February 2019: Meet the Chairman

CED F E B R U A R Y

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CONSTRUCTION EQUIPMENT DISTRIBUTION P R O V I D I N G S O L U T I O N S T O D AY F O R T O M O R R O W ’ S E Q U I P M E N T I N D U S T R Y

MEET YOUR CHAIRMAN

MICHAEL BRENNAN S TRIK I NG WH ILE TH E IR O N I S H O T AED takes lead on hours-of-service issue

RISING INTEREST R AT ES and the impact on AED members

TH E INS AND O UTS of AED’s 2019 Financial/HR Symposium

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CONTENTS FEBRUARY 2019 | VOL 85 NO. 2 | www.cedmag.com

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S T RI KI NG WHI LE T HE I RON IS HO T This past October, AED submitted comments to the Federal Motor Carrier Safety Administration (FMCSA) regarding reform to the federal hours-of-service (HOS) regulations.

20

R ISIN G I NT E RE S T RAT E S

The U.S. Federal Reserve just announced an additional quarter-point increase in interest rates, bringing the borrowing rate to a range of 2.25 to 2.5 percent.

28

THE INS AND OUTS OF AED’S 2019 FINANCIAL/HR SYMPOSIUM

The Symposium brings together industry experts in both finance and human resources to provide thoughtful insight into the most pressing topics impacting equipment distributors.

34

MEET Y OU R C HA I RMA N MICHA E L BRE NNA N 2019 is Associated Equipment Distributors’ historic 100-year anniversary, but, for incoming AED Chairman Michael Brennan, it also marks a career of nearly a quarter-century in the heavy equipment industry.

February 2019 | Construction Equipment Distribution | www.cedmag.com | 3

CONTENTS FEBRUARY 2019 | VOL 85 NO. 2 | www.cedmag.com

INSIDE

EDITORIAL Editor in Chief Sara Smith ssmith@aednet.org

P.8 AED in Canada: Cross Country Competitiveness

P.32 The Truth About Employee Disengagement

Design & Layout Phoebe Defenbaugh design@aednet.org

P.10 The AED Foundation Donor Profile: BOKF Equipment Finance Inc.

P.40 A Firsthand Look At AED’s Leadership Development Institute

• WRITERS CED Reporter Clifford Black CED Reporter Karen Algeo Krizman CED Reporter Megan Mattingly-Arthur

P.12 AED Welcomes New Distributor Member: MGB & Company P.14 Small Dealer Conference Helps Attendees Find Effective Solutions to Industry Challenges Old & New

P.44 One Size Will Not Fit All: The Evolution of the Field Services Vehicle P.46 Eliminating Hidden Insurance Costs Will Improve Your Bottom Line

• ADVERTISING Vice President Jon Cruthers 800-388-0650 ext. 5127 jcruthers@aednet.org

ON THE COVER

2019 AED Chairman, Michael Brennan of Bramco, LLC. Read about his journey within the construction equipment industry on page 34.

Production Manager Martin Cabral 800-388-0650 ext. 5118 Since 1920 Official Publication of

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 © 2018 by Associated Equipment Distributors. Construction Equipment Distribution (ISSN0010-6755) is published monthly as the official journal of Associated Equipment Distributors. Subscription rate – $39 per year for members; $79 per year for nonmembers. Office of publication: 650 E. Algonquin Road, Suite 305, Schaumburg, Ill. 60173 Phone: 630-574-0650. Periodicals postage at Schaumburg, Ill. 60173 and other post offices. Additional entry, Pontiac, Ill. POSTMASTER: Send address changes to Construction Equipment Distribution, 650 E. Algonquin Road, Suite 305, Schaumburg, Ill. 60173.

4 | www.cedmag.com | Construction Equipment Distribution | February 2019

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FR O M TH E PR ESI D EN T BR IA N P. M cG U IR E

2019 AED Events Are in Full Swing!

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019 is in full swing, and right around the corner is our first conference after Summit: the Financial/ HR Symposium, which will take place from April 24-26 at the InterContinental Chicago Magnificent Mile.

The Financial/HR Symposium brings together industry financial and human resources professionals who want to learn about the issues specifically impacting their businesses. This event is perfect for both new and seasoned professionals, as a place to learn from one another and hear industry experts share their knowledge, with the goal of giving attendees educational solutions for threats and opportunities affecting their companies.

This year’s sessions will focus on the topics of leadership, coaching, new technology, economic opportunities and much more. In addition to hearing new ideas, learning about best practices, and receiving regulatory and legal updates, attendees will have several opportunities to brainstorm and network with like-minded dealership professionals. Many of the sessions are focused by topic, either financial or HR, to give you the chance to surround yourself with your professional peers and learn from one another. But don’t worry, there will also be shared sessions to give you the opportunity to meet and connect with all those in attendance in one location.

B R I A N P. Mc GUI R E AED President & CEO

The AED Foundation will be bringing back some of our popular seminars this spring. The Basic Rental Management Seminar will take place March 14-15 in Houston, Texas. If you are newer to the rental side of your dealership, or if your company has a smaller rental fleet, this is the perfect introductory course for you.

This seminar will focus on the evolution of the rental market, what drives the market and what it takes to be a competitor within the field.

The Basic Parts Management Seminar and the Basic Service Management Seminar will be held in Long Beach, California, at the Hotel Maya. The Basic Parts seminar will take place March 19-20, with the Basic Service seminar following on March 21-22. These oneand-a-half-day seminars will give you an overview of the fundamental skills that are needed to successfully run either a parts or a service department.

For more information about the events above, or to take a look at everything we have coming up for 2019, visit bit.ly/aedevents. We hope you will find a program offered by AED that meets the needs of you and your team. We look forward to seeing you out and about at an upcoming AED event!

R OB ERT K . HEN DER SON AED Executive Vice President & COO

JA SON K. BLAKE AED Senior Vice President

OFFICERS

AT-LARGE DIRECTORS

REGIONAL DIRECTORS

MICHAEL D. BRENNAN Chairman

PAUL FARRELL

MICHAEL LALONDE West Reg.

JOHN THOMPSON

MATTHEW ROLAND Midwest Reg.

Bramco, LLC

CRAIG DRURY Sr. Vice President

Vermeer Canada Inc.

Westrax Machinery, Inc.

Modern Group Ltd.

Roland Machinery Co.

RON BARLET Vice Chairman

Thompson Machinery

MICHAEL VAZQUEZ VP Membership

Berry Companies, Inc.

STEVE OUELLETTE Northeast Reg.

Heavy Machines, Inc.

TODD HYSTAD Western Canada Reg.

Ditch Witch Mid-States

COREY VANDER MOLEN South Central Reg.

Bejac Corporation

MECO MIAMI Inc.

TODD HYSTAD VP Canada

Vimar Equipment Ltd.

GAYLE HUMPHRIES VP of Finance

JCB of Georgia

DIANE BENCK Past Chair

West Side Tractor Sales Co.

WHIT PERRYMAN Foundation Chairman

Vermeer Texas-Louisiana

JOHN SHEARER Rocky Mountain Reg.

STEVE MEADOWS

4 Rivers Equipment, LLC Norris Sales Co.

JAMES A. NELSON

Vimar Equipment Ltd.

MATT DI IORIO

DAN STRACENER

Vermeer MidSouth, Inc.

Tractor & Equipment Co.

MIKE PARIC Eastern Canada Reg.

Joe Johnson Equipment Inc. TOMMY BALL Southeast Reg.

Flagler Construction Equipment February 2019 | Construction Equipment Distribution | www.cedmag.com | 7

AED

IN CANADA

Cross Country Competitiveness

O

B Y: K Y L E L A R K I N

ne the largest federal-provincial battles in decades is brewing in Canada and will certainly spill into 2019 leading up to the federal election. The debate on carbon pricing is still the largest national debate happening between Canadians, political parties and provincial governments. Prior to the 2015 federal election, provinces were mostly handling their own carbon pricing schemes, three of which existed then. In British Columbia, a carbon tax has been in place by a conservative government for years, while in Ontario and Quebec, they joined the cap-and-trade program with California to lower greenhouse gas (GHG) emissions. However, statistics showed that despite these efforts and without a national plan, Canada was not going to meet its GHG emission reduction targets.

The federal Liberals were elected with a resounding majority in October of 2015, with one of their platform recommendations looking at a national carbon pricing system that would cover all parts of Canada. The debate is now ramping up because the federal carbon tax will come into effect in Ontario, Saskatchewan, Manitoba and New Brunswick in April 2019, and in Yukon and Nunavut in July 2019. All other provinces and the Northwest Territories are exempted because they have decided to implement their own provincial plans. Ontario, Saskatchewan and New Brunswick in defiance have decided to start court proceedings over the constitutional right of the federal government to impose a carbon tax on time. The debate will most likely reach the Supreme Court, who will need to make a monumental constitutional decision.

The federal carbon tax will begin at $20 per tonne of carbon emissions in 2019, rising by $10 per tonne each year until it reaches $50 per tonne in 2022. To offset rising costs for Canadians, the government has announced the Climate Action Incentive which will give back more then what is paid through the federal carbon tax. In Ontario for example, the average household will pay $244 in 2019, but will get back $300 as part of their income tax returns in the spring

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of 2019. Ninety percent of the revenue from the tax is supposed to be returned directly to Canadians through the annual rebate. The remaining ten percent will support small businesses, universities, hospitals and others who won’t have access to the rebate.

