April 2019: Change Your Mindset or Suffer the Consequences by Associated Equipment Distributors

CED A P R I L

2 0 1 9

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

CHANGE Your Mindset

SUFFER

the Consequences DIVE INTO CED’S EXCLUS IVE

HUMA N RESOU RCES ISSUE

I S THIS ‘A D H ESIVE’ INGR ED IEN T Missing From Your Talent Management Strategy?

“O L D ” H R

Why It’s a Detriment to Your Bottom Line

I T’ S AL L B U S I N E S S Recruiting and Retaining Women

DRIVING DEALERSHIP SUCCESS

LINDER COUNTS ON e-EMPHASYS “Our legacy business system was a major impediment. We had no option but to follow the process deﬁned in the software. e-Emphasys was a paradigm shift for us. Built-in best practices helped us immensely to drive eﬃciency at every level of our operation.”

JOHN COUGHLIN, PRESIDENT

LINDER INDUSTRIAL MACHINERY COMPANY

Fully-Integrated Software Solutions Designed for the Equipment Dealer and Rental Industry

Business Intelligence

Mobile Field Service

ERP

CRM Solution

Customer Portals

www.e-Emphasys.com Ad_template.indd 2

3/22/2019 11:14:42 AM

WIN. DELIVER. DIFFERENTIATE. If youâ&#x20AC;&#x2122;re ready to win more business, deliver a competitive advantage and differentiate yourself from the pack, ASV is your turnkey solution. The market for compact track loaders and skid steers is growing. And we offer purpose-built machines that outperform the status quo, exceed customer expectations and get you into markets no other compact brands can reach.

Become an ASV Dealer. Contact us today. www.asvi.com/AED

Ad_template.indd 2

3/20/2019 10:50:39 AM

2 | www.cedmag.com | Construction Equipment Distribution | April 2019

CONTENTS APRIL 2019 | VOL 85 NO. 4 | www.cedmag.com

CH ANGE Y O UR MI N D SET O R SUFFER TH E CONSEQUEN CES — 5 STEPS TO WAR D TH RIVING I N O UR UN STAB L E W O R L D We live in a world of unpredictable and uncontrollable change. How can we survive and even thrive when our environment turns against us?

IS THIS ‘ADHESIVE’ INGREDIENT MISSING FROM YOUR TALENT MANAGEMENT STRATEGY? Talent management – the plan, processes, and disciplined behavioral practices used to make sure an organization has the right quality and quantity of people to meet both current and future business objectives – has become even more critical for business success. The current talent crunch is formidable and is not going away.

“OLD” HR – WHY IT’S A DETRIMENT TO YOUR BOTTOM LINE Reading this article will not help you build a winning culture and foster employee retention. Why keep reading, you wonder? The truth is, most of us already know what we’re up against – the tight labor market is making headlines everywhere, and if you’ve spoken with anyone in HR across the country you already know the common theme centers around the tremendous effort it now takes to attract and retain talent.

IT’S ALL BUSINESS RECRUITING AND RETAINING WOMEN

Hiring, developing and promoting women is in the news for good reason. Women currently make up 57 percent of the eligible workforce, and 43 percent have a bachelor’s degree or higher. If you are not actively looking to recruit women or retain and develop the ones already working for you, you are missing out on a valuable part of the talent pool. April 2019 | Construction Equipment Distribution | www.cedmag.com | 3

CONTENTS APRIL 2019 | VOL 85 NO. 4 | www.cedmag.com INSIDE

EDITORIAL Editor in Chief

P.14 South Central Regional Report:

P.38 Seeing the Big Picture with

Strong 2018 Membership Growth

AED’s 2019 CODB Report

and Impressive 2019 Summit

P.40 AED Visits Altorfer CAT

Attendance Propels South Central

P.44 Wells Fargo 2019 Construction

Region Toward Banner Year

Industry Forecast

P.15 The AED Foundation Donor

P.45 2019 Changsha International

Profile: Rasmussen Equipment

Construction Equipment Exhibition

P.16 AED in Canada: Changes at

P.46 Stronger Together: What the

the Top, Construction Giant Scandal

Toro Acquisition of Charles Machine

jcruthers@aednet.org

Shapes 2019 Landscape in Ottawa

Works Means for Distribution

Production Manager

P.18 Paving the Path to Prosperity

Channels

Martin Cabral

P.24 Who Am I? I’m Your Customer

Sara Smith ssmith@aednet.org Design & Layout Phoebe Defenbaugh design@aednet.org ADVERTISING Vice President Jon Cruthers 800-388-0650 ext. 5127

800-388-0650 ext. 5118

Clifford Black

Since 1920 Official Publication of

APRIL CONTRIBUTING WRITERS

CED Reporter

Thomas Lunney

Associated Equipment Distributors Rob Leforte Impact Public Affairs

Heidi Bitsoli

K ri s Jens en- Van Heste CED Repor t er

Brian Gareau Brian Gareau Inc.

Danielle McCormick KCoe Isom, LLP

CED Reporter

2019

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 | April 2019

April 2019 | Construction Equipment Distribution | www.cedmag.com | 5

YOUR AED MEMBERSHIP PROVIDES SOLUTIONS AND OPTIONS

AED’s membership services and benefits are designed to enhance and develop the profitability and continuity of construction equipment dealers by providing tools and resources.

AED LEGAL CALL COUNSEL AED’s call counsel is a FREE legal hotline for AED members provided by Kopon Airdo, LLC - AED’s general counsel. Take advantage of this member benefit today, visit www.koponairdo.com

6 | www.cedmag.com | Construction Equipment Distribution | April 2019

DO YOU KNOW ABOUT THE AED FOUNDATION’S BEST KEPT SECRETS?

he AED Foundation has many tools that can be beneficial for your company, and there are a few that are little known but that pack a huge punch for your organization. We want to make sure you are making the most out of your membership and everything we have to offer, including these unique tools and opportunities. CERT IFIED T E C H N I C I AN P R O GR AM The AED Foundation’s Certified Technician Program is the first of its kind for the construction equipment industry. The program offers dealers the opportunity to measure the expertise of their technicians, as well as market that knowledge to their customers. Technicians become certified after successfully passing The AED Foundation technical assessment. We know that well-qualified and committed technicians add profitability and customer satisfaction to your dealership. Your company will benefit from certifying your technicians by benchmarking them against others in the industry, focusing on their continuous improvement, demonstrating that you value their contributions to the organization, and saving you time and money by helping you avoid hiring technicians that do not meet your and your customers’ standards. T ECHN I CAL AS S E S S M E N T The AED Foundation’s technical assessment is frequently used by AED members as a pre-hire tool or a technician evaluation tool. This assessment, which is aligned with industry standards, provides a quantitative benchmark of your technician’s knowledge in multiple subject areas. Benchmarking reports are given at the completion of the assessment to show areas of strength, weakness, improvement and more.

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

MICHAEL D. BRENNAN Chairman Bramco, LLC RON BARLET Vice Chairman Bejac Corporation CRAIG DRURY Senior VP Vermeer Canada Inc. MICHAEL VAZQUEZ VP Membership MECO Miami Inc. TODD HYSTAD VP Canada Vimar Equipment Ltd. GAYLE HUMPHRIES VP of Finance Low Country Machinery WES STOWERS VP of Political Action Stowers Machinery Corporation WHIT PERRYMAN Foundation Chairman Vermeer Texas-Louisiana DIANE BENCK Past Chair West Side Tractor Sales Co.

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

ON - SI TE EDU CATI ON PR OGR A MS You can bring The AED Foundation’s operational, financial and management educational programs straight to your organization! The Foundation wants you to be able to take advantage of the educational offerings it provides in a format that fits and benefits you, your company and your colleagues. Bringing these programs to your company will allow you to •

Customize content that will help with your company’s specific challenges and objectives.

•

Have a hands-on expert with practical experience lead your team through discussions, group exercises, best practices and more.

•

Experience more employee buy-in. Since the content is focused specifically on your business, employees will be more involved, are more likely to apply what they learn, and will develop more consistent practices in your departments.

•

Save both time and money by bypassing the expenses and travel time associated with attending off-site seminars.

If you would like to find out more about the Certified Technician Program or technical assessments, visit The AED Foundation’s website at www.aedfoundation.org. If you are interested in learning more about an on-site solution to improve your business, please reach out to The AED Foundation’s Vice President of Business Development, Cory Hayes, at chayes@ aednet.org or 630-524-3138, or call your regional manager. With these tools and opportunities, building up your team is easier than ever before!

R OB ERT K . HEN DER SON AED Executive Vice President & COO AT- LA R GE DI R ECTOR S PAUL FARRELL Modern Group Ltd. STEVE MEADOWS Berry Companies, Inc. JAMES A. NELSON Heavy Machines, Inc. MATT DI IORIO Ditch Witch Mid-States DAN STRACENER Tractor & Equipment Co. JOHN THOMPSON Thompson Machinery

JA SON K. BLAKE AEDF Executive Vice President & COO R EGI ON A L DIRE C TORS

MICHAEL LALONDE West Reg. Westrax Machinery, Inc. MATTHEW ROLAND Midwest Reg. Roland Machinery Co. JOHN SHEARER Rocky Mountain Reg. 4 Rivers Equipment, LLC COREY VANDER MOLEN South Central Reg. Vermeer MidSouth, Inc. MIKE PARIC Eastern Canada Reg. Joe Johnson Equipment Inc. TOMMY BALL Southeast Reg. Flagler Construction Equipment, LLC STEVE OUELLETTE Northeast Reg. Frank Martin Sons, Inc. TODD HYSTAD Western Canada Reg. Vimar Equipment Ltd.

March April 2019 | Construction Equipment Distribution | www.cedmag.com | 7

A E D IN S ID ER

UPCOMING M AY 2 3

AED

W OMEN IN CO NSTR UCTION E QU IPMENT R O UND TAB LE Hyatt Regency Chicago Chicago, IL 60601

JUNE 11–13 WASH INGTO N FLY-IN

Hyatt Regency Washington on Capitol Hill 400 New Jersey Ave. NW Washington, D.C. 20001

AUGUST 27–29 L E A DER SH IP CONFER ENCE

Hyatt Regency Sonoma Wine Country 170 Railroad St. Santa Rosa, CA 95401

SEPTEMBER 12–13 A DVANCED R ENTAL MA NAGEM ENT SEMINAR Hyatt Regency O’Hare 9300 Bryn Mawr Ave. Rosemont, IL 60018

EVENTS

OCTOBER 8–9 AD VAN CED PARTS MAN AG EMEN T SEMI N A R

Hilton Philadelphia at Penn’s Landing 201 S. Christopher Columbus Blvd. Philadelphia, PA 19106

OCTOBER 10–11 AD VAN CED SER V I CE MAN AG EMEN T SEMI N A R

Hilton Philadelphia at Penn’s Landing 201 S. Christopher Columbus Blvd. Philadelphia, PA 19106

TBD SMAL L D EAL ER CO N FER EN CE

NOVEMBER 14–15 B R AN CH MAN AG EMEN T SEMI N AR Hyatt House Atlanta/Downtown 431 Marietta St. NW Atlanta, GA 30313

SEPTEMBER 18–19

2020

EXECUTIVE CONCLAVE

2 0 2 0 SUMMI T & CO N D E X

Paséa Hotel & Spa 21080 Pacific Coast Hwy. Huntington Beach, CA 92648

8 | www.cedmag.com | Construction Equipment Distribution | April 2019

January 14–17 Hyatt Regency Chicago 151 E. Wacker Dr. Chicago, IL 60601

AE D IN SID E R

WHY LAKE SHORE DRIVE

IS CRUMBLING BY AED PRESID ENT & CEO BRIAN MCGUIRE

F ea ture in the Chicago S un- Tim es

The emergency closure of a portion of Lake Shore Drive because of a broken bridge presented Chicagoans with a firsthand look at the consequences of our nation’s failure to adequately invest in infrastructure. America’s infrastructure is insufficient, and our representatives in Washington can no longer forsake responsibility when it comes to much-needed maintenance and improvements. Every day, Americans are harmed by deferred upgrades and investments that result in avoidable yet dangerous situations. First responders are forced to reroute, delaying services. Businesses are left without customers as detours divert traffic from main roads. Lost revenue and time wasted in traffic will never be recovered. Our infrastructure is the lifeblood of our economy.

DID YOU KNOW?

The AED Foundation Can Offer Your Company On-site Education Programs You can bring The AED Foundation’s operational, financial and management educational programs straight to your organization! The AED Foundation wants you to be able to take advantage of the educational offerings it provides in a format that fits and benefits you, your company and your colleagues. Whether you’re interested in branch, parts, service, rental or a variety of other options, we can create a program that can be specifically applied to your company. If you are interested in learning more about an on-site solution to improve your business, please reach out to The AED Foundation’s Vice President of Business Development Cory Hayes at chayes@aednet.org or call 630-524-3138 or your regional manager.

