March 3, 2025 • 65 mins
What if you could unlock four decades of industry secrets from a heavy machinery veteran? Join us for an eye-opening conversation with Ron Wilson as he takes us through his 40-year journey in the heavy machinery industry. From his humble beginnings at Empire to his influential roles in launching a Komatsu dealership in California, Ron offers profound insights into the consolidation of dealerships, the competitive landscape with giants like Komatsu and Caterpillar, and the impact of corporate influences like Mitsui on U.S. operations. Gain a glimpse of the future, as Ron speculates on what the industry might look like by 2060, amidst the ongoing consolidation trends.
Explore the complex dance between mining and construction companies as we dive into dealer strategies in the face of Komatsu's strategic division of operations and Caterpillar's machine rebuild programs. Understand the intricate balance dealers must maintain between parts and service to stay profitable, and discover innovative ways they align sales and product support to enhance machinery lifecycle management. Unpack the challenges of cost-per-hour contracts and learn why maintaining high customer service standards is critical, even as the workforce shrinks.
The episode doesn't shy away from tackling tough topics like the declining market share of parts and the evolving customer purchasing behavior influenced by online shopping. Ron sheds light on the importance of effective employee evaluation and communication, drawing from his rich career experiences. With a focus on bridging the skills gap between generations, the conversation also delves into preparing for potential industry downturns and the crucial role of preserving historical knowledge for future leaders. Listen in as we discuss strategies for navigating the ever-changing heavy machinery landscape, ensuring your business remains resilient in the face of uncertainty.
Visit us at LearningWithoutScars.org for more training solutions for Equipment Dealerships - Construction, Mining, Agriculture, Cranes, Trucks and Trailers.
We provide comprehensive online learning programs for employees starting with an individualized skills assessment to a personalized employee development program designed for their skill level.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Hello and welcome to another, the Clouds Are Upside
Down podcast.
This is a situation where welook at things through fresh
eyes and try and come to someplace of providing background
information and history withtalented people who have been in
the industry for a long time.
(00:23):
So that's a complimentaryintroduction to Ron Wilson,
who's not as old as I am, buthe's been around a while.
You can see from the color ofhis hair, Ron, I think.
Did you retire from Empire ordid you retire from somebody
else?
Speaker 2 (00:40):
No, I retired from Empire.
This is my fourth year ofretirement, so I ended my career
at Empire.
Speaker 1 (00:49):
So this is our second podcast covering background and
tomorrow in this industry.
The first one was with SteveDay, and Ron has listened to it
and we're just going to have aconversation about the same
thing.
So perhaps, if you would, ron,you could go back to the
beginning and in your backgroundand bring us up to today.
(01:11):
You're retired now, but whendid you start?
How did you get there?
What made you come?
Speaker 2 (01:19):
Let's see, I started at the finished college, at uh
college at asu, and it's 1980.
I went to work for the catdealer there, working night
shift in the warehouse um, and Iworked there for 23 years and
then uh left there and went towork for a, a company in
california that was starting upa kamatsu dealer.
(01:40):
They were a cummins distributor, uh, and took the Kamatsu line
and that was very excitingbecause starting up a dealership
, which is what this was, thatwas very exciting to be a part
of that organization.
Good organization Was there forabout five years.
Then realized they were notgoing to grow much bigger
(02:01):
because they were really aCummins.
They were not going to growmuch bigger because they were
really a Cummins.
Had them on a pretty tight ropefor one thing.
And so I went to work for RodeMachinery as vice president of
product support and then it wasa few years later they took on
the California territory andasked if I would go over and
help with the transition,pulling the two together.
(02:22):
Help with the transition,pulling the two together.
Then the last probably 10 or 15years I worked at Road in
various roles, from working thedata analytics for marketing
side of the business, worked inthe training department but also
part of the role of leading apricing team.
We're establishing pricing forall the service work and,
(02:46):
primarily, component rebuilds.
So I had a lot of opportunitiesto do different roles within
the organization, differentorganizations, and I really
enjoyed it.
Speaker 1 (02:55):
Yeah, and Road had a pretty significant component
rebuild group, didn't they?
Yeah, they did.