However, it remains unclear how money will flow to small businesses who will be the most impacted, such as road builders and others who operate heavy machinery.

The government estimates the carbon tax will increase gasoline prices by 4.4 cents per litre in 2019, increasing to 11 cents per litre in 2022. Increases in diesel prices could be even higher. This could have a dramatic impact on heavy machinery operators, many of whom operate as small businesses of one, two or three people.

Unfortunately for them, there is no alternative to their diesel consuming equipment. This could also have an impact on equipment distributors who rely on heavy machine operators to be economically strong for their own well-being. Furthermore, putting small businesses out of business will impact the Liberals polling moving into October 2019 and will have impacts on them succeeding with their infrastructure plan.

Prior to moving ahead with the carbon tax implementation in April 2019, the federal government must put together a concerted plan on supporting small businesses whose operations rely on the consumption of fuel. There is no adequate replacement to the power that a diesel engine creates that allows heavy machinery to get the job done. Without a clear plan, the government risks negatively effecting the economy from the bottom up and putting thousands of Canadians out of work. While curbing climate change is necessary, even according to the Canadian Chamber of Commerce, those on the ground level who will be impacted by federal policies need to be taken into account.

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T HE A E D F O UNDATI ON DONOR PRO FILE

JOINING THE BOARD, FURTHERING THE CAUSE

I

t’s not just heavy equipment dealers who make up the ranks of The AED Foundation. BOK Financial Equipment Finance Inc., is very interested in elevating the industry as well, and supports The AED Foundation in various ways, such as sponsoring the annual fundraising Gala and live auction.

BOK Financial Equipment Finance, Inc. provides financing to more than 100 heavy equipment dealers in 44 states, delivered by a 15-person team based in Dallas, Texas. BOK Financial Equipment Finance is a subsidiary of BOK Financial, the banking subsidiary of BOK Financial Corporation (NASDAQ: BOKF), a top 25 U.S.-based commercial bank headquartered in Tulsa, Oklahoma.

From its ranks comes one of The AED Foundation’s newest board members. Darren Grahsl, senior vice president of BOK Financial Equipment Finance Inc., has taken on the role of treasurer.

Grahsl has worked with heavy equipment customers for the majority of his banking career, and joined BOK Financial’s equipment finance division in 2017. It was roughly a year ago that there was an opening on The AED Foundation’s board. “I was honored when I was asked to join,” Grahsl stated.

As for BOK Financial, “we’ve been in the heavy equipment industry for more than 15 years,” Grahsl says. “We love working with our customers to help grow their businesses. A number of our customers are actively involved with AED and The AED Foundation, so I look forward to working closely with them in my new role.”

Grahsl feels confident about his position as treasurer, considering his banking background.

“I look forward to using my analytical and informational skills to work hand-in-hand with The AED Foundation to inform group decisions, provide recommendations, and solicit feedback from members,” Grahsl explained.

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Darren Grahsl joins The AED Foundation board, with eye toward building up skilled workforce

When you pair BOK Financial Equipment Finance’s focus with the information from the Foundation’s assorted members, it will give him a good overall picture in his leadership capacity. “This will provide a better understanding of the challenges that dealers may face – both regional and nationwide. We have an excellent vantage point of what is happening within the industry.”

“Throughout the industry the labor shortage is not unique to one specific geographical location or segment,” Grahsl says.

“The purpose of The AED Foundation is to continue to further the development of workforce.

The industry has fairly significant shortage from a skilled labor perspective, and The AED Foundation’s goal is to continue to build an infrastructure of training (so it can) continue to make a greater impact for the future.”

One goal is to try to show the younger generation that construction equipment is a viable career pursuit, and by working with The AED Foundation, Grahsl hopes to bring awareness to the next generation of talent.

“We’re trying to get into high schools, to the parents of the future workforce. It’s not just a job but a career – a significant career path – and it brings value to the individual and the family as well as to the regional and national economies.”

Your contribution fuels the work that allows The AED Foundation to develop a dealer model for success. The future of dealerships depend on how we come together to build our industry’s workforce.

Thank you, Darren Grahsl for investing in the future of our industry. To contribute to The AED Foundation annual campaign, visit bit.ly/2019aedfcampaign.

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AED Welcomes Newest Distributor Member,

MGB & Company

L

ast October, IntegraVision LLC, dba MGB & Company, became AED’s newest distributor member. MGB is based in Caldwell, Texas, and specializes in the buying and selling of used mining and concrete equipment. By taking into account the objectives of both buyers and sellers, MGB & Company is forging “win-win,” high-value deals that build trust and create repeat buyers and sellers.

CED recently had a chance to speak with Michael Bandas, MGB’s owner, president and “chief deal-making officer,” about the early years of the company and where he would like to take it. Bandas has been involved in heavy construction, mining and material industries since 1982 and uses this firsthand knowledge of the industry to better serve his clientele.

“We have been in business under the MBG & Company name for more than ten years, but the company has seen a lot of transformation in that time,” Bandas said about MGB’s unconventional development. “I was interested in precast concrete and was going to get into that, so I bought up a guy’s equipment – but I didn’t need all of it, so I decided to sell it off.”

Through Bandas’ first sale of this precast concrete equipment, he realized he had a knack for spotting quality equipment and restoring such equipment to its former glory.

But at this point, he considered the sale to be a stroke of good fortune rather than a business model. It would be his next sale that cemented MGB & Company’s current identity.

“At the time of the precast concrete equipment sale, I was operating out of a general contractor’s yard. The contractor had an identical concrete conveyer to the one I had just sold off. When inquiries kept coming in about the already sold conveyer, I asked the contractor if he would consider selling his.” Relieved to get rid of his extra conveyer, the contractor was happy to sell. Happy to apply his mechanical knowledge of the equipment he was selling, and realizing the value added to both buyer and seller, it was after this sale that Bandas knew he was on to something.

He then expanded his resale operations to include scissor lifts, forklifts and extendable forklifts. Bandas’ family had had a base paving, drainage, water and sewage business, so he was comfortable assessing and working on this new inventory. MGB & Company is expanding the types of machines they are dealing in and currently serve the sand and gravel, crushed sand, frac sand, and concrete industries.

Bandas stated that the secret to his success is his ability to distinguish hidden value from junk. “My idea of quality is probably a lot different from most of my contemporaries, because I am coming at this from the viewpoint of the end user. Just because a piece of equipment has been out of commission for years and looks nasty does not mean it cannot be restored with a little TLC.

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“The ideal arrangement for us now is to buy the machinery, refurbish it, restore and find a buyer. Not only is this more profitable than simply brokering deals between buyers and sellers, it allows for a more personalized approach to the transaction. Plus, I love working on the equipment,” said Bandas. “But whether we are buying the equipment or acting as broker, we inspect the machine to determine that it is in the actual condition that the words and pictures used to market it say it is in.”

When selling a piece of equipment for an owner, MGB & Company lists and publishes pictures and descriptions of the machine on their website and on several other industryleading web-based marketplaces. In most cases, MGB will also assume the costs and responsibility of preparing the machine for shipping.

Bandas is dubbed the chief deal-making officer at MGB and believes that his value to his clients is the difference between making a deal and making a deal that will work. The cornerstone of MGB’s deal-making approach “is and must be integrity,” said Bandas. “It’s more than a buzzword or catch phrase; instead, we consider it our most valued asset.”

The future looks bright for MGB, and Bandas was happy to comment on the direction he is planning on taking the company. “We have been in our current location for the past 18 months and are really starting to build up our client base.

I am working with a colleague that rebuilds concrete plants and doing marketing for him. But as for the near future, I am hoping to acquire a truck with a crane, so I can add field servicing to MGB’s offerings.”

MGB is also in the early stages of becoming an authorized dealer for a manufacturer in addition to their current used equipment buying and selling business. Bandas was quick to emphasize just how early in this process MGB is, but he listed some of the qualities he was looking for in a manufacturer. “Finding the right manufacturer could take a week, or it could take a year. I want to find a manufacturer that is willing to work with a dealership of our size, one that is looking to establish or develop their presence here in Texas.”

One of the primary reasons MGB decided to join AED was to get involved with the Small Dealer Conference and the Small Dealers Committee. Bandas remarked, “I am excited to start thinking like a dealer. Attending the Small Dealer Conference this November, my motivation will be to take in as much useful information as I can absorb.

My background is in construction and production, so I expect I will be learning a lot of new information.”

Only time will tell what is in store for this industrious small distributor, but if its future is anything like its past, we can expect intuitive growth that stems from the needs of the industries that it serves. Collaboration between MGB and AED’s other small dealers is sure to be mutually beneficial as Bandas brings a unique perspective to the committee.

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Small Dealer Conference Helps Attendees Find Effective Solutions to Industry Challenges Old & New

B Y M E G A N M A T T I N G LY- A R T H U R

A

ssociated Equipment Distributors hosted its 2018 Small Dealer Conference in New Orleans in early November. Dozens of heavy equipment dealers from throughout the United States and Canada attended the event, which boasted networking opportunities, inspirational speakers, educational sessions and more.

In addition to addressing standard industry topics such as best practices, tax reform and ways to combat the ongoing technician shortage, the conference’s programming included lectures on Dr. Seuss-inspired leadership strategies and how to develop “scrappy” marketing plans even without a marketing budget.

AED’s reputation, as well as a chance to visit New Orleans and compare strategies with other dealers, is what drew Jamie Armstrong – vice president of Ontario-based Amaco Equipment Inc. – to attend the Small Dealer Conference for the first time.