I urge the Illinois congressional delegation to work in a bipartisan manner with their colleagues and the Trump administration to immediately address the nation’s infrastructure crisis. Further delay is unacceptable to the people of Illinois and the rest of the country.

FIND YOUR 2019 SUMMIT PHOTOS! Your 2019 Summit photos have been uploaded and are ready for you to view and download! Like and follow us at facebook.com/AEDSocial to find all of the pictures that were captured during the 2019 Summit!

BRIAN P. MCGUIRE President and CEO Associated Equipment Distributors Schaumburg, IL

ORLANDO, FLORIDA

FEBRUARY 4-7, 2019

April 2019 | Construction Equipment Distribution | www.cedmag.com | 9

IN DU S TRY NEWS

W ESG R O UP EQUI PMEN T N A M E D O N E O F B C’ S TO P EMPL OYE RS

Wesgroup Equipment and our family of companies are honored to be recognized as one of British Columbia’s top employers for the second year in a row.

MC C A NN I ND USTRIES B UILD S N EW FA C IL ITY IN M ARNE, MICH IGAN

McCann Industries has begun construction of their new location in Marne, Michigan. The new, state-ofthe-art facility will include seven service bays to assure a quick turnaround for maintenance and repair of any make or model of equipment. The complete CASE construction equipment line will be available, and a wide selection of rental machines will be available for short- or long-term needs. The current location at 3260 142nd Ave. in Dorr will continue to operate until the new facility is complete in mid-2019. “McCann Industries is investing in Western Michigan, because we plan to be here for the long haul,” said Jim McCann, president and CEO at McCann Industries. “We’re putting down strong roots to build a better, stronger future for the region. Our fifty-plus years of experience in the industry is a critical part of assuring our success in Michigan.” State-of-the-art diagnostic equipment is a crucial addition with the expansion. McCann’s certified technicians are experienced and adept at completing both preventive maintenance and repairs. McCann’s ability to provide parts within 24 hours also helps minimize downtime. About McCann Industries McCann Industries Inc. has been selling contractor supplies since 1967. The company added heavy equipment to their offerings in 1994 and now provides products from more than 400 suppliers and manufacturers, with nine locations throughout Illinois, Indiana, and Michigan. Equipment manufacturers represented by McCann Industries include CASE, Takeuchi, Wacker Neuson, Sullair, Husqvarna, Towmaster and the finest brands available for contractor supplies. For more information, visit their website at www.McCannOnline.com. 10 | www.cedmag.com | Construction Equipment Distribution | April 2019

“We are committed to being a great place to work,” commented Wesgroup Equipment’s CEO, Dhar Dhaliwal. “It’s an honor to be recognized with the other great companies that qualified as BC’s top employers. I want to thank our teams at Wesgroup Equipment, Williams Machinery and Westerra Equipment for their contributions to continuously improve all areas of our business.” “Many of the nation’s best employers are found in British Columbia,” says Richard Yerema, managing editor of the Canada’s Top 100 Employers project. “This year’s list of winners reflects the province’s highly diversified economy and is the product of decades of public investment in education and creating highly livable and desirable urban centers. Employers in British Columbia are competing on an international stage for the best and brightest talent from around the world.” Wesgroup Equipment is featured in the Vancouver Sun’s 2019 BC’s Top Employers special edition along with the other winners. Detailed reasons for selection with additional stories and photos were also released and are accessible via the competition homepage. About Wesgroup Equipment Wesgroup Equipment sells, rents and services compact, heavy and material-handling equipment. Wesgroup Equipment and our family of companies are made up of Williams Machinery, Westerra Equipment and Vermeer BC. With our strong footprint of eight locations throughout BC and our great range of products, we are committed to becoming a great service organization through a values-based culture that exemplifies service and prioritizes relationships over transactions. About BC Top Employers Now in its 14th year, BC’s Top Employers is a special designation that recognizes the British Columbia employers that lead their industries in offering exceptional places to work. Employers throughout

INDUS TRY N E W S British Columbia were evaluated by the editors at Canada’s Top 100 Employers using the same criteria as the national competition: (1) Physical Workplace; (2) Work Atmosphere and Social; (3) Health, Financial and Family Benefits; (4) Vacation and Time Off; (5) Employee Communications; (6) Performance Management; (7) Training and Skills Development; and (8) Community Involvement. Employers are compared to other organizations in their field to determine which offer the most progressive and forward-thinking programs. The annual competition is open to any employer with its head office in British Columbia; employers of any size may apply, whether private or public sector.

with Bejac for almost a decade. “I put Bejac on the very top of my equipment needs list.” For Dragon, Kevin Broderick, territory account manager at Bejac, recommended two excellent LinkBelt excavators: the massive 350 X4 and the nimble 80 X3 Ace. He knew the 350 X4 would be best for tackling the fallen trees and other debris. “At over 80,000 lbs and with more than 40,000 lbs of breakout force, the 350 X4 is a beast best suited for the grunt work,” said Broderick. “It’s there for the really heavy loading and lifting or pulling large trees up or down the slopes.” For the more precise task of clearing and cutting the cables and wires, Broderick offered the smaller, 18,900 lb 80 X3 Spin Ace coupled with a Genesis rotating Versi Pro 7 shear. “In order to cut the thin one-inch cable, it was all that was needed for that particular job. Anything bigger would have been excessive and not cost-effective,” added Broderick. Despite one minor hiccup – a shear blade broke, but was promptly fixed, thanks to Bejac’s immediate on-site service – 66 miles’ worth of cable was prepped for recycling in a matter of weeks, clearing the way for rebuilding to begin.

BEJAC CO R PORATIO N AI D S I N CALIFO R NIA FIRE CLEAN UP

Disaster struck California this year as devastating wildfires swept through towns and cities, leaving historic destruction in their wake. But the building began as soon as the fires were out. Bejac Corporation was on hand to help, working with trusted contractors and deploying Link-Belt machines to help hard-hit areas move forward. We all remember the Carr fire that spread from Shasta County through the town of Redding. Burning for over a month, from July 23 to August 30, the blaze consumed 229,651 acres, destroyed over 1,600 buildings, and killed eight people. Once it was contained, Redding Electric Utility called on Dragon Demolition to begin the cleanup. Based in nearby Chico, and with over 20 years of experience in the demolition industry, Dragon Demolition has a reputation for expertise and efficiency, and owner Tom Carpenter wasted no time reaching out to Bejac for advice on which machines would accomplish the job as quickly as possible, most economically. “They have great rental department staff, a great service department, are easy to work with, and they recommend and have the appropriate equipment that is needed for the job,” said Carpenter, who has worked

Sadly, there was little respite for California. The even more catastrophic Camp fire broke out in Paradise two months later. We all, unfortunately, know the results: California’s deadliest wildfire ever, the Camp fire tore through 153,336 acres, consuming 18,804 structures and claiming at least 85 lives. Again, Bejac was asked to assist, this time coordinating with a local contractor to dispatch another 350 X4, as well as Link-Belt’s 245 X4 Spin Ace, to clear debris on highway 70 into the Camp fire. “The 245 X4 is a compact unit with lots of power for lifting heavy objects and breakout force of 34,600 lbs, but still a small footprint and no tail swing to interfere with traffic or take up precious road space,” which is especially important when dealing with massive numbers of evacuees returning to survey damage. In both cleanup scenarios, Broderick drew on his years of experience and understanding of the machines to recommend just the right equipment for each job. “All the machines selected for the fire cleanup were chosen because they were the best tool for the specific application. Bejac has an extremely diverse product line of equipment and attachments, which is why so many specialty contractors depend on us for our knowledge.” That’s simply what Bejac does: help out at a moment’s notice. April 2019 | Construction Equipment Distribution | www.cedmag.com | 11

IN DU S TRY NEWS

A NNOU NCING TH E FO R MATIO N O F GT M ID ATLANTIC

Groff Tractor Holdings LLC has combined their locations in New Jersey, Maryland, Delaware and Philadelphia to form GT Mid Atlantic LLC. These branches were formerly Trico Equipment, Folcomer Equipment, and CC&T and were acquired by Groff Tractor Holdings over the past 36 months. The newly formed entity combines the resources, inventory and capabilities into one dynamic organization. “GT Mid Atlantic and our growing family are committed to bringing you the most reliable equipment available, backed by excellent service and quick parts deliveries. Our employees are dedicated to guaranteeing you the most effective solutions to all of your equipment needs,” says Mike Savastio, CEO of Groff Tractor Holdings. Management at GT Mid Atlantic is strong, with Pat Sherwood as president and COO. Sherwood brings over 29 years of experience to the company. “GT Mid Atlantic’s main goal will be to achieve 100% customer satisfaction by selling state-of-the-art construction equipment and providing excellent product support,” said Sherwood. Mike Chenet is the president of the CC&T division, which is the Asphalt Paving Products division of GT Mid Atlantic. Eric Marburger is the vice president / GM of the Maryland and Delaware operations, and Bill Barry is the vice president / GM of the New Jersey operations. The sales team, support staff, and parts and service employees are the same at each location. Industry-leading brands, including CASE CE, Roadtec, Rubble Master, Sakai, Takeuchi, Superior Brooms, Epiroc, Midland, Etnyre, Liebherr, Terramac and more are available through GT Mid Atlantic. The locations in New Jersey, Maryland and Delaware have a full inventory of CASE CE equipment ready for sale and a large rental fleet to supplement any job. The Folcroft, Pennsylvania, location as well as those in Vineland, New Jersey, and Baltimore, Maryland, host the CC&T road building and recycling division complete with the full line of Roadtec, Baglea, Midland and more. To learn more about the brands, staff and services provided by GT Mid Atlantic, check out the new website, www.GTMidAtlantic.com.

J AMES R I VER EQUI PMEN T BE C OM E S FUL L - L I N E EPI R O C D EAL E R I N VIRGINIA

Epiroc, a leading productivity partner for the mining, infrastructure and natural resources industries, has added James River Equipment as a fullline dealer in Virginia. Previously a dealer of Epiroc hydraulic attachments throughout the state, James River Equipment (JRE) has added sales and rental of new and used Epiroc drill rigs, along with rock drilling tools, parts and service. JRE is a full-service John Deere equipment dealership that serves customers in Virginia, North Carolina and South Carolina. Dedicated to supporting the equipment needs of construction, commercial and residential customers, James River Equipment has over 40 locations across these three states. With many customers working between North Carolina and Virginia, the expansion of Epiroc offerings allows James River Equipment to provide consistent support across the region. JRE now offers the full line of Epiroc products and services from the following Virginia locations: •

Ashland Industrial, Virginia

•

Danville, Virginia

•

Fishersville, Virginia

•

Manassas, Virginia

•

Salem, Virginia

•

Tazewell, Virginia

•

Winchester, Virginia

JRE will continue to provide drill rigs, rock drilling tools and service in North Carolina and South Carolina. “We’re excited to expand our valued partnership with James River Equipment in the state of Virginia,” said Tom Borer, Epiroc vice president, independent distribution. “JRE is a regional leader in the aggregate and contract drilling markets. Supported by JRE’s experienced and knowledgeable staff, Epiroc equipment will help drilling customers in the region increase uptime and efficiency.” Epiroc focuses on providing solutions that enhance productivity, safety and cost efficiency for

12 | www.cedmag.com | Construction Equipment Distribution | April 2019

INDUS TRY N E W S its customers. With cutting-edge technology and innovative products, Epiroc develops and produces innovative drill rigs, rock excavation and construction equipment. “We are pleased to add Epiroc drills to the bulk of our footprint in Virginia,” said John Grantier, James River Equipment vice president of sales. “Epiroc’s quality products add to the wide range of equipment we already offer and will give us an additional opportunity to take care of existing customers and new ones as well. When you combine James River’s vast product support experience, our extensive sales relationships developed over decades, and the quality and longevity of Epiroc drills, we think our customers are the big winners.” For more information on James River Equipment, visit www.jamesriverequipment.com or contact them directly through their contact form.

him transition smoothly into the company. In his first week serving as president, Iyer attended the AED Summit in Orlando, meeting with LiuGong’s North American dealers, prospective new dealers and other business partners. One of Iyer’s key takeaways from the meetings, he said, was that 2019 promises to be a time of growth for both LiuGong and its family of dealer and supplier partners. “We have a passionate organization and growing dealer representation across North America,” Iyer said. “They exemplify what we stand for – passion, partnership and growth. We have a lot to do and I am looking forward to a delightful year ahead.” Prior to joining LiuGong, Iyer served as president and CEO of Mahindra Americas, where he led the nearly unknown brand to a “top 3” position in the North American market. Iyer brings more than 26 years of multidisciplinary and multicultural achievement while serving in a wide variety of leadership positions in North America, South America and Asia. His areas of expertise include international equipment sales and marketing, business strategy and development, product management, supplier development, supply chain management, product support and service, manufacturing, quality assurance and more. Iyer was honored as the first-ever Mahindra Auto & Farm Sector Hall of Fame Recipient for Sustained Outstanding Performance through 2017. Iyer has served in many professional affiliations including AEM, IAC, OFI, CII USIBF, SAE, EPA and CARB. Iyer earned his MBA from the University of Houston, has a postgraduate diploma in foreign trade from World Trade Centre Mumbai, and has a bachelor’s degree in automobile engineering from Bombay University, India.