Yeah, the Cummins dealer thatwas Shanahan Equipment, right
Based up in San Francisco yes,yeah, yeah, kevin Shanahan and
Paul Bleeker were the two guys,the two owners.
Speaker 2 (03:11):
I worked with Gail Plummer he was the guy leading
up the tractor side of thebusiness.
But Kevin Shanahan and PaulBleeker, very good guys.
Speaker 1 (03:33):
I've been fortunate to work some good dealers and
dealer principal people, thatsome savvy business people knew
the markets and were really goodat what they did.
So I'm going to say 40 years,from 1980 to 2020, roughly right
, yep.
So go up in the helicopter andwhat would you say is the
biggest change that you've seenin the industry.
Speaker 2 (03:53):
The biggest change is the.
Of course we've all seen thatthe smaller dealers becoming
fewer.
Of those, very difficult to getin to become a dealer unless
you're a very large organization, like Roe Machinery was owned
by Mitsui.
So having to work across a verylarge organization, the people
(04:17):
changes, the workforce coming inand the workforce beginning to
retire, customer base changing,changing.
You know you get the corporateaccounts, national accounts,
becoming a bigger, bigger deal.
But yet how to take care of thesmaller uh contractor trying to
come into the business and thatowns a skid steer or a backhoe
(04:38):
and and it became very, verycompetitive.
I mean just uh.
I started about 1980s whenkamatsu came into the us.
I remember working with withempire and you walk down this
long hallway between thecorporate office and the shops
and uh, john whiteman at thetime was had a list of the uh,
some some type of japanese logosalong the hallway and I don't
(05:02):
remember what those, what thosesaid now, but that was to remind
all of us of the competitivenature that kamatsu was bringing
into the marketplace and thatso really saw the competitive
change within uh empire withjohn uh and then later with jeff
coming on, jeff's very, verycompetitive, um, and you know
(05:22):
jeff's, all in his heart is his.
His heart is all there, well.
Speaker 1 (05:26):
I think in 1980, caterpillar had 50 dealers in
the US.
They had 10 dealers in Canada.
Today in Canada there's two.
Any idea how many Caterpillardealers there are in the States
today?
No, I do not.
I've heard rumbles that they'reheading towards 15.
(05:48):
Wow, I don't know that that'strue or false, but clearly the
number of dealers has shrunk.
One of the other things thatyou mentioned, mitsui, was a
trading company, one of thelarger corporations in the world
.
How much did they interferewith the operations in the US,
(06:13):
or did they let you have yourown head?
Speaker 2 (06:17):
MARK BLYTH.
No, the Mitsui structure.
The CEO was from Japan, the CFOwas from Japan and the rest of
the organization, for the mostpart, was from the US.
So we had the president and thevice presidents.
They were folks from theindustry.
Speaker 1 (06:42):
Was the president, then Mike Bose.
Speaker 2 (06:44):
No, this is after Mike Bowes.
This was Chuck.
Paul had just come on board.
I got you Yep, he had just comeon board and I knew Chuck.
I'd worked with Chuck at Empire, so I knew him pretty well.
Speaker 1 (06:57):
Yeah, he's a pretty good guy.
Yeah, so here we are now in,I'm going to say 2020.
What do you think?
Speaker 2 (07:08):
it's going to look like in 2060?
Well, I think, like you said, Ithink that their dealerships
will continue to get smaller,the first number of dealers
individual dealers getting muchbigger.
I think Empire is very lucky,very fortunate, because they got
into the mining market.
I was there when they sold thefirst 789 truck to the Cypress
(07:30):
Corporation in Tucson.
I didn't know what a haul truckwas At that time.
The director of parts broughtme a parts book of a 789.
He said order the inventory ofspare parts for this.
I didn't know what truck to evenlook like and I'm standing in
the shop floor of Cypress andthe maintenance manager said
Empire knows tractors, they knowdozers, they're all trucks.
(07:55):
You guys never make it.
And of course, a few yearslater, that's pretty much the
cat truck is pretty muchdominant in the Arizona mining
market now.
So that allowed Empire Marketto really grow.
If you remove the miningbusiness from Empire and then
visualize what it would looklike it would be a totally
different animal Then the mininghas really provided the chance
(08:17):
to expand services and rebuildcomponent shops and hydraulic
shops and things that would havebeen very typical to do if it
had not been for the mining sideof business.
