Ron Wilson's Insights on the Future of Machinery

Well, I started at the finished college at ASU in 1980. I went to work for the cat dealer there, working night shift in the warehouse. And I worked there for 23 years and then left there and went to work for a company in California that was starting up a Komatsu dealer. They were a Cummins distributor and took on the Komatsu line. And that was very exciting because starting up a dealership, which is what this was, was that was very exciting to be a part of that organization. Good organization. I was there for about five years, then realized they were not going to grow much bigger because they were really a Cummins, had them on a pretty tight rope for one thing. And so I went to work for Rope Machinery as vice president of product support. And then it was a few years later, they took on the California territory and asked if I would go over and help with the transition, pulling the two together. 10 or 15 years. I worked at Rode in various roles from working the data analytics for marketing side of the business, worked in the training department, but also part of the role of leading a pricing team. So we're establishing pricing for all the service work and primary component rebuilds. So I had a lot of opportunities to do different roles within the organization, different organizations and kind of really enjoyed it.

they did. Yeah.

Yes. Yeah. Yeah, Kevin Shanahan and Paul Bleeker were the two guys, the two owners. I worked with Gail Plummer. He was the guy leading up the tractor side of the business. But Kevin Shanahan and Paul Bleeker, very good guys. I've been fortunate. to work some good dealers and dealer principal people that savvy business people knew the markets and were really good at what they did.

Biggest change is the, of course, we've all seen that, the smaller dealers becoming fewer of those. Very difficult to get in, to become a dealer unless you're a very large organization like Road Machinery was owned by Mitsui. So having to work across a very large organization, the people changes, the workforce coming in and the workforce beginning to retire. customer base changing. You know, you get the corporate accounts, national accounts becoming a bigger, bigger deal, but yet how to take care of the smaller contractor trying to come into the business and that owns a skid steer or a backhoe. And it became very, very competitive. I mean, just I saw about 1980s when Komatsu came into the U.S. I remember working with Empire and you walk down this long hallway between the corporate office and the shops. And John Whiteman at the time had a list of some type of Japanese logos along the hallway. And I don't remember what those said now, but that was to remind all of us of the competitive nature that Komatsu was bringing into the marketplace. And so really saw the competitive change within Empire with John and then later with Jeff coming on. Jeff's very, very competitive. And, you know, Jeff's all in. His heart is all there.

No, I do not.

No, they had to. So the Mitsui structure, the CEO was from Japan. The CFO was from Japan. And the rest of the organization, for the most part, was from the U.S. So we had the president and the vice presidents. They were, you know, they were industry folks from the industry.

No, this is after Mike Bose. This was Chuck Paul had just come on board. I got you. Yep. Just come on board. And I knew Chuck. I'd worked with Chuck at Empire. So I knew him pretty well.

Well, I think, like you said, I think that their dealerships will continue to get smaller. The first number of dealers, individual dealers getting much bigger. I think Empire was very lucky, very fortunate because they got into the mining market. I was there when they sold the first 789 truck to the Cypress Corporation in Tucson. I didn't know what a haul truck was. At that time, the director of parts brought me a parts book of a 789 and said, order the inventory as part of parts. I didn't know what any truck even looked like. And I remember standing in the shop floor of Cypress and the maintenance manager said, Empire knows tractors, they know dozers, they don't own trucks. You guys never make it. And of course, a few years later, that's pretty much the cat truck is pretty much dominant in the Arizona mining market now. So that allowed Empire to market to really grow. If you take, if you remove the mining business from Empire and then visualize what it would look like. It would be a totally different animal than the mining has really provided the chance to expand services and rebuild component shops and hydraulic shops and things that would have been very typical to do if it had not been for the mining side of business.

I don't recognize that name.

Okay. Yeah, I don't think so.

I would doubt it because of the integration of all, everything's all intertwined. Now, they did have the mining dealer requirements and non-mining. They had things to look at. If you're going to be a mining dealer, you had to have these kind of capabilities. Right. So I do think, but hopefully they don't do that. I think that's really a, and actually the road now, if I remember in Arizona, it's now split into two. There's a mining, which is the Komatsu side, and their road is a non-mining side. I think that's.

Yeah, I think that's very.