IYER NAMED PRESID EN T O F LIUGONG CO NSTR UC TI O N MACH INERY NA

LiuGong North America (LGNA) has announced Mani Iyer as its new president, effective February 1, 2019. LGNA is a wholly owned subsidiary of LiuGong Machinery, which is a global leader in heavy construction equipment. Kevin Thieneman, LGNA chairman, said, “Mani Iyer’s track record in the equipment industry and his commitment to personal and professional growth is impressive. His ability to deliver business growth, his passionate and decisive management, and his belief in corporate and employee responsibility will be a perfect fit at LiuGong. We are very pleased to have Mani join the LiuGong team.”

View these stories and other industry related news on www.CEDMag.com

Iyer has already visited LiuGong’s China headquarters, meeting senior executives who helped April 2019 | Construction Equipment Distribution | www.cedmag.com | 13

SOUTH CEN T RAL R E GIONA L R EPO RT

Strong 2018 Membership Growth and Impressive 2019 Summit Attendance Propels South Central Region Toward Banner Year THOMA S L UNNEY | tl u n n e y@aed n e t . o rg

018 was a banner year for new members and compact equipment dealers from AED’s largest region, South Central, with 10 new dealers added. Many of these dealers jump-started their AED membership by attending Summit. This year as we celebrated the Association’s 100th anniversary in Orlando, we saw an impressive turnout amid a hybrid of new and veteran AED member dealers. Notable attendees included Bottom Line Equipment, J & B Underground / Ditch Witch of South Louisiana, Hlavinka Equipment, Mid-America Equipment, IntegraVision / MGB & Company, Lansdowne-Moody, Ditch Witch Mid-South, Ditch Witch of Central Texas and Springdale Tractor. The economy is booming nationwide and AED dealers are looking east to Washington, D.C., for an infrastructure bill. To that end, South Central region members are fielding a lot of requests to book congressional visits at their dealerships this spring. It also seems that the South Central region will be well represented at the annual AED Washington Fly-In June 11-13. As the nation’s capital gets ready to welcome the cherry blossoms this spring, it should prepare itself for a strong presence from AED’s largest and most engaged region: South Central. Please be sure to register early, as this event always fills up. And with almost a hundred new members elected to Congress last year, it’s critical that they hear from us about the importance of infrastructure. For the first time ever, we can report record-breaking first-time contributors to the AED Political Action Committee (AED PAC). The AED PAC has been growing stronger every year and has blossomed into a strong voice in D.C. New AED Chairman Michael Brennan is making government affairs a priority, so we invite you to join us. Did you know that AED also has a Public Policy Council? For a nominal contribution to the PAC, you can participate in monthly conference

14 | www.cedmag.com | Construction Equipment Distribution | April 2019

calls where you can ask questions of congressional leadership in the House and Senate. One thing is certain: your AED PAC contributions only go to representatives who support AED and our industry, regardless of party affiliation. AED’s Vice President of Government Affairs, Daniel Fisher, is on the Hill each and every day cementing old relationships and building new relationships with the freshmen members of Congress elected in 2018. For dealers, this means that many of those new members of the House and Senate might just want a tour of your dealership. A tour will show them firsthand what your dealership is providing to the local economy and how your company provides its employees with good-paying jobs that allow them to raise a family and further contribute to the community. The economy is doing well, but we need to remind our representatives in D.C. that our nation’s infrastructure is crumbling and we cannot kick the can down the road any longer. The right choices in D.C. can make our dealerships prosper and allow us to contribute to the economic revitalization taking place across America. So, don’t wait – pick up that phone or computer mouse and contact your AED regional manager and tell them you want to participate in the Washington Fly-In or host a member of Congress at your dealership. We hope to hear from you soon.

THE A ED F OUNDATI ON DO N O R PRO FILE R A S M U S S E N E Q U I P M E N T C O M PA N Y:

FROM THE GARAGE TO S E R V I N G U TA H A N D B E Y O N D Rasmussen Equipment Company makes good on the use of AED Foundation resources asmussen Equipment Co.’s origin begins like any great American start-up story. In 1947 Frank Rasmussen founded the business from his garage. More than 70 years later, the West Valley City, Utah-based company specializes in custom rigging and wire rope in addition to renting, selling and servicing heavy equipment needs throughout the state of Utah and parts of southwest Wyoming and southeast Idaho. The company also employs about 50 employees and like just about any other heavy equipment business they’re also looking to hire. Rasmussen Equipment Company has always found value in being a part of AED and The AED Foundation. In addition to being AED members, Rasmussen Equipment Company has supported The AED Foundation through its Annual Campaign and even takes part in recruitment events designed to highlight the opportunities within our industry and to draw new employees. “Fortunately, Rasmussen Equipment Company does not have a lot of employee turnover,” says Steve Rasmussen, of Rasmussen Equipment Company. Some of their technicians have been with the company for 30 years, but they continue to hire and recruit. Despite the low turnover service technicians are difficult to find. One of the biggest benefits The AED Foundation provides is getting the word out about opportunities available in the construction equipment industry. “So many people think they can go to college and get a job, not understanding the link between a degree and job opportunities. A vocational degree (in contrast) is immediately hire-able. I think it’s great what The AED Foundation is doing, to bring awareness to the industry and the community,” Rasmussen says. Rasmussen Equipment Company has taken part in recruitment events, including an annual Career Day and Barbecue organized by The AED Foundation and hosted by Salt Lake Community College. 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, Rasmussen Equipment Company for investing in the future of our industry. To contribute to The AED Foundation annual campaign, visit bit.ly/2019aedfcampaign.

B Y: H E I D I B I T S O L I

The recent career day cookout included about 10 AED-affiliated dealerships and about 300 high school, community college, and charter school students, according to Randy Gallegos, VP at Rasmussen Equipment Company. “We bring machinery out and talk about the work,” Rasmussen says. “We like to help, to make it a winwin for the industry and for the high school students to know there are great opportunities in this field. The key is (for students) to know that the jobs are not lowpaying.” Gallegos seconds that. By sponsoring and/or participating in these events, “we’re showing this is a good industry and a good way to make a living.” It’s crucial to get students – sometimes as young as junior high level – and schools to look at careers in our industry. Besides having good-paying jobs readily available, program graduates come out trained and ready for the workforce. One recent high school graduate is currently in an apprentice program with Rasmussen Equipment Company and is thriving. “He’s doing very well, we’re very impressed,” says Gallegos. Getting past some stigmas of working on heavy equipment is a problem, too. “Just talking to students and explaining what’s out there,” is important, Rasmussen explains. “So many people have a misconception that it’s just getting greasy. It’s actually a very skilled job, and very technical, and can be used in numerous fields – high-tech manufacturing, repairing tractors, HVAC, compressors … (a person can) work all over.” Gallegos agrees: “It’s not just turning wrenches.” Computers, technical work, diagnostics are all involved. “It’s an ongoing challenge to find technicians and train them.” In terms of training, that’s another of the many benefits that The AED Foundation offers that Rasmussen Equipment Company finds helpful. In addition to recruiting and schooling the next generation of heavy equipment worker, Gallegos says The AED Foundation provides excellent educational opportunities for rental, sales, and service managers, as well as offering informative seminars. “The big point there (in supporting The AED Foundation) is that it’s working for dealers on finding solutions to find technicians and offer better training for parts and service managers,” says Gallegos. “The Foundation puts the time and resources in for education.” And Rasmussen Equipment Company in turn shows its support by attending those seminars and taking part in those workshops.

April 2019 | Construction Equipment Distribution | www.cedmag.com | 15

AED

IN CANADA B Y: R O B L E F O R T

C HA NGES AT THE TO P Construction giant scandal shapes 2019 landscape in Ottawa

ttawa has spent the last few years bucking trends. One that continues is the (often small) shuffling of the cabinet early in the new year. The first cabinet shuffle came on January 10, 2017, and most recently, January 14, 2019, saw a handful of new executives moved into new roles. What is supposed to be a quiet time to reflect, strategize and gain perspective for the final push to the fall election has proven to be anything but for the governing Liberals. A few of the changes were easily understood by political observers, but the decision to move the Hon. Jody Wilson-Raybould to the Veteran’s Affairs portfolio was puzzling to everyone. Everyone except, it seems, the prime minister and his inner circle of advisors. Pundits and reporters pounced on their contacts to find out why a star candidate and exceptionally effective senior minister was given a portfolio that regularly faces criticism. Wilson-Raybould was, after all, one of the main ministers responsible for two of the government’s most significant policy initiatives since she came to office— physician-assisted dying and the legalization of cannabis. Veteran’s Affairs was clearly an odd fit, and the sense that she had been handed a demotion, and was disappointed, prompted media to dig deeper. In early February, a story surfaced that SNC-Lavalin had pressured the senior echelons in government to allow their company a deferred prosecution agreement for charges of fraud and corruption related to bribes made to Libyan officials. Wilson-Raybould, as justice minister, was the lone senior minister with the ability to intervene in the case. Within a matter of weeks, Prime Minister Justin Trudeau’s right-hand man, Principal Secretary Gerald Butts, resigned his position amid claims that he did nothing wrong. The entire affair has been poorly handled from a communications perspective, and voters are starting to turn away from the Liberals, who are particularly susceptible to allegations of corruption, especially in Ontario and Quebec. Trudeau’s personal brand had been able to pull them out of that rut, but close association with this scandal may make it difficult in the next election. The involvement of a major construction company makes this a challenging time for businesses that seek to take part in the building of Canada’s next wave of major public infrastructure. Without a deferred prosecution agreement, SNC-Lavalin could be prevented from bidding on any federal government contracts for the next decade.

16 | www.cedmag.com | Construction Equipment Distribution | April 2019

At present they have been awarded the contract to work on the second phase of the Ottawa light rail transit system, one of several major projects where the firm is heavily intertwined with public contracts. For smaller businesses in the construction pyramid, the effects may not be significant, but the prominence of the firm in Quebec’s business community and overall psyche cannot be overstated. This is especially true in an election year. The government is slipping in the polls, and they need strong support in that province to win. In this context, federal Finance Minister Bill Morneau announced this week that he will be tabling the final budget of this mandate on March 19. There has been a long-standing feud between Minister Morneau and businesses owners, small and large, since at least the middle of 2017. He has made several changes that have been designed to speed up investments in infrastructure and support small businesses overall, but this will be his last chance before the next election to prove that he understands how the economy works and what enterprises need to succeed. He has indicated that he will be focusing on skills training and human resources development, but these changes will be balanced against lofty expectations for groups like Canada’s senior citizens, who were given a dedicated minister in late 2018. The government has no room for error. Missteps in the budget, or a soft landing of their top political marketing device during a political crisis, will mean they face being thrown out of office in October. Some major developments that are expected on infrastructure include a strong focus on rural economic development. The Liberals have been a government for big cities and have been seen to ignore the smaller communities that are still home to 49 percent of the population. Many rural residents are older Canadians, who vote in much higher numbers. The government showed they recognized this by appointing the Hon. Bernadette Jordan as Canada’s first minister of rural economic development in January. It is expected that she will be given a strong suite of funding projects, including big money for rural highspeed internet services, to try to cauterize that wound before voters head to the polls. The March 19 budget will set the stage for AED’s April Ottawa Parliament Hill Day, and we’re looking forward to connecting members with decision-makers from all sides to learn more and advocate for the industry.

INTRODUCING A ED3 6 0 DOWNLOAD AEDâ&#x20AC;&#x2122;S NEW ALL-ENCOMPASSING MOBILE APP

NOW AVAILABLE ON

BY KR I S J EN SEN - VAN H ESTE

merica’s vast interstate highway system. State roads. County roads. Farm-tomarket roads. Rural roads. The streets we live on. The roads are the country’s lifeblood, bringing products and services to businesses and consumers, bringing people to work and into the communities and cities, getting them where they need to go: work, school and home again. For the most part, these roads go unnoticed in our daily lives, serving as they have for decades. But therein lies the problem: America’s road systems are aging, and many are in stages of disrepair.

TH E INTER STATE SY STEM

Plenty of folks get their kicks on Route 66, but it’s the interstate highway system that really moves America. The Federal Highway Administration counts 4.12 million miles of road in the United States, and though only about 48,000 miles of that are part of the interstate highway system, the interstates are the heartbeat of the nation’s transportation structure, accounting for one-quarter of all vehicle miles driven in the country. The Interstate Highway System, first envisioned in the 1930s but championed by President Dwight D. Eisenhower, was authorized on June 29, 1956, by the landmark Federal Aid Highway Act of 1956, also known as the National Interstate and Defense Highways Act of 1956. Eisenhower had been stationed in Germany in World War II and had experienced the convenience of the system of roads there called the Reichsautobahnen. As president, Eisenhower was convinced America needed such a system, and he set his plan in motion. The act authorized the construction of a 41,000-mile network of interstate highways, earmarking $26 billion to fund the project. It laid out the funding mechanism for the road system: The federal government would pay 90 percent, with states picking up the remainder.