“AED is, in my opinion, probably one of the best industry resources for dealers in existence,” he said. “It’s an organization with fantastic people that offer a valuable platform to dealers to gain industry awareness, manufacturer distribution availability, colleague awareness, overall good partnerships and internal education tools to include accreditation toward positions within the dealership. To be honest, attending the conference was a needed break from the office and an opportunity to see how other small dealers are managing their challenges. Also, never having been to New Orleans didn’t hurt – it seemed like a win-win to me.”

For Armstrong, two key takeaways stood out: the importance of a targeted rental fleet in a small dealership and the availability of technician recruiting programs. On both subjects, Armstrong saw the need for improvement back home in Ontario.

“Successful small dealerships are relying on rentals – and process and utilization are key,” he said. “I feel this will be a struggle in Ontario, Canada, where we have a shortened construction season and a market that’s unwilling to accept a higher rental rate to account for it. As far as technician recruitment programs go, they’re more readily available in the United States, where some businesses are even starting recruitment efforts at the high school level and then assisting with college tuition. Ontario needs to do a better job in this area.”

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Having learned a lot at the 2018 Small Dealer Conference, Armstrong plans to attend again next year and offered this advice for other small dealers trying to decide whether to make time to go: “Don’t miss it. It’s important to realize you aren’t alone in your challenges. This conference is perfect for helping dealers understand that, as well as find out what others have done to overcome their struggles. Learning from others can save you valuable time and money.”

This was the second Small Dealer Conference for Luby Equipment Services Vice President of Sales and Marketing David Kedney, who attended the inaugural conference in Nashville in 2017. Kedney also serves on the Small Dealer Committee.

“I had an excellent experience last year and found the conference has a nice balance between education sessions and networking events,” he said. “Also, as a member of the Small Dealer Committee, I wanted to see how the event went, along with gathering feedback from attendees.”

For Kedney, key conference takeaways included suggestions for ways to work around the technician shortage, information about the new tax laws and ideas for developing marketing content.

“I gathered some great ideas to expand our marketing efforts at my dealership, specifically focusing on creating quality content for our customers,” he said. “I learned about creating blogs on our website, as well as developing a podcast that will be important as we expand our customer reach and content marketing strategy.”

According to Kedney, AED members should watch for big changes coming to next year’s Small Dealer Conference event.

“We are looking to expand the conference to two locations in 2019 to gain further member engagement,” he said. “We are hopeful that there will be interest from members on each coast.

Anybody that has a passion for the business should go and be ready to learn and network with industry experts and other dealers.”

For information on upcoming AED events, visit www.aednet.org. AED is also on Facebook, Twitter and YouTube.

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STRIKING

WHILE THE I R O N I S H O T; A E D TA K E S L E A D O N HOURS-OF-SERVICE ISSUE

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T

his past October, AED submitted comments to the Federal Motor Carrier Safety Administration (FMCSA) urging reforms to the federal hours-of-service (HOS) regulations. The Association’s comments were in response to the FMCSA’s “advance notice of proposed rulemaking” (ANPRM) and largely called for the FMCSA to grant a “service truck exemption” from HOS requirements to give AED members relief from the onerous regulations.

Hours-of-service issues have been on AED’s radar for many years.

However, with the electronic logging device mandate taking effect, many of the challenges AED members faced with the hours-of-service regulations were exacerbated. The current HOS regulations have been in place since 2012, but electronic enforcement has given them a new breadth.

Daniel B. Fisher, AED’s vice president of government affairs stated, “With an administration in place that’s willing to work with the business community on regulatory reforms, and in particular is committed to making commonsense changes to the hours-of-service rules, it’s the ideal time to seek modifications that will provide necessary relief for equipment dealers.”

H OS BACKG R O UN D / TH E PR O B L EM

Due to the gross vehicle weight of many field service vehicles, technicians/ drivers in the heavy equipment industry are subject to the FMCSA’s hoursof-service regulations. These regulations were drawn up primarily for longhaul truckers. This presents difficulties for AED’s member dealers, as the job functions of a long-haul trucker are far different from the job functions of a highly skilled and trained service technician.

For these field service technicians, operating a commercial vehicle is incidental to their primary job responsibilities. Field service technicians typically drive less than 150 miles per day, and 80 percent of their duty time is spent on non-driving activities. Moreover, the seasonal nature of the construction and utilities industries that utilize heavy equipment places a premium on efficient operations. The construction season in the United States is limited to the warmer months, which requires maximum efficiency in operations to meet demand, particularly in the northern states. AED members must often have their technicians work long hours to meet seasonal demand for their services and products, and they face a significant shortage of diesel technicians to service heavy equipment and drive service trucks.

February 2019 | Construction Equipment Distribution | www.cedmag.com | 17

The FMCSA has granted partial and total exemptions from the HOS regulations to several other industries with driving practices significantly different from those of long-haul truckers. Utility service vehicle drivers and asphalt and concrete drivers all enjoy exemptions from the HOS regulations, and AED believes heavy equipment field service technicians would similarly benefit. These exemptions were granted because of the unique circumstances faced by industry drivers, including many of the same circumstances faced by heavy equipment field service technicians.

A E D’S C O MM ENT AT A GLANC E

The Association requested that the FMCSA grant a “service truck exemption” from HOS requirements.

Given that operating a commercial motor vehicle is incidental to a service technician’s primary job responsibilities and they do not face the same demands or fatigue concerns as long-haul truck drivers, AED asserts that a blanket exemption from the HOS regulations for equipment service trucks is the most efficient and safest approach.

In case the FMCSA does not see fit to exempt service trucks from HOS regulations, AED alternatively proposed supports for certain reforms that will provide some regulatory relief for equipment dealers, including the following: •

Providing one set of HOS rules for shorthaul operations, wherein CDL drivers would be exempt from requirements if they operate within 150 air-miles of the work-reporting location and complete the work day within 14 hours

•

Eliminating the short-haul rule’s requirement of the driver returning to the work-reporting location to establish the origin point for that duty period. Essentially, rather than having to check back in at home base every day, field service technicians could commute from their home to their work site, saving time and fuel

•

•

Granting drivers the flexibility to extend the 14-hour daily duty window by up to three hours in a single off-duty break Allowing drivers to drive for an additional two hours beyond the 14-hour driving window during adverse conditions, such as inclement weather

18 | www.cedmag.com | Construction Equipment Distribution | February 2019

TH E CO N STR UCTI O N CO AL I T I ON

In addition to filing its own comments, AED joined the broader construction industry, including the Associated General Contractors of America, the American Road & Transportation Builders Association, the National Utility Contractors Association and the National Stone, Sand & Gravel Association, to seek changes to the hours-of-service regulations on behalf of the entire construction sector. The Construction Coalition’s comments are very similar to AED’s, although AED’s comments discuss a service truck exemption and the broader coalition is seeking a construction industry exemption (which includes service trucks).

The Coalition correctly points out that a piecemeal approach to rules, exceptions and exemptions that vary depending on the type of vehicle operated, the type of property carried, and/or the type of service provided can be tough to interpret, follow and enforce. After all, many within the industry find it difficult to comprehend the scope and applicability of all the various permutations of the current HOS regulations, let alone implementing them in daily operations.

Following review of the comments, the FMCSA is expected to release a proposed rule in the coming months. AED will continue to work with FMCSA and congressional allies to provide regulatory relief to equipment dealers from the burdensome hoursof-service regulations.

If you have any questions or input related to the HOS comments or other policy issues, please contact AED’s Vice President of Government Affairs Daniel B. Fisher at dfisher@aednet.org.

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R I S I N G I N T E R E S T R AT E S AND THE

I M PA C T O N A E D M E M B E R S

T

he U.S. Federal Reserve just announced an additional quarter-point increase in interest rates, bringing the borrowing rate to a range of 2.25 to 2.5 percent. This was the fourth hike in 2018, and Fed Chairman Jerome Powell has made it abundantly clear that the decision was data-driven and not influenced by politics.

maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.

In its December rate hike announcement, the Federal Open Market Committee (FOMC) gave its reasoning for the increase:

So, on balance, inflation has not gone up significantly since the ’70s and shows no signs of rising, yet the Fed is raising rates. What gives? The Fed cites the historically low unemployment rate for the move, a reason that can be hard to swallow for members of heavy equipment dealerships who have yet to find the answer to the skilled labor shortage.

When determining the timing and size of future rate adjustments to the target range for the federal funds rate, the FOMC will assess realized and expected economic conditions relative to its

20 | www.cedmag.com | Construction Equipment Distribution | February 2019

As noted above, much of the Federal Open Market Committee’s decision-making process is based on forecasts rather than outcomes. The committee released its own projections with their September rate hike announcement. Below is the FOMC’s table of summary forecast:

Despite this trend of rising interest rates, rates are still at historic lows. We have all enjoyed zero percent or close to zero percent interest rates since the Great Recession of 2008 through late 2015. These bargain rates were geared to encourage borrowing and growth and, to some extent, it worked. Moreover, the trend of increasing hikes is apparently slowing.

The Fed chairman commented, “Despite this robust economic backdrop and our expectation for healthy growth, we have seen developments that may signal some softening.” Powell added that FOMC officials “now think it is more likely the economy will grow in a way that calls for two rate increases next year.”

In previous rate hike announcements, the FOMC predicted three rate hikes for 2019, so this news came as a relief to many.