Well, I don't know. I know for the dealer, their parts are, well, parts in the service, the absorption rate thing, I mean, those are so critical for the dealer to survive. Yep. So I think messing with that equation in any way whatsoever makes it much more difficult for the dealers to survive and prosper. And that's one thing. So working at Shanahan, we were looking at bringing on our very first lube truck. Yep. And so put the information together. And it's pretty hard to justify the return on investment of a lube truck strictly on the sale of oil and oil changes, the labor side. And the owners, Kevin and Paul said, no, no, that's not how we do that here. Okay, we'll look at the total parts and service. What does that bring to the company overall? And we'll base their return on investment. And parts will pay for part of that loop truck as well because they'll get the revenue too. So it's interesting how some dealers will take and manage the business a little bit different. But to me, impacting the balance of that parts or labor side can be very tough for a dealer to survive on that.

It did. And Comanzo had that as well. So in road, but they had not, when I was there, had not rebuilt any machines. We took, they've got, come on some great spreadsheets or whatever it was for a machine rebuild. So then Albuquerque had a really nice road machinery store, corporate office at one time. Yep. Big shop. So they actually did a rebuild of a Komatsu dozer, which was the first time in many, many, many years that anyone from road ever had ever done that. So, but that, yeah, that. Having the shop to do those kinds of rebuilds, it's great doing the lube service, but you've got to be able to rebuild the machines as well.

Right down to the frame, yeah.

Yeah, Kamasa had the same thing as the CAT did. I don't remember the Kamasa dealers I visited, I don't remember many of them ever doing that. Right. Fairly common with us, I'd say most cat dealers would do that, but Empire was big and they really, that was a great program. They marketed very well and they included the account managers, sales folks into the process so that it wasn't, you know, you don't want to have the sales guy trying to sell the machine and product support trying to rebuild the machine. They've got to be in the same boat. So Empire developed around it to where it would work with the sales people. compensation wise as well with the PSSR.

Yeah. Yeah. And that's kind of difficult. The marketplace puts a lot of risk on the dealer. I mean, when you're taking on the responsibility and the life of the component and the cost per hour and trying to average in at the beginning of the machine's life, what it's going to cost in five years or whatever it is, what the break-even point is, that's just a road struggle with that because they had that on their haul trucks. Empire struggled with that when they first got on board as well. And so that's... And CAT had developed a program, I forgot what it's called now, but it was a program to certify, kind of a certification for the customer as well as for the dealership. And if you are under the agreement, you had to make sure the hall profile was correct and the payload was within this range, plus or minus, whatever it was, and opened the book so we could see that. So that I really, the assurance program, I believe CAT called it, was really a, where the cat and the dealer was trying to work with a client to, what they call work together. Because especially the mining side, they really had to work together in order to get the availability and the productivity there.

Yeah, a little bit. And one of the challenges with that, the concept is really good. But usually those rebates would go back to the corporate office side of it. And the local operation, the mine, the maintenance manager, the folks on site, they didn't have any, there's nothing there for them. So that was a little bit of a challenge in some cases because there's no incentive for them. They didn't get a bonus on it. They were not part of it. It was more applied towards future purchases or whatever it was. So yeah, it was a great concept, but it wasn't. to me, was implemented down into the shop floor side on the mining side.

Yeah, probably more with Empire was really good on tracking participation in sales deals. Yep. which is a great, which to me was a great measure. And there's good things in it. And the one thing about Empire is they were really good about balancing that. That wasn't the only thing that drove the number. I mean, Cat, you know, Cat would come in, for example, or it could be Kamatsu or John Deere would come in and this is how you do this. But Empire won because as good of the dealer as they were, Cat was a little more flexible and understanding probably than some others. But Empire did a good job of balancing the partition rate and why and the lost sales and what happened and doing the analysis on it. And to me, what I saw was really how they managed was very well. Because if a deal was lost, salesman lost a deal, he wasn't so much on the fire. It was, let's see what happened. Because chances are there may have been something else that lost the deal. then the salesman wasn't responsible for. So it could have been a parts that showed up later or something else that trying to rebuild on something that the salesman really didn't have any role in that, except to maybe to manage and overcome the challenge. So, but I think that Empire is very good about balancing the benchmarks between the dealer and capped. And, but they were always pushing the limit, you know, and the dealers are kind of going to squeeze between what what the customer wants and what the dealer, I mean, what the OEM wants. You're right kind of in that middle, whether it be on parts pricing or machine sales or available, whatever it is, that the dealer's in a very tough spot of balancing that pressure.