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

H IGH WAY FUND ING

The primary source of funding for the interstate system is the Highway Trust Fund (HTF), created in 1956. Today, revenue sources include an 18.3-cents-per-gallon federal excise tax on gasoline and gasohol, a 24.3-cents-per-gallon tax on diesel fuel, equivalent taxes on other motor fuels such as compressed natural gas, and three taxes levied on heavy trucks and truck tires. Individual state taxes are also levied, funding the state’s portion of interstate maintenance and repair. Government figures indicate revenues of approximately $38 billion to $42 billion per year on the federal level, with expectations by the Congressional Budget Office that little will change. States pay for their portion of the costs with varying taxes and user fees. Each state levies taxes, whether excise or flat, on gasoline and diesel fuel, from a low of 26.4 cents per gallon in Alaska to 69 cents in California. Other revenue sources include vehicle registration fees, driver license fees, sales taxes on motor vehicles, heavy truck use taxes, traffic violation fines, and similar taxes and fees. Despite the mandated funding mechanisms, the Highway Trust Fund is struggling for viability. Since 2008, revenues to the HTF have not been able to support the level of investment authorized by Congress. Before the FAST Act, the annual gap was nearly $15 billion. And though spending has grown since 1993, the federal government has not increased the gas tax. To breathe life into the HTF, on Dec. 3, 2015, President Obama signed the five-year, $305 billion Fixing America’s Surface Transportation Act, reauthorizing the federal highway and public transportation programs for fiscal years 2016-2020. “For the last decade, the construction industry has been plagued with significant uncertainty due to inaction on a long-term infrastructure plan,” said Diane Benck of West Side Tractor. “In particular, the Highway Trust Fund’s continuous flirtation with insolvency prevents states from planning projects, which, in turn, means contractors aren’t investing in new equipment, hindering economic growth for equipment dealers.”

D ETER IO R ATING R O AD S

In addition to the interstate system, many of the country’s highways, thoroughfares and bridges are reaching the end of their viability now. The Federal Highway Administration keeps an eye on the condition of 1,006,257 miles of major highways eligible for federal aid. In 2013, the latest data available, the administration deemed 161,971 miles, or 16.1 percent, in “poor or mediocre condition,” needing, at best, repaving, or even more serious repairs. While that sounds dire on the surface, it’s good economic news for AED members. “As long as we have consistent federal highway bill funding, you have a good economy,” said Al Cervero with Associated Equipment Manufacturers. “Look at almost any economic indicator except the soybean farmers – everybody is doing pretty well, and that’s consistent within construction equipment manufacturers.” AED is hard at work advocating for federal funding solutions to the growing road crisis and encouraging members to engage on the issue with their federal representatives. “Infrastructure investment is a win-win for everyone. It creates well-paying jobs and facilitates economic expansion,” Benck said. “And unlike many government programs, infrastructure funding provides a return on investment in increased tax revenue and greater productivity. There’s no better way to put the nation on a course for sustained economic growth than passing a fully funded long-term infrastructure bill.”

SOURCES: Associated Equipment Manufacturers; American Road & Transportation Builders Association; the National Archives; U.S. Department of Transportation’s Federal Highway Administration; Wikipedia; Gaspricewatch.com; History.com April 2019 | Construction Equipment Distribution | www.cedmag.com | 19

T O P T E N I N T E R S TAT E F A C T S 1 . IT T OOK 17 YEARS TO CREAT E AN D FUN D TH E I D EA O F TH E I N TER STAT E .

Two members of the U.S. Bureau of Public Roads presented a report to Congress in 1939 that detailed the need for a non-tolled road system in the U.S. The Federal Highway Act of 1944 allowed for development of a 40,000-mile National System of Interstate Highways, but it didn’t provide any method of funding, so it went nowhere. It wasn’t until the act of 1956 that funding was finally allocated to its construction.

2 . P E OPL E FIR ST LO VED , TH EN H ATED I T.

When the Interstate Highway Act was passed, most Americans thought it was a good idea. But when construction started and people, especially in urban areas, were displaced and communities cut in half, some started to revolt. In the 1960s, activists stopped construction on highways in New York, Baltimore, Washington, D.C., and New Orleans, which resulted in several urban interstates becoming roads to nowhere.

3 . E VE RY STATE OWNS ITS PORTI O N (I N CL UD I N G TH E PO TH O L ES) …

This means the state is responsible for enforcing traffic laws and maintaining the section of highway in its borders. Currently, the “largest pothole in the country” award has been claimed by the section of I-75 outside Detroit.

4 . … EXC E PT FO R O NE (FO R ME R ) B R I D G E.

The Woodrow Wilson Memorial Bridge (I-95/495) that crossed the Potomac River into Washington, D.C., used to be the only part of the interstate system owned by the Federal Highway Administration. But issues over it being too small led to the creation of a new, bigger, taller bridge. As for the old one? It was destroyed, in part by people who won a contest for having “the toughest daily drive.”

5 . THE STATES SET TH E SPEED L I MI TS.

However, in the early 1970s, all 50 states set their speed limits to 55 mph. A clause in the Emergency Highway Energy Conservation Act signed into law by Richard Nixon dictated that if a state did not set its highway speed limit to 55 mph, that state would lose its federal highway funding.

6 . THE SIG N S ARE TR AD EMAR KED .

The red, white and blue shields used to designate interstate numbers are trademarked by the American Association of State Highway and Transportation Officials. The original design for the shield was drawn by senior traffic engineer Richard Oliver of Texas and selected out of 100 entries in a national design competition in 1957.

7 . INTERSTATES AND H IGH WAYS W I TH TH E SAME N UMB ER CAN N O T R U N THROU G H TH E SAME STATE.

The numbering system used for interstates is intended to be the mirror opposite of the U.S. highway system, so drivers won’t be confused about whether to take Highway 70 or Interstate 70. For example, I-10 runs through southern states east-west (as all major even-numbered interstates do; odd-numbered interstates run north-south), while Highway 10 runs through northern states. Because I-50 would run through the same states as Route 50, the number will never be used.

8 . I-99 DOESN’T FO LLO W TH IS SY STEM, B UT TH AT’ S N O T TH E FED ER AL H IG HWAY AD MINISTRATIO N’S FAULT.

According to the Federal Highway Administration’s numbering system, Pennsylvania’s former US 220 should have been named something like I-876 or I-280. But Representative Bob Shuster wanted a catchier moniker for it. According to The New York Times, as a child he was fond of the No. 99 streetcar, which he used as his inspiration for the road’s tag.

9 . THE INTERSTATE IS PART OF TH E U. S. ’s ATO MI C ATTACK PL AN .

A major concern during Eisenhower’s presidency was what the country would do in the event of a nuclear attack. One of the justifications for the building of the interstate system was its ability to evacuate citizens of major cities if necessary.

1 0. THE RE AR E NO D ESIGN RUL ES D I CTATI N G TH E SH APE O F R O AD S.

A major myth of the interstate system is that one out of every five miles is straight so an airplane can land. While this has happened, there are no rules or regulations that require such a design. Also, there are no requirements for curves to be designed into a highway to keep drivers awake. However, the Federal Highway Administration does admit that this is a perk of winding roads. SOURCE: Mentalfloss.com 20 | www.cedmag.com | Construction Equipment Distribution | April 2019

UNSTOPPABLE LAND CLEARING + CONSTRUCTION EQUIPMENT. BECOME AN FAE DEALER | FAEUSA.COM | 770.407.2014 CED mag ad-generic.indd 1 Ad_template.indd 2

3/27/2019 11:18:31 10:36:59 AM

CHANGE YOUR MINDSET OR SUFFER THE CONSEQUENCES 5 STEPS TO WARD T H R I VI N G I N O UR UN STAB L E W O R L D B Y: B R AD W O L FF

e live in a world of unpredictable and uncontrollable change. How can we survive and even thrive when our environment turns against us? Bill Evans was the CEO of Shifting Rocks Corp., a dominant regional player in providing rocks for road construction. After 30 great years, the company suddenly dropped behind two competitors. Due to a combination of unforeseen changes, sales plunged from $50 million to $25 million. They went from a $5 million profit to a loss of $2 million in only two years. Bill hired a firm that helps companies thrive in a changing environment. After one year of working with this firm, Shifting Rocks reached break-even. In two years, they had climbed to a $6 million profit. Their engagement levels are now higher than in the “good years,” and Bill enjoys his job more than ever.

B E C O M E A F L E X I B L E , A D A P T I V E , L E A R N I N G O R G A N I Z AT I O N

The turning point was when Bill’s mindset changed, with the realization that what led to success in the past often doesn’t work today. The primary characteristics needed to thrive now are

1. FLEXIBILITY

The willingness to change or compromise

2. AD APTABILI TY

The ability to use flexibility to meet the demands of new conditions

3. “LEARNAB IL I TY ”

The ability to quickly gain new knowledge and skills that are required to meet the demands of new conditions

When you implement these traits, you become a flexible, adaptive, learning organization (FALO). A FALO has a unique competitive edge in an unstable environment. A key element is the mindset shift to focusing on the things that lie in your sphere of control rather than constantly reacting to things out of your control. Instead of things getting easier, you get better!

AB O UT TH E AUTH O R :

Brad Wolff specializes in workforce and personal optimization. He’s a speaker and the author of People Problems? How to Create People Solutions for a Competitive Advantage. As the managing partner for Atlanta-based PeopleMax, Brad specializes in helping companies maximize the potential and results of their people to make more money with less stress. His passion is empowering people to create the business success they desire, in a deep and lasting way. For more information on Brad Wolff, please visit www.PeopleMaximizers.com.

22 | www.cedmag.com | Construction Equipment Distribution | April 2019

HOW D O Y O U D EVELOP A FAL O ?

1. A mission that matters: A clear mission and vision statement to motivate and unify employees

Step 1: Shift your mindset from solving problems via processes and technologies to solving people problems first. All business problems (including process and technology problems) are people problems at their root, since people select, develop, operate and manage your processes and technologies. The perfect processes and technologies with the wrong people, or with people who are not using them properly, will never work. A focus on process and technology is a convenient distraction away from the more challenging arena of focusing on human beings. However, starting with processes and technologies is treating the symptoms, not the cause. Your solutions will always be suboptimal with this approach.

2. Transparency of leaders: A crucial element to build safety, trust and collaboration that requires openness and vulnerability

Below is a five-step process for creating a FALO:

Step 2: Create a personal development mindset as an organizational strategy. The key to your professional growth is your personal growth and development. We take ourselves with us everywhere we go, and our self-awareness, skills and character traits are our only tools. It’s critical to realize that these elements of personal growth are developed, not inborn. Certainly you have inborn gifts; however, they are not very useful until they’ve been developed over time. History’s most successful CEOs, like Jack Welch of GE, Lou Gerstner of IBM and Ray Dalio of Bridgewater, shared a common philosophy. They recognized that as people work on their personal development, they contribute far more productivity, collaboration, and positive energy/engagement as extra benefits. Each of these benefits enhances the others, creating a multiplied effect throughout the organization. As people develop, they also adapt much better to ongoing life challenges. The organization increases in knowledge and skills (learning) while becoming more flexible and adaptive. Step 3: Cultivate a culture that supports ongoing personal development. Developing a strategy of personal growth requires that you develop a culture that supports this strategy. Organizations frequently fail to execute their strategies because they lack a culture that supports them. Peter Drucker said, “Culture eats strategy for lunch.” Google provides one of many examples of an organization that focuses on culture as a key driver of its success. Here are their “three principles for a top-notch culture”:

3. Giving everyone a voice: A perspective that values everyone’s opinion and point of view Do these principles apply to other companies? Yes. In fact, it’s more difficult to apply these principles in large organizations like Google because of increased layers of complexity. Step 4: Starting with upper management, take an open, honest inventory of weaknesses. A weakness is any habitual behavior that impairs your effectiveness and prevents you from becoming who you want to be. Having weaknesses is an unavoidable part of being human. The key is to deliberately identify and acknowledge these habits rather than trying to hide or cover them up. Our weaknesses are obvious to others anyway, so attempting to deny or hide them impairs our growth and relationships. When leaders are authentic about their weaknesses, it builds trust and respect and creates a culture where people feel safe to do the same. Research and experience consistently demonstrate the importance of people feeling safe. They won’t allow themselves to be open about their weaknesses until they feel secure from ridicule or punishment. Step 5: Commit to a process of ongoing improvement. The key is that leaders commit with both their hearts (emotions) and their minds (thoughts). Developing new habits that serve us better than the old ones requires committed effort over time. Demonstrating this commitment helps develop a culture of people committed to their personal and professional growth. It’s also important to develop a culture of constructive feedback and encouragement, since we often don’t realize when we revert to old habits. Ongoing improvement is difficult without a culture that supports people making a consistent effort. Developing a FALO is not complicated. It starts with a mindset shift from focusing on the external environment to focusing on the source of your success and power – the ongoing development of human beings. You can try to control your external environment or adapt to meet (or exceed) the demands. Which approach will you choose?