Speaker 1 (08:28):
Was Rod Bull at Komatsu at the time you retired.
Speaker 2 (08:33):
I don't recognize that name.
Speaker 1 (08:35):
Okay, he's now the president of Komatsu Mining.
Speaker 2 (08:40):
Okay, yeah, I don't think so.
Speaker 1 (08:42):
Okay, and he's a former cat guy out of cat mining
.
He and another fellow, michaelMcClanahan, came over.
They changed the pensionretirement compensation programs
at Caterpillar and a wholebunch of younger guys left and
went elsewhere.
Rod's a pretty talented guy.
(09:03):
My guess is he's destined forbigger places.
But Comatose split the companyinto two pieces mining and
construction.
Can you see?
Speaker 2 (09:14):
Caterpillar doing that?
David ROSENBERG?
I would doubt it because of theintegration of everything's all
intertwined.
Now, do have uh they did havethe mining dealer uh
requirements and non-none mining.
You know they had things tolook at.
If you're going to be a miningdealer, you had to have these
kind of capabilities, right.
(09:35):
So I do think, uh, buthopefully they don't do that.
I think that's really a andactually the road.
Now, if I remember, in arizonait's now split into two.
There's a mining which isKomatsu side and their road is a
non-mining side.
Speaker 1 (09:49):
I think that's what they're doing all across North
America.
Now it might be they take itall around the world.
P&h with their large shovelshad, I think, a sector, a
(10:11):
division, called PartsPro, sothey did their own distribution.
In other words, the dealerswere owned by, operated by, p&h.
So when Komatsu came in, it'san interesting situation where
Komatsu and OEMs in general makebetween 40% and 50% gross
(10:33):
market on parts when they sellto their dealers.
With PMH, they were making themoney at the dealer level and
the OEM level together and as aresult of that, their customer
price was significantly lowered.
In other words, they'd taken alayer out of the supply chain
(10:54):
and passed it back to thecustomer.
Do you think that's sustainable?
Speaker 2 (11:01):
Well, I don't know that.
I know for the dealer theirparts side.
Well, parts and service, youknow the absorption rate thing,
I mean, those are so criticalfor the dealer to survive, yep.
So I think messing with thatequation in any way whatsoever
would make makes it much moredifficult for the dealers to
survive and prosper, and that'sone thing.
(11:23):
So working at Shanahan, we'relooking at bringing on our very
first lube truck.
Speaker 1 (11:27):
Yep.
Speaker 2 (11:29):
And so put the information together and it's
pretty hard to justify thereturn on investment of a lube
truck strictly on the sale ofoil, and oil changes the labor
side.
And the owners, kevin and Paulsaid noul said no, no, that's
not how we do that here.
Okay, we'll look at the totalparts and service.
(11:49):
What does that bring to thecompany overall?
And we'll base the return oninvestment.
And parts will pay for part ofthat loop truck as well, because
they'll get the revenue too.
So, uh, you know.
So it's interesting how somedealers will take and manage the
business a little bit different.
But uh, but me impacting thebalance of that parts or labor
side can be very tough for adealer to survive on that.
Speaker 1 (12:13):
Especially in the construction side, where one of
the things that used to beinteresting to me sales per
employee and productivity hasalways been something I've been
concerned with.
And I'm going to say, over thelast 20 years, plus or minus,
dealers have shrunk the numberof people.
(12:36):
I say they put profit overpeople, which means customer
service has eroded.
Customer service has eroded andI'm going to say we have three
different businesses withinproduct support One's the
maintenance business, one's therebuild business and one's the
(12:58):
traditional parts and service,repair and maintenance business.
And Shanahan was one of the fewthat recognized that.
The maintenance business.
You got to look at both partsand service together.
Traditionally we've had everydepartment stand on their own.
Parts department is required todo this in absorption and this
(13:19):
in sales, and same thing withservice, et cetera.
And then you were involved, I'msure, with the caterpillar
machine rebuild program, andthat changed the game as well,
didn't it?
Speaker 2 (13:35):
it did and and kamatsu had that as well, but
the so in road, uh, but they hadnot when I there had not
rebuilt any machines.
So we took they've got.
