybrid loader. The competition has a couple of hybrid machines, and Deere has chosen to introduce the concept on a wheel loader. This machine saves 25 percent on fuel, compared to a conventional power train. And the loader is 3 decibels quieter than a conventional machine, which makes a big difference. People are more concerned about noise these days.” Stern, who has an excellent memory for customers’ projects, people and situations, asks one contractor about delays in construction at an airport project. “We should be more than half-finished with the paving by now,” says the contractor. “The delays are related to surveying and design issues. We try to stay out of it.” With an older customer, Stern harks back to the days when construction equipment belched black smoke. “You probably remember the days when the project superintendent would tell you that you’re not moving dirt unless the dozer is spewing out black smoke,” says Stern. The customer grins and nods. particular product that they’re having trouble with,” Stern said. What then? “We communicate that product at risk to the OEM,” was his answer. “That is with some certainty, especially if it’s a new machine that still has warranty. But even if the machine is out of warranty, we’re still communicating that to the OEM,” said Stern. 2010 Acquisition West Side acquired Holt Equipment Co. in Indiana in 2010, a time when
Stern turns to a group of customers from the city of Elkhart, Ind., and flat out tells them that West Side is not interested in selling just one machine. “We’re interested in building long-term relationships,” he says. “We want to build repeat business. The turnover at our company is very low. We’ve been around for 50 years, and we’re owned by the same family that started the business in 1962. So the chances are that the person you’re dealing with today will be the same person you deal with in five or 10 years.” To keep a close watch on customer activity, West Side uses a new customer relationship management tool – software called “Handle” from Customer TRAX. “We’ve just had this software for about 90 days,” Stern tells CED. “It’s Web-based, so that any sales person can access it from anyplace they have the Internet. Customers are listed on a spreadsheet along with their respective sales people, who can log in with daily sales activity regarding that customer. We keep notes about quotes needed, service agreements, alerts for new business, that kind of thing. It serves to remind us about the next step we need to take with customers. We have 24 sales people now, so it’s difficult to keep track of it all with paper forms. “We use this program for sales forecasting,” he says. “We are ordering millions of dollars of equipment for stock, and you just can’t do that blindly. We look at past sales settlements over a rolling 12-month average, and a rolling 24 months as well. We use the numbers, but part of what goes into it is gut feel as well.”
the former ownership had reduced the number of sales people significantly. “So to restore it to where it was viable again we hired quite a few people back,” Stern explained. “We hired people back who had worked for Holt before – technicians as well as sales people.” He says the Indiana territory is much larger than West Side’s Illinois area of responsibility. “We only deal with a very small territory in northern Illinois,” he said. “It’s 15 counties – largely Cook County (Chicago) and the surrounding counties.”
We’re glad to have had the opportunity to get better acquainted with this AED member, which celebrated its 50th year in business in 2012. It’s plain to see that Stern and West Side management have the right people and practices in place to succeed for another 50 years. n Daniel Brown is a long-time construction writer based in the northwest suburbs of Chicago. He can be reached at danbrown4@msn.com.
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A Closer Look
Avoid the Sting of ‘Affordable Care’s’ Coming Rate Increases
Your AED membership pays off again: The AED self-insured captive program provides opportunity for large savings to most member dealers, and averts many ACA wrinkles.
Judy Dunn, controller, and Doug Hansen, president of W.I. Clark Co., the John Deere dealer in Connecticut, got a check for more than $100,000 back from their 2012 health care premiums from Veritas Risk Services, which offers the AED dealer captive program.