No, the Empire, that market share was very important. to them they knew and it was kind of like you know if you could drive down the road and you see a job along the freeway and i what i i still do today is wherever i am in the country drive down the road and how many cap machines are as a total population kind of represents what their market share is and uh uh so now they were uh all over that market share piece they're very protective of uh of their of their pins and and uh parts uh sales percentage

Yeah, no. Do you? No, no. No, the information's there. I guess market share and no, really, there really isn't actually, you know, they can measure, there's some measurements there, but not enough to really drives too much of anything. You know, we don't really worry about, Empire did worried a lot about the competition. That was one of my roles on the marketing side is every month I did a competitive research on the competitors on the service side. And, you know, we were down where data analytics wise, we could pull. the parts list that the competitor bought i was tracking road because road did a lot of cat rebuild components so but i could track what kind of what kind of parts they bought and from there could determine what kind of level rebuilds they were doing uh so we did a lot of analysis every month i would do a report and get it back to the product support side on we looks like we lost an engine deal here because of what this competitor bought and what size it was and sometimes we could actually they would even give us a serial number because they needed to buy the parts anyway so So

Absolutely. Yeah, yes. And so we get to tracking by client, which you probably call them clients, not customers. There's a reason for that. We get tracking by client and we would identify. Which of our clients are not doing engine rebuilds with us or transmission rebuilds or hydraulics or welding? And why not? Because for the most part, you just look at, well, total volume of customer and you will pick out maybe lube services. But if you really get into digging into why in parts of the business they won't do business with you, for example, customers would rebuild their own engines or have road rebuild or somebody else, but they typically would not do transmissions themselves.

concern in the technicality of those. So are welding or hydraulic cylinders. So if you start drilling into which of this business are you not getting and then modify your programs to figure out, well, what's wrong here? What's happening here? And is it a marketing strategy or is there something else? And then go back after that business. But that's where the competitors would come in. They would come in and pick up the hydraulic, but we'll just do hydraulic cylinders for a while. And then they get into the pumps and motors. And next thing you know, they're into something else. But I don't think a lot of the dealers are drilling down far enough to really figure out where are we losing that business and why specifically for that type of component type.

That was important.

I think probably some of both and some on the customer side as well, because some of the, now this has been a while since I've been there on the dealer side, but the old school customers You know, they're used to having that paper parts book and then calling the parts line and it's busy or they get on the line, you get somebody on the phone you're talking to and they're trying to take the customer in front of them kind of thing. And so they're used to that. But then we started seeing the customer buying the online, the cat online, and they come out as well, online parts ordering. And then on the cat side, at some of the stores they set up a a customer we'll call pickup place you just go pick it up and leave we don't don't even come in the door yep so a customer actually order something online and go pick it up and never see the parts guy uh and you know first we thought well although there's going to be going to lose parts and and uh But we found very, I can't think of any time that they're worried about parts being stolen by another customer. The warehouse person may put the right part in the wrong customer bin, but those customers, I brought them back, hey, this is an hour, this is XYZ Construction Company, and I thought bring them back. That relationship between the contractors. But it was possible for them to actually buy a part and pick it up in a will call and never actually physically go into the store. And then, of course, delivery services, the dealers starting to do deliveries. And there's kind of a disadvantage with that. I was riding with a parts person and we're going along their route and we pulled into this customer shop area and we're stepping over hydraulic cylinders, cores, they're going to be rebuilt by a competitor and we're delivering, going around them to deliver these parts. And the thought was, well, if we can train this parts delivery person, hey, can I take these with me? And are we, you know, something to, on the delivery side to generate some sales opportunities and recognizing there's a sales opportunity could increase the parts sales too. So, you know, there are a lot of disconnects between the employees, how to use technology, and we make it easier, but we don't make it better. Yeah.

Yeah.

Yeah.

Yeah, use Dropboxes was real big. So that was an, I implemented that on the road machinery side as well. So at Dropbox and in that Dropbox, if it's a freeway job, there may be multiple customers' parts in that Dropbox. And so yeah, that was definitely a convenience. We also used the, implemented the empty shopping cart. So if a customer went online and clicked a bunch of parts and they never bought them, then okay, then he's priced, and he's doing it himself. But he's not buying parts from us. He's just checking price or he's going to give the list to a competitor who's going to wind up. Or they may buy the parts and then give them to the competitor to do the rebuild. But we use the empty shopping cart as part of our competitive analysis as well.