Komatsu has some greatspreadsheets or whatever it was
for a machine rebuild.
And Albuquerque had a reallynice road machinery store,
(13:57):
corporate office at one time YepBig shop.
So they actually did a rebuildof a Komatsu dozer, which was
the first time in many, many,many years that anyone from Rode
had ever done that.
So but that, yeah, having theshop to do those kinds of
rebuilds, you know it's greatdoing the lube service, but you
(14:19):
got to be able to rebuild themachines as well.
Speaker 1 (14:24):
Yeah, and they took it right down to the frame,
didn't they?
Speaker 2 (14:26):
Right down to the frame.
Speaker 1 (14:27):
yeah, and gave it a new serial number.
Speaker 2 (14:30):
Yeah, kamasai, the same thing as the CAT did.
I don't remember the Kamasudealers I visited.
I don't remember many of themever doing that.
That was fairly common with us.
Most CAT dealers would do that.
But Empire was big and that wasa great program.
They marketed very well andthey included the account
(14:50):
managers, sales folks, into theprocess so that it wasn't you
don't want to have the sales guytrying to sell the machine and
product support trying torebuild the machine.
They've got to be in the sameboat.
So Empire developed aroundround to where it would work
with the salespeople,compensation-wise as well with
(15:11):
the PSSR.
Speaker 1 (15:13):
You remember cost per hour?
Yes, when customers would buy amachine on an hourly rate,
5,000 hours, at 20 bucks an hour.
And you get to a certain pointand we'll give you another
machine.
Speaker 2 (15:29):
Yeah, yeah, and that's kind of difficult.
The marketplace puts a lot ofrisk on the dealer.
I mean, when you're taking onthe responsibility and the life
of the component and the costper hour and trying to average
in at the beginning of the ofthe machine's life what it's
going to cost in five years orwhatever it is that, what the
break-even point is, uh, that'sjust a road.
(15:55):
Uh, struggle with that becausethey had that on their haul
trucks.
Uh, empire, struggled with thatwhen they first got on board as
well, and uh, so that that's umand cat had developed a program
I forgot what it was called now, but it was a program to
certify, kind of a certificationfor the customer as well as for
(16:15):
the dealership.
And if you are a, under theagreement you had to make sure
the haul profile was correct andthe payload was within this
range, plus or minus, whateverit was and opened the book so we
could see that.
So that I really the assuranceprogram I believe Cat called it
was really where the Cat and thedealer was trying to work with
(16:37):
a client to what they call worktogether, because it you know,
especially the mining side, theyreally had to work together in
order to get the availabilityand the productivity there.
Speaker 1 (16:48):
Well, mining is all about availability, isn't it?
Machine availability.
The other thing that wasinteresting that mining today is
probably.
10 companies worldwide havemaybe 80%, 90% of the mining
business.
I think a lot of the mines inArizona and New Mexico were
(17:08):
owned out of Mexico.
It's a really interestingmarketplace and there's so much
money in every respect thecustomer, rio Tinto and all of
the rest of them.
There's Valet and out of theSouth America, britain's got a
(17:34):
few, australia's got a few, andthen Caterpillar had a special
program I think it's still outthere that they would give
rebates back to these customersbased on and it was a small
number of customers, not justminers, others as well where,
based on their performancecriteria, the dealer would give
them back a rebate based on howmuch they purchased.
(17:54):
Were you ever involved in that?
Speaker 2 (17:57):
Yeah, a little bit, and one of the challenges with
that.
The concept is really good butusually those rebates would go
back to the corporate officeside of it and the local
operation, the maintenancemanager, the folks on site.
They didn't have any.
There's nothing there for them.
So that was a little bit of achallenge in some cases because
(18:19):
there's no incentive for them.
They didn't get a bonus on it,they were not part of it.
It was more applied towardsfuture purchases or whatever it
was.
So, yeah, it was a greatconcept but it wasn't to me,
wasn't implemented down into theshop floor side, on the mining
side yeah, I agree with you.
Speaker 1 (18:35):
I was involved with that at finning and I was
basically running the um partsbusiness and I would go out once
a year and give a check of therebate to the mine manager and
the mine manager would tell themoperations people buy from
(18:59):
Finning and the operationspeople weren't particularly
happy about that.