By Joanne Costin
Many experts believe that with the year. However, it is not risk free, regards to rising health care costs, the because the risk is all in the renewal,” worst is yet to come. When the Affordsaid Truax. able Healthcare Act is fully implemented, In contrast, self-insured companies large increases in costs for fully ensured pay health care costs out of company small business plans are expected. The funds, purchasing a stop-loss policy primary reason: The law will prohibit that caps the loss from a claim at a carriers from using health history as a predetermined amount. “If someone factor in setting premiums and acceptgets cancer and sends in a $200,000 ing participants; and it will reduce their claim and the company has a $50,000 ability to adjust rates based on age. stop loss policy, they pay $50,000 in Doug Truax, president and managing claims and the stop loss carrier pays the partner of Veritas Risk Services and Illinext $150,000,” explained Truax. nois’ Republican candidate for the U.S. Under a captive plan, self-funded senate, minces no words about what companies in the group can purchase small businesses should do. “If a group stop loss insurance at a cheaper rate, is fully insured right now, it needs to be and they can get some of that money running from that as fast as it can.” back. According to Truax, if the stop Truax predicts that the Affordable loss policy is $250,000, they can get up Care Act will wreak financial chaos on to $175,000 back, depending on the insurance companies over the next group’s actual claims. three or four years. Due to a lack of W.I. Clark Company, a John Deere transparency in how the premiums are dealer based in Connecticut, was set, Truax believes there is opportunity experiencing coverage increases of to push those costs onto the groups 15-25 percent a year before turning who are fully insured. to the AED captive insurance offered Under fully insured plans, the through Veritas in early 2010. “We insurance provider assumes the risk never really understood the real reasons of health care expenses for an annual for the increases,” said Doug Hansen, cost known to the business. “It is president. “According to our agent, our perceived by some business owners as increases were less than the industry norm.” Now self-insured and participating a risk-free environment because they in the AED captive health care plan, have stability in pricing throughout
the dealer says its costs are completely visible. So Hansen wasn’t surprised when he received a check for more than $100,000 as a result of lower claims the prior year. According to Truax, W.I. Clark is just one of many companies that have realized savings in a self-insured captive plan. “Once you go self-funded, you save money,” said Truax. “We have seen this consistently with every group we take on. “When you self-fund, the only increase that you have to worry about is the stop loss insurance and it’s only a third of your total costs. Would you rather take a 20 percent increase on a third of your costs, or a 20 percent increase on 100 percent of your costs?” Hansen said, “You are paying in as you go with some anticipation of what expenses are going to be, and if you do better than expectations, you reap a reward from that. There is always the possibility it could go the other way. If our people can help us and themselves by living healthier, we can mitigate that downside.” W.I. Clark is encouraging employees to improve their health. In 2012, they offered employee health screenings. This year, the screening will continue and a newly formed wellness committee
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A Closer Look
added a refrigerator stocked with hard for us when we needed their help.” healthy eating options at subsidized According to Truax, one of the prices, as well as a basketball hoop. barriers for the self-insured captive Before deciding on the captive health plan has been insurance agents who insurance plan, W.I. Clark compared don’t understand self-insured plans. their current plan with information “They have a vested interest in keepfrom Veritas that outlined the maxiing employers in fully funded plans,” mum and potential exposure. “When he added. we extrapolated what we thought The decision most often rests with could be the increases from our regular CEOs and CFOs. “It’s a matter of carrier over two to five years and compared that with the Veritas plan, we felt we could do much better with Veritas,” said Hansen. Is There a Downside? Both Hansen and Truax believe that some companies just aren’t comfortable with the downside risk of being self-insured. Nevertheless, Truax says ACA has generated “a huge uptick” of interest in self-insuring. Hansen’s initial perception was that self-insurance was only for large companies. However, he found out the minimum number of employees required for the AED plan is 50. W.I. Clark has 50 employees on the plan out of 75 total employees. According to Truax, even those companies with fewer than 50 employees should contact Veritas about other self-insured options. Changing networks was a big Before making a decision they asked employees for the names of their health care providers to ensure they had adequate coverage on the new network. “Everyone is much more comfortable with the plan now,” said Hansen. “In some cases, employees did have to switch doctors, which initially caused some concern.” Veritas also sets the company up with the stop loss insurance provider, as well as a third party administrator. According to Truax, plan designs are completely flexible. In the case of W.I. Clark, the new coverage was very similar if not better than the prior coverage. Hansen says that though they had some initial bumps in the road with the new provider, things have smoothed out nicely. “Every now and then we have asked Veritas to get involved. They have been responsive and have worked
