April 2014
www.cedmag.com
Marketing Maze Our survey identifies what dealers are doing to market themselves – and what actually works.
Plus: n Meet the queen of export sales n Sales growth could be tricking your bottom line n
What’s the holdup on U.S.-Canada bridge?
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Contents
Award Winning
april 2014 Editorial Team Executive Editor and Director of Programs Kim Phelan kphelan@aednet.org
Vol. 80, No. 4
Features
Fact: Dealers want manufacturers to host their events at AED’s Summit.
Contributing Editor Joanne Costin pr@aednet.org
Editor’s Note 7
Graphic Production eva Belmonte design@aednet.org eva@neggie.net
Smile like you mean it.
On the Numbers 39
Three more brief but vital keys to building, protecting wealth.
Columnists Garry Bartecki Financial Consultant to the Construction Equipment Industry Christian Klein AED Vice President of Government Affairs Eli Lustgarten ESL Consultants Ron Slee R.J. Slee & Associates
Don’t Mess With Musya 16 The senior vice president of Hoffman Equipment is a true international sales guru but not always what her customers are expecting.
Retiring next month, the CEO of the world’s largest CE auction company reflects on his career and the business – a special sidebar probes used equipment industry.
from the cover
Aftermarket 43
Instead of staying the same, start changing the game.
View From the Hill 45
Why America needs to switch to biennial budgeting
Inside AED 8 Groundwork 10 Industry Beat 12 Advertisers’ Index 47 Dealer Data 48
Advertising Sales Manager Albert J. Ramirez 800-388-0650 ext. 311 aramirez@aednet.org
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The real holdup on the Detroit-Canada bridge
departments
Vice President–Sales/ Publisher David W. Gordon 800-388-0650 ext. 334 dgordon@aednet.org
600 22nd Street, Suite 220 Oak Brook, IL 60523 630-574-0650 fax 630-574-0132 www.aednet.org
Just So You Know – an occasional guest column 41
On the Ramp with Ritchie Bros.’ Peter Blake 24
Advertising Contacts
Production Manager martin cabral 800-388-0650 ext. 313 mcabral@aednet.org
Columns
From the Chairman 5
Plus: Best Practices: Always in Training 36
Marketing Maze – and the Search for the Right Mix 30 Industry-exclusive research by AED and EDA uncovers the marketing tactics dealers are using and what they deem most effective.
Watching Sales Growth Go to Waste 34
Gibson Machinery recognizes the direct correlation between training and retaining.
The numbers are hollow if they don’t translate into profit on your bottom line. Profit expert Dr. Al Bates explains what you need to control.
April 2014 | Construction Equipment Distribution | www.cedmag.com | 3
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From the Chairman President & CEO - Brian McGuire Associated Equipment Distributors Oak Brook, Ill.
The Easiest – and Most CostEffective – Way for Manufacturers to Support Their Own Dealers
Executive Vice President & COO Robert Henderson Associated Equipment Distributors Oak Brook, Ill.
Officers
Chairman - Tim Watters Hoffman Equipment Co., Piscataway, N.J.
They’ll thank you for this, and so will AED.
Vice Chairman - Don Shilling General Equipment & Supplies, Inc. Fargo, N.D. Sr. Vice President - whit perryman Vermeer Equipment of Texas, Inc. Irving, Texas Vice President - Rick van exan Toromont Industries Ltd. Concord, Ont., Canada Vice President - Wes Stowers Stowers Machinery Corp. Knoxville, Tenn. Vice President of Finance Michael D. Brennan Brandeis Machinery & Supply Co., Louisville, Ky. Past Chairman - mike quirk Wagner Equipment Co. Aurora, Colo.
At-Large Directors
Todd Bachman Florida Coast Equipment, Inc. Boynton Beach, Fla. Ron Barlet Bejac Corp. Placentia, Calif. Dennis J. Heller Stephenson Equipment Inc. Harrisburg, Pa.
Larry R. Miller Kelbe Bros. Equipment Co. Inc. Butler, Wis. Mitch Nevins Four Seasons Equipment, Inc. Houston, Texas Mike Rooney Thompson Tractor Co., Inc. Tarrant, Ala.
Regional Directors
Ryan Greenawalt Midwest Reg. Alta Equipment Co. Wixom, Mich.
Todd Hystad Western Canada Reg. Vimar Equipment Ltd. Burnaby, B.C. Patrick W. McConnell West Reg. Clyde/West, Inc. Portland, Ore. Christopher Palmer Northeast Reg. Wood’s CRW Corp. Williston, Vt. Giles Poulson Rocky Mountain Reg. Faris Machinery Co. Commerce City, Colo. Jay Rodes, Southeast Reg. Wilson Equipment Co. Lexington, Ky. Rick Van Exan Eastern Canada Reg. Toromont Industries Ltd. Concord, Ont. Gary D. Vaughn South Central Reg. OCT Equipment, Inc. Oklahoma City, Okla.
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By Tim Watters
We have already discussed the benefits that AED brings a manufacturer – a healthier distribution channel with stronger and more productive dealers. How does AED build stronger dealers? Our workforce development activities improve a dealer’s ability to find and train technicians (which improves their product support capability). Our ongoing training programs and webinars improve dealers’ performance in all aspects of the business – parts, service, rentals, sales, and financial. Our events and meetings allow dealers to network and learn from their peers. And our advocacy efforts improve the environment in which we work by influencing the regulations and tax laws from Washington and by increasing the investment of those tax revenues into infrastructure. Given these facts, of course every manufacturer wants to support AED; but what’s the easiest way to help AED without spending even one additional dollar? Easy: Host your next dealer gathering at our Annual Meeting (Summit), which is held every year in January or February (next year will be in Orlando, Fla). That’s right, just hosting your next dealer event at Summit gives a tremendous boost to our association. Be it a product launch, dealer council or advisory board meeting, awards breakfast, or any other type of dealer event, choose the AED Summit as the venue (and your dealers will appreciate it, too). The AED Summit & CONDEX trade show is our biggest source of revenues outside of dues, and lately attendance at this meeting is declining, primarily a result of manufacturers no longer using this venue to host their dealer meetings. Whenever a manufacturer hosts a dealer meeting at Summit, some 30 or 40 distributors (or more) from that manufacturer’s channel are now assured to attend as well; plus, all of the manufacturer staff who are involved in the meeting. Once at the Summit, these dealers’ and manufacturers’
participation in other Summit events have a tremendously positive impact on the meeting, creating a more vibrant atmosphere at our events, increasing the opportunities for all to network and learn from each other. Conversely, a manufacturer’s decision to host its meeting elsewhere has a tremendously negative impact on AED. Our association almost always comes out on the losing end when a manufacturer forces its dealers to choose between a manufacturer meeting or the AED Summit. And even if the meetings don’t directly conflict, dealers’ travel schedules are already full, and many simply cannot afford to be away from their businesses to attend all of the manufacturer meetings and their association meeting, too, forcing many to skip the Summit so as to accommodate their manufacturers. This year, only three (enlightened, progressive, forward-thinking) manufacturers chose to host a dealer meeting at the AED Summit in Houston, and I want to thank them for their support of this great association! Thank you Volvo, Esco and Komatsu!! We would love to see many more (enlightened, progressive, forward-thinking) manufacturers come back and support our association by hosting their next dealer meeting at AED Summit. P.S. – Many manufacturers supported our association by way of exhibiting at CONDEX (63 manufacturers and 41 service providers) or hosting a suite or meeting room (42 manufacturers and 10 service providers) at Summit – a big “shout out” to you, as well. P.P.S. – The 2015 Summit is in Orlando, Feb. 10-12 – what a great spot for your dealers to spend an extra day to attend your meeting. Please start planning now.
Tim Watters (timwatters@hoffmanequip.com) is president of Hoffman Equipment in Piscataway, N.J.
April 2014 | Construction Equipment Distribution | www.cedmag.com | 5
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Editor’s Note
Smile, You’re on [Customers’] Candid Camera By kIM pHELAN
What is the seriously simple way to right a wrong, start a friendship, and create lasting, loyal partnerships? Don’t laugh when I tell you.
Five up-and-coming leaders from AED-member dealerships took 40 minutes out of their busy schedules on a recent Friday morning to meet as a new steering committee for this year’s Leadership Academy. What a great group of professionals, and they brought some excellent ideas to the table as AED prepares to roll out an exciting program for future dealer principals this coming August. (26th through 28th – see ad on page 44) One of the most impressive aspects of the conference call was their discussion about the growing concern of: How do we get everyone on the team “living and breathing customer service?” In other words, helping every dealer employee embrace the fact that every action, every encounter with customers counts – a lot. Is there a way to teach people how to have an owner’s heart and to literally amaze customers with attitude and action that demonstrates authentic concern? I’m not altogether sure you can teach attitude – shape it, encourage and promote it, yes, but hiring goodattitude DNA is probably the foolproof way to start. The former CEO of Southwest Airlines, Herb Kelleher, once said, “We hire great attitudes, and teach them any functionality they need.” I actually learned that bit of trivia from a wisdom-rich little book sent to me last month by its author, Mike Hinrichsen, a veteran account manager with Caterpillar. Mike produced his book, “The Little Black and Yellow Book,” as a thanks to his company on the occasion of his 35th anniversary – it is a compilation of “Lessons Learned From a Lifetime of Sales, Marketing and Account Management at Caterpillar.”
Immediately following Mike’s the easy route?” reflections about the monumental Isn’t it strange that we have to even importance of a positive attitude is talk about this? The unfortunate reality a four-paragraph commentary about is that people can get wound up pretty “The Value of a Smile.” I am absolutely tight, including (or maybe especially) convinced of the veracity in Mike’s me; it’s all too easy to wear your stress conclusion that, “people are like a plastered across your face for everyone mirror, smile and they will smile back to see. But customers have a way of at you. Your relationships begin with a picking up on not-so-subtle vibes like genuine smile.” that, don’t they. I’ve been a student and practitioner Ironically, the next-gen leaders of this principle since my adolescence. from that conference call I mentioned I tested and proved my theory in the seemed pretty concerned with the 7th grade that even the sourest old lack of customer service mentalmath teacher could be softened with a ity among some of their companies’ smile and friendly conversation. And it younger-generation employees. Getseldom fails – you would be surprised ting everybody on board with making how the countenance of the grumpy every customer contact a happy one public at large can transform abruptly is a tough challenge – and a challenge when they see someone smiling at that never gets a checkmark next to it. them. I see this play out in airports, You have to teach thoughtful, friendly trade shows, grocery stores, meetings, customer service as a habit, and then anywhere. teach it some more. Now, I believe it’s not an uncom Smiling at people is beautiful outmon assumption among the male ward evidence of the right attitude, gender that a sweet smile combined and some natural happy in the DNA with the batting of lashes is a skillfully goes a long way. I said you can’t teach applied tool among the opposite sex. attitude, but you can surely teach This is not the kind of smile we’re talkways to work on it and how to project ing about, ok? it. And while faking is not ideal, I love Smiling is effective for setting a this remark quoted in Mike’s book: tone or even changing the mood of “I’d rather have an individual acting others without speaking a word, but if positive and enthusiastic than a sincere the intent is manipulation of some sort, sorehead.” -Ed Foreman, Caterpillar forget it. leadership trainer. Mike writes, “A genuine smile says Please be sure to send your nextI like you, like serving you and being gen leader to Leadership Academy this with you.” summer for great professional develop If I needed to train a group of ment and networking. And, by the people how to take care of my way, thanks for reading. customers, the curriculum – and the Kim Phelan (kphelan@aednet.org) final exam – would feature a segment is the executive editor of Construction on the practice of smiling. Mike also Equipment Distribution and director of observed that, “it takes 72 muscles to programs for AED. frown and four to smile. Why not take April 2014 | Construction Equipment Distribution | www.cedmag.com | 7
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Inside AED
Introducing AED’s New HR Help Desk
Trusted human resources advice is now just a phone call away. Who do you call if you have a human resources clients appropriately and may be able to refer dealers to question or problem? If you don’t know or are looking an employment attorney. for another option, you now can call AED’s HR Help “In my short time here, one of the things I have heard Desk: 888-412-8079. The Desk is being manned by from several members is that they have a need to either Karla Dobbeck and her associates at Human Resource update their employee handbooks, or are in need of an Techniques Inc., based in Algonquin, Ill. employee handbook,” said McGuire. “Karla offers an Dobbeck says 80 percent of the calls she typically opportunity to get that done.” receives are for problems that could have been avoided Ditch Witch Midwest wanted to review and update by taking some preventative measures. “Any employment their employee handbook for years, but it just kept getting issue, if handled poorly, can lead to lawsuits and unintenpushed to the back burner, primarily because of the time tional consequences,” she cautioned. needed to complete it. They welcomed the opportunity to Dobbeck believes small and midsize businesses without have Human Resource Techniques review the handbook professional human resources personnel often don’t and were pleased with the service. “It’s nice to have know where to turn for help dealing with employment someone that we can trust to turn the handbook over to, issues. That’s why AED’s new HR Help Desk should be make sure we are compliant, and not have to worry about very beneficial to many it,” said Mark Harbaugh, AED members. president. “The price they “Karla provides quoted was reasonable members the unique and from a time aspect, it opportunity to access a was a huge savings.” What: New HR Help Desk is a free Q&A human resource profes “For smaller companies, service for members sional without the cost without an internal What Else: Customized HR services at an of having one on staff,” human resources departAED discounted rate said AED President and ment, we can be used on Who: Karla Dobbeck at Human Resource Techniques CEO Brian McGuire. “For an ongoing basis, whenWhere: All 50 states those members that do ever a question comes How: Call 888-412-8079 have trained HR profesup, or if a company needs sionals it gives them a help working through a peer to reach out to.” touchy situation,” said Dobbeck. “Larger companies might Through the Help Desk AED members can get an want to use us on a project basis for employee training.” answer to a simple question on many employment-related On the company’s website – www.askhrt.com – AED issues free of charge. Customized specific HR services are members can find a wealth of HR resources including also available to AED member companies at a discounted downloadable federal labor posters, as well as forms rate of $125 per hour. Services include employment law related to healthcare, taxes, The Family and Medical Leave auditing, which evaluates your company’s compliance Act, immigration, and OSHA. with many federal and state employment laws; policy Clear communication is a key part of Dobbeck’s philosoand handbook development and review; performance phy and is applied to all aspects of the company’s HR management and employee development. Employee services. “I firmly believe if you communicate your expecrecruitment and selection is another area of focus for the tations clearly you are going to have better results,” said HR Help Desk. Human Resource Techniques Inc. is able to Dobbeck. work with distributors in all 50 states. If an employment Dobbeck holds a Human Resources Professional (HRP) issue requires an attorney, the AED Help Desk will advise designation from the Human Resources Accreditation
Your AED Membership Pays Off – Again
Proposed New Members Townline Equipment Sales, Inc. Plainfield, N.H.