So, just like you say, it drovea wedge between and, as a
result of that, unionizationcame in pretty heavily in mining
and at Finning we weren'tunionized.
I don't think you were atEmpire either, were you no?
And it was hard like hell toget into the repair business.
(19:22):
We finally were able to get inthere on the basis that we'd
come in once a year and give acertification, a machine
inspection to basically give.
It's almost like a kid atschool.
That graded the minetechnicians and it exposed them,
(19:43):
because they don't have thetraining that the Caterpillar
people have, they don't staycurrent with the equipment, they
don't have the documentationand as a result of that we were
able to start getting into someguaranteed cost per hour for
components.
So we'll rebuild an engine,give it out to you, you just
install it, but it createsfriction.
I like the incentive program.
(20:04):
I think the concept's great,but I'd like to see it better
distributed, more logically.
Let me call it so same thingfor employees at dealerships.
Incentive programs are verydifficult, in my view, to
administer.
I want to give them rewards forperformance.
(20:27):
I want to be able to define anddescribe the performance and
get agreement with the employeethat that's what the performance
really is.
But then corporate screwsaround with it.
Speaker 2 (20:38):
Yeah.
Speaker 1 (20:40):
You know, one of the things that bothers me is this
profit over people thing.
Gross domestic product hasbecome a real political football
, whether it's here or Europe oranywhere else in the world, and
GDP is a function of goods andservice produced in a country
divided by the workforce.
So if you want to fix thenumber, if you want the number
(21:03):
to go up, you just reduce thenumber of people, and in America
we get a little bit misledbecause the percentage of the
working age population thatactually works is shrinking what
they call a participation rate,and that's partly what's going
(21:24):
to bother me over the next 10,20, 30 years.
I think we're moving from atransaction world a part sale, a
labor hour, a machine, a rentalto a data world where we're
going to be much more involvedin predicting when that next
transaction should take placeand how come we didn't get it.
(21:45):
Did you experience that witheither Road or Empire or anybody
along the way?
Speaker 2 (21:51):
Yeah, probably more with.
Empire was really good ontracking participation and sales
deals, yeah, which to me was agreat measure and there's good
things in it.
And the one thing about Empireis they were really good about
balancing that.
That wasn't the only thing thatdrove the number.
I mean Cat would come in, forexample, or it could be Kamasi
(22:14):
or John Deere would come in, andthis is how you do this.
But Empire won because, as goodof a dealer as they were, cat
was a little more flexible andunderstanding probably than some
others.
But Empire did a good job ofbalancing the partition rate and
why and the lost sales and whathappened and doing the analysis
on it.
And to me, what I saw was reallyhow they managed was very well,
(22:37):
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 mayhave been something else that
lost the deal than the salesmanwas responsible for, so it could
have been parts that showed uplate or something else that
prevented a rebuild on somethingthat the salesman really didn't
(23:00):
have any role in that exceptmaybe to manage and overcome the
challenge.
So, um, but I think that empireis very good about balancing
the benchmarks between thedealer and capped and uh, but
they were always pushing thelimit, you know, and the dealers
are kind of going to squeezebetween what, what, the, what
the customer wants and what thedealer I mean what the, uh, what
(23:22):
the oem wants.
They're right kind of in thatmiddle of the parts pricing or
machine sales or availability,whatever it is.
The dealer's in a very toughspot of balancing that pressure.
Speaker 1 (23:33):
Yeah, they really are .
And the other thing about theequipment sales side is again,
as an outside observer for along time, and you probably have
the same view Caterpillar,comenzu, john Deere and Volvo to
me throw Hitachi in there aswell are the five largest large
equipment dealer networks, andeach of them has lost market
(24:02):
share over your work life andmine big time.
Did you see that?
Speaker 2 (24:10):
at empire no, the empire that that uh uh market
share was very important to them.
They knew and it was kind oflike you know, if you drive down
the road and you see a jobalong the freeway and what I
still do today is, wherever I amin the country, drive down the
road and how many cap machinesare as a total population kind
(24:32):
of represents what their marketshare is.
So no, they were all over thatmarket share piece.
Speaker 1 (24:39):
They're very protective of their pins and
parts sales percentage, themachine market share, we get
really very definitive.