getting engaged and getting educated, and thinking differently about how they pay for their second most expensive line item behind payroll,” Truax said. Because fully insured contracts are typically only for 30 days, you can consider self-insurance at any time during the year. Call Gail Lisek at 630601-1498 or e-mail sales@veritasrs.com to learn about your options. n
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On the Numbers
The Coming Extinction of Sales Market Share The proliferation of rental, among other things, is raising provocative questions that demand your attention. By Garry bartecki
The proliferation of rental, combined with dealer savvy in transitioning their business model to align with customer demand, is raising provocative questions. If ever there was a time to step back from your day-to-day tasks and spend some time gathering data about the future, the time to do it is probably right now. There are major changes that will take place in this industry over the next 18 to 24 months. If you don’t think so, then please consider the following: n The rental business is expected to increase 37 percent over the next three years, which will significantly change dealer/vendor relationships. n As we speak, Congress is considering a change or elimination of every major tax break a dealer or rental companies currently get. n That mysterious thing we call interest rates appear ready for an increase, and it could be significant – but then again, it may not. n Employer/employee relationships will never be the same after ACA because you will need to balance changes in personnel costs between pay and benefits. I don’t think there is anything farfetched here, do you? If even half of this shortlist comes about new strategies will need to be implemented to deal with the new order of things. No matter how you look at the next three or four years, and I am sure you could add to my list, C-level executives are going to earn their keep by making the necessary changes to the business to keep it competitive and profitable. Finding the time to work on the business instead of in the business
may mean divorcing yourself from the day-to-day operations and devoting the bulk of your time planning the future direction of the company. Dealers are now in the rental business and will continue to be in the rental business if they hope to maintain their customer base. And when I say “rental business” I mean the rental business the way rental companies do it. To be in the rental business, dealers are transferring inventory into rental assets, and they can’t both maintain inventory levels and a rental fleet because it is financially impossible. Rental companies keep their units for 60 to 84 months before they replace them. Of course, they set up a rotation policy, but they are only buying 20 percent of their investment in inventory (I mean rental fleet) per year or maybe a bit more if business is increasing. What this means for OEMs is less equipment sales. Contractors are not buying and probably won’t buy as much going forward now that they have figured out how much it costs to own equipment. Dealers are now the new customers via their rental fleets, and they will replace fleet when the ROI analysis tells them it is time. The parts sales will be there, but not maybe as much, because dealers maintain their fleet better than a contractor would. So what does this all mean? It means the market share concepts go out the window. It also means dealers may have to divert some of their purchases to other vendors to fill rental customer needs, further reducing market share stats for existing vendors. It looks like your annual vendor meetings are about to get more interesting and dealers need to be
prepared to discuss these issues from a position of knowledge and strength, because I am not so sure vendors are up to speed on this yet. If you are looking for subjects to add to your annual board meeting agenda I suggest: 1. How are we going to transition our business to accommodate customers who now want to rent, finance that transition, make rental profitable (same as public rental companies) without a negative impact on cash flow? 2. What exactly is our current tax position in terms of carrybacks, carryovers, deferred taxes (even if you don’t book them) and effective rates. And what happens if our depreciation deductions are reduced by 50 percent, LIFO goes away, LKE use is restricted and dual-use rules become more restrictive. In short, what if my tax bills go way up (even with lower rate)? What happens to our cash balance over the next two years? 3. What would a significant increase in interest rates do to us? Our customers? 4. What if ACA hits us with extreme increases in health care costs? It’s very possible depending on what state you work in. With total personnel cost being as important to dealer profitability as it is, how would you handle a 40 percent increase in health insurance premiums? Call me to sit in on your planning meetings, if you like. Or maybe you want to send me to your OEM to get them up to speed. Garry bartecki (gbartecki@ aednet.org) is AED’s vice president of Finance.
