Dale Hanna and Ron talk about Fleet Management and how it relates to the Maintenance Services business.

We have an interesting evolution that equipment used to be pretty simple. Correct. And it was kind of like the old, the first mechanic from my perspective was a blacksmith who worked at a forge and made horseshoe storage. And so it was a guy that had the biggest back that was the one that was successful. Today, it's the guy who's got the biggest brain. Those technicians have to be, they're some of the smartest people we've got at dealerships with what they have to understand about hydraulics and electrical and temperature and da-da-da-da-da. And then what you were saying about maintenance is interesting. Our Polish contributor, Richard Kicuk, was just talking about maintenance. owners and operator, the operator and owner manual that has all of that stuff in there and how in the old days it was a book. And the book is only as current as the day it's printed, which means the week after it's all of a sudden gone.

But we don't have that excuse anymore with the internet, with et cetera. So telematics allows me to automate the machine, the communication with, I know exactly where it is. It's kind of like signals. What do you mean by API, just to flush out that jargon? Yeah. Manufacturers have

So that has evolved even more now, where we've got sensors in the machine monitoring temperature, flow. Oh, yes. A whole series of things. So, you know, where you started, I remember a client of mine back in the late 80s, early 90s had two people whose purpose in life was picking up the phone and calling every customer that had a machine that was on a maintenance agreement to find out where they were and how many hours. Exactly. So they could schedule it. And your comment about seven calls. You know, that might be optimistic. If you were really lucky, you got it in a couple of three. But, you know, so this is taking away the loss of productivity through the inability to contact people the first time because we've automated the NAMM thing. So your supplier of the maintenance services knows without asking. instantaneously where the machine is and how many hours.

Yeah, and the other part of maintenance, if we look at it, we've got repairs. Correct. They started in the shop because we had specialized tools, lifting devices, et cetera, that were required. Yes. And we added a component in the field when we got good cranes, five-ton cranes that we could put on without riggers and blah, blah, blah. Yeah. And so that became complicated. And then the manufacturers added to the mix by broadening the offering of kinds of equipment from tractors to tractors and loaders and excavators and loader backovers and blah, blah, blah. And as all of that exploded, the capacity for the dealer to keep up from a repair point of view was challenged. Correct. because of warranty. So the warranty took a priority. Guess what got left behind? Maintenance. So here's maintenance. Now the customer would come and they would hire a technician from the dealer. Dale, we'd like you to come and work for us.

And we'd like you to look after these machines. You've been trained by the blah, blah, blah. So you know how to maintain them. We've got the owners and operators manual. You know what's important. Here we go. While there wasn't enough, the owner, the contractor found it. There wasn't enough to keep Dale occupied 100%. Dale recognized this. He's sitting around not having enough to do. So he looked for other things to do. He started taking away the low tech work. So the dealers, back down and happy, continued with the repairs, continued with the warranty, continued in the shop, continued in the field, and they let maintenance go away to the point that surveys say. The customer does 95%. Somebody under the control of the customer does 95% of the maintenance work in America. 5% is done by the OAM dealer. We can get that back because of these tools.

So in maintenance management, we can track the location, we can track the hours. That means we can schedule men. So there must be a component in the maintenance management of scheduling or managing routes that the service technician has to follow.

It's amazing. I saw something last month from Australia where the operator of a machine can initiate oil sampling from his operator station.

is. I mean, the whole thing is evolving, isn't it? In every maintenance cycle, there's an inspection. Yes. And that inspection, I've always said that the more I touch the machine, the more I can control the operating costs of that machine. The owners and operating costs is one of my primary missions. And so many people, like you indicated earlier, so many people look at maintenance as dropping fluids and changing filters. That's not at all what the manufacturer specifies. When we look at lifecycle management and we start looking at standard times, that's how you do the routing, I'm sure. Like the 500-hour service on that type of machine is this many hours, boom, boom. You're 102 miles away. It's 50 kilometers an hour or 70 miles an hour. It's going to take boom, boom, boom. So all of that stuff is easily automated but hasn't been done by very many people. It's surprising to me.

Oh, no question about it. No question about it. Alex Schussler, who founded SmartEquip, went down a similar path or a parallel path to you. And you and I have spoken about this, that he views the opportunity of parts and service, the consumption of parts and service per machine. is 7% of the purchase value of the machine over the useful life of the machine. So you buy a machine for $400,000,7% of that, $28,000, is going to be spent on average every year for 20 years in parts and service and process. Three for parts, three for labor, one for process. And his contention, and it's interesting, his contention is we can eliminate the one for process by automation.

No more purchase orders, no more invoices, automatic payments, all of that. So you take one point, one piece of the price of the machine, $4,000 a year, and that eliminates price competition on the other side. So 3% of the year is, you know, of $400,000, it's $12,000. I take $1,000 out of that because I can't be in the process. That's 9%,15%,18%. The price differentiation on the product all of a sudden goes away.