I'm going to say four-digit,four-decimal place market share
numbers on equipment,association Equipment
(24:59):
Manufacturers, the OEM.
They do all of these tests.
I don't see a lot of goodmarket share calculations for
labor or parts.
Speaker 2 (25:08):
Yeah, no.
Speaker 1 (25:09):
Do you?
Speaker 2 (25:10):
No, no, now the information's there.
Well, I guess market share andno, really there really isn't
actually.
You know they can measure,there's some measurements there,
but not enough.
That really drives too much ofanything.
You know we don't really worryabout.
In part did worried a lot aboutthe competition.
That was one of my roles on thein the marketing side is every
(25:30):
month I did a a competitiveresearch on on the competitors
on the service side and uh, youknow we were down.
We're data analytics wise.
We could pull the parts listthat the competitor bought.
I was tracking road becauseroad did a lot of cat rebuild
components so, but I could trackwhat kind of what kind of parts
they bought and from therecould determine what kind of
(25:52):
level rebuilds they were doing.
Uh, so we did a lot of analysisevery month I would do a report
and get it back to the productsupport side on.
We looks like we lost an enginedeal here because of what this
competitor bought and what sizeit was, and sometimes we'd like
they would even give us a serialnumber because they needed to
buy the parts anyway.
Speaker 1 (26:10):
So so taking that place and going forward.
We used to sell parts to all ofthe machine owners and I'm
going to go back.
I started in 1969.
And I was able to get a report.
(26:31):
That was in 1965 was the lasttime Caterpillar did this, but
every five years they personallyinterviewed every machine owner
in the world and then in 1970,they changed it because that was
a rather expensive proposition.
Again, profit over people.
(26:51):
And Ray Paul Hill, who's anassociate, lives in North
Carolina today, retired, reallytalented guy.
He drove that survey.
But I remember seeing surveydata based on that face-to-face
stuff where 83% was the numberthat Caterpillar said their
(27:12):
market share was on parts toCaterpillar machines.
I'm at a Caterpillar conferencein Mississippi in the early
2000s and the man who droveUnited States Commercial
Division, the US side of thebusiness was in the crowd.
There was a couple of hundredpeople and I don't know if
(27:35):
you've seen me in a classroom.
I have a lavalier and a mic andI wander around amongst the
crowd like an idiot because I'man old time teacher and I went
up him and I put the microphonein his face.
It wasn't particularly good, itwas kind of rude.
I said I'm going to ask aquestion and you don't need to
answer it because it might bedifficult.
(27:57):
I said when I started, theparts market share was 83%.
Do you know what it is today?
He didn't hesitate, he saidit's 38.3% and I thanked him.
So let's call that 2010, just toput a number on it, and let's
(28:18):
go back to 1970.
So that's 40 years, from 83% to38.
Let me change that and make it80 to 40.
And I say to the Caterpillardealers today the same thing's
true for Comatose, the samething's true for Deere, et
cetera.
I say to the Caterpillar familywell, don't worry about that,
(28:44):
in another 40 years you're stillgoing to have 10% of the
marketplace.
So it should be okay, or 20%,whatever the hell the number is.
If you take that much of theparts business away, kind of
like the electric car business,the dealer can't survive.
You agree with?
Speaker 2 (29:01):
that Absolutely yeah, yes, and so we get to tracking
by client, which you might callthem clients, not customers and
there's a reason for that.
We get tracking by client andwe would identify which of our
clients are not doing enginerebuilds with us, or
transmission rebuilds, orhydraulics or welding.
And why not?
(29:26):
Because for the most part, youjust look at, well, total volume
of customer and you pick out,maybe lube services, but if you
really get into digging into whyand parts of the business they
won't do business with you.
For example, customers wouldrebuild their own engines or
have road rebuild or somebodyelse, but they typically would
not do transmissions themselves.
Yeah, a little more concern thetechnicality of those, um so, or
welding, or hydraulic cylinders.
(29:47):
So if you start drilling intowhich of this the business are
you not getting and then modifyyour programs to figure out,
well, what's wrong here, what'shappening here, and is it their
marketing strategy or is theresomething else?
And then go back after thatbusiness.
But that's where thecompetitors would come in.