To say the economic prosperity that the nation has experienced in the last few years is a direct result of the Fed’s past low interest rate would be absurd; after all, the interest rate is a tool that artificially influences the organic operation of the economy and financial institutions. The real reason for our industry’s recent growth can more likely be attributed to the Trump administration and its business-friendly tax reform.

President Trump’s response to the September 2018 rate hike was critical, but understandably so. The

president tweeted, “The United States should not be penalized because we are doing so well. Tightening now hurts all that we have done. The U.S. should be allowed to recapture what was lost due to illegal currency manipulation and BAD Trade Deals. Debt coming due & we are raising rates - Really?”

Fed Chairman Jerome Powell seems to be taking the brunt of the president’s flak, despite being nominated

by President Trump in late 2017. It should be noted that Powell has no formal background in economics and is by far the wealthiest person to hold the chair position, with a potential worth of over $112 million as of 2017. What’s more, Powell was first nominated to the Fed’s board of governors in 2012 by Obama.

Since the Fed is not technically a part of the government, firing Powell would be a tall order. Even for someone whose catch phrase is “You’re fired.” But deep in the Fed’s founding laws lies the previously unused section 10, which states, “Each member shall hold office for a term of fourteen years from the expiration of the term of his predecessor, unless sooner removed for cause by the President.” A political firestorm and a ding to the United States’ reputation for economic stability would surely ensue from the use of section 10. But who knows, President Trump might be up for it.

February 2019 | Construction Equipment Distribution | www.cedmag.com | 21

RATE HI KE IM PACT ON DE A L E RSH IPS

But enough with the politics. When it comes down to it, AED members want to know what the hikes mean for their dealerships. This question has a lot of moving parts and will only truly be answered with time. Traditional logic suggests higher rates mean dealerships hold off on purchasing new equipment. And yes, going into the new year, the cost of financing will likely play a larger role in the decision-making process of dealer CFOs and purchasers. But are the rate hikes enough to turn the tide on the heavy equipment distribution industry’s current good fortune?

Again, only time will tell.

Jon Shilling, president and CEO of General Equipment & Supplies, commented on his company’s past experience with higher interest rates: “Interest rates were in the 4 to 8 percent range for years and we managed our inventory accordingly. With a higher interest rate environment, we buy inventory that is needed to service our customer base and do not get too wild and crazy about stocking unproven products or slow-moving products.” Shilling was quick to highlight how his company uses increased rates to their advantage: The up side to the higher interest rates is that we still continue to make a margin on the interest rates we charge customers during rentals and potential rental buyouts. When the customer gets to the end of a work season and must decide whether he is going to purchase the machine he has been renting from us, the higher interest environment actually works somewhat to our benefit, as he can put the machine on a purchase contract with a lower interest rate than was charged to him during the rental. Conversion from rental to ownership then makes sense.

For now, dealership decision-makers will keep a close watch on economic indicators like the real estate cap ratio and the price of oil. After all, our success is dependent on the needs of the industries we serve.

John Crum, national sales manager at the Construction Group at Wells Fargo Equipment Finance, advised, “A lot of dealers are conscious about exposure to variable cost to an interest rate and look at debt floating, fixed, or some combination of the two. Dealers can protect themselves by having interest rate hedges or a fixed rate component.”

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D EAL ER SH I PS I N STATES W I T H G A S AN D O I L MAR KETS

Dealerships in states like North Dakota, Texas and Oklahoma who serve the needs of oil and gas producers are especially concerned with rate hikes, as oil producers tend to be very debt heavy. Shale fracking is a capital-intensive endeavor, and most oil companies sell a lot of debt in capital markets to raise the money for operations.

Rate hikes will make transacting in these capital markets more expensive, which may lead to a reduction in oil production, which in turn could lead to AED members servicing and selling fewer machines to said oil producers. Some economists are even predicting a major burst in the shale energy industry bubble, as the industry is highly dependent on low interest rates.

“On the topic of the interest rate in the oil industry,” said John Shilling, “I guess in North Dakota we have not experienced anything negative yet. Oil production rates are roughly 1.2 million barrels per day and have been for seven or eight years. They are becoming more efficient at drilling for oil and getting it to market, thus our ‘boom’ in the oil patch has become steady business and we all have adjusted accordingly.”

TH E SI LVER L I N I N G

Interest rates are rising, but they are hardly skyrocketing. The Fed plans to raise the interest rate at an incremental pace, roughly a quarter of a percentage point per quarter. Such a measured approach should not drastically alter a dealership’s financial forecasting; after all, interest rates are still pretty low. In addition, more rate hikes will boost the purchasing power of the dollar compared to other currencies.

Before we get too worked up about rate hikes, let’s remember that it is the strong economy that got us here. For many dealerships, the economy’s strength will be enough to offset any foreseeable additions to the cost of borrowing. John Crum reminds dealers that we are all in this together: “Increases in rates happen across the board; rental rates for equipment have been low because the cost basis is low. If everyone is in the same boat, then everyone will have to raise equipment prices to remain competitive and to maintain profits.”

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SmartEquip

A Closer Look: By Karen Algeo Krizmanz

SmartEquip wants to help equipment distributors and owners achieve maximum productivity with minimum wasted effort or expense.

“S

martEquip is a company that provides software solutions to the equipment industry that drive shop, procurement and e-commerce efficiency,” explained Ron Piccolo, executive vice president of sales and marketing for the Norwalk, Connecticut-based company.

The company’s software is unique because it provides a multi-brand parts library combined with a point-to-point procurement system, acting as “the conduit that facilitates the transaction between the equipment owner and the OEM or dealer,” Piccolo said.

“What SmartEquip does for fleet owners is a game changer. Through our agreements with over 350 manufacturers and suppliers across the globe, we have taken all of the parts diagrams and support manuals and brought them into one place,” he said. “So if you’re an owner of multiple brands of

24 | www.cedmag.com | Construction Equipment Distribution | February 2019

equipment across multiple locations, rather than having to keep all that – all the parts manuals, operator manuals and service manuals – updated and accurate, we deliver it all in a standardized format to each authorized user through a single sign-on, so you can access everything you need on one screen instead of having to have multiple logins with multiple portals. The end result is an enormous improvement in efficiency. We typically see the time it takes to identify and order a part reduce from an average of 40 minutes without our software to less than 10 minutes utilizing our software. The accuracy of the orders is also improved, which leads to an increase in utilization.”

What SmartEquip doesn’t do, however, is impede the relationship between manufacturers, dealers and equipment buyers.

“We value relationships,” Piccolo said. “Initially when we introduce our company to people who have not heard of SmartEquip, they get concerned that we’re going to take over the buying relationship, but we don’t.”

Piccolo also wants to make it clear that SmartEquip is not the Amazon for parts. “We’re not, because we’re not an open network,” he said. “What we do is connect the manufacturers and the dealers directly to the customers; and we embed their parts and their support information into their customers’ workflow. So rather than saying here’s a part, buy it for as cheaply as you want from across any of these suppliers, we connect the customer directly to the dealership.”

Each SmartEquip customer gets a secure login to the company’s software where they can peruse manufacturers’ manuals and are routed to the content that they need. The software is an adaptive, responsive design, so it works on a phone, tablet or desktop computer.

“You’re always in the SmartEquip environment,” Piccolo said. “We’ve built integrations in the background with the manufacturer, so we are delivering to the customers the manufacturer’s information and the dealer’s information.

We don’t take ownership of the transaction at any time. We don’t buy the parts, we don’t sell the parts. We don’t mark up the parts. Our role is to make sure customers get the right part for the right machine at the price the customer and dealer have agreed upon.”

Founded 18 years ago by Alex Schuessler, a co-founder of Caterpillar Rental Services Network, and other equipment industry veterans, SmartEquip originally targeted the larger rental fleet market.

“We started off with very large fleets because that’s where the value proposition was,” Piccolo said. “For United Rentals or Sunbelt, to manage all of this content across multiple locations with hundreds of brands was a nightmare.”

February 2019 | Construction Equipment Distribution | www.cedmag.com | 25

The company has since ventured “down market” to contractors and smaller fleets. “We’ve made it very affordable for fleets of all sizes to utilize the software and get on board,” Piccolo said.

“The product really creates efficiency from parts identification all the way to payment of the invoice.

We have also introduced e-commerce software so dealers can support their customers online.”

relationship between the customer and the dealer.

We don’t want to get in the way of that. We simply want to provide the mechanism that allows the dealer to get the order when the customer needs a part – period.”

Today, the company employs 60 people and is still led by a management team that comes from the equipment industry. “We are former dealers and rental equipment people so we understand the importance of parts sales to dealerships,” Piccolo said. “It’s a high-margin business that is extremely important to the health and success of the dealership.

When we develop new products we always make sure we are delivering value to our OEM and dealer partners. We want to make sure that we support the

When you offer your customers a better parts procurement tool, they tend to stick around.

We understand the importance of parts sales and client relationships to your business. SmartEquip is a software solution that your dealership can offer its customers which connects them directly to all the parts and product support information for every brand you sell. We keep your customers off the internet and imbed your storefront right in their workflow.

So, no more competing with open marketplaces and will-fitters. We’ve spent 18 years getting the support content in place. Now your business can leverage that and keep your customers glued to your business.

To find out more, email us at beready@smartequip.com or visit our website.

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26 | www.cedmag.com | Construction Equipment Distribution | February 2019

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THE INS AND OUTS OF AED’S 2019

FINANCIAL/HR SYMPOSIUM Calling all finance managers, directors of finance, CFOs, vice presidents of finance, directors of accounting, controllers, account leaders, e-commerce managers, HR generalists, HR directors/ managers, technical recruiters, training managers, and education coordinators: join us for AED’s fourth annual Financial/HR Symposium.