April 2019 | Construction Equipment Distribution | www.cedmag.com | 23

W H O AM I? I’M YO UR C US T O M E R How you treat me will determine whether you will keep me or lose me to your competitor.

BY CHRISTINE CORELLI

If you want to keep this relationship, let me tell you how…

PR O V E I T TO ME.

I’m very skeptical. I don’t believe that there is much truth in advertising. After all, your website and your marketing and advertising claim that you provide “five star service – guaranteed.” It’s just that sometimes, when it comes to customer service, it often depends on whom you get to serve you. When I call for the very first time, I will form my first impression of your organization and how professional it is. It starts with that person who answers the phone. If that individual doesn’t sound sharp or doesn’t know how to handle my call, how can I expect great service at any other level? So, if you claim superior service, make sure that everyone in your dealership demonstrates the highest level of service in every aspect of my experience with you. After all, your company is supposed to provide consistently superior customer service – not sometimes, but all the time. Be sure it does, or I might head over to your competitor. It’s that simple. I hope you have the type of culture where everyone recognizes that they, too, affect my impression of you and your bottom line, and that it’s me who provides their paycheck. If you don’t, then get your house in order!

I WAN T SER VI CE N O W !

I am better educated, more cost-conscious, and more discriminating than my predecessors. And patience is not one of my virtues. If I call your dealership about anything, I want someone to answer the phone by the third ring. If you put me on hold, I will tolerate it for 30 seconds, but that’s it. I want the people at your parts and service counters to display a sense of urgency to serve my every need. If there’s anything that turns me off, it’s when people don’t realize I’m in a hurry and under pressure.

I H AV E H I G H EXPECTATI O N S.

I expect courtesy and I expect you to be readily available to me 24/7. I expect everything to be right. If you don’t want to turn me off, you might want to manage my expectations from the get-go. Here are a few things to consider: • Be clear with me on costs. • Let me know in advance whether there may be additional charges or wait time. • Communicate at the outset what the warranty does and does not cover. • Tell me outright what you can and cannot do.

TAL K TO ME!

Don’t leave me hanging. Keep me informed on how your technicians are doing. Don’t call me. I’m busy! Text me. 24 | www.cedmag.com | Construction Equipment Distribution | April 2019

I WANT Y O U TO B EN D O V ER B ACKWAR D S.

One of my associates told everyone about how your service manager delivered a part to a customer on Christmas Eve at 6:00 p.m.! I want you to do whatever it takes to keep me up and running too.

I’M NO T IMP R ESSED B Y CUSTO MER SATI SFACTI O N .

Customer satisfaction reports are nice, but not enough! Your website states, “We are very well known for our high levels of customer satisfaction.” Nice, but not enough. Instead, show me your numbers for customer retention, customer loyalty and customer advocacy! If you can boast high numbers in those areas, then I will be impressed! Business is tough. Real tough. If you have a long list of loyal customers and advocates who are willing to give you referrals, then I will be seriously impressed.

I ’ M ALWAY S R I G H T!

If I’m wrong or mistaken about something (hard to believe because I’m always right, remember?), don’t get defensive. Simply say, “Perhaps there’s been a misunderstanding.” Then move on to correct the situation. In fact, if I call you to complain about something, you should welcome my complaint. Not only do I have a right to do it if the complaint is viable, but this way you’ll know where improvement is needed. If you’re smart, you will instruct your team to document all complaints, so you can be proactive in preventing them from occurring any time in the future.

TR EAT ME R IGH T, TH E SAME AS Y O UR MO ST I MPO RTAN T CUS T OM E R.

If I originate from a country other than this great USA, I expect you to be able to communicate with me and understand that, although my culture may be different from yours, my hard-earned money is still green; I want to be treated with the same importance as others. If I am a woman, I want you to treat me the same as if I were a male customer. Studies have shown that you will need to talk more with me before I buy than if I were a man. I want a feeling of connectivity. I want to hear words of appreciation and reassurance: “Thank you, Ms. Smith. We appreciate your business. If I can help you in any way, I’m always here for you.”

I WAN T TO FEEL L I KE I ’ M FAMI LY.

That’s another way you can keep me. I love it when the people in a company call me by name, and when they know me, they say, “Hi, Mr. Jones, how are you today?” I expect you to remember things about me, know my buying habits, and anticipate my needs even before I’m aware of them.

D O N ’ T # @* ME O FF!

When I do business with you, I never want to have to worry about anything. I have enough of my own worries about keeping developers happy and avoiding cost overruns. Fair warning: As much as you want and need me, I can be dangerous to you. If my experience and every interaction with you isn’t positive, I can become your strongest critic. I am your judge and jury. I can be your executioner, too. Don’t say I didn’t warn you. If my experience with you is not positive in every way, I’ll tell everyone in my contractor association not to do business with you. Sorry, but research has proven that I tend to tell a whole lot of people about any negative experience I have with you. In fact, if even one person in your organization acts indifferent to me, I’ll get turned off fast! Then, of course, if I really want to hurt you, there’s always Yelp.

I’LL SPR EAD TH E G O O D W O R D AB O UT Y O U.

On the positive side, if you do well by me, I can be your ambassador; I’ll tell everyone about how happy I am with your product support, and if they are interested in purchasing a new or used machine, they will get a great deal and can depend on you.

AM I B EI N G TO O H AR D O N Y O U?

I don’t think so. I believe I’m doing you a favor by being blunt with you. Why? It’s because I’m the customer! Get serious about improving the level of service you now provide. And if it’s already superior to your competitors’ service, remember that companies (and dealerships) are never satisfied where they are. Continuous improvement is one of their core values.

LOOK AT THE B I G PI CTUR E FR O M TH E O UTSI D E I N .

Look at your business. Examine your systems, procedures, practices and every person in your company through my eyes. Then, do whatever it takes and then some to keep me happy. April 2019 | Construction Equipment Distribution | www.cedmag.com | 25

BY B RIAN GAREAU

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

alent management – the plan, processes, and disciplined behavioral practices used to make sure an organization has the right quality and quantity of people to meet both current and future business objectives – has become even more critical for business success. The current talent crunch is formidable and is not going away. Consider this: •

In the fourth quarter of 2018, the U.S. hit a 50-year low in unemployment.

•

The Bureau of Labor Statistics reported 7.3 million job openings at the end of 2018.

•

Skill gaps cost U.S. businesses an estimated $160 billion annually.

•

Replacement costs are high, running as much as 30-50 percent of an employee’s annual salary to replace an entry-level worker and several hundred percent for specialized or high-level jobs.

A C O M M O N F R AM E W O R K Most organizations construct their talent management strategy on solid building blocks: attract, hire, develop and retain. Ongoing challenges and questions include the following: 1.

Attract and hire. What new sources of labor should we explore? How does our organization catch the interest and attention of potential employees? What specific activities should we focus on to increase both the quality and quantity of applicants? How do we effectively and efficiently screen and select new hires?

Develop. How do we develop employees’ knowledge, skills and abilities to do their current jobs more effectively? And how do we monitor and identify additional learning opportunities (education, training, job assignments, special projects, mentoring, etc.) to help build a talent pool capable of taking on more responsibilities?

Retain. What steps does our organization take to keep critical talent? How do we continually motivate and challenge everyone, especially high performers?

Each of these building blocks is absolutely critical, but without the proper “adhesive,” many well-intended talent management activities will shift, slip, and potentially fall short of expectations and needs. That adhesive is employee engagement – an individual’s commitment, effort and loyalty. April 2019 | Construction Equipment Distribution | www.cedmag.com | 27

Let me illustrate, with three brief scenarios at Company X, the importance of employee engagement in attracting, hiring, developing and retaining talent. 1. A previous employee (resigned, fired or retired) is outside the building. A friend approaches and says, “You worked at Company X. Would you recommend it to my daughter?” Someone texts or posts on social media, “Considering applying at Company X. What is it like working there?” A potential candidate asks, “What makes working at Company X different than working at other companies?” These are some defining moments in attracting new talent. Are current or previous employees promoting your organization? Are they encouraging or discouraging prospective new applicants? Engaged employees will be stronger company advocates than their disengaged colleagues. 2. Employees are told they must complete some training and development (T&D) at Company X. Most T&D activities there are focused on critical, current operational needs and not longer-term development; they are “sheep-dipped” activities (one size fits all); they’re viewed as a necessary chore; they lack clarity on WIIFE (what’s in it for the employee); and they seldom have follow-up on actual use. When an organization helps employees develop, it demonstrates that it cares about their success and their future – a sign of engagement in their well-being. Employees are more likely to reciprocate in a company like this. And genuine interest and concern help build loyalty, a key component of employee engagement. In my corporate experience, we found a more than 30-point (not percent) difference in the level of employee engagement between those who felt this genuine interest in their well-being and those who did not. Research has also found that engaged employees are 87 percent less likely to leave an organization than those who are disengaged. 3. Company X touts its low employee turnover. But it continually tolerates some employees’ poor attitudes and behaviors, avoidance of accountability, and general lack of initiative. These employees basically “show up” and only do what they are told, no more. These disengaged employees give the company their hands (doing what they are told) but not their heads (creativity and problem-solving), their hearts (commitment), or their habits (consistency). 28 | www.cedmag.com | Construction Equipment Distribution | April 2019

Disengagement is costly. Research shows that a disengaged employee costs an organization approximately $3,400 for every $10,000 in annual salary. And disengaged employees impact engaged employees, who have to pick up more of the load of work around those who are disengaged. THE A DHESI VE The concept of employee engagement has been around since 1990. It differed from previous focuses on employee satisfaction and commitment because employee engagement showed directly how employees’ attitudes and behaviors could impact performance. It gained significant momentum and interest in the early 2000s. Unfortunately, many employee engagement initiatives lacked robust plans and buy-in, execution rigor, accountability, and commitment. Common missteps and mistakes organizations have made include the following: •

A belief that there was little strategic value, with limited time and resources allocated

•

Laser focus on a single measurement of success, such as a survey score

•

Fixation on only the rational drivers of engagement; emotional drivers were discounted or ignored

•

Reluctance to change the behaviors of leaders, so their culture (accepted way of doing things) stayed the same

•

Lack of integration; engagement was treated as a stand-alone HR initiative

•

Information bias – focus on surveys, analysis and number crunching, with minimal feedback or tangible action

•

No mutual responsibility for engagement between company/ leaders and employees

•

Ignoring ongoing research findings and locking in on the mindset “but we’re different”

•

Declaring victory too quickly – sustainable engagement only happens when employees consistently do the right thing, at the right time, the right way, for the right reason

WHI CH STR ATEGY TO F OLLOW There are two primary ways businesses have and will continue to compete for talent – an exclusively rational approach and a blended/differentiated strategy. •

Exclusively rational. This strategy focuses on what I call the basic “ticket to play.” Factors include competitive wages and benefits, physical safety, basic tools and technology needed to do the job, etc. With this method, a company monitors its local competitive

market and tries to keep pace. There is only one leader in this approach, and it’s hard to maintain leadership. Some other company is always trying to tweak the “ticket value” with a little more money or a perk to help attract, hire, develop and retain employees. •

Blended or differentiated. This strategy starts with the above rational elements. These must be done first. Remember, they are the basic “ticket to play.” But then the focus moves on to emotional elements that ultimately are additional drivers of employee engagement. This approach can have multiple leaders, differentiating themselves from others by focusing on one or more of the following: Being ethical and values-based. Values are not compromised when tough decisions and choices must be made. Companies with bad reputations or that are being negatively portrayed in the news or on social media will be severely challenged to get and keep talent. Having a positive work culture. This environment encourages genuine camaraderie, not internal competition at the expense of someone else. Employees experience both physical and emotional safety. They feel affiliation (being part of a winning team); affirmation (being valued and appreciated, not taken for granted); and achievement (having pride in doing something that matters). Inspiring leaders. Leaders have a great deal of influence on the way employees do their jobs and the level of commitment they give. Research has shown that as much as 35 percent of the variability in employee discretionary performance is a result of managerial styles and behaviors. Inspiring leaders routinely make their employees feel important, genuinely cared for and appreciated. It’s been so often quoted that it’s

threadbare, but employees excel with good leaders and leave bad ones. It requires both hard and heart work! Providing life balance. It’s not about equal time between work and life anymore. It’s about an individual’s desired proportions. For some, life balance is where or how they work (home/office/ available technology). For others, it’s being able to cut the electronic umbilical cord and truly disconnect for a little while. And still others desire flexibility with start/stop times or acceptable hours to have meetings. Ultimately, life balance isn’t a single solution, a simple policy or a procedure change. It’s listening, customizing and making it easier for more employees to consistently be their best. Holding leaders and all employees accountable for the concepts listed above.