October 2013 | Construction Equipment Distribution | www.cedmag.com | 47
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GE Capital
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12/20/2012 11:51:57 AM 12/20/12 3:22 PM
Business Outlook
2014: Moderate But Mixed Recovery for Construction Equipment
War on coal severely curtails heavy-equipment demand, while rental drives growth in light and medium equipment. Eli Lustgarten
Global themes continue to dictate sluggish economic growth both here and abroad for the foreseeable future. Industrial activity peaked globally in the summer of 2012 as global politics froze virtually all major markets. Industrial companies reacted by completing projects underway, deferring the approval of new major programs, and instituting inventory liquidation in the second half of 2012 through the first half of 2013, led by the two sectors that overproduced more than any other – trucks and construction equipment. To date, U.S. markets have been somewhat stronger, Europe has been weaker than expected but clearly showing signs of stabilizing, and emerging markets have been somewhat a disappointment but beginning to improve, though at growth rates below recent norms. Japan has been the country with the most positive surprise for growth, and economists have adjusted to the new China policy of focusing on quality growth that is more muted at around 7.5 percent – that government’s priority is to remake its economy to be domestic demanddriven with less reliance on exports and investment in capital-intensive, stateowned companies. In sum, economic growth in 2H13 and into 2014 is likely to be more of the same muddling along that we have been experiencing. The key change is that growth is likely to be led by developed countries such as the U.S., still the best house in a lousy neighborhood; Europe, where the Euro-zone recession looks like it is ending; and Japan. Emerging market growth should improve but at rates well below the norms of 2002-2008. Our forecast for 2013 construction
equipment demand remains flat to down 10 percent in North America, and a low-single digit decline in Europe. Latin America is still on track for about a 9 percent gain, underscored by resurgence in government spending across most regions led by civil construction, infrastructure, and energy. China’s reviving outlook for 2H2013 continues to support expectations for a moderate improvement, reflecting new government projects possibly in pipeline and private fixed asset investment. We continue to expect further growth in 2014. Construction activity in the U.S. should continue to improve next year, driven by further growth in housing and higher spending in private nonresidential construction markets. We look for double-digit growth for light and medium equipment demand next year, but a 5 to 10 percent decline in larger, heavy equipment reflecting continuing soft mining demand. Besides macroeconomics, the key input into the equipment buying decision making equation in 2014 is Final Tier-4 emissions regulations, which become effective for larger equipment over 174 horsepower in 2014 and all equipment in 2015. Smaller equipment FT4 compliance is being phased in now. Unlike the truck emissions cycle, the good news is that costs for Final Tier-4 are probably only 60 percent of the cost of moving to Interim Tier-4 in 2011-2013. However, that still suggests a midsingle-digit price increase, though less onerous than the double-digit price increases that characterized the move to IT4. Rental companies, which represent more than 50 percent of the market for equipment, seem to be the key to the strength of buying near-term. Most major rental houses are reassessing
their planned flat expenditure profile for 2013 and into 2014 due to continued strong utilization rates, improving outlook for construction spending, the need for replacement, and the implementation of FT4 and associated higher prices. We look for a strengthening level of rental expenditures to drive growth in light and medium equipment for the rest of 2013 and into 2014. The only sector with ongoing deterioration of demand is mining. Our surveys show a 45-50 percent or more decline in coal equipment capital spending in North America and midsingle-digit or more weakness abroad. More recently, the Obama administration has renewed its declaration of war against coal power plants with a focus of reducing coal use both domestically and abroad. Further, the five largest global mining companies all have new CEOs with a mandate to improve shareholder returns and reduce capital spending. While the improvement in natural gas prices is off their recent $2 per MCF low to the $3- to $4-level will likely stabilize coal mining related equipment purchases in 2014, noncoal mining capital expenditures are expected to decline at least 15 to 20 percent in 2014. Mining will be troubled well into next year. The super-cycle in commodities is over, and future mining expenditures will depend on global growth, especially in Europe, and how well China manages its transition from exports to domestic consumption. As we said last time, push the politics (and perhaps mining) aside, and the construction industry is poised for at least several years of moderate growth. Eli Lustgarten (elustgarten@aol. com) is president of ESL Consultants, an industrial consulting firm.