This year’s event will be centrally located in Chicago, from April 24 to 26.

T

he Symposium brings together industry experts in both finance and human resources to provide thoughtful insight into the most pressing topics impacting equipment distributors.

Attendees bring back tools and solutions to the issues affecting their dealerships. In addition to hearing new ideas, learning about best practices, and receiving regulatory and legal updates, participants will have several opportunities to brainstorm and network with like-minded professionals.

Here is a quick glance at what’s in store for this year’s attendees, from some of the folks that know the symposium best. Accompanying this are some tips and tricks from last year’s attendees on how to get the most out of this event.

T HE F INANCIAL FOCUS

This year’s financial sessions will cover the following topics: the expanding role of the modern CFO, an 28 | www.cedmag.com | Construction Equipment Distribution | February 2019

analysis of the AED Cost of Doing Business Report, the 2019 economic outlook, industry consolidation dynamics, HR for the finance professional, and using technoloygy in the finance department to automate processes and leverage the power of data.

The full program agenda for the Symposium has yet to be released, but it is sure to be jam-packed with useful information for your dealership as a whole.

Here is one attendee’s comment on last year’s agenda: “My two favorite sessions were Critical Skills for Developing Culture, which is such a hot topic right now, especially as we see the generational shift with our employment, and the Roundtable Collaboration, which allowed me to really get to hear what other AED businesses are doing – what best practices are out there, what works, what doesn’t, etc. I got many ideas for recruiting and employee benefit options specific to my industry’s needs.”

Stephanie Farley, director of human resources at Berry Companies Inc., remarked, “As a newer employee of Berry Companies, I have been in my field for many years, but not necessarily in this industry. This was a great way for me to introduce myself to individuals in organizations with the same struggles that we have. Hearing personal experiences and best practices from those that have been in this industry for years is invaluable.”

ON T HE H R SID E

On the HR side of things, topics being explored at this year’s Symposium will cover coaching skills, common HR issues from a legal perspective, creating a culture that generates high-impact teams, and recruiting and developing women in the dealership.

“I loved the smaller size of the group sessions,” said Farley. “This really allows for greater engagement in topics that truly affect our organizations. It’s not a one-size-fits-all kind of conference – it’s specifically planned and organized to create the most effective experience possible. Introduce yourself to everyone and engage in conversation. This is hard for an introvert like myself, but so worth it. I learned so much in such a short amount of time, and gained a number of tools and practical applications that have increased my value as an HR professional.”

A L L TOGETH ER NO W

HR and financial attendees will have opportunities to mingle and gain a mutual understanding of the issues each group of professionals face. This year’s shared session topics will include talent selection, team building and retention, leadership, and a panel discussing what’s to come in health care.

“In the 20+ years we have been researching what it is that non-accountants don’t get about accounting, our key learning is that accounting is a language, and if you don’t understand the words, the numbers are meaningless anyway,” said Mark Robilliard, cofounder of Color Accounting and CEO Americas.

Mark gave a presentation at last year’s Symposium entitled “Six Tips for Communicating with NonFinancial Staff.” Mark’s session demonstrated why employees outside of the finance department are confused by “accountant-speak” and how to better communicate with them to ensure that everyone is on the same page.

Jamie Govey, vice president of accounting at Equipment Corporation of America, advised, “If you have two different people in the accounting and HR departments, you should send both people.” Beyond the soft skills and networking opportunities that are a fundamental part of the Symposium, participants can also receive professional credits for attending the event. CPE credits will be available for this conference.

In addition, AED is recognized by the Society for Human Resource Management (SHRM), which offers professional development credits (PDCs). Symposium participants can earn PDCs for the SHRM-CPSM or the SHRM-SCPSM. For more information about certification or recertification, please visit www.shrmcertification.org.

This year’s joint health care session will feature a panel discussion on changes in employer health care options and what dealers can do to drive down costs. If you are curious about health care trends on the horizon for 2019 and want to know which changes are going to affect your bottom line, this is the session for you.

SEE YOU THERE!

This year’s event will be held at the Intercontinental Chicago Magnificent Mile, at 505 North Michigan Avenue in Chicago, from April 24-26. You can reach the hotel at 312-944-4100. Be sure to mention you are with AED to secure a spot in AED’s exclusive room block.

B R EAKI N G TH E I CE W I TH M I C HE LLE WAG N ER , H UMAN R ESO UR C E S MAN AG ER FO R MARTI N EQ U I P M E N T How long has your company been a attending the Symposium?

To my knowledge, our history of attending AED’s Symposium is in its infancy, but we have quickly grown to love it. Our controller and I attended the 2018 Financial/HR Symposium in April and we both enjoyed the varied topics and we learned quite a bit. The subject matter was relevant; the number of attendees in the seminar was the perfect size for engagement and networking; the schedule and pace were appropriate and manageable. Our COO attended an AED event in 2017 and thought it was an invaluable experience.

February February 2019 2019 | Construction Equipment Distribution | www.cedmag.com | 29

What value have past symposiums added

Will you be attending the next

to your company’s AED membership?

Symposium? How would you recommend

Can you speak of any particular

attendees get the most out of it?

opportunities that arose from attending

Yes, I plan on attending the next Symposium in April 2019. I would recommend that attendees dress comfortably, and bring an additional sweater if you get chilled during meetings. Also bring a laptop or notebook to take notes during the sessions, bring business cards for distributing and networking, and bring a positive attitude for listening and engagement.

the Symposium?

Since I had the pleasure of attending an AEDsponsored Symposium, I can assure you the presentations are interesting, the presenters are thorough and embraced their role, and I definitely felt my trip was worthwhile. Upon my return to work, I shared many of my experiences with the management team and with co-workers, and it has ultimately made me a more aware and thorough manager. During the Symposium, I listened to the differences in leadership types, how workplace culture affects people and business, the changing talent management trends, wellness – what you should do now and for the long term, cybersecurity do’s and don’ts, etc. Such a diverse and interesting agenda.

Would you recommend the Symposium to other dealers? Why or why not?

Yes, I would recommend other dealers attend the Symposium. The AED staff is approachable and helpful; the presenters are interesting and engaging; and the attendee variety is great for networking, talking to folks with similar needs, and sharing ideas.

Is there anything you would like to add?

If you are a professional who likes attending seminars or presentations but are a little nervous about speaking in roundtables with a group of peers, or nervous about being at a large conference, this is the Symposium for you. You can engage as much, or as little, as you want, and the size of the Symposium is comfortable and not overwhelming. Also, take advantage of the reception break to mingle and get to know fellow dealers and AED representatives.

I love takeaways too, not like trinkets and souvenirs, but like the presenter’s copy of their presentation or flyers/handouts from their speech, or a spiral notebook or binder for taking notes during the presentations. I have learned to come prepared with a leather portfolio, notepad, pens/pencils, etc.

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T H E TR U T H ABOUT EMPLOYEE

D I S EN GA GE M E N T

BY BRAD WOLFF

M

ost companies struggle with employee disengagement. It’s costly in productivity, profitability and stress. Gallup’s engagement survey data published in 2017 found that twothirds of U.S. workers are not engaged. American companies have invested billions of dollars per year for many years to solve this problem. The results?

The needle still hasn’t moved. How similar has your experience been? Could this data simply reveal a general misunderstanding of the true causes of disengagement?

The Acme Corporation was suffering a 41 percent turnover rate. A recent survey showed that 85 percent of their workforce was disengaged. The general attitude of apathy, complaining and cynicism permeated the culture. This was puzzling to management, since they had attempted multiple efforts to improve engagement. These were well-planned and wellexecuted programs such as team-building exercises,

32 | www.cedmag.com | Construction Equipment Distribution | February 2019

social events and pay raises. All showed early enthusiasm and positive survey results that generated optimism. Unfortunately, the magic always wore off within a few weeks. In despair, Acme engaged a firm with a very different philosophy than that of their other advisors. This firm focused on helping executive leadership understand the root causes and solutions.

Within nine months, disengagement improved from 71 percent to 26 percent, and turnover dropped to 19 percent.

The door to solving this dilemma opened when Acme management acknowledged that since their previous solution attempts were ineffective, their current way of seeing the problem must be flawed.

This wisdom, humility and openness paved the way to learning the true root causes of their disengagement.

Once root causes are clearly understood, the solutions usually become obvious.

FIXING ENG AG EMEN T I SSUES: W H AT W O R KS?

The first step is for the company leaders to take an honest, objective view of the company culture (that is, beliefs and behaviors that determine how people interact and do their work) that impacts and drives the way people think and behave. That’s why lasting change occurs when focus is aimed at the culture level rather than at specific individuals. Below are the human psychological needs that affect people’s level of engagement. Examples of mindsets or philosophies that effectively address these needs follow each need. Engagement will improve when management’s actions align with people’s psychological needs.

1. TO FEEL VALUED AND UNDERSTOOD. Management earnestly listens to employees’ concerns, opinions and ideas with the intent to understand and consider their merits before responding. This replaces the common responses of defending positions or punishing employees for expressing contrary viewpoints. Management isn’t required to agree with the employees; what’s important is the sincere effort to listen, understand and consider their input.