I’ll leave you with three simple but powerful questions to think about. If your current workforce is discouraged, discontented, disconnected or disengaged, then…

1. Why would they be strong company advocates and good teammates? 2. Why would new people want to join your organization? 3. Why would good talent stay? Employee engagement may be the glue you need to make your talent management strategy and, most important, your results, even stronger. Just make sure it’s applied effectively.

Brian Gareau has been studying, consulting, and implementing employee engagement initiatives for more than 15 years. He helped lead a successful eightyear employee engagement initiative at a Fortune 50 corporation and has written several books on the subject. More information is available at BrianGareauInc.com, or contact him directly at Brian@BrianGareauInc.com.

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

“OLD”

HR WHY IT’S A DETRIMENT TO YOUR

BOTTOM LINE BY DANIELLE MCCORMICK

30 | www.cedmag.com | Construction Equipment Distribution | April 2019

eading this article will not help you build a winning culture and foster employee retention. Why keep reading, you wonder? The truth is, most of us already know what we’re up against – the tight labor market is making headlines everywhere, and if you’ve spoken with anyone in HR across the country you already know the common theme centers around the tremendous effort it now takes to attract and retain talent. It’s a wonder, then, why most of the HR and management systems used currently have been in practice for decades, despite lackluster results. The fallout of this practice is everywhere as business leaders struggle to retain top talent and overcome underperforming teams. Providing proof for your executives and board that making the investment to a new HR management system is not only worthwhile but profitable is precisely what this article can help with. According to the Association for Talent Development, companies that offer comprehensive training programs have 218 percent higher income per employee than companies without formalized training. If you ever needed an incentive to overhaul the way you’re implementing retention strategies, here it is. These companies also enjoy a 24 percent higher profit margin than those that spend less on training. The investment in training and development – versus the cost of replacing high performers – easily outweighs the cost of retaining them, even when there are economic downturns. The time has come to shake up your HR practices and bring them into this century. The benefits to your company come in the form of increased productivity and efficiencies, employee engagement, talent retention, emerging leaders, cost-saving solutions, process improvements, and client satisfaction, to name a few. Advantages like these would provide a competitive edge for any business and are essential for a business’ growth and survival in today’s marketplace.

H O W D O E S Y O U R C O M PA N Y R AT E ? “You’re perfectly aligned to get the results you’re currently getting!” I love this quote from Stephen Covey and I think of it so often in the work we do with our clients. We’ve learned that any time we have a consistent result, good or bad, it’s because we have a great system to get us there. A few questions worth asking yourselves: 1. As a leader, are you getting the employee performance results you want? 2. Is your culture one that is thriving? Are your employees volunteering their best, or do you feel as though constant management is required to get even a mediocre performance from your teams? 3. Do you find yourself doing the “head slap” out of frustration and disappointment that your leaders still aren’t leading at the level you need them to? 4. Do you struggle to attract and retain employees? The good (and bad) news is that if you said yes to any of those questions, you’ve got a great system in place if you want to maintain your current results. However, if you see room for improvement, you will want to evaluate three key areas: talent development, training and coaching, and HR capacity. How effective will doing this be … really? In a 2016 national Gallup poll of over 400 employees spanning three generations (baby boomers, Generation X and millennials), 70 percent of the respondents indicated that job-related training and development opportunities influenced their decision to stay at their job. The millennials had the most significant results, with 87 percent of them citing access to professional development or career growth opportunities as being very important to their decision of whether to stay or go.

April 2019 | Construction Equipment Distribution | www.cedmag.com | 31

H E R E ’ S H O W W E R E C O M M E N D G E T T I N G S TA RT E D : 1. Trash your traditional performance evaluation

In traditional performance management, the supervisor does most of the work – they evaluate employees based on criteria typically designed for an entire company population, and they often compare employees to others in the organization, rather than considering individual talents and capabilities. Why does this system fail? Supervisors frequently complain that they spend hours preparing feedback and working to justify ratings, only to walk away from the meeting questioning its effectiveness. Leaders feel trapped by an ineffective system, and employees too often walk away feeling devalued and focusing more on the number or rating they felt they should have earned, instead of the message of feedback the leader worked hard to craft. Alternatively, effective talent development systems put the employee in the driver’s seat of the conversation, while also providing the necessary space for accountability and performance documentation that leaders seek. It is a move from “grades” to guidance, and it allows employees an open door for a two-way discussion. Ultimately, this changes the review process from evaluation to collaboration, enabling truly great things to happen in the long term.

H E R E A R E S E V E R A L WAY S T O P O S I T I V E LY I M PA C T T H E WAY Y O U A R E R E V I E W I N G A N D S U P P O RT I N G E M P L O Y E E P E R F O R M A N C E : Replace Annual Ratings with Talent Development Discussions Rather than once- or twice-per-year evaluations, the new method centers around the continuous development of employees on a quarterly basis, and the discussions are driven by the employees. Additionally, companies are offering over-the-shoulder coaching throughout the review period to encourage and foster personal career growth, satisfaction and leadership skills. Implement a New Approach to Feedback Systems It’s critical that employees know where they stand on a more regular basis and whether they are failing to meet expectations or project competencies throughout their jobs. In a tight labor market, it is especially tough to lose trained talent. The more frequent feedback approach allows time to try to remedy the situation – with potential to train or coach the employee during the project, rather than waiting until a performance evaluation to deliver the news about failures.

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

2. Train and coach with intent – finally get the ROI on your training investment Assuming you’ve selected the right talent, the greatest predictor of performance complacency comes from a lack of impactful employee development and performance management systems. Modern training tactics support ongoing learning for employees and leaders using a blend of on-demand and live learning platforms, but the magic comes when we pair the learning experience with professional coaching. This hybrid development approach moves from training as an event to the foundation for lasting and meaningful skill development. Some examples of ways to use a talent development coach include introducing a structured mentorship program to teach employees how to be successful; facilitating employee learning experiences; implementing learning, team building, and development programs across offices; bridging generational gaps; developing natural talents; and cultivating leadership programs. 3. Increase HR capacity – enlist help from seasoned professionals where your HR department has gaps The lack of ability to provide strategic, focused HR guidance leaves companies vulnerable to a breakdown in culture, compliance, talent hiring practices, employee retention, leadership development, and growth practices. How to alleviate administrative overload: •

Consider outsourcing your HR compliance duties. Outsourcing time-consuming or risk functions like employee benefits can provide the benefit of an entire HR department at a fraction of the cost.

•

Seek out the right training solutions for you. Use ondemand learning platforms to provide shorter bursts of learning. Even spending just 10 minutes a day in a stand-up meeting equates to 40 hours of training in a year for a full-time employee, and the training cost is minimal.

It’s time to break out of the “old” HR. The labor market has raised the bar for employee and culture expectations, and we all know what happens to businesses that don’t adapt and evolve.

Danielle McCormick is a principal and functional leader for K·Coe People, the Human Resources consultancy team which provides expertise and HR service solutions for businesses. She and her team of Talent Advisors provide coaching, training and HR support for equipment dealerships and companies throughout the construction industry. Contact her at Danielle.mccormick@kcoe.com, or visit https://www.kcoe.com/services/kcoe-people/ for more information. April 2019 | Construction Equipment Distribution | www.cedmag.com | 33

RECRUITING AND

R E TA I N I N G

WOMEN

34 | www.cedmag.com | Construction Equipment Distribution | April 2019

recently had a conversation with my father after he watched a video interview I did, in which I discussed women and leadership. Heâ&#x20AC;&#x2122;d had a home improvement business that he closed in the mid-1990s. My father said he recognized that the women sales associates had better results than their male counterparts, and that if he had kept his business open he would have hired all women for the sales team. Hiring, developing and promoting women is in the news for good reason. Women currently make up 57 percent of the eligible workforce, and 43 percent have a bachelorâ&#x20AC;&#x2122;s degree or higher. If you are not actively looking to recruit women or retain and develop the ones already working for you, you are missing out on a valuable part of the talent pool.

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

Just as my father recognized, this is smart business. There are many studies showing that companies with a higher percentage of women leaders have greater profitability. According to Gallup, genderdiverse retail operations have 14 percent higher revenues, and gender-diverse service sector operations have 19 percent higher quarterly net profits than their non-gender-diverse counterparts. While a lot of these statistics are derived from studying large corporations, there is no reason to believe that revenue and profit growth won’t also be true for small and mid-size organizations. So what can you do to bring more women into your business or retain them once they are hired? Here are five actions I’ve coached my clients to consider implementing.

PA RT NER WITH LO CAL OR REG I O N AL SCH O O L S Even if you want to recruit women to your business, it’s hard if they don’t know about the industry or opportunities. We know that, for the most part, heavy equipment is not on their radar. If you are near a local or regional college or trade school, find ways to build a partnership. Offer to speak at career days, sponsor a women’s event organized by the school, see if there are school-sanctioned women’s organizations where you can speak to the group. Anything you can do to get your name into that community and start to build awareness will eventually pay off.

L OOK FO R WOM EN WH ERE TH EY AR E If you do an internet search for “local women’s organizations” or “local women’s networking groups,” you will find pages of results. Research them and proactively target groups that hold regular events. Don’t worry if you don’t have a woman who can attend; most of the time men are allowed and welcomed, and if you go, you’ll probably stand out. That is great as long as you stand out for the right reason. If you attend an event and you are “selling,” you won’t be invited back. If you show that you want to get to know the organization and its members, you will be welcomed back again and again. Often these same organizations look for sponsors for their programming. As a sponsor, you will usually have the opportunity to speak for a few minutes before the program begins. This allows you to give a short commercial about your company and how you support the local community.

RE VIE W YOUR POLICIES AN D B EN EFI TS Before you begin a focused outreach, take a look at the benefits you offer. Most women are the primary caregivers for their family – whether that means children or aging parents – and thus they look for flexibility. The word “flexibility” can be scary to many managers and owners. It’s common to associate flexibility in the workplace with someone who doesn’t want to work hard. That isn’t what it means to most women. For them it’s being able to balance their work and their home life. What can this look like? It might not work for all the roles in your business, but, for example, is it possible to create a work schedule that allows people to drop off and pick up their children from school? Leave a bit early to attend a sporting event or play? Take a day off to care for a sick child or parent? Sometimes you need to be creative to make things work. You will find that most people who are given flexibility with their schedules work harder and work more hours overall. It just might not be during “normal” hours. 36 | www.cedmag.com | Construction Equipment Distribution | April 2019

Another key area is providing paid benefits to new parents. This can help to limit turnover when a child is born or adopted. Note that this policy can apply to both mothers and fathers. You will need to look at what is right for your organization, but offering something will set you apart from your competition.

INVO LVE WO MEN IN TH E I N TER VI EW PR O CESS

Women want to see themselves in your place of business. If you already employ women, especially in leadership roles, involve them in the interview process even if they work in a different department. This lets the candidate see that there are already women working there – she won’t be a pioneer.

CR EATE A MENTO R ING PR O G R AM

Mentoring is one of the best retention tools for women. Studies show that 65 percent of women who are mentored become a mentor in the future. Mentoring programs show participants that the organization is invested and interested in their success. There doesn’t need to be a lot of prep work or formality in the pairing or the process. If there are no women available to be a mentor, choose a man with similar qualifications and background. For example, find a single dad you can pair with a single mom, or others with similar goals or backgrounds. One thing to note about a mentoring program: it is critical that you make a change if the relationship isn’t working. A bad mentoring experience can do just as much to discourage a woman from staying as having no mentor at all. So back to the discussion I had with my father. Maybe raising three daughters and having a wife with her own business influenced him to hire women, but it was the results these women achieved that led him to the all-women sales team conclusion. Whatever you do, this is a business decision that needs to be implemented in a way that works best for your organization.

Alexis Gladstone is an affiliate with The Chatfield Group and has over 25 years of training, coaching, speaking and consulting experience. She works with clients across all industries in the areas of leadership, sales, and organizational change to maximize company and individual results. Her passion is helping women succeed, and she works with women individually through coaching and mentoring, and with organizations and leaders who want to retain, develop and champion women.

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

SEEING THE BIG PICTURE WITH

AED’S 2019

CODB REPORT The 2019 Cost of Doing Business (CODB) Report is coming soon. This annual report, available exclusively through AED, provides members with the most up-to-date comparative financial performance information and enables them to evaluate their operating results.