Fairchild Equipment Green Bay, Wis.
This list is published each month as required by AED bylaws. Comments on the applicants should be directed to AED President and CEO Brian McGuire 800-388-0650, ext. 326.
8 | www.cedmag.com | Construction Equipment Distribution | April 2014
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Inside AED
Institute (AHRI). She founded Human Resource Techniques Inc. in 1997, and reports that 90 percent of business comes from referrals or
repeat business. AED members who want to find out more about HR Help Desk services or would like to receive a proposal for
specific services should speak with Karla Dobbeck at 888-412-8079, or send her an e-mail at kdobbeck@ askhrt.com.
mark your
calendar
For information on any upcoming AED events, visit www.aednet.org or call 800-388-0650. April 10
May 15
June 12
Webinar: Step-By-Step Change Management - 10-11:30 a.m. CDT
Webinar: The 8 Most Common Mistakes Made By Leaders
Webinar: How to Create a “Sales Service Excellence” Culture
Presented by Christine Corelli
April 15 Webinar: Service Management – Labor Efficiency - 11a.m.-Noon CDT
Presented by Ron Slee
April 15 Webinar: Service Management – Flat Rating/Standard Jobs
2-3 p.m. CST | Presented by Ron Slee April 16 Webinar: Service Management – Shop Floor Scheduling
11a.m.-Noon CDT Presented by Ron Slee
10-11 a.m. CDT Presented by Ryan Morrison
10-11:30 a.m. CDT Presented by Christine Corelli
June 4
June 16-17
Webinar: CFO/CEO Industry Financial Updates
Parts Management Unit II: Performance Excellence (PE)
2 p.m. CDT Moderated by Garry Bartecki
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Groundwork Officers
Chairman A. Roy Kern Equipment Corporation of America Coraopolis, Pa. Vice Chairman Dennis Vander Molen Vermeer MidSouth, Inc. Jackson, Miss.
President Bob Henderson The AED Foundation Oak Brook, Ill. Treasurer John D. Crum Wells Fargo Equipment Finance Pittsburgh, Pa. Immediate Past Chairman Christopher Pera Able Equipment Rental Deer Park, N.Y. AED Board Representative Wes Stowers Stowers Machinery Corp. Knoxville, Tenn. Executive Director Steve Johnson The AED Foundation Oak Brook Ill.
Directors
Gary Bridwell Ditch Witch of Oklahoma Edmond, Okla. John Cosgrove Central Power Systems & Services, Inc. Liberty, Mo. Mike Hayes Komatsu America Corp. Rolling Meadows, Ill. Timothy Kramer Kramer Ltd. Regina, Sask. Dr. Wayne Longbrake Former Dean, Penn. College of Technology Williamsport, Pa Sonja Metzler Ohio CAT Broadview Heights, Ohio David REilly John Deere Construction Equipment Moline, Ill. Kenneth Silverman Volvo Construction Equipment Shippensburg, Pa. Mark teel Caterpillar, Inc. Peoria, Ill.
New AED Foundation Financial Symposium Addresses Pressing Distributor Issues Former ‘CFO Conference’ provides updates, insights you can instantly fold into your equipment business. n How
do I prepare for new tax regulations? much rental fleet do I really need? n How current are my rental contracts? n How can I deal with rising health care costs? n How can I hire and keep good, skilled employees? If you have been asking any of these questions lately, you’re not alone. These issues were top of mind among AED-member dealers responding to a recent survey. The AED Foundation will provide the answers in a two-day Financial Symposium on May 8-9 in Burr Ridge, Ill. The AED Foundation Financial Symposium (formerly known as AED’s CFO Conference) provides an interactive learning environment for dealer executives and financial managers. Questions are encouraged and there is time to network with speakers, dealers and suppliers. n How
The AED Foundation Financial Symposium
May 8-9, 2014 • Burr Ridge, Ill. Register at www.aednet.org/cfo $895 Members/$1,295 Nonmembers $695 multiple registrants from same company A few subjects include: Tax Law Changes Equipment depreciation, LIFO, LKE, and a host of other tax code provisions on which you and your customers depend are all possible targets of the latest tax reform bill. Christian Klein, AED vice president of Government Affairs, will update you with the current status of tax legislation and the implications for equipment distributors.
Workforce Issues Human resources expert Karla Dobbeck provides advice on how to research and interview potential candidates, which will lead to better hires. Once the right employee is in place, learn how a consistent plan can keep the employee on track, create higher job satisfaction, and improve employee knowledge and productivity. Retirement Plans New to the conference this year, Todd Thompson, director of the Business Products Group at Sentry Insurance Co., explains the Todd Thompson different ways of allocating employer contributions into a retirement plan and some of the creative plan designs that can be utilized to motivate and reward specific employees or owners. Managing Risk and Rental ROI A panel of AED members will address all those burning questions you have about risk management, ROI on rental, and managing manufacturer expectations. This interactive conference will help you navigate your business through continued uncertain times. Attendees will receive 11.5 CPE hours for attending through WTP Exchange, one of the event sponsors. Call or e-mail Pat Novak with questions: 630-468-5135, pnovak@aednet.org
Chicago Marriott Southwest at Burr Ridge Rate: $149 per night Free shuttle to and from Midway airport
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10 | www.cedmag.com | Construction Equipment Distribution | April 2014
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11/26/13 9:27AM 10/29/12 1:39 PM 2/1/12 11:00
Industry Beat
AEM and AEMP Agree on a New Standard for Telematics Data
End users, dealers will have ability to collect, analyze asset data from mixed fleet.
The Association of Equipment Manufacturers (AEM) and the Association of Equipment Management Professionals (AEMP) recently announced a new standard for telematics data. The standard includes 19 data points and defines a format that enables OEMs to deliver 44 fault codes as part of the data feed. Data will be provided to the end user via an Application Program Interface (API) server-to-server data-sharing standard. The datasharing standard will include standardized server-to-server communication protocols for the transfer of telematics information in mixed equipment fleets to end user business enterprise systems. The protocols will allow fleet managers to employ their own business software to collect and analyze asset data from mixed equipment fleets without the need
for customization work across multiple telematics provider applications. Now that the standard is established, a developer group will work together on industry-wide integration of the standard, future versions and introduction dates. Another task force will set the data transfer/conversion security plans and a governance group will also be assembled. In a press conference held at CONEXPO-CON/AGG, AEMP Executive Director Stan Orr said integration of the standard is expected be complete by the end of 2014. “By expanding the standard we can start to build a business case for adopting telematics,” said Ron Piccolo, vice president, strategic sourcing mobile equipment for Oldcastle Materials, who was involved in the work to develop the standard.
ICP Will Sell Emerging CE Brands Via a Dual Distribution Model The official launch of International Construction Products (ICP) took place at CONEXPO-CON/AGG in Las Vegas last month. ICP is bringing Asian heavy equipment brands to North America with a promise of low prices and total support. The company claims their distribution platform will save equipment buyers 30 to 45 percent while providing a standard three-year warranty and 48-hour parts guarantee. Founded by industry veteran Tim Frank, ICP has joined forces with Chinese manufacturer Lonking Holdings Ltd., to bring wheel loaders, excavators, lift trucks, road rollers and other heavy equipment to customers in the U.S., Canada, Mexico and Central America. CEO Wes Tim Frank Lee said ICP will sell to end users using
a dual distribution model: an online store called ICP Direct, and through traditional equipment dealers. The company has partnered with IronPlanet to provide a secure platform for processing online orders through its website, www.icpdirect.com. TVH will provide parts support through nine parts depots across North America. ICP customers can select their own service dealer, choose from dealers in ICP’s network, or in some cases, do the warranty work themselves. ICP says it is looking to build dealer relationships.
AED Dealers Join KOBELCO in Supporting Wounded Warrior Project One machine that stood out among the thousands displayed at CONEXPO-CON/AGG was KOBELCO Construction’s limited edition SK350LC crawler excavator wrapped in a patriotic design. All five dealerships that purchased the excavators were AED members including Abele Tractor & Equipment Co, Inc. (Albany, N.Y.), Baschmann Services Inc. (Elma, N.Y.), Mid Country Machinery (Fort Dodge, Iowa), Scott-Gallaher Inc. (Roanoke, Va.) and Southeastern Equipment Co, Inc. (Cambridge, Ohio). Southeastern Equipment sold its unit to Shelly & Sands Inc., headquartered in Zanesville, Ohio. KOBELCO will donate $100,000 to the Wounded Warrior Project, a nonprofit that supports a full range of programs and services for injured veterans and their families. KOBELCO also collected more than $19,000 in donations from CONEXPO attendees. (continued on page 14) 12 | www.cedmag.com | Construction Equipment Distribution | April 2014
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Industry Beat
In the News
Dire States Panel Assembles at CONEXPO-CON/AGG Case Construction Equipment hosted an esteemed panel at CONEXPO-CON/AGG 2014 to highlight the problems facing American infrastructure and what can be done to remedy the situation. The panel discussion was the final stop of the Dire States tour undertaken by author and infrastructure expert Dan McNicol. McNichol’s infrastructure road trip in a 1949 Hudson throughout the U.S. helped raise awareness about the nation’s crumbling infrastructure. McNichol was joined by Jim Oberstar, former U.S. Congressman who was chairman of the House Transportation and Infrastructure Committee; Janet Kavinoky, executive director, transportation & infrastructure, U.S. Chamber John Hugg, president of Hugg & Hall Equipment Co., was recently named Executive of the Year by Arkansas Business Publishing Group at the annual Arkansas Business of the Year Awards at the Statehouse Convention Center in Little Rock, Ark. According to Arkansas Business, during his tenure as an owner the company expanded into 13 different locations in Arkansas, Louisiana, east Texas and Oklahoma and revenues grew from $12 million to $160 million. Hugg credited a balance of four profit centers in parts, rental, service and sales for propelling the company.
John Hugg (left), president, and Robert Hall, vice president, Hugg & Hall Equipment Co. Photo courtesy of: “Little Rock Soiree” magazine
LiuGong North America is scheduled to move to a larger, 35,000square-foot interim facility to support its expanding dealer network. The new facility, located at 22220 Merchants Way in Katy, Texas, will almost triple the amount of space currently housing the company’s operations.
of Commerce; Jim Hasler, vice president, CASE Construction Equipment; and moderator Adam Snider, transportation reporter for Politico. Oberstar summed up the Highway Trust Fund best. “It is not short of funds, it is short on political will – political backbone.” Watch the panel discussion in its entirety at www.direstates.com.
Genie introduced the industry’s first telematics-ready connector to enable telematics devices to be plugged into Genie boom lifts. The telematics-ready connector is now available on the Genie S-80 and Z-80 boom lifts, and will be available on the S-100, S-120 and ZX-135 models by the end of the first quarter. Xylem, a global water technology company, opened a new, 12,000 square-foot solutions branch in Pompano Beach, Fla. H&E Equipment Services appointed Rob Hepler as senior vice president of sales, assuming H&E’s most senior rental sales position. Hepler will Rob Hepler oversee planning and strategy, along with talent and sales development, to assist H&E’s ongoing rental growth objectives. Beginning in 2015, John Deere Construction & Forestry Division will offer a retrofit kit to enable Interim Tier-4 (IT4) machines to be sold in countries where ultra-low sulfur diesel fuel is not available. The kit can be used on John Deere-powered crawler dozers, wheel loaders, articulated dump trucks, motor graders, excavators and backhoes.