2. TO EXPRESS OUR GIFTS AND TALENTS. Management puts a focus on aligning roles and responsibilities with the gifts and talents of the individuals. We all bring substantially higher energy and engagement (and productivity) when we do work that we like and are good at. As legendary management consultant Peter Drucker said, “A manager’s task is to make the strengths of people effective and their weaknesses irrelevant.”

3. TO FIND MEANING/PURPOSE IN WHAT WE DO. This means that employees have a clear understanding of how their work impacts the mission and vision of the organization. Don’t expect them to figure this out on their own. People are much more motivated when they realize that their efforts truly matter.

4. TO SUPPORT OUR INTERNAL DRIVE FOR PROGRESS OR DEVELOPMENT. Employees are at their best when there is “healthy tension” (not too low, not too high) to meet clear and reasonable standards. This means fair and consistent accountability and consequences based on performance relative to agreed-upon standards. Being too nice and lax harms engagement, since people inherently desire growth and realize that standards and consequences help them do this. People are motivated when they focus on “What did I achieve today?” “What did I learn today?” “How did I grow?”

W H AT D O ESN ’ T W O R K

In short, anything that doesn’t authentically address the root causes of disengagement is doomed to fail. If the message is “look at this nice thing we just did for you” rather than “this is how we value you as human beings,” it’s highly likely to fail.

Examples of the “nice thing we just did for you” include most team-building events, social mixers, company newsletters, upgraded office environments, etc. Even pay and benefit increases have an initial rush soon followed by the familiar “right back where we were” rebound effect. That’s not to say companies should not do these things. They’re nice add-ons after the day-to-day essentials of human psychology are authentically addressed.

It’s understandable that we gravitate toward easy, quick-fix solutions to our problems. There are plenty of people to make these suggestions and sell them to us. They also don’t require us to identify our own personal contributions to the problems, which we’d prefer to avoid. However, as in most things in life, there is no substitute for working at the causal level and creating new habits of thinking and behavior. If you’re serious about creating a high engagement level leading to more profits with greater ease and personal satisfaction, this is what it takes. As a bonus, openly addressing personal challenges that make you human will increase your effectiveness and fulfillment in every area of your life.

February 2019 | Construction Equipment Distribution | www.cedmag.com | 33

Meet Your Chairman:

MICHAEL BRENNAN B Y M E G A N M A T T I N G LY- A R T H U R

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Brandeis Machinery & Supply Co. CEO values industry relationships and looks forward to helping AED and its members develop a stronger political voice in Washington and Ottawa.

2

019 is Associated Equipment Distributors’ historic 100year anniversary, but, for incoming AED Chairman Michael Brennan, it also marks a career of nearly a quarter-century in the heavy equipment industry.

“This will be my 24th year in the industry,” Brennan said. “I am honored to serve as the Chairman for AED in 2019, its’s historic 100th-anniversary year, as the organization has meant so much to the development and success of equipment dealers in North America for the last century.”

Unlike many in the industry, Brennan found his way into the world of heavy equipment through a financial background, rather than a mechanical one. He spent a decade working for an international accounting firm – including a one-year overseas assignment in beautiful Auckland, New Zealand – before accepting a position as vice president of finance for Bramco Inc. in 1995.

Based in Louisville, Kentucky, Bramco Inc. is a family of equipment companies that includes Brandeis Machinery and Supply Co and Power Equipment Co., two leading heavy equipment suppliers with a diverse range of products. Also included is BramcoMPS, a crushing and screening distributor; and Certified Rental®, a separate rental division that provides short- and long-term rent-to-rent construction equipment.

February 2019 | Construction Equipment Distribution | www.cedmag.com | 35

When Brennan joined Bramco in 1995, the industry was experiencing a period of rapid growth, with a dramatic shift toward rental businesses that included the consolidation of rental companies.

It was during this time that Bramco made the strategic decision to sell its general rental company, RESCO Rents, to Prime Energy – a company that was subsequently acquired by United Rentals. This decision gave Bramco the opportunity to develop and launch Certified Rental®, a new and different rental business, just a few years later. Considering the central role that rental businesses play in today’s heavy equipment industry, entering the industry at a time of explosive growth in the rental market, has given Brennan a valuable edge.

“I was very fortunate to come into the construction equipment industry during this time of rapid growth and consolidation of the rental industry,” he said.

“In the early 2000s, we started a rental business inside our distribution company, Certified Rental®.

My early experience and the company’s history within the rental industry has served us well with our current rental business model. I am fortunate to have spent my early years in this industry immersed in the rental side of the business. I anticipate this will continue to be a a key component to success for construction equipment distributors.”

Once at Bramco, Brennan found he was a perfect fit for the industry, and his role at the company quickly evolved. After joining Bramco as vice president of finance in 1995, he was promoted to vice president and chief financial officer (CFO), followed by executive vice president – a role that included direct responsibility for Certified Rental®, which allowed him to show off the rental business knowledge he’d picked up early in his heavy equipment industry career. In late 2012, Brennan became chief operating officer (COO) of Bramco and gained direct responsibility of both Brandeis Machinery & Supply Co. and Power Equipment Co. Just two years later, Brennan was appointed president and COO of Bramco, as well as CEO of Brandeis Machinery and Power Equipment. In this current role, he oversees the growth and success of the entire Bramco family of companies..

Bramco, has a long and storied history that’s intimately entwined with AED. starting with Brandeis Machinery, founded in 1908. Not only was Brandeis Machinery one of the Association’s founding members in 1919, but it also has the distinction of being the only founding AED

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member company still in operation today. Brandeis Machinery, together with Power Equipment founded in 1946, have been steadfast in their support of AED, its mission and its goals since the beginning, according to Brennan, and have greatly benefited from the relationships AED has helped each of the companies form with other North American distributors.

“Bramco, through Brandeis Machinery as the only surviving original founding member of AED and Power Equipment another long term member, has provided unwavering support for the organization and its goals,” he said. “We strongly believe in bringing together the collective strength and wisdom of equipment distributors throughout North America for the betterment of the entire industry. Our management has made an ongoing commitment to serve on a variety of AED boards, committees, projects, etc. Additionally, we have been active participants in Summit, other professional development programs and AED’s business services. Since its inception, we have been very active with The AED Foundation and believe strongly in education and training as the cornerstone for long-term success in this business.

Likewise, we have been enthusiastically engaged in AED’s governmental affairs program, as we believe having a strong voice in Washington, D.C., is critical to the long-term success of our business and industry.”

AED was originally formed after the president of one of the founding member companies expressed a desire for a trade organization that would allow equipment distributors to network, discuss good business methods, and become more efficient. Today, AED continues to deliver on that vital mission, in addition to offering exceptional professional and educational development programs.

“This is a business and industry built on relationships, and AED has allowed our entire management team to form long-lasting relationships with dealers throughout the country,” Brennan said. “These relationships have been very important to us and have allowed us to learn many things from our peers by sharing best practices, discussing solutions and ultimately sparking new ideas that we implement when we return to Bramco. I cannot begin to describe the value we, as an organization, place on the bonds we have formed with equipment dealers throughout North America.”

Brennan’s involvement with AED began in the summer of 1996, just months after he joined Bramco, when he attended a program for young executives. That experience led him to join AED’s Young Executives Committee and, from there, he was hooked. Brennan started attending the AED Summit and Washington Fly-In events in the late 1990s/early 2000s, joined the AED board in the mid-2000s, served as the board’s vice president of finance in the midst of the Great Recession and has sat on the AED board’s executive committee since 2009.

“With the exception of a one-year hiatus, I have been on the AED board’s executive committee since 2009,” he said. “The thing I treasure most about my AED involvement is the relationships I have developed with other dealers throughout North America. I have formed great bonds with dealers representing many different manufacturers around the country and have learned a great deal from those relationships. The connections I have made at AED have helped me to consider and implement new approaches in our business.”

Bramco focuses on learning and implementing the best business practices throughout the industry.

The company’s commitment to ethics and values has proven popular with manufacturers, employees and customers alike. In 2019, Brandeis Machinery celebrates its 111th year of business and Power Equipment celebrates its 73rd year. The more-thancentury-old company has achieved great success through the years, in part because of its reputation for operating with honesty and integrity. Another key to Bramco’s success: its talented and dedicated employees.

“We are focused on long-term success and are driven by a mission, vision and statement of principles,” Brennan said. “Our Statement of Principles begins with the words, ‘We do not lie, cheat or steal.’ This is purposely a clear statement to our customers, manufacturers and employees regarding the value we put on honesty and integrity in everything we do. We pride ourselves on being our customers trusted partner. This helps us attract and retain the most talented employees in the industry who are dedicated to our company and our customers. Our employees know they will be treated with both respect and honesty, and will be given many opportunities to grow and flourish.

This develops a value-driven culture from inside our doors. Our employees take our core values and beliefs and translate them into outstanding daily support of our customers. We work really hard to have the most engaged and dedicated employees in the industry who are truly part of the Bramco family.

Our customers can see and feel the dedication of our employees which we hope ultimately translates to the success of their businesses.”

Treating employees with respect, offering opportunities for growth and making workers feel like part of the family may be a part of Bramco’s values and good for customers, but it also serves as a surefire workforce retention strategy. Many members of Brandeis’ workforce are longtime employees – in fact, one service technician will celebrate his 54-year anniversary with the company later this year.