October 2013 | Construction Equipment Distribution | www.cedmag.com | 49
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9/20/13 4:36 PM
Aftermarket
Owner Investment is Tied Directly Into People Productivity Ask yourself, how much technology, innovation and training is enough? By Ron Slee
I recently read an article addressing the gap in productivity between Canada and the U.S. It pointed to the fact that in the first quarter of 2013, Canadian productivity dropped by 0.9 percent versus a gain of 1.2 percent in the U.S. Statistics Canada stated the productivity index was 102.0 at the start of 2013 versus 100.6 at the end of 2005. That is truly a concern. Over the same period of time, labor costs expressed in U.S. dollars have risen to $120 from $86.10 – a whopping 39 percent increase. That is hard to sustain when there is a competitor for labor right next door. The culprit, according to David Dodge, who spent most of his career studying productivity as a former Bank of Canada Governor: “We don’t seem to get the mileage out of our information and communication technology that the Americans do.” According to Bank of Canada Senior Deputy Governor Tiff Macklem, Canadian workers had just half as much machinery and information and communications equipment as their American counterparts in 2010. Further, the Conference Board of Canada in 2011 found that spending for on-the-job training had dropped 40 percent since peaking in 1993. Slowing investment in technology, communications equipment, and information and training ties directly into productivity, doesn’t it?! Having operated a training business for the past 20 years and seeing the ups and downs of investment by dealers and manufacturers in training, this point resonates with me very strongly. The AED Foundation stated a goal many
years ago of 40 hours of training per We have been through a rough six years and it is not over yet. We are employee per year. Although I have not going to see growth in the forenot got the facts to back me up, I seeable future like we have experidon’t think very many businesses enced in previous business cycles. We meet that goal. To make matters are either going to have to accept the worse, I believe that goal should be current business levels and just ride it at least 80 hours if not more. Innovation is another element out or do something about creating directly contributing to productivity. growth in the existing markets. How much does your current The problem with driving growth business system assist in the day-toin this market is that either you have day operations? Does it contribute to add more people to cause it or you to productivity? Does it make the have to make investments to make the information that is necessary for current staff more productive to allow your employees more readily availthem to create the growth. It isn’t able than it did five years ago, or going to happen if you continue to do 10? Do you have an easy Internet what you have always done. portal to allow customers to become I don’t believe that we have a co-producers with you? Can they situation where we don’t know what find parts numbers on your portal? we need to do. I believe that we know Can they place orders on your what we need to do. But I don’t see portal? Sadly, the answer in most many dealers stepping forward and cases is, “no.” doing it. A wise person once said But that is a no harm no foul issue “Yesterday is history; Tomorrow a isn’t it? Not if you read the opening mystery; Today is a gift.” Tomorrow paragraph. Remember what we’re is only a mystery to those who are a talking about: the devastating impact victim to it. Many people take the bull by the horns and make the tomorrow of reduced investment in tools and training have on productivity. I am a of their dreams. Isn’t that what you huge fan of “The Balanced Scorecard” not only want to do but recognize business tool developed by Harvard that you should do? The time is now. Business School, which speaks to the customer needs and wants being Ron Slee (ron@rjslee.com) is the founder satisfied by defining internal excelof R.J. Slee & Associates, Rancho Mirage, lence. It asks the question, “What Calif., celebrating more than 30 years in do we need to excel at internally to business in the United States, a consulting satisfy customer needs and wants?” Then you need to determine the tools, firm that specializes in dealership operations. Ron also operates Quest Learning Centers, technology and training that are a company that provides training services necessary to support the employees specializing in product support, and Insight in delivering internal excellence. (M&R) Institute, a company that operates I suspect we all know that this is and facilitates “Dealer Twenty” Groups. Folwhere we fail. We don’t identify what low Ron on Twitter: @RonSlee; and read his is necessary, and if we do, we don’t blog at learningwithoutscars.com. spend the money to get it done. October 2013 | Construction Equipment Distribution | www.cedmag.com | 51