JLG Industries is expanding its customer training center in McConnellsburg, Pa. The $2.5 million, 15,000-square-foot center, due to open this summer, features a new, significantly larger bay for hands-on training and a ground course for hands-on driving and operating skills.
Curry Supply Company, based in Martinsburg, Pa., has announced the recent addition of Bo Cowan as field sales representative, with Bo Cowan responsibilities in the oil and gas industry throughout North America. Canadian Prime Minister Stephen Harper unveiled the much-anticipated New Building Canada Plan, the largest long-term infrastructure plan in Canadian history. In addition to $70 billion in stable funding for 10 years, the proposal includes dedicated funding for small communities, provincialterritorial allocations, project categories eligible for support, cost-sharing thresholds, and public-private partnership screening requirements.
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Industry Beat ™
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Don’t Mess With Musya
A Closer Look
She isn’t what males of some foreign nations might have been expecting, but by dealing openly and honestly with global customers the senior vice president of international sales at Hoffman Equipment has won trust – and business. By Giles Lambertson
There is heavy iron and tempered steel – and then there is Musya Tumanyan. It is appropriate to mention Mrs. Tumanyan in the same sentence with ferrous metals and alloys because they all share some characteristics. Tough. Stressresistant. Resilient. “I learned to be very straight forward,” she says of her reputation as a savvy negotiator and no-nonsense sales executive. “I learned to say what I mean and mean what I say. I learned from an early age that if I say something, to say something valuable, to be of value.” As senior vice president of
international sales for Hoffman Equipment, Musya (pronounced Musha) Tumanyan has been saying and doing valuable things for 25 years. The Piscataway, N.J., construction equipment dealer has a large footprint overseas, and Tumanyan is one reason why. Moldavian Heritage Tumanyan was born in the Moldavian Soviet Socialist Republic (now Moldova), which sits between Ukraine and Romania. Breezes off the Black Sea foster warm summers and mild winters, which have nurtured produce, grape-growing and winemaking
industries in Moldova for many generations. But in 1977, Tumanyan and her family turned their backs on this pleasant and picturesque climate and emigrated to the United States. Already a university graduate, Tumanyan entered an international trade and marketing program in New York City. She spoke Russian and German and quickly added English to her stable of languages. (She since has mastered Italian and is working on French.) Upon graduation from the NYC program, Tumanyan started at the bottom with a trading company and parlayed her global background (continued on page 18)
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Executive Spotlight
(“Don’t Mess With Musya” continued from page 16)
and general inquisitiveness into a solid early career. That work ended when she and her husband decided to move to New Jersey. Like Moldova, The Garden State is home to vegetable and fruit truck farms but also, of more relevance, to Hoffman Equipment. Within three months, Tumanyan was named Hoffman’s marketing director. Though she had learned something about heavy equipment working in New York, it was her international outlook that best served her. “International sales is a very unique profession,” she says. “To succeed, you have to understand cross-cultural backgrounds and how minds work overseas.” Of course, to sell construction equipment, you also have to know how the machinery works. She systematically began the task of familiarizing herself with the heavy equipment and components of hundreds of U.S. manufacturers. Hoffman coincidentally set up an office in Italy the year
Shown here at the entrance of the President of Cameroon Palace accompanied by Lt. Emmanuel Sako, Cameroon Ministry of Defense, Musya made sure the country’s first 40 machines were delivered in time for the National Day Parade.
Tumanyan arrived in the U.S. The satellite office became a European headquarters for the company and a precursor of sales to Russia, Asia, Africa, and Latin America. Global sales now constitute about 20 percent of Hoffman revenue; some months perhaps twice that much. Tumanyan is one of three people at Hoffman headquarters dedicated to foreign sales, all of them working under owner and president Tim Watters, who is also AED’s 2014 Chairman. Pioneering Executive It is unusual for a woman to play such a central role in global heavy equipment sales. Yet Musya Tumanyan doesn’t look at herself as a pioneer but as a successful business executive. “At any given meeting, there will be 10 men and one woman. What I feel the most at these meetings is great pleasure at being able to share my experience in the industry.” The fact remains, however, that her gender creates some interesting dynamics. “Musya” is a variation of “Maria,” but the name’s feminine marker obviously is unrecognized by many of her peers in the industry. (As well as by some business writers: A New Jersey newspaper reporter giving a second-hand account of a 2008 seminar at which Tumanyan spoke at length repeatedly referred to her as “he.”) “In working in some countries, many times a customer will come into the room and see me and say, ‘I am looking for Musya.’ I tell them, ‘I am Musya.’” Consternation sometimes follows, especially in Muslim countries where business people decline to shake the hand of a woman for religious reasons. But even there, she says, “they eventually compliment me and we do business.” In Yunnan Province in China, where Tumanyan had flown to finalize a transaction for Hoffman, her male counterparts in the meeting learned that they could not easily intimidate this woman. She said the dozen Chinese businessmen at the meeting balked over agreed-upon terms of the deal. She pushed back, telling them that they were not at some bazaar where they could “haggle” over a price. Though she couldn’t understand Mandarin, she could sense the increasing anger in their voices. When they persisted, she suddenly stood up. “It was such a pleasure to see you,” she told the startled buyers. “I am going home now. I can’t offer you anything more.” Whereupon they caved. Having failed to shake her conviction that the price of the equipment was legitimate, they affixed their signatures to a $1.5 million sales agreement. In the U.S., even politically correct peers sometimes are taken back by her position, she says. “It is still seen as a ‘good old boys’ job, and not a woman’s place. But I am respected for my knowledge.” Globe-Trotting Executive On an overseas trip in 1998 that included stops in Russia,
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Executive Spotlight
Israel and Lebanon, she ran into another kind of bias: anti-Israeli. A Syrian soldier stopped her at a border crossing because her passport showed she had been to Israel. She had to board a return flight to Moscow. “I am not a spy,” she recalls saying with some exasperation in her voice. “I am a business person. I am bringing business, the good stuff. They should open doors for me.” Tumanyan helped Hoffman make inroads in Russia, though she ran into legal roadblocks that were characteristic of those early post-Soviet years. European equipment makers had an easier time of it because of their longer-term sales relationships with Moscow and its satellite states. Though legal hurdles are fewer now, she says, the presence of European machinery is greater and Russian contractors are reluctant to switch to U.S. brands. The other drag on Russian sales is corruption. “I hear it is very corrupt. I was never directly approached, and if I had been, I would have stopped them right in their tracks. I walk away from business conducted that way. It is important we sleep at night and know things have been done properly. I don’t regret losing any contracts to that, because if you do one…” she says, not finishing the thought. “There is no glory in that type of business.” A small Hoffman sale to a contractor in the African state of Cameroon later led to a 165-machine, $45 million sale to the government. At one point, the sale got hung up on the fact that some of the equipment was dual-purpose – that is, a water truck or bulldozer could be used by both civilian and military operators. Congressional committee members eventually approved the deal. Tumanyan says such sales as the Cameroon transaction are especially gratifying. “People were lined up to get to work on a road or a bridge. The first machine was immediately driven off to some job, rather than
being parked in some contractor’s changed that somewhat, but not for equipment yard. All the equipment long, she says. “Fifteen, 20 years ago, was for the good of the people of the average Russian had hope. Today in Cameroon. There is a lot of satisfacRussia, the middle class is wiped out.” tion in that.” Tumanyan is not pleased with the She scurried around more in the direction of politics in this country. early days than she does now – six Speaking with characteristic frankness, weeks here and six weeks there when she says she is “petrified that we are the Russian market was opening up, going in the direction of Russia. I left a for example. In May 2009, she was system that was controlling. I learned constantly flying between four counthe best way to control someone is to tries: Russian, Kazakhstan, Egypt and reward him. The Russian system does Italy. Now that business relationships not work. Me being here in the United have matured in some 40 countries States is proof that it does not work. served by Hoffman, she flies abroad All this talk about control and distriless and relies more on her computer. bution is a change from the United “Skype, Internet, cell phones States of 30 years ago. Such a system have changed tremendously how does not work.” we do international business. Yes, She has no family left in Moldova, face to face can be important, but where civil unrest periodically stirs communication works over Skype,” the country. The last of her relatives she says, though modern technology there packed up and moved to the hasn’t entirely obviated the gender U.S. years ago. But her business thing. “I worked long distance with vision is still global; she teaches a man from Pakistan who operated students at Monmouth University out of the Czech Republic and one the importance of exports, and is day he Skyped me. I said hello and a strong advocate of companies he hesitated and then said, ‘I want to looking for deals across borders. talk to Musya.’ I said, ‘This is Musya.’” “Exports mean balance for a company, The man ended up buying a couple additional earnings. They are a very of machines from her. important part of the economy.” It might be a tribute to her femiCulture Shock nine perspective that she insists on When Musya Tumanyan landed couching global business in terms of in New York City, she says she men and women, rather than dollars experienced culture shock, mostly and cents – or their equivalent in a in respect to the abundance of foreign currency. “Sometimes I talk goods for sale on shelves and to management,” she said, “and I tell tables. The late 1970s was a time them, ‘When you talk about exports, of hyperinflation in the U.S. and of this is not an accounting job. It is a international tensions leading up to business of people and of building the U.S. embassy take-over in Iran. “It relationships with people.’” n was bad here, but the difference was (see sidebar on page 22) so dramatic,” she says. “When U.S. immigrants compare new and old countries, even in the most difficult Giles Lambertson period it is much better here. Always. is a retired journalist “No matter what anyone says, we and freelance writer have opportunity here in America. To whose interest in the say what you believe, the ability to construction industry achieve. If I want to do something for goes back to his carpenmyself, I can. In Russia, I couldn’t do try days. He can be reached at geepeela@ anything. I had to follow the rules.” yahoo.com. The collapse of the Soviet Union
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Executive Spotlight (“Don’t Mess With Musya” continued from page 19)
Doing Business Abroad – Or Thinking About It?
Be Sure to Abide By the Foreign Corrupt Practices Act By Christian A. Klein
The Foreign Corrupt Practices Act (FCPA) is a federal law enforced by the U.S. Department of Justice (DOJ) that criminalizes payments to foreign government officials to influence them in their official acts or to obtain or retain business. Here are some things you should know about the law if you’re doing business internationally: Who’s covered? It’s a safe bet you’re covered by the law. It applies to both publicly traded and private companies, as well as to U.S. citizens and residents. It also applies to foreign companies and individuals while in the territory of the U.S., and to nonemployee foreign agents working on your behalf. What does the law prohibit? The law prohibits paying (or promising to pay) foreign government officials (or their friends and relatives) to influence them to use their official position to help you obtain or retain business or to give you an unfair business advantage. This could include winning or preventing termination of a government contract, preventing a competitor from getting a contract or being allowed to operate, circumventing the procurement process or import rules, getting nonpublic information about a pending project, improperly influencing the judicial process, or getting an exemption from existing regulations. Does the law prohibit ever giving something of value to a foreign government official? The law doesn’t prohibit all gifts to foreign officials. It generally prohibits giving things of value to improperly influence them in carrying out their duties. Giving company promotional items and paying for reasonable meals and entertainment expenses isn’t likely to trigger a prosecution. But the DOJ assumes that the larger or more extravagant the gift, the more likely it was given with an improper purpose in mind. What does the DOJ consider in determining whether a gift violates the FCPA? Factors prosecutors consider include: n Size and reasonableness of the gift – paying airfare and basic expenses for a foreign official to inspect your facility in the U.S. probably wouldn’t violate the law if there’s a legitimate business reason for the trip; but flying the official and his family first class and taking them to
Disney World for a week would almost certainly raise eyebrows. n Transparency – is the gift or expense properly recorded on a company’s books? (mandatory for public companies) n Legality – is the gift permissible under the laws of the foreign official’s home country? n Purpose – is there an indication that the gift was given “corruptly” to influence the foreign official in his official duties? How to avoid running afoul of the law. If you’re doing business internationally, make sure you and your employees understand the FCPA. Create company compliance guidelines, which could include gift limits, gift clearance processes, and reimbursement rules. The DOJ also puts a premium on transparency, so make sure that gifts are properly noted in company records. Where to get more information. The DOJ has a website –http://www.justice.gov/criminal/fraud/fcpa/ – with information about the law and an extensive compliance guide. (http://www.justice.gov/criminal/fraud/fcpa/guide. pdf). You can also request a formal opinion from the DOJ about whether conduct you’re considering is permissible. The FCPA is complicated and there are many nuances. This article is intended as a brief introduction; it is not legal advice. If you have questions, consult the DOJ website or your attorney. Christian A. Klein is AED’s vice president of Government Affairs.
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On the Ramp with Ritchie Bros.’ Peter Blake
One-On-One
Catching bids on the ramp at RBA’s Bejing auction last spring, Pete Blake is a roll-upyour-sleeves type of leader who likes to be right in the middle of the auction action.