Along with their commitment to operating ethically and employing a skilled, dedicated workforce, Brennan credits the company’s success to the emphasis it places on developing positive relationships – with everyone from manufacturers to other distributors, employees and customers. These powerful business relationships have benefited Bramco over the years through the exchange of ideas and the building of both employee and customer loyalty. For Brennan, these relationships are what he loves about his positions as president and COO of Bramco and CEO of Brandeis Machinery and Power Equipment, as well as his work in the heavy equipment industry in general.

“My favorite thing about working in the heavy equipment industry and my role with the company comes down to the role of relationships in conducting business,” he said. “This is such a great industry to work in because of all the outstanding connections

February 2019 | Construction Equipment Distribution | www.cedmag.com | 37

that make this business successful. There are three keys I see as to our success: connections with our customers, support from our manufacturers and lifelong bonds with our most valuable assets – our employees. I enjoy my role in nurturing these relationships and realize how fortunate I am to be a part of an organization that not only has a long legacy, but is focused on future success.”

Bramco’s longtime commitment to honest and ethical operations, industry relationships, dedication to employees, and having a skilled workforce has worked out well for the family of companies. Today, Brandeis Machinery & Supply Co., along with its sister company, Power Equipment Co., make up one of the largest construction and mining distribution networks in the United States.

Together, the two companies serve as distributors for major manufacturers such as Komatsu, Wirtgen Group, Epiroc and Sennebogen and boast 14 branch locations throughout Kentucky, Indiana, Tennessee, northern Mississippi and eastern Arkansas.

Additionally, Bramco-MPS serves three of the top 10 leading states – Kentucky, Indiana and Tennessee – for the production of crushed stone, sand, and gravel. Both Bramco – MPS and Certified Rental® offer services and equipment rentals from each of the aforementioned service branches.

“I hope to continue to lay the groundwork for AED’s success over the next 100 years,” he said. “A very important area

Brennan has a keen eye toward the future and looks forward to helping lay the groundwork for success in AED’s second century. Supporting AED’s government affairs program and increasing the Association’s political presence in both Washington and Ottawa will play a large role in its advancement in the coming years. Therefore, these issues will be a central focus during Brennan’s AED chairmanship.

for AED and its members is the need to

Getting involved with AED’s governmental affairs program is as easy as contacting the program’s Washington office, which is staffed by attorneys with extensive political and equipment industry experience. Governmental affairs staff can help AED members stay up to date with important policy and legal developments, create opportunities for distributors to get personally involved in the policy process, and even schedule appointments for members to meet with their members of Congress during the upcoming two-day AED Washington Fly-In. The event marks the start of an all-new Congress and will include information on engaging elected officials on issues that are important to the heavy equipment industry, including infrastructure investment, commonsense regulatory policy and policies that address the skilled workforce shortage.

prosperity for equipment dealers and our

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have a strong voice in Washington, D.C., and Ottawa. This will be a particular point of emphasis for me in 2019. We need to have governmental policies, regulations and legislation that will foster growth and customers in North America. This will only be achieved if our voice is loud and strong with elected governmental officials. In 2019, AED will have a new officer position, vice president of governmental affairs, to help grow our political presence. I hope all AED members will join us in becoming more active participants in the political process for the growth and success of our industry and our individual businesses.”

The 2019 AED Washington Fly-In will be held June 11-13 on Capitol Hill. Early registration is open now and ends on March 28. Regular registration ends on May 26. You are encouraged to register for the 2019 AED Washington Fly-In at www.aednet.org/aed-events.

While his roles with Bramco and AED keep him busy, Brennan makes time for what’s important: his family. And with both he and his wife, Elaine, coming from large families, there’s a lot of family to love.

“When not working or serving AED or other civic duties, I find my time often filled with family activities,” he said. “My wife, Elaine, and I have three children: Matthew, Meghan and Patrick. I am from a family of five children and Elaine is from a family of 12 children. When you include my parents, who are now well into their eighties, that’s a lot of family! Elaine and I also enjoy traveling, socializing and competing in spin class at the gym.”

For more information on AED’s Government Affairs Program, visit www.aednet.org/government-affairs or www.aedaction.org. To learn more about the Bramco Family of Companies, visit www.bramco.com, or connect with the company through their various Facebook, Twitter, Instagram, LinkedIn or YouTube pages.

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February 2019 | Construction Equipment Distribution | www.cedmag.com | 39

A F I R S T H A N D L O O K AT

AED’S

LEADERSHIP DEVELOPMENT

INSTITUTE T

he first session of AED’s Leadership Development Institute (LDI) concluded this past October, and participants and instructors alike reported it to be a rewarding experience. This is the second time AED has offered the yearlong program, which is intended to strengthen the core leadership abilities of high-potential managers who are expected to prepare for broader organizational roles.

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Last year’s LDI participants generated an average annual net income impact of $481,495 for their dealerships.

LDI is the only industry-specific program that takes participants out of their areas of responsibility in their organizations and encourages them to focus on the business as a whole. The program is comprised of three sessions, which cover content in the operational areas of a dealership as well as personal leadership development.

Each LDI session is facilitated by highly regarded industry experts and executive development professionals, with workshops by successful executives from across the construction equipment industry. Cohort learning experiences are also incorporated into each session and were rated by last year’s attendees as one of the most beneficial aspects of the program.

At each session, participants engage in professional development workshops, hear from keynote speakers, receive personalized coaching and work on their capstone projects. The capstone project is a key feature of LDI in which participants conduct a review of their respective dealerships and identify areas for improvement. Real-world SWOT analysis and action planning are used to generate measurable ROI business improvements for the participants’ respective companies.

In between sessions, program participants will work on their capstone projects as well as attend monthly webinars. Despite such an ambitious program schedule, the LDI participants were more than happy to discuss their experiences, from the details on the program to how LDI facilitated professional growth.

LDI participant and service manager at Vermeer Northeast, Daniel Murphy, said about the program: “One thing that I like about the program is the enthusiasm for making big ideas feel possible and big goals feel achievable. I liked having my inspiration put into high gear and then taking time to absorb and unload my newly acquired leadership tools. What I walked away with from the first session was a treasure trove of ideas and concepts that I am eager to put into action in my business. Both myself

and my boss, Danny Carvalho, are taking advantage of the opportunities that LDI is creating. We have big goals ahead of us and are looking forward to seeing how far we can take them.”

Richard Fawson, general product support manager at Murphy Tractor & Equipment Co., spoke with CED and said: Murphy Tractor & Equipment Co. has been an AED member for a long while, and I learned about the program through their emails and marketing materials. But it was Murphy President Tom Udland who encouraged me to enroll. It is interesting to learn different solutions to the problems my company faces. Overall, it’s just a good environment for an up-and-comer like myself.

LDI Curriculum Program content is focused on both functional and technical know-how and leadership “soft skills” with industry-relevant case studies, role plays, and application projects. The goal of the curriculum is to create key synergies across sales, service, parts, rental, finance and administration.

According to Andrew Schneider, LDI participant and parts manager at Finkbiner Equipment Co., the program is deepening cross-functional knowledge and helping him explore strategic connections across lines of business. Schneider commented to CED, “This program is very helpful for someone like me looking to learn more about the different aspects of our industry. With the wide range of experienced participants in this program, there is a lot of information to absorb from others who have been in this industry much longer than I have.”

February 2019 | Construction Equipment Distribution | www.cedmag.com | 41

Capstone Project

One-on-One Executive Coaching

During the first session, participants were able to start their SWOT analysis and begin setting goals for themselves and their companies. Schneider reflected on the experience, stating, “Throughout the session, we were introduced to many new tools to help put our own companies under a microscope and get a better understanding of where we can improve. I believe these tools will be very helpful to bring back to a growing dealership.” The SWOT analysis is part of the participants’ capstone project.

They work on their capstone projects throughout the program and present their final project at the last session, showing how they’ve applied their LDI knowledge and capabilities to generate business improvements within their respective dealerships.

Each participant will work with an executive coach throughout the LDI program. Coaches assist participants with drafting an Individual Development Plan (IDP) based on priorities identified in various personal assessments participants complete before starting the LDI program. Coaches troubleshoot issues, hold participants accountable and challenge their personal development as leaders in the equipment distribution industry. Coaches and participants met for the first time in October, and continue to be in regular contact as they work together to maximize this unique professional development opportunity.

Keynote Speakers Participants took part in a full day workshop with wholesale distribution expert Dirk Beveridge at the first session. Beveridge has worked for over 25 years as a consultant to a wide range of companies to help align, focus and strengthen their sales and leadership strategies. Beveridge told LDI participants that to remain relevant their companies must outperform the market and provide deeper value to customers.

Beveridge’s message resonated with LDI participant Richard Fawson, who said, “Right out of the gate, the first session’s keynote speaker, Dirk Beveridge, helped me step away from my business for a brief moment to see how other companies are becoming aligned. I walked away from his talk with a renewed company vision and the ability to share that vision with our employees.”

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The LDI program costs $4,995 for AED members, sans travel expenses. The value of the program far exceeds its buy-in price, and it is AED’s goal that participating dealerships see a 20:1 return on investment. Last year, when the program’s highestperforming participant presented their capstone project to upper management, the company was able to implement over $1.819 million in savings as a result of the their efforts.

For more information on the AED Leadership Development Institute, or to register to participate, visit www.aednet.org/leadership-developmentinstitute. To learn more about AED membership or programs, visit www.aednet.org or connect with the Association on Facebook, Twitter, YouTube and Google+.

INTERVIEW

WITH GIBSON MACHINERY’S CHIEF FINANCIAL OFFICER, LAUREN GIBSON

How did you hear about the LDI program?

What made you decide to participate?