T HE 2019 C O D B R E P ORT INC L UD E S TH E FOL L OWING: Comparison to evaluate operating ratios against the medians of other distributors Balance sheet and income/expense statement performance Distributor performance by sales volume Employee performance measures Sales mix of high-performance dealers Gross margins for new and used equipment, rentals, parts and service departments Operating ratios, including debt to net worth Year-by-year trend analysis

ealers who regularly participate in this new reporting platform can start to compare performance year over year and to analyze trends in a way they weren’t able to before: •

Static reports: the full, industry-wide report as well as a personalized Company Performance Report (CPR)

•

Report card: provides an objective, qualitative evaluation of the business’s performance; participants can see how their company “grades” compared to the industry on several key financial metrics

•

Performance graphs: visually track company data versus industry data on significant financial metrics

•

Interactive peer report: allows participants to create company performance reports on demand; participants choose the data cuts they would like to compare against

•

Searchable results: allows participants to dig deeper into the data by creating custom aggregations of the survey results

38 | www.cedmag.com | Construction Equipment Distribution | April 2019

The company performance reports are what is truly remarkable about the new CODB format. The CPR displays each distributor’s own ratios and data computed in a manner consistent with those appearing in the full report, and the results are displayed alongside the appropriate industry comparatives. As shown on any given line of the CPR, a company’s own data are included along with reported norms for all respondents and for companies of similar sales volume, line of business, and region. Thus, the individual owner/manager is provided invaluable information without needing to spend time and effort performing the calculations manually. In addition, these highly confidential reports contain a qualitative assessment of a company’s situation. Better yet, says AED’s Senior Director of Education and Programming Liz McCabe, “Members who participate in the survey get a copy of the final report and their personalized company performance report for free!” This is the third year that AED has worked with Industry Insights to produce the CODB Report. Industry Insights, based in Columbus, Ohio, has decades of experience providing survey research

solutions. The company is an independent professional research and consulting firm that specializes in conducting financial surveys, compensation studies, market assessments, customer satisfaction research, educational programs and other forms of customized research. Michael Becher, CPA and vice president at Industry Insights, told CED, “Since taking over the study we have added many new features for respondents to slice and dice the data in an online platform, while also providing a fresher industry-wide report and individual company performance report that includes the respondent’s own data.” Becher commented, “We have been conducting similar studies for associations since 1980 and currently work with over 200 national associations – primarily doing research projects on financial operations, compensation/benefit practices, and member satisfaction.” While these studies are standard procedure for Industry Insights, AED knows that some members are initially hesitant to give up some of their dealership’s financial information – with good reason. Aside from the digital piracy that occurs more and more frequently these days, there are competitive concerns and hesitancies with regard to antitrust compliance. So let’s tackle these potential misgivings head on. Because this report will only get better throughout the years with AED member participation. Data Privacy Every day, it seems, another person or company is hacked by digital pirates. To respond to such looming threat, Becher says, “We hold confidentiality and security of the utmost importance. In about 40 years of working with associations and their members, we have not had a security breach. We continue to work with the data anonymously and in the aggregate form and continue to update our databases and websites to make sure we are within all appropriate standards.” Competition Concerns As mentioned by Becher, to maintain confidentiality all data is worked with on a completely anonymous basis (all company identifying information is removed, and each company is assigned a unique code). No individual company responses are shared with AED or with any other person or organization. That’s right – not even AED sees the company-specific information used to compile the Cost of Doing Business Report.

Additionally, all data is shown in aggregate form, with a minimum of five responses needed to show any metric. Antitrust Hesitancies AED members might have qualms about exchanging price or other sensitive business data among competitors. The FTC’s publication Spotlight on Trade Associations sheds light on this major concern: “Any data exchange or statistical reporting that includes current prices, or information that identifies data from individual competitors, can raise antitrust concerns if it encourages more uniform prices than otherwise would exist.” Note the emphasis on current prices, which the CODB report does not cover. The FTC goes on, “In general, information reporting cost or data other than price, and historical data rather than current or future data, is less likely to raise antitrust concerns. Dissemination of aggregated data managed by an independent third party also raises fewer concerns.” These are precisely the means used by AED and Industry Insights in preparing the CODB report. There seems to be a lot of synergy between AED, its dealer members and Industry Insights; 118 companies, representing approximately 25 percent of AED’s dealer members, participated in the compilation of the CODB Report last year. “This is a robust report,” says McCabe, “that contains information that can’t be found anywhere else. Dealers can utilize the tools in the online platform to benchmark themselves against other dealers by region, sales volume, line of business, and more. It really is an invaluable tool for dealers to use to evaluate their results.” Becher says, “We are very happy with our partnership with AED on this project. AED is clearly very appreciative of their members and wants to provide them with the best information possible. We are also very encouraged with our increased participation since taking over the study, which makes the data even more robust than in the past. All in all, we expect continued growth in participation numbers and continued success for those that participate.” April 2019 | Construction Equipment Distribution | www.cedmag.com | 39

CED

Magazine recently visited Altorfer CAT to produce a video on technicians in the workforce. The purpose of the video is to bring awareness of the job and get potential students interested in this career path. Shop technicians, specialized technicians, special projects technicians, lead shop technicians, and of course, field technicians are the lifeblood of our industry, and Altorfer CAT trains and hires them all. We got some fantastic footage and were able to capture some great interviews with Altorfer’s key players. In 1998, Altorfer CAT partnered with Illinois Central College (ICC) in East Peoria. Earlier that year, ICC had started their Caterpillar Dealer Service Technology Program, also known as Caterpillar ThinkBIG, as a joint venture with Caterpillar Inc. to develop a pilot program to proactively address the growing need for technicians in the heavy equipment industry. The main focus of the program was to train young men and women on a Caterpillar product line that would provide the program’s partner dealers with high-quality technicians. The partnership between Altorfer CAT and ICC has proven to be fruitful over the last 20 years. Since its inaugural class of 1999, the ThinkBIG program has graduated over 330 students. First accredited by The AED Foundation in March 2003, the program achieved its third reaccreditation last April. Through the ThinkBIG program, students earn an associate in applied science degree. With the help of ICC, Altorfer chooses a handful of students to sponsor through their two-year program, offering four paid eight-week internships at their shops and long-term employment. These sponsored students also receive free uniforms, a safety account and financing on their basic tools with no interest. Here is a little about Altorfer’s ICC Caterpillar technician program from some of the folks that know it best.

40 | www.cedmag.com | Construction Equipment Distribution | April 2019

W I TH J O H N D O D G E , B R AN CH SER VI CE M A N A G E R: So, what would you say to someone who did not come out of college or know what to do, how would you get them involved in this industry? I recently went to career day at a high school and was asking seniors, “What do you want to do when you grow up?” And if they said they wanted to build this or fix that, then that was a lead-in, because our opportunity is that they get eight weeks of working with a seasoned mechanic who helps them learn aspects of the machines, and they go to school. It’s not just bookwork; they have clinics and hands-on curriculum as well. You have to challenge them. It’s a competitive industry. When you lose students to other schools or dealers it’s sad, but when students are trained by CAT dealers, they can go anywhere in the country. If you have any drive or interest in mechanics, give it a chance. Tell them to stick with it for five years and they will have a solid résumé. Many technicians get offered jobs by their customers because they know they are so well-trained. Our dealership is unique because it’s all-inclusive, including welding and machining departments.

VIEW T HE INTER VIEW H ERE: bit.ly/aedvisitsaltorfer

What would you say to women who are thinking of entering the industry? On the customer side of the business there’s a huge number of women operators, and they’re very good operators. They just have that “feel.” It’s different than a guy – a guy is rough, but women pick up the feel of a machine quicker. But on the technician side, it’s different. That’s when the rough physicality comes in handy. When we go to trade schools or anywhere, we encourage women just the same as men because it’s a new era. It’s not their grandfather’s shop anymore, and women are just as capable of doing it. Women’s biggest fear is not being as strong

as men, but now with all the new tools and technology that are available it’s really not a problem. The technology side of the industry might draw in some women, but with these jobs, it’s going to be 25-35 percent technology and 50-75 percent physicality. So, many women right off the bat are not going to see themselves capable of that physical part. We interview women for machining and welding positions, because we have seen many good ones in the past, but as far as the mechanical, they would have to have a very strong drive to rip something apart and put it back together again. Do you see any special demands from the technician industry? The whole industry is looking for journeymen. And that’s the long-term goal of the apprentice program, to train technicians that are ready for the journeyman seniority and responsibility. Journeyman technicians are required to do anything we send them out for, including whole tear-aparts. But the benefits of added responsibility are there as well: more pay, freedom to do all parts, and the ability to share knowledge with the apprentices they are paired with. There is a draw for technicians to move into the field, and most usually work in the shop for five years and then move into field. April 2019 | Construction Equipment Distribution | www.cedmag.com | 41

W I TH MI CH AEL CH R USI EL , TECH N I C I A N : Tell us about your path to becoming a technician. Before I was a technician, I went through the ThinkBIG program, with a CAT dealership sponsorship. I am really very happy with the field I chose. Not only am I engaged in my work daily, it pays great. If you like to work on things, then pick heavy equipment. The heavy machinery industry is more challenging than regular automotive mechanics, and it prepares you for a lot. There are so many different machines and more things to focus on. The schooling gradually increases in challenge. I found it beneficial to get both the schooling, from very good teachers, and hands-on experience at the dealership, with technicians that stay up on the new technology. Comparing the costs of completing this school versus other regular bachelors or master’s degree programs, I didn’t gain extensive debt, and now I am making a substantial income directly after graduating. I went to school for a year and a half and took loans out for everything – for housing, all tuition, all bookstore credit, plus money to live on while I was down there. I am only $13,000 in debt for that, but I’ve already made way more than that with the knowledge that I gained from school and being able to work on things, and regular paychecks. My cousin went to school to be a surgeon and is hundreds of thousands of dollars in debt.

42 | www.cedmag.com | Construction Equipment Distribution | April 2019

WITH MATTHEW OFFMAN, JOURNEYMAN TECHNICIAN IN ALTORFER’S MAIN SHOP

What kind of work are you doing these days? I work on all sorts of equipment – engines, emissions, bodies, all parts basically. Definitely a wide variety of things. I came from the trucking industry and had a personal interest in machines, and I was seeking a stable, consistent work environment where I could get to do things. What kind of opportunities did CAT offer you that others didn’t? You can do so much! CAT really opens doors to lots of different areas in the industry. I can work in the field or at a dealership with strong job security. Other jobs didn’t offer that much variety, but here, the sky is the limit with where you can go. It’s job security too, because it’s not just one part of the industry, it’s everything. I enjoy not knowing what I am going to be working on, on any given day. I would tell up-and-coming technicians to take advantage of all the opportunities to learn throughout school.

Tell us about some of your day-to-day activities. There’s such a variety of tasks to be accomplished day to day. I coordinate all the shop work between the UN shop sales force and my technicians on the floor. I preorder parts for any jobs that are coming in, I talk to all the sales coordinators to meet deadlines according to what their needs are, I coordinate with paying customers, I do quotes for customers. I work on pavers mainly. I review jobs when they get turned in by technicians completing the work, and I inspect machines for quality control that are completed by our technicians on the floor. Oh, and I also give supervisors a hand when they need something. There’s never a dull day on the job. What steps did you take to get where you are today? How did you get into the industry? I started out in the advanced technician training class at the technology center. I then got recruited into the ThinkBIG program. I was in the third ThinkBIG class and spent two years there, then I got hired on here and have been here for 18 years. I was an apprentice/intern in the UN shop (that I’m currently running), transferred to the main shop and worked there for seven years, then got switched back to the UN shop. What’s the most important step you took to get where you are in your career today? Learning from the old guys! I did not give them any attitude, I kept my mouth shut and I learned from the guys that had 30 years of experience. While at DuPage, I was in an automotive training class, and recruiters from Caterpillar, Mercedes Benz, Toyota, GM, and Ford approached me. One of my instructors told me to go where the money was, and at the time Patten was paying the most out of all of them. It seemed like the best career opportunity that I had. There are different challenges every day. And you get to see all the new technology that is coming out, like the new gear controls, payload controls, a lot of new stuff you have to figure out on your own, so it can be challenging. What technologies are you excited about using in your day-to-day work? Troubleshooting-wise, it’s easier to diagnose a machine these days; now that a lot of things are electronic, you can narrow down symptoms really fast, you can plug in computers and see if operators have been abusing the machine for 30 weeks or if it’s something that just happened. It cuts down on a lot of troubleshooting time and also allows you to narrow down the source of the problem – operators, customers, or maintenance practices. April 2019 | Construction Equipment Distribution | www.cedmag.com | 43

W E L L S FA R G O S U R V E Y Construction Industry Reports Strong Optimism for Eighth Straight Year

96 PERCENT EXPECT TO BUY NEW, USED EQUIPMENT | 92 PERCENT GIVE NOD TO RENTALS

or the eighth consecutive year, construction industry executives say they feel optimistic about the year ahead for their business sector, according to the 43rd Wells Fargo (NYSE: WFC) Construction Industry Forecast. The 2019 forecast reveals sustained confidence for the industry and expectations that expansion is more likely than contraction. The results are a tempered decrease from 2018 record-high optimism. Conducted by Wells Fargo Equipment Finance in late 2018, the survey tallied opinions of industry contractors, manufacturers and equipment distributors to determine the National Optimism Quotient (OQ) — a key indicator of whether or not local, nonresidential construction is likely to increase or decrease in the coming year. The 2019 OQ remains in strongly optimistic territory at 122. Although optimism declined slightly from 133 in 2018, most executives maintain an encouraging outlook on industry expansion and 2019 net profits. OQ scores above 100 represent strong optimism for increased local construction activity relative to the perceived level of activity the prior year. Scores between 75 and 99 denote more cautious or measured optimism. A score below 75 signals a more pessimistic point of view, where fewer executives say local construction activity will increase than say it will decrease. “Even if this year’s activity remains the same as last year, many see it as a positive for the industry due to significant growth over many years,” said John Crum, Construction Group national sales manager for Wells Fargo Equipment Finance. “If 2019 turns out the way survey respondents indicate, we could be in for another good year.” To weigh future business decisions, Crum urges business owners to consider the full-report details and also to read respondents’ verbatim comments about the industry printed throughout the report. In addition to determining the OQ, the 2019 survey posed questions about equipment sales and purchase expectations, rental market trends, and major concerns and challenges that industry participants identified as relevant to their businesses.