To succeed as a leader, the retiring head of the world’s largest auctioneer says you just have to listen, hire people smarter than you and follow the rules and principles you learned in kindergarten. By Tina Grady Barbaccia
Peter Blake – known affectionately as just “Pete” to his peers, colleagues and family – may be the president and CEO of the world’s largest industrial auctioneer, but he is quick to point out that the success of Ritchie Bros. Auctioneers is because of the company’s entire team. “It’s never been about me or the company,” Blake said. “It’s very much a flat organization, and it’s about getting things done. Nothing ever gets done without an amazing team. That has been the evolution of the organization.” That’s also how Blake wants everyone to remember him when he retires from Ritchie Bros. in May. “Everyone contributes to the legacy of Ritchie Bros.,” he said. “Hopefully that’s how everyone will remember me. I’d like to be remembered as a good leader who took the time to listen. This is a skill that is less ‘en vogue’ these days.” Despite leading a company that is worth close to $4 billion and overseeing a shareholder value increase of more than $1.2 billion, Blake doesn’t just sit behind a desk. He is a leader, but he’s also a roll-up-the-sleeves kind of guy who likes to be part of the action of the high-paced auction
environment. Although surprising to some, it’s not uncommon to see Blake taking bids on the auction ramp. Blake recently took some time away from the auction scene to talk with Construction Equipment Distribution for a Q&A about his plans for the future, a look back at his tenure with the company, and some reflection on the used equipment/auction industry now and down the road. What would you like your “legacy” to be at Ritchie Bros. Auctioneers? In addition to being remembered as a good listener and team player, Blake says as CEO, he wants to leave the organization better than when he joined it and hopes that this is the sentiment. “I’ve been part of the company for 23 years, the last 10 as CEO,” Blake said. “I started as CEO at age 42 when I inherited the organization from our founder. It has grown as we have managed and worked our way through the world.” The company was achieving $500 million to $600 million in sales when Blake took over, a significant difference from the $3 billion to $4 billion Ritchie Bros. does in sales now. (continued on page 26)
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One-On-One
(“On the Ramp with Ritchie Bros.’ Peter Blake” continued from page 24)
Blake says leaders should identify their own strengths and weaknesses, then hire the skills they don’t have.
Who has had the biggest impact on your leadership throughout the years? When Ritchie Bros. Founder Dave Ritchie retired in 2004, there was a lot of press around this. He was an icon, Blake says. However, Clifford Russell Cmolik, a.k.a. “Russ,” a Ritchie Bros. director, also played an important role in the company. Although he was more behind the scenes, Cmolik was just as important because he was the “financial genius,” Blake notes. “I was schooled and mentored by them,” he said. “They are both brilliant leaders. They both left the company, but we still managed to survive. No one person will be tagged with the success or lack of success in the organization. I can leave or Dave can leave, and Ritchie Bros. will carry on. We have tremendous people in the organization and we are focused on growing and having the right people in the right positions.” Ritchie and Cmolik had the biggest impact on how the company is run today. Both had very different skill sets, but when they worked together, they were “a dynamic duo,” Blake says. An important part to creating this dynamic, Blake says, is realizing your own weaknesses and strengths. “You need to take your ego and park it outside the door,” he said. “A lot of leaders today realize that they can’t be everything they need to be and they surround themselves with people who have those skills. This is a good leadership lesson. You can find people who have the skills you don’t, and bring them in. That’s what I’ve done. I’ve hired people smarter than me, but this isn’t always the most popular thing to do these days.” The company’s four core values – “stuff you learned in kindergarten and what your mom and dad tell you,” Blake says – have also kept the company on track for success. The core values are: It’s all about the customers; do what is right; we are all one team; and we have fun. “These are so important,” Blake said. “Doing what is
right is really important. This hasn’t always been ‘en vogue,’ either. We have turned away a lot of business because it wasn’t the right thing to do. If you lean back on your values that you were schooled on as a young person, that is how we operate. As for being team, it’s not complicated. If I don’t do my job or the guy in the yard doesn’t do his job, then it throws everything off. We all work together.” Blake also emphasizes the fourth core value of having fun. “This is my favorite,” he said. “Life is short. If you’re not having fun, figure out something else to do.” What are the most challenging issues you have had to deal with or tackle as CEO of the company? Despite a strong company foundation based on the core values and a good team, the recent severe economic downturn and the recessions in the 1980s and 1990s were still significant challenges, Blake says. The drop in U.S. construction spending was 12 to 13 percent in both the 1980s’ and 1990s’ recessions. And then, for a period of about 18 months – from about mid-2008 to late 2009 – construction spending dropped about 38 percent, Blake says. “If you put it in the context of the last 30 to 40 years, there was about a $460 billion drop in spending,” Blake says. “People can’t get their heads around this.” Playfully putting these numbers into context, Blake says that wrapping the Earth in 6-inch-long dollar bills would require 240 million of them. To reach $460 billion, you’d have to repeat that process around the planet 1,742 times. Using another analogy, Blake explains that if $460 billion in $1 bills were laid down and driven over at 60 mph for 10 hours per day, it would take 200 years to drive over all of it. “We have been through one of the worst construction spending drops in a lifetime,” Blake said. “When you talk about managing through that, anyone who survived should get a platinum medal. There are better signs in the economy today, but people don’t appreciate the storm we just went through. We are in the equipment exchange business. To see a drop and manage our way through this – and still be very profitable – took an entire team. It was like a hurricane. It was so off the scale it is hard to comprehend.” What will you miss most about Ritchie Bros.? Blake says he will miss the people and the friendships he has made throughout the years with customers and employees. “Traveling to auctions is an event,” Blake said. “It takes time and effort, and people are appreciative of what you do and know you are adding value. It really means a lot when [customers] are putting their entire family wealth in your hands. That’s an incredible level of trust. We honor that and make sure we deliver value for them.” Besides the people, Blake says he will also really miss catching bids on the ramp and the energy surrounding that experience. “Once you get good at it, you can look at people and you know when they want to bid one more time but they are still thinking about it,” he said. “You want to make sure you give them enough time but keep the auction going
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One-On-One
as well. It’s really high energy and a lot of fun.” Do you have any advice for your successor? Robert Murdoch, chairman of the board of director at Ritchie Bros., has called Blake “an outstanding leader.” Asked about this, Blake remarked, “I have no magical wisdom from the mountain. Just pay attention to what your mom
and dad told you and what you learned in kindergarten. Listen to others, work as a team, and have good core values. That’s what will drive success.” However, he is determined to make sure the organization is in good hands. “I’ve already told the board that I’d stay around for the landing of the new leader,” Blake said. The (continued on next page)
Used Equipment Prices Up in ‘Tight Marketplace’ Tier-4 Final makes an impact. The current used equipment marketplace has been relatively tight and flat, with inventory in short supply because the amount of equipment moving into this space, explains Jeff Jeter, IronPlanet’s president of the Americas. As companies went through the recession, new production and the demand for equipment declined, and lenders were not as eager to finance equipment. This means the amount of machinery moving into the marketplace is reduced and, throughout time, affects Jeff Jeter inventory, Jeter explains. Supply in the used equipment market also remains tight, Jeter says, because equipment owners who have been unable to purchase new machines are hanging on longer to their inventory. “Even as people can afford to buy new, lenders won’t give them the credit,” Jeter said. “Instead of replacing equipment after three to four years, it may be five to eight before they replace it – especially for contractors who don’t have the confidence to buy new after the backdrop of what has happened [with the economy] during the last few years.” However, at the same time there is less supply there are also still buyers, Jeter says. “There is a tightening of supply as work comes in and things are starting to get better,” he said. “This demand for equipment means prices are strong.” This demand is also coming from outside the U.S. Jeter says about 33 percent of IronPlanet’s equipment has left the United States, with the highest percentage going to South America, Latin America, Canada, Africa, and the Middle East. Buying used equipment online via an auction isn’t going to slow down. According to the Wells Fargo Construction Quarterly Newsletter for Q3 2013, one-fourth of contractors said that within the past 12 months (from when the report was published), they have acquired equipment from the Internet without first inspecting it in person and that
it was a positive experience. “Broadly, people are more comfortable now conducting commerce over the Internet,” Jeter said. “Whether it’s eBay or Netflix, we are all consumers and all have a great appreciation for efficiency.” Now that Tier-4 Final emissions laws are in full effect, it remains to be seen what the implications will be for used equipment pricing – especially since so much used iron is sold into countries without easy access to ultra-low sulfur diesel fuel. “Some ‘de-tiering’ solutions will be needed,” Jeter said. And, he says, as T4F iron gains domination, older equipment will be viewed as premium product. Equipment market expert Frank Manfredi, president of Manfredi & Associates, a consulting firm and publisher of Machinery Outlook, says prices on Tier-3 equipment have been very strong because people are putting off the purchase of Tier-4 machines. “This has kept prices of Tier-3 machines at a pretty high level,” he said. “The cost of Tier-4 machines is quite a bit higher than the old machines.” Just how much more, though, really depends on the type of equipment and size of the machine. A machine valued at $50,000 is impacted more noticeably than a machine worth $300,000, because the T4F engine in a smaller unit is a smaller part of the purchase price. Tier-4 engines cost more, and manufacturers are increasing prices because of the higher cost of Tier-4 engines, Manfredi says. “It is impacting smaller machines Frank Manfredi more than the bigger machines. The percent increase for Tier-4 Interim is about 12 to 15 percent more compared to Tier-3 machines. For a Tier-4 Final, the impact will be closer to 15 to 25 percent when compared to a Tier-3.” “Used equipment prices are certainly elevated, especially the older equipment technology engines,” Manfredi said. “People are holding on to them and rebuilding them. Prices are higher than they might normally be because there is a disruption in the marketplace with this technology change.”
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One-On-One
(“On the Ramp with Ritchie Bros.’ Peter Blake” continued from page 27)
target date for announcing the new president and CEO is May 1. Ritchie Bros. is currently down to a short list and all the candidates, he says, “are highly impressive individuals.” The biggest advice he has for choosing the next leader of the company is to make sure that person is the right cultural fit with the organization. “There is the adage that culture eats strategy for breakfast,” Blake said. Although Ritchie Bros is quite strategic, the culture is very strong and carries the organization. “We have lots and lots of talented people here,” he said. “I think good leaders today need to spend a lot of time listening. They need to rely on our amazingly talented people who bring with them their wisdom.” Ever the advocate for Ritchie Bros., Blake added: “If you think this organization fits you, then call our people department because we are hiring.” What are your plans for retirement? Although he is retiring from Ritchie Bros., Blake says it doesn’t mean he is out of the game. “I’m calling it my ‘first’ retirement,” he said. And the company is well positioned for continued success and ready to forge ahead. “The organization is at the right inflection point,” Blake said. “There are now 44 auction sites around the world. I took a look in the mirror and said to myself that it was time to bring someone else in here who hasn’t ‘been there, done that.’ I recognize that it’s time to bring in some new energy. I know what I am good at and what I am not good at. I’m good at building an organization from where we were and building on the footprint and delivering value to shareholders, but the company is ready to be taken to the next level.” Although Blake says he could easily stay at Ritchie Bros. for several more years, “10 years as a public company CEO is longer than the average. My decision was not an easy decision to make, but it is the right one for the organization.” In this “first retirement,” Blake says one of the first things he’s looking forward to is watching the World Cup – but he adds with a laugh that this scenario won’t characterize his future lifestyle. “My wife has already advised me that I won’t get to sit on the couch and eat Doritos.” He also has some plans for fishing and spending time with his family. “I will figure out something after that.” n Tina Grady Barbaccia is a writer/editor who has been covering the transportation/ construction industry for the past 10 years. She can be reached at tinabarbaccia@gmail.com.