They would come in and pick upthe and is it their marketing
strategy or is there somethingelse?
And then go back after thatbusiness, but that's where the
competitors would come in.
They would come in and pick upthe hydraulic business.
We'll just do hydrauliccylinders for a while and then
they get into the pumps andmotors and next thing you know
(30:09):
they're into something else.
So yeah, but I don't think alot of the dealers are drilling
down far enough to really figureout where are we losing that
business and why, specificallyfor that type of component type.
Speaker 1 (30:24):
Yeah, Caterpillar, a number of years ago, made the
statement that the dealers wereleaving too much of the parts
and service business to chance.
It wasn't a driven program,problematic market coverage, and
they did a really nice job withcommodity codes identifying
families of parts.
(30:45):
They did a really nice job withlifecycle management how long
is the transmission supposed tolast?
Hydraulic pump blah, blah, blah.
What you did was ahead of thecurve, finding not just what
they bought but what they didn'tbuy.
That was important.
Yeah, that's almost moreimportant.
And then I like to touch all ofthose customers and say, okay,
(31:08):
and they're there to help you.
So where did you go?
And they'll tell you.
And then my next question usedto be well, what is it you like
about doing business with them?
And whatever the hell they said, then we weren't doing it and
that's why we lost the business.
If you look at the electric carbusiness, I think the number of
(31:37):
dealers that you're going tosee going forward is going to
shrink even more in theautomotive side.
Yeah, and that's because ofparts market share and I'm going
to translate that over toAmazon has changed people's
buying habits.
Speaker 2 (31:58):
Yeah.
Speaker 1 (32:00):
They're today the largest retailer in the world.
You can buy Caterpillar partsthere, John Deere parts there,
Bobcat parts there, and a lot ofour customers now are shopping
online.
And what percentage of thedealer business the Caterpillar,
Camacho, Deere, Volvo, Hitachibusiness is conducted online?
(32:24):
It's a tiny amount.
Is it because the dealers don'twant to change or their systems
aren't good enough for that?
What do you think the cause isof that?
Is it attitudinally or is ittechnology?
Speaker 2 (32:40):
I think probably some of both, and some on the
customer side as well, becausesome of the uh now this has been
a while since I've been thereon the dealer side but the um,
the old school customers, youknow they're used to having that
paper parts book and and uh andthen calling the parts line and
it's busy.
Or they get on the line, youget somebody on the phone you're
talking to and they're tryingto take care of the customer in
(33:02):
front of them, kind of thing,and so they're used to.
They're used to that.
But but then we started seeingthe customer buying the online,
the cat online, or come out,come out as well, online parts
ordering.
And then on the cat side atsome of the stores they set up a
a customer will call pickupplace.
You just go pick it up andleave.
(33:23):
You don't even come in the door.
Speaker 1 (33:25):
Yep.
Speaker 2 (33:26):
So a customer actually order something online
and go pick it up and never seethe parts guy.
And you know, first we thought,well, there's going to be going
to lose parts and but we foundvery there.
I can't think of any time thatthey're worried about parts
being stolen by another customer, that we may, the warehouse
person may put the wrong, theright part in the wrong customer
(33:47):
bin.
But those customers I broughtthem back.
Hey, this is an hour, this isXYZ Construction Company and I
thought, bring them back thatrelationship between the
contractors.
But it was possible for them toactually buy a part and pick it
up and we'll call and theynever actually physically go
into the store.
And then, of course, deliveryservices.
The dealer is starting to dodeliveries, um, and there's kind
(34:11):
of a disadvantage with that.
I was riding with a partsperson and we're going along
their route and we pulled onthis customer shop area and
we're stepping over hydrauliccylinders cores they're going to
be rebuilt by a competitor andwe're delivering going around
them to deliver these parts.
Uh, and the thought was, well,if we can train this parts
delivery person, hey, can I takethese with me?
(34:32):
And are we know something to onthe delivery side to generate
some um sales opportunities, andrecognizing there's a sales
opportunity could increase thepart sales too.
There are a lot of disconnectsbetween the employees how to use
technology.
We make it easier but we don'tmake it better.
Speaker 1 (34:56):
That's a good way of saying it.