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7/24/13 1:51 PM
Washington Insider
A Day in the Life of AED in Washington For effective advocacy in the nation’s capital, it’s not just what we do, it’s how we do it. By Christian Klein
I write a lot about what we do for equipment distributors, but not necessarily how we do it. So this month I’m sharing a page from the AED Government Affairs Office calendar. Here’s what AED Senior Director of Government Affairs Daniel Fisher (DF) and I (CAK) were doing on your behalf on July 10, an average day in the life of AED’s lobbying team: 8:30 a.m.: Breakfast fundraiser for Sen. Barbara Boxer (D-Calif.) (CAK & DF). AED may disagree with Boxer on some issues, but infrastructure isn’t one of them. As Senate Environment & Public Works Committee chairman, she’s been an unwavering advocate for road and transit construction programs. Were it not for Boxer’s hard work, it is unlikely that last year’s highway bill would have gotten done. At this breakfast fundraiser, which AED co-hosted with the National Stone, Sand & Gravel Association and the National Ready Mixed Concrete Association, we lauded Boxer for her leadership and discussed ways to deal with the looming Highway Trust Fund (HTF) crisis. 10 a.m.: Construction lobbyists’ meeting with Sen. Debbie Stabenow’s (D-Mich.) transportation legislative assistant (CAK). With outlays significantly exceeding revenues, the HTF is on the verge of bankruptcy. The entire $40 billion annual federal highway program – and $2.5 billion in yearly equipment sales, rental, and product support activity – is in jeopardy. This is just one of dozens of joint meetings AED and a handful of allied organizations have held with key Senate offices this summer to ring alarm bells about the devastating economic consequences of letting
the highway program collapse and to discuss ways to put the HTF back on solid fiscal footing. Noon: Lunch with former Rep. Anne Northup (CAK). During her decade in the House, Anne was one of AED’s closest allies, thanks in large part to the strong relationships she’d formed with many of our Kentucky members. After leaving Congress in 2006, Anne was appointed to the Consumer Product Safety Commission. Her term recently ended and she has signed with a prominent D.C. law firm. Over lunch, we caught up, shared insights about the current political situation, and discussed areas where AED’s interests overlap with those of her clients, particularly in the energy sector. Afternoon: Private activity bond (PAB) legislation lobbying visits with various congressional offices (DF). With the federal budget bleeding red ink and infrastructure programs facing across-the-board cuts, AED is promoting innovative financing mechanisms to attract private investment. Lifting the private activity bond cap for water infrastructure projects would generate $5 billion in additional capital annually to rebuild U.S. crumbling drinking water and sewer systems while creating $600 million in new equipment market activity. DF has been lobbying aggressively with our allies to recruit new supporters for the proposal. 2 p.m.: Meeting with Association of Equipment Manufacturers (AEM) lobbyists at AEM Washington office (CAK). AEM is one of AED’s closest allies and coalition partners. We meet regularly with Nick Yaksich and Anne Forristall Luke, who head AEM’s public policy shop. Today, the topic is tax reform and our efforts to simplify
the tax code while protecting the business interest deduction, capital investment tax incentives, like-kind exchange, and LIFO. Over coffee, we share intelligence and data to help strengthen our collective advocacy. Late afternoon: Working at the Capitol Hill Club (CHC) (CAK & DF). The CHC is a convenient place to return phone calls and e-mails between meetings and pick up the latest political gossip from the lawmakers who wander through. 5:30 p.m.: Main Street GOP reception at CHC (CAK & DF). AED’s Political Action Committee (PAC) contributes $5,000 per year to Main Street PAC to help elect and re-elect pragmatic, common-sense Republicans. Main Street members share our commitment to strong federal infrastructure programs, progrowth tax reform, and common-sense regulatory policy. The monthly Main Street receptions are a great place to gather intelligence from members of Congress, staffers, and fellow lobbyists; touch base with long-time allies; and build new relationships. The events are also a great opportunity to remind lawmakers of their connections with distributors “back home” and plant the seed for future AED member facility visits. The day’s been long and tiring, but exhilarating. We’re proud both of what we do for AED and how we do it. Thanks to all the AED members out there who support the association’s Government Affairs program. Christian klein (caklein@aednet.org) AED’s vice president of Government Affairs and Washington counsel. He can be reached at 703-739-9513.