So competitive advantage, worthy intent, thinking of Ed Wallace, I care, Dale. Here's my maintenance business. Here's how I do it. I can track it with telematics. I'm going to know where your machine is. I'm going to know how many hours. I don't know how many hours are idle on your engine. And the customer is looking at me saying, oh, wow, you know my business. Cool. We'll let you look after that. I can worry about digging the hole. You just look after the machine that I use.

Yeah, and as North America is particularly challenging, we've been the last ones to rental, as an example. But Europe and Asia, I think in Europe, the statistic is that 50% of the working hours on machines are on a machine that's rented. Well, it works because the geography is compressed. Like all of Europe fits into Quebec. So I can drive from one country to the next in a very short period of time. Driving from where you are in Phoenix to Dallas, it's going to take a few hours.

Asia is the same. Japan has got an unbelievably high concentration. I think it's over 80% of the hours are put on rental machines. So, you know, we have different test tubes, if you will, in different regions of the world that allows us to try these tools. What will work in Europe maybe won't work here, but maybe it will.

It's, again, an interesting... evolution, the equipment world, if you look at the large equipment, mining support equipment, forestry support equipment, you've got a very small number of people that deal with those machines. In mining, it's basically Caterpillar, Hitachi, and Comatsu. Then forestry got similar circumstances where you got specialized equipment. The general contractor has maybe 20 or 30 different vendors to contend with. So those dealers, if we're going to look at maintenance, maintenance can be done by a technician for all brands.

They can get the parts for all brands. Just go back to the OEM dealer. What they can't do, however, is have the information like your maintenance management, fleet management system provides hours, condition, location, so that I can manage that business. And once I know how to manage it, anybody who's got technical skills can do it.

So, the customer could actually do this himself. It could be a self-service thing.

yeah. It's the same story, Dale, in almost everything, like time cards to track a payroll issue for a technician and posting it to a worker. There used to be two cards, you know, and they were never in sync. So, you know, and similarly stories. that, you know, pictures are wonderful to be able to send to a customer to explain or describe what you're looking at, as opposed to, Dale, the fufu valve on your left binky is not looking that good. No, well, here's a picture. We can, oh, I see that.

Well, again, it becomes a function of the speed. My classic illustration is in parts at one point, we used to send stock orders by mail. Right. And I'm in Canada then, so we had Her Majesty's Mail meeting at the border and censoring a package to a pony express driver. And then we went to teletype. Most of the people listening are probably never, they don't know what that damn thing is. And then we went to teletype. And then we went to a computer entry. And I remember the owner of the dealership that I worked at, I was at a Caterpillar dealer and Caterpillar wanted to connect our computer so that the emergency orders and the stock orders could go directly from our computer into their computer without any intervention. Bob Hewitt was the owner. He said, I am not letting anybody into my computer ever. You can have two machines. You can have a chair in the middle with an operator swiveling, but they're not going to connect. Like that's 50 years ago.

Today, everything's

yes. So it's unbelievable. The maintenance, your fleet management, it becomes a function of the limitation of our imagination as to what that can do, doesn't it?

And it's interesting because as you get older, you recognize how much more important in real terms time is. Absolutely. As we're younger, we don't really think about it. We just got our heads down and we're working away and we get this much done today and I can outwork you or this and that and the other thing. That's not the case anymore. It's who can be the most productive, most effective. I'm not going to say efficient, but effective in the use of time. And it's typically transferring information. Fantastic. So how do they get in touch with? you to talk about maintenance management services?

That's pretty sexy.

Dale's right now looking up what the numbers are for fleet, I suspect.

877-57-FLEET. We'll get to you.

It's the truth, isn't it? It's kind of nice not to have to remember all that stuff. My wife is a maniac. She remembers every number. She's an accountant by trade.

nerd than I am.

Yeah, just a small size thing. I remember we had a party line when I was growing up where our ring was a long, a short, and a long. And there were, I don't know, seven or eight people on the same loop. Yeah. You know, depending on, you had a slow night, you pick up the phone and listen in on people's phone calls. You had to be careful what you shared, you know.

update on the management. I think it's going to be very helpful to our audience. Is there any closing comment you want to give us?

hope so. I hope so. You know, working from home has taught us things. Virtual education has taught us things. Some good, some bad. But we're never going to go back to where we were. And technology is one of the things that will free us. from falling back to where we were. It's, you know, we're starting to make wings. You know, Ray Bradbury, who was a science fiction writer when he was alive, says it's awfully hard to grow wings when you're falling. And we've been falling through the pandemic, trying to find a way to soar. And very difficult. Thank you, Dale, for this time together. And for the discussion with maintenance management, I hope that everybody listening has gained something from it and you know how to get in touch with Dale so that you can follow through on this. And we look forward to having you with us in another candidate conversation somewhere in the near future. Mahalo. Thank you for listening to our podcast.

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