Fast Facts From Ritchie Bros. Auctioneers
First auction: 1958 in Kelowna, British Columbia, Canada – CA$2,000 of furniture sold First auction outside North America: 1987 in Liverpool, UK Largest auction in Ritchie Bros. history: $203 million of equipment sold throughout six days at the Orlando auction site in February 2012 Largest Canadian auction: CA$93 million ($79 million) of equipment sold throughout three days at the Edmonton, Alberta, auction site in April 2009 Largest auction in Europe: $67 million of equipment sold throughout three days at Moerdijk, Netherlands auction site in November 2004 Highest bid ever placed at a Ritchie Bros. auction: 34 million Euros ($46 million) – for a 220-foot megayacht, Apoise, at an auction in Grand Cayman, Cayman Islands in March 2010 Highest bid placed on a piece of equipment at a Ritchie Bros. auction: $3.7 million for a Liebherr LR 1800, 800-ton crawler crane at the auction in Sacramento, Calif., in April 2006 The most bidders at one auction: More than 8,670 people registered to bid onsite or online at an auction at the Orlando auction site in February 2012 The most lots ever sold at a Ritchie Bros. auction: More than 10,000 heavy equipment items and trucks sold throughout six days at the Orlando auction site in February 2012. Most equipment sold to online bidders at one auction: $47 million of equipment sold to online bidders participating in an auction at the Orlando auction site in February 2012 Largest auction site: 200-acre Orlando site First permanent auction site: Edmonton, Alberta – opened in 1976 Source: Ritchie Bros. Auctioneers
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A Closer Look
Marketing Maze
and the Search for the Right Mix A new AED/EDA Marketing Study reveals the most effective tactics among CE dealers. By Joanne Costin
What works? What doesn’t? When it comes to marketing that’s what dealers want to know. But even with the growth of digital marketing, these are questions that dealers struggle with. In a newly released marketing survey from AED and Equipment Data Associates (EDA) 134 construction equipment dealers shared their insights. “One of the reasons we conducted this study is the lack of information to help dealers make good marketing decisions,” said Ross Conroy, EDA’s director of digital marketing. EDA provides dealers and manufacturers with market intelligence based on UCC-filings. “This information can help our prospects and customers excel.” Lacking time and sometimes data, dealers can find themselves in a quandary about where to spend their marketing dollars. Nowhere is this more evident than in Yellow Pages/Directory Advertising usage. Seventy-two
percent of the dealers surveyed still use it, yet more than half of those who do find it “ineffective.” No one surveyed found it “very effective.” It’s an indication of just how difficult it can be for dealers to let go of traditional marketing methods. Fifty percent of the dealers surveyed reported their biggest marketing challenge is measuring return on investment. “It takes diligence to track where sales leads come from,” said Conroy. “But the key is always measuring everything you do. The world is changing very quickly, and things have a way of becoming antiquated quickly.” “The problem with marketing is that it’s generally difficult to pinpoint whether something is working,” said Deborah Frakes, managing director of Winsby Inc., a marketing agency with several dealer clients. “Everyone
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Exclusive Report wants to take credit for an increase in sales, but it’s a team effort. All we can do as marketers is identify targets properly and remind them about the products and services that are offered. In the end, it’s up to the dealer to make it happen.” Websites: Rated Most Effective Dealers view websites as their most effective marketing tool. Fifty percent of respondents rate them as “very effective,” compared to 38 percent for open houses, and 37 percent for search engine optimization. Ninety-eight percent of dealers surveyed use a website to tell their story. And more than half (56%) say they will be increasing their investment in the website in 2014. Dealers are moving beyond static websites. Bobcat of the Rockies, a Division of Berry Companies, plans to betatest an auction service on its website through Equipment Web Services. “We see that used equipment is a driver of visitors to our website,” said Patrick Kelleher, the dealer’s sales manager. “If we take a used machine off our website and put it on an auction site, it takes views away from our site.” Through an agreement with Proxibid, Equipment Web Services now offers e-commerce capability on dealer websites. Dealers can send their used inventory to BidTraderauction.com, an online auction, while they continue to be marketed on the dealer’s website. Now, buyers can purchase or make an offer directly off of the dealer’s website. Titan Machinery is currently updating its website and plans to make it mobile-friendly. “People are doing their research using mobile technology,” said Mike Hall, senior marketing manager. “They are not waiting for a magazine to come out. They are going to find their information in real time, and we have to be there.” Hall’s observations are confirmed in a study conducted by EDA among subscribers to Equipment World magazine. Forty-four percent of end-user respondents said the last time they purchased or rented from a new dealer they found them through an online search. Bobcat of the Rockies receives several requests for quotes from its website each week with traffic driven by organic search for used equipment. “What surprises us are the existing customers who contact us through the
website instead of calling their sales guy,” said Kelleher. Research conducted by CEB Marketing Leadership Council (in partnership with Google) found that B2B buyers progress nearly 60 percent through their decision process before engaging a sales rep. “People are trained to research products online. We are trying to tailor our marketing approach to those kinds of people,” said Kelleher. For ADI Agency, which works specifically with heavy equipment and truck dealers, the most effective website isn’t necessarily the most aesthetically pleasing. “An effective website is one that not only generates traffic but converts unknown visitors into leads,” said Raj Julka, ADI managing partner. “The No. 1 objective is to generate quality leads to hand off to the salesperson.” “A good website is all about the user experience and it takes a team that studies and specializes in the way (continued on next page)
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Exclusive Report
(“Marketing Maze” continued from page 31)
Video: Effective but Underutilized Among the dealers who used video, 35 percent find it “very effective,” while 57 percent find it somewhat effective. However, video is only employed by just over half of dealers who responded (55%). “We find video very effective and well worth the time investment,” said Gayle Humphries, chief financial officer, JCB of Georgia. Dealer salespeople give customers virtual demos with their iPads. Other videos are shot at customer Open Houses and Events: Dealers Value Them, But jobsites. “Customers don’t want smoke and mirrors. They What About End-Users? want to see how machines work in the real world.” Events showed up strong in the AED/EDA Marketing Study. Despite recognizing its effectiveness, some dealerships Thirty-eight percent of dealers surveyed rated open houses struggle to find the time to create machine videos. “We and other events as “very effective,” while 55 percent know for a fact it helps you sell equipment,” said Hall. found them “somewhat effective.” However, on the “The hard part is getting people to execute.” EDA/Equipment World end-user survey, only 14 percent Dealers appear to be missing an opportunity when of respondents indicated dealer events/shows were a it comes to video. “There’s huge value in it,” said Tran. preferred way of getting information from dealers. “When you think about the way you shop online, you want rich content and rich media because it builds confidence SEO: Increasingly Important to Get Found Online in what you are buying.” Search engine optimization (SEO) was also rated high among dealers for effectiveness. Thirty-seven percent of E-mail Marketing: Effective and Preferred by dealers found it to be “very effective” while 57 percent of End-Users dealers found it “somewhat effective.” Virtually all the dealers surveyed (97%) rated e-mail SEO is an area Titan Machinery aims to improve through marketing as either very effective (28%) or somewhat a new website and other digital marketing initiatives. “If effective (69%). E-mail is utilized by a high percent you are not on the first page of the search results you may of dealers (84%). End users find e-mail useful as well. as well not be there,” said Hall. Sixty-two percent of end-user respondents typically “Search engine marketing supports all your other get information and offers via e-mail, compared to 49 initiatives,” added Tran. “When someone responds to percent who typically get their information from a dealer traditional advertising, they typically head to Google to rep. E-mails are the preferred communication method for find more information and if your website is not search 64 percent of the end-users surveyed, compared to 48 engine optimized, [or] you don’t have a social media percent for dealer reps. presence, [or] you haven’t listed your business on Google “E-mail marketing requires consistency,” advised Frakes. Places, or you don’t have a paid search campaign, people “Dealers aren’t usually selling through an e-commerce site, aren’t going to find you.” so their e-mails are a necessary reminder that they are the local experts, ready to help in any way with your equipment. The chances of being able to attribute business directly from e-mails are slim, but I’ve seen people stop sending them with disastrous consequences to their business.” that people behave on a commercial dealer’s web page to really understand how to design an effective website,” said Lan Tran, product marketing manager, Equipment Web Services. Through their partnership with VisiStat, they use a tool called Touchmapping to analyze web pages and make design and website structure decisions based on consumer behavior.
Print Advertising: High Usage, Difficult to Track Effectiveness Print advertising, while used by 93 percent of dealer respondents, was seen as “very effective” by just 16 percent of dealers who used it. However, 60 percent found it “somewhat effective.” Tracking ROI from print has been a challenge for marketers. Both ADI agency and Winsby are seeking ways to more effectively track response via unique landing pages or ad-related phone numbers.
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Exclusive Report
Social Media: Somewhat Effective In the AED/EDA Marketing Study, social media was utilized by 69 percent of respondents – far lower than the 87 percent of B2B marketers who said they used it in a recent Content Marketing Institute (CMI) study. Sixteen percent of dealers who use it find it “very effective,” while 55 percent find it “somewhat effective.” “Social media is not effective unless you are constantly updating it and keeping it fresh and interesting,” said Humphries. “We haven’t had the resources for that.” Now that their market is recovering, JCB of Georgia is planning a new Facebook initiative. Facebook (69%) and LinkedIn (60%) lead in usage among dealers. Content Marketing: A Source of Confusion Only 55 percent of dealers said they utilized content marketing, a fact that surprised some of the marketing agencies with whom we shared study results. In the CMI Study, 91 percent of all B2B marketers had adopted some form of content marketing. “Content is the most effective online marketing tactic there is,” said Christine Julka, managing partner with ADI Agency. “What the search engines and potential customers look for is content.” ADI advocates blogs as a way to boost site traffic and engage customers. “The reality is, if you have a website, if you advertise online, if your business has a Facebook page, you are doing content marketing,” added Tran. “How? All of those marketing tactics require your business to tell its story.” “There has been a paradigm shift in marketing,” said EDA’s Ross Conroy. “The mentality of pushing out messages and making statements to your customers is no longer as effective as it once was. Today, it is much more of a pull effect. Publish content that is valuable to your customer. When they are ready – if you have done your job – they will come to you informed and ready to buy.”
recognized that. We now have completely reinvented ourselves one more time. I am open to new marketing methods.” A lack of time and expertise were key marketing challenges uncovered by the research. Forty-three percent of dealers reported that a lack of time presented a challenge, while 35 percent cited a lack of expertise in marketing. “The problem with trying to accomplish marketing in-house is that you need a lot of different skill sets to do it thoroughly and well – a graphic designer, a writer, a programmer, a videographer, an editor, an SEO specialist, and someone who understands social media,” said Winsby’s Frakes. “Then, someone needs to manage their efforts and point them in the right direction, which is why I think it makes a lot of sense to work with an agency.” The majority of dealers use an agency for less than 25 percent of their marketing activities. Whether using digital or traditional marketing methods, The AED/EDA Marketing Study provides a great starting point to finding out what works and what doesn’t. Dealerships still need to do their due diligence to find the right marketing mix for their business.
The Digital Shift The degree to which dealers have shifted to online marketing varies considerably. At one end of the spectrum are 9 percent of the dealer respondents who have shifted more than 50 percent of the budget to digital. There’s More… At the other end are 10 percent of dealers who haven’t Both the dealership marketing study and end-user study shifted their budget at all. are available for download at www.edadata.com. n Chicago Machinery Company in Linwood, Ill., falls in the middle with 35-50 percent of their budget shifting to digital. To take advantage of a resurgence of business activity Joanne Costin is a freelance writer in Indiana, they recently consulted with Purdue University and marketing consultant focusing on the Business School on their website, plan to increase marketconstruction industry. She can be reached at ing spending, and will add to their sales team. (847) 358-1413 or jcostin@costincustom.com. “The old playbook – you can use it as a fireplace starter,” said Joe Thoesen, president. “Nothing is the same. I have
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Watching Sales Growth Go to Waste
Profit Improvement Report
Hello sales, good-bye margins – more dollars don’t mean more profit, unless you keep tight reins on pricing and payroll. By Dr. Albert D. Bates
The last couple of years have seen distributors recover from the recession and enjoy some dramatically improved levels of sales growth. Some of that growth was the result of the acquisition of competitors weakened by the downturn. However, most of the growth has been organic. The economy may not be completely back on track, but sales have increased at a reasonable pace. Unfortunately, this sales growth has not translated into increased profits. While there was a very modest increase in dollar profits, profit growth lagged well behind sales growth across almost all of distribution during this period. Sales growth proved extremely hollow. This report examines the sales growth versus profit growth dilemma from two different perspectives. Profit Growth Pressure Points – An exploration of the two key factors that were behind the lag in profitability. n Changing the Sales-to-Profit Relationship – An identification of specific actions that firms must take to turn sales growth into profit growth. n
Profit Growth Pressure Points The profitability culprits for distributors were pressures on the gross margin percentage and accelerating payroll costs. To be clear, distributors did not suffer any major problems in these areas. However, even extremely small changes have a large cumulative effect on profit. Exhibit 1 demonstrates the impact of sales growth on profit for the typical AED distributor based upon the latest CODB Report. As can be seen, the firm generates $50 million in sales, operates on a gross margin of 21.5 percent of sales, and produces a bottom line profit of 3.5 percent of sales – or $1,750,000. Three different scenarios are presented in the table. They all enjoy sales growth of 10 percent. The differences in the scenarios are related to what happens to gross margin and payroll expense as a result of the sales growth. The Business as Usual scenario assumes that sales, gross margin and total expenses all increase at the same 10 percent rate. The result is that dollar profit also increases by 10 percent. From a percent-of-revenue
perspective, shown at the bottom, everything stays the same. Dollars up, but percentages flat. The second scenario, Profit Deterioration, reflects the profit challenges currently facing distributors. In this scenario, gross margin dollars increase by only 9 percent while sales increase by 10 percent. Second, payroll expenses increase by 11 percent during the same period. With these minor variations, profit inches forward to only $1,762,500, offsetting most of the sales increase. The profit margin also declines, from the 3.5 percent starting point to just 3.2 percent of revenue. In simplest terms, even small, seemingly insignificant changes are not all that insignificant. The final scenario, Profit Enhancement, reverses the profit challenges. It demonstrates the effect of an 11 percent increase in gross margin and only a 9 percent increase in payroll. The profit impact, however, is not simply a mirror image of the Profit Deterioration results. The impact is dramatic, with profit rising to $2,087,500, an increase of 19.3 percent.
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Profit Improvement Report
In short, sales growth is nice. However, the factors underlying the sales growth are decidedly more important than the sales growth itself. The deterioration in gross margin and payroll expense performance must be reversed. If that can be achieved, the typical AED distributor is positioned for strong profit results.