October 2013 | Construction Equipment Distribution | www.cedmag.com | 53
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New & Improved
New RT-120 Quad Utility Tractor from Ditch Witch Many attachments multiply its underground construction functions. The new RT120 Quad utility tractor from Ditch Witch features a heavy-duty frame and traction for long installations of large-diameter pipe on the most jobsites. Built around a heavy-duty undercarriage designed to withstand harsh ground conditions, the Ditch Witch RT120 Quad has a frame engineered to tilt, enabling the machine to dig a vertical trench on uneven ground. Stability and traction are provided through the Quad Track System with each track frame weighing 1,500 pounds, including track. The feature gives the RT120 Quad a lower center of gravity for increased stability and drawbar, while the chevron-pattern tracks provide maximum traction in wet conditions and on slopes. The machine also features a ground clearance of 15.5 inches allowing the
Four New XT Mobile Shear Models Added to Genesis Attachments Line Genesis Attachments added its new GXT 445 and GXT 775 straight and rotator models to a line that was introduced earlier this year, including the GXT 555 and GXT 665 models. The GTX is shorter in length and height and lighter in weight and features a center of gravity that is closer to the excavator. This enables the rotating models to mount on 46,000- to 78,000pound excavators that previously were capable of only carrying smaller, less powerful shears. Used for scrap processing, for demolition work and other applications, because the units fit smaller carriers, initial acquisition and hourly energy consumption costs can be reduced, according to Genesis. The GXT also features an apex, where most cutting is done, that is located closer to the back of the jaws. Genesis says this feature improves material gathering and increases cutting performance and efficiency while reducing maintenance. For more information visit www.genesisattachments.com
54 | www.cedmag.com | Construction Equipment Distribution | October 2013
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machine to be more productive around bar ditches, creek beds and uneven terrain. Powered by a Deutz diesel engine, the four-wheel drive RT-120 is equipped with a three-speed, shift-on-the fly transmission so the operator can quickly adjust to changing ground conditions. Standard rear steering gives the RT120 Quad a tight turn radius allowing better maneuverability on the jobsite. Several attachments are available on the RT-120 Quad utility tractor for use in a range of underground construction tasks. These include a combination trencher/plow attachment, an individual plow, a backhoe, a reel carrier, two types of saw, and two types of trencher attachments. For more information visit www.ditchwitch.com
Generac Introduces Preconfigured Diesel-Fueled Backup Generators Generac launched its new Protector Series, products that can be used when natural gas or liquid propane is not an option. A prepackaged diesel-fueled automatic standby generator, an alternative to diesel-fueled generators, the Protector can be used as a backup generator by homeowners and small business owners who are without access to LP or natural gas. The Protector Series features the new Evolution Controller for easy monitoring and management of all generator functions. Its Quiet-Test weekly self-test mode runs at a lower RPM for quieter operation and less fuel consumption. An integrated, double-wall base tank meets all applicable codes for optional standby power and is UL/cUL 142 listed for venting and filling. To address additional local code requirements, a variety of accessories are available for dealers and installers. These include a five-gallon spill box and drain-back kit, tank risers, lockable fuel caps, and emergency stop kits. Fully compatible with Generacâ&#x20AC;&#x2122;s existing line of automatic transfer switches and Mobile Link remote monitoring, the Protector Series meets code requirements for optional standby diesel fueling and storage. It comes with a standard five-year limited warranty. Generac will offer 15kW, 20kW, 30kW, and 50kW Protector Series nodes in both single- and three-phase configurations. For more information visit www.generac.com
9/27/13 12:53 PM
New & Improved
ALLU GROUP Introduces New Positioning System Situ mixing technology supplier ALLU GROUP has added the new ALLU 3D Positioning System to its line of mass stabilization equipment. The new system is used in the geotechnical market and solidification/stabilization applications. With about 50 percent of a mass stabilization project in the cost of the binder agent, the new system is designed to help contractors reduce jobsite expenses. It features GPS signals to precisely locate the ALLU PMX excavator-mounted power mixing heads to guide the excavator operator to feed the correct amount of binder and to thoroughly mix each block of the job matrix. Comprised of four modules, including computer unit with software, touch screen, base station and GPS Sensor, the new system includes the ALLU Pressure Feeder Data Acquisition System (DAC), which tracks the amount of binder
applied. The 3D Positioning System tracks exactly where it was applied providing the contractor with more accurate record keeping. The 3D Positioning System tells the operator when to change locations and begin stabilization from another point, optimizing mixing production rates while ensuring thorough mixing, accurate binder addition rates, and efficient use of the binder. The ALLU 3D Positioning System can be installed on both existing and new stabilization systems. For more information visit www.allu.net