No, no. And then that takes people, a little bit of people. It's more of a... The data crunching part of it. But again, some of these things, we're talking about cutting headcount. They're trying to get down to the headcount of where they think it needs to be. But these other roles can really increase the revenue and provide increased market share. So a lot of the, some leaders just don't understand that part of it.

Yeah, we sure added to it. If we didn't create it, we sure added to it. That was one of the things when Jeff Whiteman came on with the leading empire, separating the client versus customer. Is that, you know, if you go to the grocery store, you're a customer, you're picking up whatever produce you want. Whereas if you're a client, it's more like going to your accountant or to your doctor is that you're there asking questions. But not all customers want that. Some want to be a client and they want your input. They want your suggestions. And others may start off as a customer and you may develop them into a client. But that was really, I think, a very key difference when I saw Road versus Empire is that that client view was very, very important within the dealership. And I think those customers recognize that they are a client. They're not just a customer. Not all wanted to be the client. Some wanted to be, I'll just, no, I'll call you when I need you. which is fine that there may become a point or time when you can convert them to a client type relationship.

Yeah, the employee. So we're like there's five generations working in the workforce today.

is. And I'm looking at, oh my gosh, I'm part of the older generation now, so I'm at the end of it. But what I've seen is that there are four key pieces of training on the employees. That's the technical side, whether they be an accountant or whether they be a part salesperson or a technician, there's a technical part of their job that they need to be trained and developed on. There's the people skills of working across other departments and peoples within the department. There's also a personal. training on how do you behave at work. And it's surprising we have to teach those things, but the people skills of working with our coworkers is so important. And then there's a safety side. One thing I learned when I managed field service for a while is that I was always talking about manage your field service truck as if it's your own. The problem is I had the chance of riding in an employee's pickup truck one time and it was a disaster. Yeah. So so they that that management was your own didn't mean anything to that individual because their personal how they manage their personal vehicle was was not what we wanted. So so learning how to adapt from someone's how they do things in real life or the personal skills or or managing an asset or, you know, that's that you have to get those in line with the corporate structure.

Yes, absolutely.

Yes. Now, probably not as thorough as we should have been, but I went through one of my change roles at Empire. One of my responsibilities when I took the new role is that we're going to have a layoff. And I was given direction, okay, you need to let go 60 people. And so when I pulled all the, so of course, ask the managers, you know, what's your list? And I got the list. Well, I pulled all the performance reviews for all those people. And oh, my goodness, I was surprised that they all walked on water. Not all of them, but walked on water. And what you're saying, this person should be let go. So we had to really get back and begin training on how do you do assessments and evaluations. Yeah, so most, it's easier not to do them effectively, just get done. And I think what happens, a lot of companies, they do them at the end of the year. So they all have to be done at the end of the year. So you've got this crunch time. Along with budgets, you've got to get all the reviews that have to be done. And instead of planning them out during the year and getting them done, they do this at the end of year crunch time. And so we just kind of do a very poor job in some cases doing the evaluations.

Yeah, and they don't want to have that difficult discussion. I mean, it is having a difficult discussion with someone that is not performing well over something specific. And so I think training them on how to have that discussion and have it early enough during the year, close to when the event happens, they can recognize, oh, yeah, I could have done that a little bit different.

Yes, absolutely. As long as the standard is set. Again, if I talk to the employee and he got into his personal pickup truck and it was a mess, an employee that's personal life is not on a good space, he thinks he may be doing fine within the work environment. And so as long as the standard has been set that he's not all like that, but some know, yeah, I kind of messed that up. And then there's some they don't know. They've got to be. And I think the new generation, especially now with the folks that are getting into the workforce that were out during COVID, you know, those that were juniors or seniors or freshmen or sophomores in high school that went to school, finished high school at home, then goes into the workplace, you know, they really have not had the opportunity to develop those skills yet. And the employer has got to teach those. And we kind of think we shouldn't have to, but that, yeah, we kind of do.