Top learnings for 2019 from the Construction Industry Forecast include the following: •

New equipment levels expected to be maintained or increased Ninety-six percent of contractor respondents plan to purchase new or used equipment in the coming year. Of those, 76 percent intend to maintain or increase their purchases of new equipment compared to 2018. Three-fourths of contractors say they will increase or maintain their level of purchasing used equipment, and nearly 13 percent don’t plan to purchase used equipment at all. Contractors intend to maintain or increase rental equipment levels

•

Ninety-two percent of contractor respondents intend to maintain or increase their level of rental activity. Forty-six percent of equipment renters identify flexibility as the primary reason — far above other reasons for renting identified in the results, including renting costs. Finding qualified workers remains a concern

•

Ability to hire qualified workers is the No. 1 concern among survey respondents in two categories: Fortyseven percent of contractor respondents cited hiring qualified workers as their top cost concern; 36 percent of all respondents pegged it as the leading risk to the industry. Executives ranked qualified workers above the impact of health care costs, employee wages and benefits, tariffs, interest rates, and equipment. How does the Optimism Quotient compare to other key economic indices?

•

Although there are outlier years, data over time shows that the OQ tracks closely with four economic indices that are significant to the construction industry outlook: •

Architectural Billings Index

•

Private Construction Index

•

Industrial Production Index

•

Public Nonresidential Construction Index

Download report at mail.wellsfargoemail.com/construction-industry-forecast 44 | www.cedmag.com | Construction Equipment Distribution | April 2019

AED INDUSTRY SHOW PREVIEW

2 0 1 9 C H A N G S H A I N T E R N AT I O N A L CONSTRUCTION EQUIPMENT EXHIBITION MAY 15-18, 2019

C HA N GSH A INTER NATION AL CO N V EN TI O N AN D EXH I B I TI O N CEN T E R, C HI N A www.chinaCICEE.com

Featuring an intelligent new generation of construction machinery:

mining machinery, municipal engineering equipment, logistics equipment, aerial work platforms, special vehicles, marine machinery, agricultural machinery, construction equipment and accessories

REAS ONS TO ATTEND CICEE ■ The exhibition highlights the Belt and Road Initiative and the steady upswing in China’s economy, gathering together the countries along the “Belt and Road” and the key construction projects in central and western China to provide sustainable and important business opportunities for the development of the construction machinery industry. ■ The exhibition will center on the theme of the “intelligent new generation of construction machinery,” with a focus on high-end product technology and upgrading of industrial structure. Technological innovation, product innovation and model innovation will be the force behind the integration of information technology and manufacturing technology and improving the support capabilities of the entire industrial chain of construction machinery. The aim is to provide the direction for achievements in the new generation of technology and product development in the industry. ■ Changsha construction machinery is the primary arena for China’s “manufacturing power” strategy. By 2020, the business revenue of the Changsha construction machinery industry is expected to reach USD$35 billion, and USD$56 billion by 2025. This will accelerate the formation of a world-class construction machinery industrial cluster. ■ The exhibition showcases the interconnection of the entire industrial chain of the world’s construction machinery, so that manufacturers, upstream accessory enterprises, after-sale markets and clients can meet on one platform for promotion, demonstration, trading and information sharing. ■ Hunan province has become a national demonstration area for the “Made in China 2025” plan, and the national remanufacturing base is in Changsha.

Exhibition area: 213,000 m2 (expected) Number of exhibitors: 1,200 (estimated) Number of visitors: 150,000 (estimated)

EXHIBITION PROFILE 2019

Guiding Units:

Ministry of Industry and Information Technology of the People’s Republic of China Hunan Provincial People’s Government Organizers: China Machinery Industry Federation, Asia-Pacific CEO Association, Chinese Mechanical Engineering Society, Industry and Information Technology Department of Hunan Province, Department of Commerce of Hunan Province, China Council for the Promotion of International Trade–Hunan Branch, Changsha Municipal People’s Government Undertaking Units: Changsha Municipal Commission,

Economic

Changsha Municipal Management Office,

Conference

and and

Information Exhibition

Changsha Economic and Technology Development Zone Management Committee Executive Units: Hunan Power City International Exhibition Co., Ltd. CMIF Brilliance Convention & Exhibition Co., Ltd. April 2019 | Construction Equipment Distribution | www.cedmag.com | 45

STRONGER TOGETHER W H AT T H E T O R O A C Q U I S I T I O N OF CHARLES MACHINE WORKS MEANS FOR DISTRIBUTION CHANNELS

nless you had your head under a subterranean trench last month, you heard that Toro Company announced their purchase of Charles Machine Works. For the all-cash purchase price of $700 million, Toro purchased the myriad companies under Charles Machine Works, including Subsite Electronics, DW/ TXS, HammerHead, Radius HDD, American Augers, Trencor, MTI Equipment, and Ditch Witch. This is by far Toro’s largest acquisition, towering over its $227 million purchase of the Boss line of professional snow equipment in 2014.

Charles Machine Works aligns well with and will contribute to our own strategic priorities of profitable growth, operational excellence and empowering people. The company expands our business in a meaningful way in an adjacent category we know well through our own specialty construction business and in a market that is attractive given the potential for growth in addressing both aging infrastructure that is currently in place and new infrastructure that will be needed to support next generation technologies like 5G.

Rick Rodier, group vice president, construction business for The Toro Company, said, “We have long admired and respected the Charles Machine Works team and its family of companies, from their deep history and family legacy to their market leadership and strong dealer channel.” According to the press release announcing the $700 million cash-in-hand deal, the purchase was a natural fit for both companies. Richard Olson, Toro’s chairman of the board, president and chief executive officer, said:

Rick Johnson, Charles Machine Works chief executive officer, added to the purchase announcement:

The addition of Charles Machine Works will further strengthen our portfolio of market-leading brands supported by talented employees, a commitment to innovation, a best-in-class dealer network and longstanding customer relationships. As an organization,

46 | www.cedmag.com | Construction Equipment Distribution | April 2019

Our success is the result of years of hard work and an unwavering commitment to developing innovative solutions for customers. From developing the world’s first service line trencher in Perry, Oklahoma, to today’s robust Ditch Witch dealer network, our family of companies is well-positioned to join The Toro Company’s family of brands. We look forward to building upon our founder’s legacy of bestin-class offerings in the expanding underground construction market.

Formalities and niceties aside, AED members are left wondering what the purchase means for Charles Machine Works brands and distribution channels and how Toro will support dealers post-acquisition. Luckily, CED has the scoop on everything you need to know.

There have been murmurs throughout the industry that the purchase price seemed lower than expected for such an outstanding family of companies. Responding to these largely unfounded rumors, Rodier pointed out, “The purchase price of the acquisition is just one of many factors that both parties evaluated. When both parties looked at all the aspects of the transaction, we considered it a ‘win-win’ transaction.”

B R AN D N AMES

A C QU ISITION GR O UND WO R K

Those familiar with the acquisition have said the negotiations between the two companies heated up within the past eighteen months. But according to Rodier, Toro has respectfully had its eye on the “Underground Authority” for quite a while. “As with any relationship, these things take time to develop. It needs to be right for both companies, and we certainly believe the combination of these two companies will be stronger together. We’ve had interest in Charles Machine Works for some time and were impressed by their strategy and vision to cover the full life cycle of underground pipe and cable.”

REG U L ATORY APPROVALS

According to Toro representatives we spoke with, the acquisition of privately held Charles Machine Works is still subject to federal and international regulatory approvals. The transaction is contingent upon customary closing conditions, such as providing premerger notification in the U.S. to the FTC and the Department of Justice per the Hart-Scott-Rodino Act, and outside the U.S. to governing bodies in applicable jurisdictions. (These approvals may have been granted by press time.)

P U RC HASE PR ICE

The press release announcing the acquisition showed how the two companies amicably arrived at a purchase price: Toro expects to finance the transaction with a combination of cash on hand and debt, including from additional financing arrangements and borrowings under its existing credit facility. The all-cash purchase price of $700 million represents a multiple of approximately eight times Charles Machine Works’ calendar year 2018 EBITDA, including $30 million of anticipated annual run-rate cost synergies phased in over three years, that Toro intends to achieve through opportunities in purchasing, manufacturing best practices and administrative efficiencies. Toro expects the transaction to be immediately accretive to EPS excluding purchase accounting adjustments and transaction related expenses.

One of the first questions to run through the head of anyone who hears about the acquisition is probably “What’s going to happen to the Ditch Witch brand?!” Rodier graciously put these concerns to rest when he told CED: This essentially will be a change in ownership, with Charles Machine Works companies eventually becoming part of The Toro Company’s family of brands. The Charles Machine Works name and logo is a strong reminder of the legacy the Malzahn family has created in the underground and trenching industries. These companies/brands will continue on and be the cornerstones of the underground construction business. We are confident these brands can continue to be market leaders in the categories they compete in.

D I STR I B UTI O N CH AN N ELS

CED readers surely want to know what the acquisition could mean for Charles Machine Works distribution channels. Rodier said: The industry-wide trend of consolidation of equipment dealerships leads me to believe the acquisition will result in similar fashion. One of the things that makes Charles Machine Works and its family of companies so successful is its best-in-class dealer channel. It was a key reason why this acquisition was attractive to us. We cannot be successful without their distribution network and the strong customer relationships they’ve forged over years of service and expertise. This is a channel for which we have great respect and will look to help strengthen and grow. This includes Ditch Witch’s four company-owned dealers. “Those are included in the acquisition,” says Rodier, “and they will continue to operate as they had. These too are important to the continued success of the Ditch Witch brand.”

PO ST- ACQUI SI TI O N SUPP ORT

In response to the questions “What role will Toro play in supporting dealers post-acquisition? What do they see as the biggest challenges moving forward?” Rodier stated, “Similar to what we shared above, it will be business as usual. We have great respect for the channel of Charles Machine Works, and the role they play in supporting the complex needs of the underground construction professional. We will do everything we can to support their efforts.” April 2019 | Construction Equipment Distribution | www.cedmag.com | 47

U NDE RG RO UND RESEAR CH AND DE VE L OPM ENT

The firsthand knowledge that comes with being The Underground Authority is hard to compete against. And part of Toro’s admiration and respect for Charles Machine Works operations could justifiably be based on the abovementioned fact. Referring to Toro’s previous R&D efforts in the subterranean space, Rodier commented: The Toro Company’s R&D group has been a critical part of our desire to provide customers with innovative product solutions to all our markets. Equally, we are impressed with Charles Machine Works’ R&D efforts to do the same, which is one of our many cultural similarities. As we move forward, we will certainly look to find and share whatever technology and innovative synergies we can take advantage of. This is one of the many synergistic opportunities this merger will offer. The themes of synergy and compatible company cultures reverberate throughout the acquisition press release. Olson stated: Culturally, our two organizations are very well aligned, and, in our past experience, that has been

essential to the success of a business combination like this. We share similar people values, performance expectations, business models focused on innovation, brand and channel, and strong community ties. We have respected and admired Charles Machine Works for a long time. We were excited when joining forces became a possibility, and we know that both companies will be stronger together. Closing Comments Rodier wished to add: We have long admired Charles Machine Works’ many market-leading brands, strong dealer network and long-standing customer relationships, all things that are important to The Toro Company as well. Culturally, we believe that our two organizations are very well aligned, which is essential to a business combination like this. We remain committed to the communities where Charles Machine Works’ employees live and work. Historically, this has been important to both companies, and it will continue to be going forward. Thus, it is clear that the two companies are stronger together. Only time will tell how the underground construction and service industry will benefit from this newly forged relationship.

A DVERT IS E RS ’ INDEX

ASV, LLC IFC

asvi.com/AED

CDK Global OBC

cdkglobal.com/us/construction

e-Emphasys Technologies Inc. 1

www.e-emphasys.com

FAE USA, Inc. 21

www.fae-group.com/us

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

YOUR NEW DIGITAL CED EXPERIENCE IS WAITING FOR YOU AT CEDMAG.COM!

April 2019 | Construction Equipment Distribution | www.cedmag.com | 49

Final_Print_Ready_18-9251_Heavy_Equipment_CONDEX_January_issue_full_page_ad.indd Ad_template.indd 2 1

1/8/2019 12/21/18 7:55:56 4:00 AMPM