Exhibit 1: The Impact of 10.0% Sales Growth for the Typical AED Member
Income Statement ($) Net Sales Cost of Goods Sold Gross Margin Expenses Payroll and Fringe Benefits All Other Expenses Total Expenses Profit Before Taxes Income Statement (%) Net Sales Cost of Goods Sold Gross Margin Expenses Payroll and Fringe Benefits All Other Expenses Total Expenses Profit Before Taxes
Current Results $50,000,000 39,250,000 10,750,000
------------------10.0% Sales Increase-----------------Business Profit Profit As Usual Deterioration Enhancement $55,000,000 $55,000,000 $55,000,000 43,175,000 43,282,500 43,067,500 11,825,000 11,717,500 11,932,500
5,500,000 3,500,000 9,000,000 $1,750,000
6,050,000 3,850,000 9,900,000 $1,925,000
6,105,000 3,850,000 9,955,000 $1,762,500
5,995,000 3,850,000 9,845,000 $2,087,500
100.0 78.5
100.0 78.5 21.5
100.0 78.7 21.4
100.0 78.3 21.7
11.0 7.0 18.0 3.5
11.1 7.0 18.1 3.2
10.9 7.0 17.9 3.8
Changing the Sales-to-Profit 21.5 Relationship 11.0 The profit challenges facing 7.0 18.0 distributors today are nothing 3.5 more than a repetition of the challenges that have followed every period of economic sluggishness underprice their slowest selling items and recovery. The euphoria of sales and special-order merchandise. The growth causes managers to forget improvement potential is more most of the painful lessons learned substantial than most firms believe. in the down period. Finally, it is also essential to deal As demonstrated in Exhibit 1, those with the pesky operational issues that lessons are centered on gross margin are ignored when everybody is busy and payroll expense. While both of with growing sales volume. Pricing these factors are important, gross errors are endemic to firms with lots margin is the real profit driver. of SKUs. Cleaning them up creates Gross Margin – The total profit “free” gross margin dollars. Tighter swing between the Profit Enhancecontrol of shrinkage also represents ment and Profit Deterioration scenara significant opportunity. Neither of ios in the exhibit is $325,000. Of that these topics is exciting, but both are amount, $215,000, or 66.2 percent important. comes from gross margin. Payroll Control – The keys to Experience from prior periods of payroll control are twofold. The first is strong sales growth suggests that the euphoria. The second is an infrastrucgross margin issue is nothing more ture bias. than one of focus. The sad reality The euphoria problem arises is that gross margin walks out the because there is an understandable door when strong sales growth walks tendency to want to help employees in. Getting the margin focus back “catch up” on payroll increases that requires communication, analysis and may have been deferred during the emphasis on some mundane operadown economy. In thinking about tional issues. such catch-up situations, though, it The communication issue requires is essential to ensure the increase in reinforcing the important of price payroll follows rather than leads the integrity throughout the firm, but increase in sales volume. especially to the sales team. Without The infrastructure bias comes into constant reminders regarding pricing, play because now that sales are up gross margin slippage occurs almost nicely, the firm would like to generautomatically. ate even more growth. The thought The analysis component involves process is that if the firm increased finding hidden opportunities to its infrastructure (sometimes more improve gross margin. In both good correctly called adding overhead), times and bad, firms continue to then sales growth would be not just
nice, but even more spectacular. The timing of such increases, in terms of additional sales staff, must be related directly to real sales potential, not to some vague desire for even more growth. Moving Forward Distributors in every line of trade are facing the challenge that sales growth is simply not translating into profit growth. It is a pattern that repeats itself every time a sluggish economy gives way to sales growth. The key for distributors, including AED members, is to maintain control over gross margin and payroll expenses. If that is done properly, strong profits will follow strong sales growth. n Dr. Albert D. Bates is founder and president of Profit Planning Group. His latest book, Triple Your Profit!, is available at: www.tripleyourprofitbook.com, as well as Amazon and Barnes & Noble. It includes Excel templates for understanding the economics of the firm and planning future performance. ©2014 Profit Planning Group. AED has unlimited duplication rights for this manuscript. Further, members may duplicate this report for their internal use in any way desired. Duplication by any other organization in any manner is strictly prohibited.
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Best Practices
Always in Training Taking a long-term view on the benefits of personnel training has paid off for Gibson Machinery. By Joanne Costin
Pictured: Lee Gibson and daughter Meredith Cavell
In 2009 Gibson Machinery was like many other construction equipment dealers, cutting back everywhere it could. They laid off employees and slashed spending. But what they didn’t do was stop investing in the employees who remained. “Training is probably something that we try to not eliminate, because in the long run it saves you money and it makes you a better company,” said Lee Gibson, president. “Walking the talk” when it comes to training is never easy. Short-term pressures on both profits and productivity tempt managers to forgo training opportunities. When times are good, companies often argue that they don’t have the time to have employees leave their everyday responsibilities. When times are bad, they claim they can’t afford the training. During the difficult economic environment of the past few years AED witnessed a decline in member participation for employee development. Yet, it is during these difficult times when dealers most need to empower their employees to find innovative solutions to meet ongoing challenges. Gibson’s long-term view is part of the reason why the company has been profitable every year they have been in business. Gibson and his wife, Larysa, founded the familyowned company in 2003, after having grown up in the industry. Larysa is vice president of finance and administration, and their daughter, Meredith Cavell, serves as sales coordinator. A member of GE Capital’s Dealer Counsel, Gibson Machinery was one of only a few select businesses chosen to be featured in GE Capital and Slate’s 2013 Roadshow for Growth, a six-month, 20-city tour that addressed the issues of middle market businesses. They were profiled in a video that appeared on Slate.com as well as YouTube.
Technician Training Gibson Machinery takes advantage of technical training offered by its primary brands, which are Doosan Infracore and Sennebogen. It sends all 16 technicians to be trained at the manufacturer’s facilities, rather than sending one technician who will train the others. “It is better that they all actually go and learn it there,” said Lee Gibson. Manufacturer facilities have specialized equipment to help technicians learn to diagnose specific problems. “The training is done very well.” Gibson believes technicians are the backbone of the dealership and a key component of the company’s competitive advantage. “To be competitive and offer your customer everything that you can, you really need to have that training,” he said. “All machines are going to have a problem, it’s just a matter of how fast you can fix them.” Gibson has seen firsthand how training empowers his employees to get to a jobsite and take care of a problem in a minimum amount of time. The company prides itself on its service work, and Gibson believes the training plays a big part in that. “If you don’t have to spend hours troubleshooting something you fix it much quicker. Everybody’s happier.” Training creates an opportunity for personnel to find growth while remaining in the same company that has invested in them. In the end, the Gibsons feel, training is an essential retention tool, which is especially critical to an industry where there is a shortage of qualified technicians. “We have very low employee turnover among our mechanics,” said Gibson. “We go years without losing someone. And then one year, two people might leave.” A mixed age group helps protect the company from the knowledge-loss associated with retiring technicians. Experts believe training helps employees feel more
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Best Practices
secure about their jobs, and leads to greater productivity as well as greater commitment toward the organization. Sales Training Gibson Machinery tries to take advantage of all the training opportunities available to them. Salespeople participate in Doosan University, a series of online courses to keep them up to date on both technology as well as general sales know-how. Participants are required to pass tests with a score of 80 percent or better on monthly exams. “We attempt to keep the latest, most current and accurate information in front of the salespeople – on all the products – so they are able to keep the customers up to date. We do this in classroom setting, with walk-arounds and with in-field visits,” said Michael Camp, vice president of sales. “In my experience the most seasoned sales veterans are always hungry,” said Camp. “They are willing and anxious to continue their education.” With products changing all the time, Camp believes salespeople have to stay on top of their own machines as well as those from the competition. At the Dooson Real Operation Center (ROC) in Tucson, Ariz., Camp’s sales team has a chance to see, touch, and feel competitive products, as well as every piece of Doosan machinery. It’s a bootcamp for salespeople. “We understand the competitive product, and that helps us know how to strategically position our machine,” said Camp. Management Training There is no formal management training program at Gibson Machinery, but that doesn’t mean it doesn’t get done. When a new branch manager was hired for the Pittsburgh location, the company organized a three-day training program so the new employee could learn how the company operates – covering everything from general perspectives down to how to create a work order. “We will send someone from Cleveland to Pittsburgh once a week until the new manager has everything under control,” said Gibson. Also in the works is a new Policies and Procedures Manual to help ensure quality and consistency in the company’s operations. Gibson Machinery often turns to AED to promote employee development. They have frequently taken advantage of events such as Summit and Executive Forum over the years, “Summit is an excellent source to network and go to classes if you are still learning your job and learning how to go about it,” said Gibson. As a result of the Executive Forum, the company was able to learn about the tax advantages of like-kind-exchange and subsequently started a program. “A number of the seminars are very extremely worthwhile,” said Gibson. Last fall, Gibson’s daughter Meredith Cavell attended AED’s Leadership Academy, which partnered with Disney
Knowing your own machines is just half the sales battle – Gibsons Machinery takes advantage of their manufacturers’ resources to learn competitor machines, too.
Leadership Institute in Orlando, where she learned about implementing policies and core values that employees can understand. Renowned for its best-in-class training, the Disney program reinforced the importance of training and the idea that investing in your staff will pay off exponentially. “I learned a ton,” said Cavell, “but the most beneficial portion was learning from other dealers about how they do things. While we may be competitors we can definitely learn from each other.” AED webinars are also popular with the company. In 2012 and 2013 Gibson personnel participated in more than eight webinars covering topics that included service, sales and marketing. Setting the Budget for Training Gibson doesn’t have a set percentage devoted to training, but rather a budget is developed based on what the company needs. Managers identify needs, determine what training is available, and only then it is included in the budget – thus ensuring the budget addresses real issues. Gibson Machinery clearly recognizes that there is nothing more important than its people. It is investing in them for the long term. When employees leave, it is common for companies to want to place the blame on economy, family issues or other outside factors. But very often the reasons are internal. If an employer does not offer an opportunity to learn and grow, they risk losing talented staff while poor performers hang on. A lack of training opportunities demotivates employees and causes them to look elsewhere for professional satisfaction. In contrast, workers who receive support through training are likely to be happier and more loyal. Gibson Machinery’s investments are proof they’re in it for the long term. And in this crazy, challenging business, training may be the one sure thing you can do to control your company’s destiny. n
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Attendees receive 11.5 CPE hours, provided by WTP Exchange.
MAY 8-9 | CHICAGO
The AED Foundation Financial Symposium (formerly AED’s CFO Conference) allows distribution executives and managers a chance to sit down with financial powerhouses of the construction equipment industry. A relaxed, open format allows you to dialogue with our experts as we cover financial issues that matter most right now for the CE distribution company.
Updates and insights you can instantly fold into your equipment business
Highlights include: n Tax update n Economic outlook n Legal rental issues - specifically for dealers n Dealer retirement plans n Best practices for product support n Hiring & retaining the right employees
www.aednet.org/cfo CFO_AprilCED.indd 1
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On the Numbers
Build Your Wealth – Part 2 Last month I launched a commentary about building and protecting your wealth. I had five points to get across, but we ran out of space after No. 2 – let’s finish them here. By Garry bartecki
So what are the three points programs to train and recruit techniwe didn’t get to last month? cians. You may find it beneficial No. 3: Use systems that allow to find out about these programs, increased efficiency (lower because you could use this process in payroll). Today’s systems are offeryour own location to help train and ing more data and efficiencies, most hire qualified applicants. are now cloud based, which in itself In the end, the dealership that can offers a host of benefits, with many communicate and deliver the goods in providing portals and services for a stress-free manner is going to move customers, as well. I think we have to to the top of a customer’s call list. face the fact that customers want to Being that dealer is certainly the way deal with vendors who make shopto make more to keep! ping and execution of the transactions as simple as possible. And For My Next Act No. 4: Training, training, There’s a big change happening here training. Continuous training is a at AED – to describe it, I was rememmust – for just about everyone in bering an old Barbara Lewis song, the place. Staff has to know how the “Baby, I’m Yours,” but maybe I’m system operates and how to use it for dating myself! The point is, I am now maximum benefits. Training to use the yours! Yours for coaching, consulting, latest technology, which will better rental management, tax planning and help communicate with customers, is overall dealer performance objectives. also a priority. Telematics related to Good news for you – and me. logistics, equipment maintenance and One thing you can count on: I location are now common practice. know rental and dealer operations, Sure, these changes will cost a few and I know how to make money with bucks to get going, but the returns both. On ABC’s “Shark Tank,” they should more than offset the cost. say, “show me the money!” I have the No. 5: Develop a process to same passion when it comes to dealer develop and hire techs. The cash flow. 800-pound gorilla in the room, which After 20 years of affiliation with we all realize, is the need to develop AED and having served as both CFO a continuous stream of techs to work and vice president of Finance (plus on customer units as well as rental 30 years working with dealers), I am units. With units becoming more now going to turn over the reins to a technically complex, a dealer needs new CFO – but I will continue as an to hire a number of technicians each independent contractor to produce year so they’ll eventually wind up with this column, the Financial Symposium enough senior techs to get the job (formerly called the CFO Conference) done. We all know how it goes – you and the annual CODB report. hire 10 and five years later you have In addition to these projects, I three, and so on. am going to do what I love, which I am sure you are all aware of The is working with dealers to improve AED Foundation’s work with college the value of their investment in any
number of ways. To that end, I have formed Dealer-Rental Success LLC (DRS), a company independent from AED that provides industry-specific services and products geared to improve financial performance and thus shareholder value. More details will follow when my new website is launched in April – but I will say that AED members will get special terms from DRS. From this point forward, please contact me at 708-347-9109, at gbartecki@comcast.com, or gbartecki@DR-Success.com. So whether you are a dealer, rental company or OEM, I welcome your suggestions and inquiries. OEMs may want to have us help underperforming dealers. Rental companies may need some coaching to improve margins. Dealers may have questions about the rental phenomenon before it eats up all the cash flow. I assure you I am not interested in making your project a full-time job. We’ll get in there, analyze the situation, offer up solutions, and then follow up to see that you received the results that were discussed. I’ve been working in this industry long enough to know there are some new wheels I don’t need to reinvent. I thank Brian McGuire for this solution that is sure to be a win for all parties involved. Please call me to discuss your issues. Garry bartecki (gbartecki@ aednet.org) is founder of Dealer-Rental Success LLC, is a financial consultant to the equipment industry. He can be reached at 708-347-9109.