Well, yeah. One of the things getting into the leadership role, I wanted to make sure that the employees on the shop floor and field service knew who I was and I knew them. So it was not unusual for me to ride in a pickup truck in the middle of the night on a guy that's R &I on a transmission or going up one of the mine sites. two o 'clock in the morning and talk with the technician there in the shop, the Empire technician there in the shop. But I really wanted them to have the opportunity, whether they want to share something or don't. And then if there's a challenge going on, I can support that supervisor as well on, hey, how's this going? And not get in their way, but I'm there to support both the lead person or manager, supervisor, and the employee to kind of, hey, this is why this is important to us. And I don't think managers do that much. It's, you know, wandering by, managed by wandering around, you know, that is being seen, being visible. Yeah.

Right. Yep.

Yes, yes, it is. Yeah, the dealers have got to... We don't want to, but we've really got to be more aggressive in taking on a role of a full-fledged whole person training, which is that, you know, the people skills, the technical skills, the safety skills, and team building skills. We don't want to do it, but we really need to be successful. We're going to have to.

Yeah, there is. And there's several places in the roles I had. I was I'm not a technician, never was a technician, but put into positions to manage service operations that I was very fortunate that I had the strong technical people around me that could that I didn't. You know, my job wasn't to troubleshoot and how well they did troubleshooting. My job was to make sure we get we support them and taking care of them from the office perspective. And so I was very fortunate when I was placed into a role to restructure, do something different, is to bring my skill set in for that, but to have a strong technical balance that helped me with those kind of decisions for the technicians out in the field.

No, no, because I think the technical side is, that's going away as well. So, you know, people worked for me that had 20,30 years experience as technicians. So I'm very, very fortunate. Otherwise, it would have been a very difficult role for me to help manage a service department, for example, if it was just me by myself and I didn't trust and rely on those people with the skills of the technicians.

Yep, or an iPad or something. They'll know how to use it. So instead of not allowing that kind of technology in the bay, they'll use it. There's parameters around that. Yep. We had to always worry about the technician not exactly knowing how to do this. Well, they're going to YouTube it. Well, we don't want that. You got to be careful with the stuff on the YouTube thing. But how to adapt the technology for that generation that's using it into a matter that meets the business needs and practices.

No, no, no. Yeah, you can hardly get that done on your own personal vehicle now, take it to a shop. Yeah, that's kind of missing now, is that taking it to the next step. And there may be something else that may be the real cause. But by the way, if I just fix that, when you take it back, this other part is going to fall off. I mean, it's, but looking beyond is just, and we're seeing competitors offering things. I took my car. I usually try and use a dealership because I want to support the dealer as well. And I was having a challenge with the dealer I was going to. So I took it to this private shop. And I get so much better service. I mean, they washed my vehicle when it was over with. The lady did the plug in and got the diagnostics. I had a short on an injector line, the number one cylinder, troubleshot that. And of course, didn't know what the root cause was, but we knew what the issue was and followed up on the phone calls. So even dealers have got to realize the competitors are getting better. And we have to realize, and if you take my pickup to us, this privately owned small shop and the lady, so once you wait a few minutes, you're having your pickup washed. We'll be back here in just a second. That's going above and beyond that you think, but that can happen at a dealership as well. The competitor could be on much better service. So you have to be aware of what's going on.

I think the one would be for the dealer principals whose children are coming into the business is that they have a really good understanding of the difficulties that prior president CEOs went through. know the history, know the people and not just the grandma and grandpa and those folks, but the key salesman that was able to strike a deal of a whole fleet of 79 trucks. What caused that? Or we had a downturn in the market because I think that's one of my concerns is it's been a long time in this industry that we've had a downturn of any major significance. So we've got generations of senior leaders that have not been through a mass layoff or reduction workforce of any kind. So how do you handle one of those when that comes up? So know what the challenge they went through and how did they address it? It may be different now, but how do they address it that you can learn from and apply in your new role? Because I think there's just a lot of. legacy things and decisions made that were really good and some not so good, but you need to know the ones that weren't so good either and why. So you don't want to see the mistake again. But I really worry about the legacy that the young folks coming up and taking on the dealerships that their dad and granddad and great granddad and grandma, they all did a lot of sacrifices for the business. And they won't really know the whole legacy of why that happened, when it happened, and what the outcome was. So the loss of information, I guess I worry about that.