Fecon Adds New SH360 Excavator Stumper The newest addition to Fecon’s stump grinder product line is its SH360 Excavator Stumper, which can be mounted to any 20-plus-ton excavator. Using a bolt-on mount custom fitted to a particular excavator, the unit’s hydraulics and drive train can be set up for the power provided by the excavator in the 45-65 gpm range and up to 5500 psi. Designed for those hard to reach stumps that
cannot be safely accessed with normal stumper carriers, the SH360 complements the Fecon line of stumpers for skid steers and small to large prime movers. The SH360 can be set up for the Fecon BHP170 and BHP250 self-contained Powerpacks with Fecon Power Management that deliver 65-105 gpm. For more information visit www.fecon.com
Advertisers’ Index Apex Supply Chain Technologies . . . . . . . . . . . . . . . . . . . . . 52
Leading Edge Attachments . . . . . . . . . . . . . . . . . . . . . . . . . 45
Bell Trucks of America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Manitou North America . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
BLS Enterprises, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
PriSim Business War Games, Inc. . . . . . . . . . . . . . . . . . . . . . 13
DIS Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Ritchie Bros. Auctioneers . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
EPG Insurance, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SANY Heavy Industry Co., LTD . . . . . . . . . . . . . . . . . . . . . . . 9
Fubag Machinery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Sentry Insurance Company . . . . . . . . . . . . . . . . . . . . . . . . . . 6
GE Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Veritas Risk Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Glynn General Corporation . . . . . . . . . . . . . . . . . . . . . . . . . 35
Verizon Networkfleet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
HKX, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Wacker Neuson Corporation . . . . . . . . . . . . . . . . . . . . . . . . 15
Hydrema Exports A/S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Wells Fargo Equipment Finance . . . . . . . . . . . . . . . . . . . . . . 31
Infor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Werk-Brau Company, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . IBC
John Deere Power Systems . . . . . . . . . . . . . . . . . . . . . . . . . 41
XAPT Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . OBC
Kobelco Construction Machinery . . . . . . . . . . . . . . . . . . . IFC
XL Specialized Trailers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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
October 2013 | Construction Equipment Distribution | www.cedmag.com | 55
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Dealer Data
July Construction Recedes 2 Percent Nonbuilding pulled back, while nonresidential strengthened. 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
July 2013
June 2013
% Change
$161,294
$149,616
+8
204,059
198,172
+3
113,788
139,026
-18
$479,141
$486,814
-2
Source: McGraw-Hill Construction, www.construction.com
Nonresidential Building Residential Building Nonbuilding Construction TOTAL Construction
7 Mo. 2013
7 Mo. 2012
% Change
$88,257
$91,239
-3
117,739
91,545
+29
75,730
96,669
-22
$281,726
$279,453
+1
Source: McGraw-Hill Construction, www.construction.com
Monthly Sales Volume by Original Equipment Cost with Recovery %
This graph illustrates sales of used rental fleet by the major North American rental equipment companies for the last 24 months. Each month’s equipment sale volumes are expressed as a percentage of the total original equipment cost (“OEC”) sold in the highest volume month, with December ’12 representing 100%, (e.g. total OEC sold in January ’13 was approximately 60% of total OEC sold in December ’12). 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. January’13 sales $ recovery was 47.7% of total OEC sold).
Source: Rouse Asset Services. Contact Gary McArdle at gmcardle@rouseservices.com, (310) 363-7520
The Dirty Dozen - UCC filings on 12 earthmoving units. Equipment Description Articulated Dump Trucks Crawler Dozers
JUL 12
Excavators - Wheeled, Hydraulic
SEP 12
OCT 12
NOV 12
DEC 12
JAN 13
FEB 13
MAR 13
APR 13
MAY 13
JUN 13
Grand Total
48
108
50
57
69
86
32
24
40
57
86
71
728
240
256
246
368
306
375
340
184
291
269
305
254
3,434
Crawler Loaders Excavators - Crawler, Hydraulic
AUG 12
4
3
2
1
6
10
7
9
3
6
11
4
66
471
555
476
691
550
741
624
408
529
662
719
706
7,132
19
36
23
22
31
47
31
10
22
20
20
21
302
554
621
555
681
615
717
824
435
615
749
921
754
8,041
95
78
59
99
115
133
89
44
54
96
103
108
1,073
4
8
3
7
4
7
5
6
2
2
13
13
74
Skid-Steer Loaders
827
811
835
1,122
1,479
1,677
1,393
752
994
960
1,069
Tractor Loader Backhoes
295
351
352
423
366
384
335
246
231
361
355
Mini Excavators Motor Graders Scrapers - Conventional
882 12,801 284
3,983
Wheel Loaders < 80 HP
38
38
48
69
72
96
78
50
61
44
66
62
722
Wheel Loaders > 80 HP
362
435
366
539
625
625
608
330
336
489
483
397
5,595
4,366 2,498
3,178
3,715
Grand Total
2,957 3,300
3,015 4,079 4,238 4,898
4,151 3,556 43,951
Supplied by Equipment Data Associates, Charlotte, N.C.
56 | www.cedmag.com | Construction Equipment Distribution | October 2013
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