April 2014 | Construction Equipment Distribution | www.cedmag.com | 39
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3/17/2014 12:54:03 PM
Just So You Know – a guest column
U.S.-Canada Bridge Delay Comes From Unlikely Source With so much at stake, why is the administration dragging its feet? By Jack Lessenberry
Whatever happened to the New atmosphere between the parties. International Trade Crossing bridge However, there is broad – if relucover the Detroit River? Why hasn’t tant – bipartisan agreement that a new ground been broken? When will bridge is needed. Michigan’s Republiconstruction start? can governor, Rick Snyder, may be the Didn’t the American and Canadian bridge’s loudest champion, but most governments sign an agreement last of the state’s Democratic congressional year? Didn’t President Obama issue a delegation endorsed it even before permit for the bridge in April? Didn’t Mr. Snyder was elected. Michigan voters, in November 2012, President Obama has also been a decisively defeat Ambassador Bridge strong bridge supporter. So what’s the owner Manuel Moroun’s attempt to problem? According to Roy Norton, give himself a perpetual monopoly Canada’s consul general in Detroit, over the nation’s most important some fairly senior officials in the trade crossing? administration think Canada should pay All true. But one remaining hurdle for the customs plaza too. does not involve the nuisance lawsuits That strikes Canada as a little much. continually filed by Mr. Moroun, an Mr. Norton, a longtime diplomat, says: 86-year-old billionaire with money to “We really think our paying 15/16ths of burn, or the last remaining parcels of this project is more than fair.” land to be acquired and soil testing to Nobody disputes – apart from the be done. owners of the Ambassador Bridge The holdup comes from Washington. – that a new bridge is vital. The AmbasThe Obama Administration may be the sador Bridge will be 85 years old next main culprit. year and is wearing out. It was plainly Canada, as most who have been not made for the volume of freight or following this issue know, has offered the size of today’s trucks. to front all of Michigan’s share of the And nobody is saying whether the costs for what is estimated to be a $4 customs plaza issue has been a subject billion project. That money is eventually of discussion between President to be repaid out of the state’s share of Obama and Canada’s prime minister, the tolls on the new bridge. Stephen Harper. It is known that But one remaining expense is the Washington believes – correctly – that responsibility of the U.S. government: the bridge is even more important to a customs plaza, which is required Canada than it is to the U.S. at any international border crossing. That could mean, in this time Estimates are that it will cost about of budget restraint, that President $250 million, and would have to be Obama may think he has Ottawa approved by Congress. over a barrel – and is hoping to score Yet the Obama Administration points with fiscal hawks by shrewdly has yet to ask Congress for the plaza. getting Canada to come up with all Granted, getting any new expense the costs of the new project. approved isn’t easy, given divided For Mr. Norton, a veteran negotiacontrol of government, the budget tor who has had two tours of duty in sequestration wars, and the poisonous Washington, it is curious that politicians
in this country – especially in Michigan – aren’t pushing harder to get the bridge started, because of its enormous positive economic impact. “Study after study has estimated that more than 10,000 full-time jobs in the construction sector alone will be created from this project, just in Michigan,” Norton said. “Good-paying jobs.” Those jobs would last, on average, four years. Mr. Norton estimates that 13,000 “ripple effect” jobs – some of them permanent – also would be created. Once the bridge is clearly under way, Mr. Norton notes, the $550 million that Canada is putting in as Michigan’s share will qualify the state for an extra $2.2 billion in matching federal funds for road construction and repair. That money could be used anywhere in Michigan. That alone, you would think, is more than enough reason to justify the state’s members of Congress asking Washington to quit stalling and get moving on appropriating money for a customs plaza. You wonder why more of the state’s movers, shakers, and lobbyists aren’t trying to get this deal finally done, now. Or how many of Michigan’s citizens really understand what’s at stake. Editor’s postscript: On March 18, AED spearheaded a letter (joined by more than three dozen organizations) to the Obama administration calling for swift action on the bridge. Jack Lessenberry is a member of the journalism faculty at Wayne State University in Detroit and The Toledo Blade’s ombudsman, he writes on issues and people in Michigan.
April 2014 | Construction Equipment Distribution | www.cedmag.com | 41
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Are you still feeling the pain from paying your quarterly estimated taxes?
Equipment dealers are facing substantially higher taxes in 2014 as a result of bonus depreciation expiring on December 31, 2013. Fortunately, there is a solution to the problem – a Like-Kind Exchange (LKE) Program. An LKE Program is a proven solution for the heavy equipment industry that can reduce your tax bill and increase cash flow. Contact us for a no-cost consultation. But don’t delay … every day you wait results in more tax paid to the IRS! For more information, please contact: Ron Hodgeman, LKE Practice Leader Email: ron.hodgeman@wtpexchange.com Phone: (513) 600-3532
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3/18/2014 3:51:12 PM
Aftermarket
Don’t Compete. Change the Game. For too long now, we have been continuing to do what we have always done.
By Ron Slee
For as long as I have been involved in this industry the parts department has been in the “parts number business” not the “parts business.” We have become a parts processing factory not a parts sales and service group. And our parts departments look and function exactly as they have for decades. As Einstein is noted for saying, doing the same thing over and over again and expecting different results is insanity. It seems we have fallen into that realm of insanity. Our market capture rates continue to fall, which is the ultimate measure of customer acceptance; our customer defection rates continue to rise; our ability to attract and hire bright young employees continues to be challenged; the Internet competitors continue to take away more and more of our business because we’ve been slow to get an online interactive delivery system. In general, things don’t look that optimistic. Isn’t it time we made some changes? I was struck in the last month by an article I read – and a recent spate of books on competition – that stated what I believe might be the rallying cry that we need right now. Don’t compete, change the game. We have been competing in the same manner for the past 45 years and more. Greet a customer who comes to your dealership, not your store – your dealership. We have been pleasantly answering the telephone when it rings. Granted, we have gotten considerably better at the supply of parts, and our availability numbers are much better today. And the supply chain and expediting have each gotten more effective, so the wait on backorders is much
shorter today. But, we have been predictably competing in our markets the same way. We have inadequate numbers of field salesmen. Few dealers have implemented a telephone selling sales function. So your market coverage continues to be in the range of 50 percent, meaning that 50 percent of your customers have the “privilege” of a sales person contacting them and helping them with their parts needs. The other 50 percent of your customers are left on their own. No, that isn’t true – they are left to your competition. Is it any wonder that the market capture rates continue to decline and are now, at best, in the high 30 percent range? I think it is high time we changed the game. What we need to do is completely change how we cover the market. Start with a simple calculation. Find out what the defection rate is for your parts department. Get a listing of your customer parts purchases for 2012 in alphabetic order. Get another one for 2013. Get a green felt pen and a red felt pen. (Or do this in Excel and use red and green highlighting.) Any customer who bought parts from you in 2012 but did not buy in 2013 gets a red line through his name on the 2012 list. Customers who bought parts from you in 2013 but did not buy any parts in 2012 get a green line through their name on the 2013 list. Now add up the red lines and the green lines and do some math – the red lines divided by the total parts customers in 2012 is your defection rate. The green lines divided by the total customers on the 2012 list is your acquisition rate. I have seen defection rates in the
high 40 percents but rarely less than 10 percent. In the old days, there was an 80:20 rule – 20 percent of your customers generated 80 percent of your business. Today that is more like 90:10, and I have seen it as bad as 93:7. This is for your parts department. I believe that you are becoming more and more vulnerable to a smaller and smaller number of your largest customers. (E-mail me for the formula to do your own calculation.) In the 1980s, when interest rates skyrocketed, we changed all operational metrics and reduced head counts dramatically to survive. After all, personnel costs are the single largest expense in the dealership, aren’t they? Well, that is true at one level but personnel are your single most important and most valuable assets, as well. Today, we have too much work being done by too few people in processing orders and providing customer service with hardly any people in the field covering your customers – either growing your business or protecting it from further decline. We are way overdue to change the game. The time is now. Ron Slee (ron@rjslee.com) is the founder of R.J. Slee & Associates, Rancho Mirage, Calif., celebrating more than 30 years in business in the United States, a consulting firm that specializes in dealership operations. Ron also operates Quest Learning Centers, a company that provides training services specializing in product support, and Insight (M&R) Institute, a company that operates and facilitates “Dealer Twenty” Groups. Follow Ron on Twitter: @RonSlee; and read his blog at learningwithoutscars.com.
April 2014 | Construction Equipment Distribution | www.cedmag.com | 43
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April_ad.indd 1
3/25/14 11:05 AM
View From the Hill
Biennial Budgeting: The Case for a Much-Needed Upgrade Already used by 20 states, a two-year federal budgeting cycle allows for more responsible planning and spending. By Rep. Reid Ribble (R-Wis.)
For too long, Washington has stumbled from budget crisis to budget crisis. Government shutdowns, short-term spending bills and an ad-hoc oversight process have corrupted our nation’s ability to budget effectively, creating unwanted uncertainty in our economy. Many of our problems stem from Congress consistently failing to pass an annual budget and spending bills. Every year, Congress is required by law to pass a budget. Congress is also required to pass 12 different spending bills to ensure federal departments and agencies have funding to provide government services. Since Congress created new rules in the mid-1970s governing our nation’s budget process, we have never passed both a budget and all its spending bills on time in the same year. Never. In fact, since 2001, Congress has managed to enact only 8.3 percent of those spending bills on time. It gets worse in election years. In the past eight election years, Congress has failed 75 percent of the time to even pass a budget. No boss in the world would accept this lack of performance from his or her employees, and it’s unacceptable that Congress can’t get its work done for the American people. Recent studies have also shown that our budget process encourages agencies to develop a “use it or lose it” mentality. Agencies spend nearly 20 percent of their annual funds in the final five weeks of the year. Billions are spent unnecessarily, simply to avoid ‘losing’ the money or giving it back to the treasury. Additionally, Congress wastes billions every year funding
programs that are unnecessary and redundant, because it simply doesn’t have enough time to properly review the government’s budget and spending activities. This is a clear failure to govern, and both parties are responsible. The American people deserve better than a broken system that creates unwanted economic uncertainty. It’s time for Washington to change its ways, and Wisconsin has the answer. In order to foster greater economic certainty and create a better functioning, more efficient federal government, Congress should switch to a biennial budgeting system. Twenty states currently use biennial budgeting, and have produced great results. Every president since Ronald Reagan has supported switching to a two-year system. Now, after dozens of conversations with members of Congress on both sides of the aisle over the past year, I am pleased to say that my legislation has more than 140 bipartisan co-sponsors, and was approved by the House Budget Committee by a bipartisan vote of 22-10. A biennial budgeting system creates greater oversight of federal agencies and the programs for which they are responsible. Instead of forcing agencies to spend all of their time bureaucratically researching, planning, and submitting budget plans for the upcoming fiscal year, biennial budgeting creates set times for departments to submit their budget plans, and dedicates the rest of the time to actually governing. And instead of encouraging agencies to use funds by year’s end just so they don’t risk having a smaller budget the next year, agencies would have a longer
time window to make effective, necessary spending decisions. This process could also help federal contractors plan and coordinate medium- to long-term infrastructure projects that receive funding over the course of multiple years. Halting the incessant starting and stopping of these projects due to uncertainty surrounding federal funds, biennial budgeting allows agencies and departments to better develop and fund these long-term infrastructure projects with the certainty they need to complete projects on time and on budget. In these tough economic times, we cannot continue to allow our economy to suffer because of our fiscal failures. In order to begin fixing our broken budget process, Congress should take more time to research and discuss the problems in a responsible, factbased manner. Switching to a biennial budgeting system won’t solve all of our fiscal woes, but it will give Congress much-needed time to properly understand and research federal programs and agencies to ensure taxpayer funds are spent wisely. I look forward to working with equipment distributors from across the country to solve America’s budget crisis and to restore certainty to federal infrastructure programs, which will create an environment to allow businesses to once again grow and prosper. Rep. Reid Ribble (R-Wis.) is in his second term representing Wisconsin’s eighth congressional district. He serves on the House Transportation & Infrastructure, Budget, and Agriculture Committees.