I first learned about the LDI program during its launch last year through AED communications. My friend and colleague Gus Wilson from Heavy Machines attended the inaugural program and said it was a tremendously involved and worthwhile investment, and I jumped on the chance to sign up for round two.

Where do you see your career heading in the next 10 years?

How will the program help you achieve this goal?

Gibson Machinery is approaching a transitional period in terms of its day-to-day leadership from the second generation to the third. Coming from several years in the Assurance Services practice at EY, I joined Gibson with very strong financial and accounting analysis tools but lacked specific knowledge around the construction equipment industry. I hope to use the LDI experience to broaden my knowledge of our industry to identify disruptions and find opportunities for innovation to help Gibson Machinery grow into a world-class organization. My current vision of my career path is to help lead Gibson Machinery into its next era of success, and LDI will be integral to helping us remain relevant, sustainable, and profitable now and into the future.

How was your experience at the first session?

Who was your executive coach and what was it like collaborating with them?

I’ve attended the Financial/HR Symposium twice, and Summit once, and as usual AED puts together top-notch events. Our speaker, Dirk Beveridge, was one of the most engaging presenters I’ve had the pleasure of listening to, and I’m so grateful for the connections I was able to make with my LDI team and the larger group as well. My coach is Alexis Gladstone, who I initially met at AED’s Women in Construction Equipment Roundtable event earlier this year. I am confident we will develop a great relationship, and I’m looking forward to her guidance on effective leadership.

What were your biggest takeaways from the first session?

What tools did you gain from the session that you will be taking back to Gibson Machinery?

I had no idea so many threats were lurking around the distribution industry! Not to sound alarmist, but man – pretty much everything can go wrong at the drop of a bucket (get it?) and we need to be better prepared. The tools and skills that worked to make Gibson Machinery as successful as it has been in the past are not guaranteed to ensure our success going forward. All participants have been assigned to create a full and formal SWOT analysis of their operations, and I think that’s going to be incredibly helpful to identify not only the threats, but to shine light on our strengths, and how we can leverage those to continue to grow. Often people can get so focused on what external resources we need to bring in to our companies to create sustainable growth that we neglect the resources we already have within our distributorship. I’m eager to identify those bright spots in our organization to contribute to other participants’ knowledge and skills.

February 2019 | Construction Equipment Distribution | www.cedmag.com | 43

ONE SIZE WILL NOT FIT ALL The Evolution of the Field Services Vehicle

BRUCE BUNTING | Industrial Products Specialist, Knapheide

O

n the subject of field service vehicles, why does one size no longer fit all? We worked for years to achieve a specification that made field service trucks standard. One of the goals was to provide a one-size-fits-all solution in order for central dispatching to be more efficient, as well as for fleets to have a uniform appearance.

So what happened? A rapidly changing work environment has caused a complete re-evaluation to take place.

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We need to examine objectively the primary issues that are influencing and shaping today’s specifications and how the truck of tomorrow will look in order to understand why one size does not fit all when designing the right field service vehicle for your company.

A common phrase heard from work truck operators across the country is “My truck is overweight.” One major factor is that the truck has components that aren’t being used that contribute to the weight issue, but that still continue to be specified. A common example of this is welders. It is not rare to see trucks with seven-plus years of service and a welder with barely 100 hours of usage. The reason for this is that most of the field service welders are used to provide electricity, not welding. A lightweight, costeffective alternative to a welder is an inverter, as it can provide the needed capabilities without the weight of the welder. Another common example is a crane. A crane mightsdqsa be a necessary component on the truck, but it is important to evaluate what reach and capacity the operator truly needs. In most cases, by eliminating the welder and rightly sizing the crane, you can reduce the weight by over a thousand pounds.

Another question to consider: “Do I have too much truck?” As the scope of field service work continues to shift from “heavy iron” tasks to diagnostic, sensors-and-emissions type work, it is smart to evaluate how many trucks in your fleet actually need a large-capacity crane or welder or a high-output air compressor.

When working on the specs for your field service truck, it is important to consider what type of machines the truck will be servicing. As the population of compact machines continues to grow worldwide, the factors of servicing compact machines prove to be challenging regardless of the diminutive machine size. These machines commonly work in downtown and urban areas where it would be tough to even park a large-scale field service truck.

The accessories required to work on these compact machines, in most cases, don’t require a crane or a high-capacity air compressor. This is opening the door for a variety of compact field service trucks, such as vans, in configurations that only a few years ago would have been considered unthinkable, but they do have a place right alongside the traditional large-scale field service trucks.

How do we begin to evaluate the necessities of a field service truck? The first step is gaining a new perspective that starts with analytics. Having a working understanding of your field service operations each day is no longer sufficient, and having real-time data is a necessity. By using existing technology, a field service manager can have data available on a laptop, tablet or smartphone and know how much of the truck is actually being used. This is a huge benefit and highly influences component specifications. If you know how often components are used, you can understand the return on your investment.

Large-scale mechanics trucks will never disappear from fleets, but it will no longer be necessary for all of the field service trucks to be equipped with the traditionally required components, such as large cranes and air compressors, as the scope of work performed in the field moves to a preventative model rather than a reactive model. We all know that machines will still have breakdowns, but work orders today are nothing like they were a decade ago.

More and more end customers are leasing or renting equipment, so it is in everyone’s best interest to keep that machine running. Telematics from the machines are providing real-time information that gives an unprecedented level of connectivity not available in the past. As time changes and technology evolves, it is imperative that we take advantage of these advancements in order to maximize the output of our fleet equipment and truly get the most out of our service vehicles.

February 2019 | Construction Equipment Distribution | www.cedmag.com | 45

E L I M I N AT I N G H I D D E N I N S U R A N C E C O S T S WILL IMPROVE YOUR BOTTOM LINE

F

or equipment dealers, a proactive approach to risk management is necessary to control costs and keep the business running smoothly. Reviewing insurance policies each year with an insurance adviser is a great way to prepare in advance for the most common, or perhaps the most costly, losses. Reviews are time-consuming, so enlisting the help of a trusted insurance adviser is a great time-saver and disaster check.

No dealership wants to discover an oversight or shortcoming of an insurance policy after a loss occurs.

A knowledgeable adviser will guide clients to work with an insurance carrier that is familiar with the equipment industry. Look for carriers that insure multiple equipment dealers and will get to know your business well. These carriers can be strategic partners for a dealership and can help to trim costs without sacrificing protection.

A good insurance adviser can also help you close insurance-program loopholes that cost thousands of dollars in physical losses, lost time, and costly legal fees. It is important to find an insurance adviser who works for the equipment dealer, not for the insurance company. An insurance agent cannot be an adviser unless the companies he represents are not the providing carrier. Likewise, large insurance firms that claim to be consultants cannot be unbiased because they simply do not reach the entire marketplace. A true adviser will not benefit from which carrier the dealership chooses for insurance coverage and will help the client make a decision that most benefits the client. Insurance agents and brokers are rewarded when their clients pay higher premiums, but insurance advisers are incentivized to lower premiums, keep premiums low and make sure insurance coverage is designed to meet the needs of the dealers. An experienced carrier will write appropriate policies with the right amount of coverage so that dealers will not be over- or under-insured.

An equipment insurance adviser must be knowledgeable about insurance in order to build an effective insurance program and should be able to answer any questions a dealer may have about proper coverage for the dealership. An insurance adviser will save your dealership thousands of dollars in premiums as well as protect your company from catastrophic losses. The savings from an adviser are realized year over year at renewal time and compounded over the duration of the adviser-client relationship. To determine if your business would benefit from an adviser, ask yourself the following questions: Do you know the benefits of an occurrence policy versus a claims-made policy?

Do you know the pros and cons of admitted paper and non-admitted paper?

Do you know the pitfalls of self-insuring and the legal issues that may result from doing so?

?

What do you know about maritime W/C and how it could affect you even if your locations are in the middle of the country?

What do you know about aggregate limits and how important they may be to you in the event of a serious loss?

Do you know how legal fees are paid when a liability claim occurs?

Do you know about hammer clauses?

Do you know how severability clauses may affect you personally as an individual and not just as a corporation?

Does your insurance agent make you aware of the tax advantages that will affect your insurance program as well as your bottom line?

Do you know the benefits and pitfalls of a captive insurance program?

Do you have a proper cyber policy?

What you don’t know about your insurance program could cost you thousands of dollars or, worse, the loss of your business. For a free examination of your insurance program, contact this author.

J. GRIFFIN R I CKER & ASSO CI ATES

jim@jgrandassociates.com | Toll free 888-550-9233 | Phone 614-851-9233 | Cell 614-314-5366 46 | www.cedmag.com | Construction Equipment Distribution | February 2019

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48 | www.cedmag.com | Construction Equipment Distribution | February 2019

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AED’s HR Help Desk allows AED members to get answers to simple questions or many employmentrelated issues free of charge. Call about any HR compliance or procedural issue, even sensitive personnel situations, call 888-276-9803 or email info@bluecornhr.com

GEAR UP.

Whether you’re looking to start a rental business or upgrade your current fleet, Sullivan-Palatek offers the industry’s most reliable equipment. Tier 4 Final available for all our models, ranging from 110-1800 CFM, with pressures up to 500 psi. Built to meet your specific needs, there’s nothing cookie cutter about them. Sullivan-Palatek equipment and service are dependable by design.

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FIRST FOLD AT 4.0”

SECOND FOLD AT 12.25”

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ON FRONT COVER

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