April 2014 | Construction Equipment Distribution | www.cedmag.com | 45
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New & Improved
Hyundai Unveils Amphibious Excavator The R220LC-9A is ideal for working in soft terrain. Hyundai Construction Equipment Americas, Inc., unveiled their R220LC-9A Amphibious Excavator at ConExpo 2014. This midsize excavator is equipped with amphibious undercarriage designed for wet environments like swamps and marshes. It’s ideal for maneuvering in soft terrain applications such as dredging a waterway or construction on wetlands. The R220LC-9A features hydraulic extendable pontoons constructed with premium grade steel that are designed for floatation on water. A proprietary design utilizes multisynchronous hydraulic motors on each pontoon. Multiple active motors are provided to propel each pontoon for sufficient power making it virtually undeterred in any
terrain. Optional supplementary pontoons can be added on each side of the machine to boost stability in deeper water to a maximum of 14.1 feet (4.3 meters). The R220LC-9A amphibious model is equipped with track shoes/cleats that are robotically welded. Each pontoon comes with three strands of heavy-duty track chains, constructed with high yield strength tensile steel. The 22-ton (44,000 pound) class R220LC-9A Amphibious excavator boasts a 20-foot, 8-inch arm and a maximum dig depth of 34 feet, 11 inches. For more information visit www.hceamericas.com
Charter Software Announces ASPEN Sales Kiosk (ASK)
Sany’s New Telescopic Boom Crawler Crane
Charter Software, one of two software vendors approved for Doosan-Bobcat dealers, recently launched their new dealership sales enhancement tool, ASPEN Sales Kiosk (ASK). ASK is a sales tool application that runs on a Windows 8 touchscreen in conjunction with the dealership’s ASPEN business management system. ASK aids in-store customers with a “self-serve” means to search for parts and units information. When searching for parts using ASK, customers can view a parts description, in-store availability, and images of the part along with the dealership’s floor map indicating the part’s location. Customers can also search for units using a variety of search terms such as model, name, unit description, etc., and pull up detailed information and images.
At CONEXPO-CON/Agg 2014 Sany introduced its newest crawler crane. A five-section, telescopic boom upperworks combined with a crawler lowerworks, gives the new SCC8100TBXL model provides the dual advantages of a crawler crane and hydraulic crane. The machine features a boom that uses heavy-duty nylon rope instead of the commonly used steel cable, enabling a lighter weight boom design with no sacrifice in boom strength. The machine is particularly well suited for road and bridge building. The SCC8100TBXL crane has a maximum lift capacity of 110 tons, a maximum boom height of 155.8 feet, total counterweight of 81,570 pounds, and maximum gradeability of 60 percent. A 300-hp Cummins QSL9-C300 Tier 4 Interim-certified engine powers the SCC8100TBXL crane. Its Porsche-designed UltraCab 2 provides optimum operator comfort and safety. Operators will find a combination of comfort, control and safety features in the Porsche-designed Sany UltraCab 2, which provides enhanced ergonomics, large windows for clear visibility, heat and air conditioning, and well-placed function screens and video monitors to enhance operator control. Sanydesigned and manufactured electrical and intelligence systems on the SCC8100TBXL crawler crane ensure quality, efficiency and high performance.
For more information visit www.chartersoftware.com
For more information visit www.sanyamerica.com
46 | www.cedmag.com | Construction Equipment Distribution | April 2014
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New & Improved
LiuGong Introduces NextGeneration Skid Steer Loader LiuGong recently introduced the completely redesigned 375B skid steer, equipped with a Tier IV final engine. A new curved-shaped cab provides a wider, less obstructed view of the worksite and a solid “corner to corner” view of the bucket, blade, fork or other attachment being used. Intelligent use of complex shapes adds another important benefit – reduced noise levels inside the cab. The narrow stance and panoramic view combine for superior handling and control in tight quarters between buildings and walls and inside trailers. The machine lifts to a dump clearance height of 7 feet, 3 inches and with a lift speed of 4.1 seconds, dump at 2.4 seconds and float down of 2.2 seconds, the machine is quick all around. The 375B rated operating load is 1,907 pounds, in its standard configuration with a 0.52 cubic yard bucket, and it travels safely around the jobsite at 6.6 mph. The machine features double-lever pilot control for sure, simple, effortless operation. The hydrostatic transmission
Advertisers’ Index Arctic Snow & Ice Control, Inc.. . . . . . . . . . . . 17 Bell Trucks of America. . . . . . . . . . . . . . . . . . . 29 e-Emphasys Technologies, Inc.. . . . . . . . . 20-21 EPG Insurance, Inc.. . . . . . . . . . . . . . . . . . . . . 11 RFE Distribution . . . . . . . . . . . . . . . . . . . . . . . 25 HKX, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Hyundai Const. Equip. USA Inc. . . . . . . . . . . . 13 Infor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Leading Edge Attachments. . . . . . . . . . . . . . . . 9 Manitex . . . . . . . . . . . . . . . . . . . . . . . . . . . . IBC PFW Systems Corporation. . . . . . . . . . . . . . . . . 1 Ritchie Bros. Auctioneers . . . . . . . . . . . . . . . . . 2 SANY Heavy Industry Co., LTD . . . . . . . . . . . . IFC Screen Machine Industries, Inc.. . . . . . . . . . . . 15 Sentry Insurance Company. . . . . . . . . . . . . . . . 6 Wells Fargo Equipment Finance. . . . . . . . . . . . 23 WTP Exchange. . . . . . . . . . . . . . . . . . . . . . . . 42 XAPT Corporation. . . . . . . . . . . . . . . . . . . . . OBC As the official magazine of Associated Equipment Distributors, this publication carries authoritative notices and articles in regard to the activities of the association. In all other respects, the association cannot be responsible for the contents thereof or the opinions of contributors. Copyright © 2013 by Associated Equipment Distributors. Construction Equipment Distribution (ISSN0010-6755) is published monthly as the official journal of Associated Equipment Distributors. Subscription rate — $39 per year for members; $79 per year for nonmembers. Office of publication: 600 W. 22nd St., Suite 220, Oak Brook, Ill. Phone: 630-574-0650. Periodicals postage at Hinsdale, Ill. 60521 and other post offices. Additional entry, Pontiac, Ill. POSTMASTER: Send address changes to Construction Equipment Distribution, 600 W. 22nd St., Suite 220, Oak Brook, Ill. 60523
system provides infinite speed control so operators can inch through critical areas with no extra space, but still travel quickly over large areas. Other features include spring applied, hydraulic release brakes, hydraulic self-leveling and quickcoupling system. The Perkins 404F-22T engine has a solid reputation for power and durability and low fuel consumption and emissions. The engine is rated at 53.6 hp net power and meets North America Tier IV final emission standards. For more information visit www.liugong.com
Kobelco Unleashes SK55SRx Excavator at ConExpo 2014 Kobelco Construction Machinery USA introduced a new model, the SK55SRx, to the North and South American markets during ConExpo-Con/Agg 2014. The SK55SRx is a mini-excavator that delivers full size performance and short radius agility from its compact footprint. This new machine comes in both cab and canopy models. The 11,050-pound SK55 is engineered to supply maximum digging power while maintaining a short tail swing. Its 37.4 hp, water-cooled Yanmar diesel engine is not only powerful, but also fuel efficient, delivering operational cost savings through its multiple modes, including an “Energy Conservation Mode”, which can easily be engaged with the push of a button when the work at hand allows the operator to run the equipment at lower power and performance levels, providing greater job efficiencies. A one-touch deceleration button makes it easy to switch to an idling state, further reducing fuel consumption while the machine is at rest. The SK55’s engine meets Tier IV final requirements, while its hydraulic system minimizes energy loss for outstanding hydraulic performance. In addition to fuel economy and power, the SK55 has many practical performance features including an arm force of 5,530 pounds and a two-pin bucket force of up to 11,128 pounds for robust digging. The machine’s dig depth of 12 foot, 10 inches, 20 foot, 6-inch reach at ground level and a swing speed of 8.5 rpm ensure productivity goals are always within reach. For more information visit kobelco-usa.com
April 2014 | Construction Equipment Distribution | www.cedmag.com | 47
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Dealer Data
January Construction Slides 13 Percent Value of new construction starts fell 13 percent in January to a seasonally adjusted annual rate of $485.0 billion. 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
January 2014
December 2013
% Change
$157,348
$167,626
-6
204,662
209,360
-2
123,024
180,426
-32
$485,034
$557,412
-13
Source: McGraw-Hill Construction, www.construction.com
Nonresidential Building Residential Building Nonbuilding Construction TOTAL Construction
1 Mo. 2014
1 Mo. 2013
% Change
$11,302
$12,084
-6
13,762
12,739
+8
9,004
11,173
-19
$34,068
$35,996
-5
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 2012 representing 100 percent, (e.g. total OEC sold in February 2013 was approximately 80% of total OEC sold in December 2012). 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. February 2013 sales $ recovery was 47.8% 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
JAN 13
Excavators - Wheeled, Hydraulic Mini Excavators Motor Graders
Tractor Loader Backhoes
APR 13
MAY 13
JUN 13
JUL 13
AUG 13
SEP 13
OCT 13
NOV 13
DEC 13
Grand Total
33
24
40
57
86
72
91
111
82
70
69
120
855
184
291
269
307
267
355
365
352
362
309
432
3,833
7
9
3
6
11
4
9
15
13
7
4
14
102
624
408
529
662
719
733
700
847
779
768
606
951
8,326
31
10
22
20
20
27
14
26
35
39
16
36
296
825
435
615
749
925
775
889
809
815
909
702
974
9,422
89
44
54
96
104
112
110
88
105
121
97
109
1,129
5
6
2
2
13
15
6
7
6
6
1
6
75
1,394
752
994
960
1,074
897
916
797
912
1,238
1,320
335
246
231
361
356
294
400
383
366
369
288
Scrapers - Conventional Skid-Steer Loaders
MAR 13
340
Crawler Loaders Excavators - Crawler, Hydraulic
FEB 13
1,624 12,878 413
4,042
Wheel Loaders < 80 HP
78
50
61
44
66
64
58
84
78
86
92
124
885
Wheel Loaders > 80 HP
608
330
335
489
484
440
522
467
518
590
563
856
6,202
4,369 2,498
3,177
3,715
Grand Total
4,165 3,700
4,070 3,999 4,061 4,565
4,067 5,659 48,045
Supplied by Equipment Data Associates, Charlotte, N.C.
48 | www.cedmag.com | Construction Equipment Distribution | April 2014
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3/27/14 4:44 PM
NEXT GENERATION OF TRUCK MOUNTED CRANES THE
I N T R O D U C I N G
T H E
MANITEX TC700 70-TON (63.5 mt) TELESCOPIC CRANE The highest capacity crane available for installation on a commercial chassis in the western hemisphere. This heavy-duty crane is engineered with advanced technology to meet the wide-ranging needs of operators around the globe.
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12/18/2013 1:35:21 PM
The COMPLETE COMPLETE Microsoft Microsoft Heavy Heavy Equipment Equipment The Solution for for Successful Successful Dealers Dealers Solution Improve productivity, decision making and customer satisfaction while increasing your competitive edge Improve productivity, decision making and customer satisfaction while increasing your competitive edge with Microsoft Dynamics AX for Equipment Dealers, developed and delivered by XAPT. with Microsoft Dynamics AX for Equipment Dealers, developed and delivered by XAPT. Microsoft Dynamics AX for Equipment Dealers delivers the following core capabilities: Microsoft Dynamics AX for Equipment Dealers delivers the following core capabilities: • • • • • • • • • • • • • •
Equipment Management Equipment Management Rental Management Rental Parts &Management Inventory Management Parts & Inventory Management Service & Warranty Management Service & Warranty Management Sales, Marketing & CRM Management Sales, Marketing & CRM Management Power Systems & Project Management Power & Management Project Management HumanSystems Resource Human Resource Management
• • • • • • • • • • • • • •
IT Management IT Management Financial Management Financial Management Supply Chain Management Supply Chain Management Business Intelligence Business Intelligence Performance Management Performance Management Workflow Management Workflow Management And much more... And much more...
Find out why other dealers have turned to XAPT and Microsoft Dynamics AX for their dealership needs. Find out why other dealers have turned to XAPT and Microsoft Dynamics AX for their dealership needs.
Visit us online at www.xapt.com Visit us online at www.xapt.com
FOR MORE INFORMATION FOR MORE INFORMATION Phone: 1 866 727 XAPT (9278) Phone: 1 866 727 XAPT (9278) Email: Contactus@xapt.com Email: Contactus@xapt.com Web: www.xapt.com Web: www.xapt.com
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12/16/2013 8:04:32 AM