I say a lot of our systems havejust gone from paper to glass,
yeah, but we've left the method,the procedure, the system
pretty much the same.
You know, a customer calls into the parts department.
I used to tease that.
You know what's the firstquestion you ask the customer
(35:19):
and essentially the answer thatcame back to me is who the hell
are?
You Give me your customer namefirst and I say to them well,
why the heck is that important?
Well, we want to have adifferent pricing structure for
them.
Well, wait a second.
What do you think thecustomer's wanting when they
call in?
What's the questions they wantanswered?
And I say it's have you got it?
(35:41):
How much is it and how long doI have to wait to get it?
And I don't know that.
We've adapted that way andtoday, with the internet, you
can dan nearby any part for anymachine from the people that
made the part, not the OEM,who's a middleman.
(36:02):
They're an assembler ofmachines.
They don't make.
Caterpillar doesn't make verymany parts, neither does Komatsu
or Deere.
Speaker 2 (36:07):
Anybody Can you imagine how big those factories
would be.
Oh yeah.
Speaker 1 (36:13):
So younger generations?
I don't.
We're not young anymore, ron,as we're both going to admit,
but the guys that are 30 yearsold and down in this business,
they're going to go on theinternet as their first option.
They can find out how to repairsomething, they can find out
(36:33):
what the life is of that, theycan track when the next
maintenance service should be,and they're acting on it, yeah.
Speaker 2 (36:44):
Did you use drop boxes?
Yeah, use drop boxes was realbig, so that was an.
I implemented that on the onthe road machinery side as well.
So I drop box and in that dropbox it's if it's freeway job,
there may be multiple customersparts in that drop box and so,
yeah, that was a, that was a,definitely a convenience.
Uh, we also used theimplemented the empty shopping
(37:06):
cart.
So if a, if a customer wentonline and clicked a bunch of
parts and they never bought them, then okay, then he's price and
there's doing himself, but he'snot buying parts from us, he's
just checking price or he'sgoing to give the list to a
competitor who's going to windup.
Uh, or they may buy the partsand then give them to the
competitor to do the rebuild.
But we use the empty shoppingcart as part of our competitive
(37:28):
analysis as well.
Speaker 1 (37:30):
Yeah, with technology it used to be HTML and then it
went to XML so I can track howlong you cursor stayed where on
the screen.
So I'd know who looked lastnight at what.
Did they check availability,Did they check price, Did they
buy?
And the next morning, if theydidn't buy, I'd call them say I
noticed you.
Look at this.
Did you find a source?
(37:53):
Because I can help you.
I've got it on hand now and itchanged the whole dynamic.
But there are not very manydealers that do that.
Speaker 2 (38:02):
No, no.
And then that takes people alittle bit of people.
It's more of the data crunchingpart of it.
But again, some of these thingswe're talking about cutting
headcount.
They're trying to get down tothe headcount of where they
think it needs to be, but theseother roles can really increase
the revenue and provideincreased market share.
So a lot of the sum dealersjust don't understand that part
(38:25):
of it.
Speaker 1 (38:30):
The other thing that happens, I think, ron, is you
and I both were involved inproduct training schools back at
Factors, the works and wares ofundercarriage, how filters work
, bearings, et cetera, et cetera, the part sales kit for
Caterpillar, defining anddescribing all that stuff.
The internet can give that toanybody anywhere now and I don't
(38:51):
know that.
That profit over people thingcomes back to the headcount
thing that you were mentioning.
I think the relationship thatwe've got with customers is
eroding and for some time we'vehad the situation where loyalty
(39:12):
in America everybody kind ofsays this loyalty is no longer
an issue and people aren't loyalanymore.
I think we forced that andpeople aren't loyal anymore.
Speaker 2 (39:24):
I think we forced that.
We've created that, yeah yeah,we sure added to it.
If we didn't create it, we sureadded to it.
That was one of the things whenJeff Whiteman came on with the
leading empire separating theclient versus customer is that
if you go to the grocery store,you're a customer, you're
picking up whatever produce youwant, Whereas if you're a client
it's more like going to youraccountant or to your doctor.
(39:47):
Is that you're there askingquestions and and.
But not all customers want that.
Some want to be a client andthey want your input, they want
your suggestions, and others maystart off as a customer and you
may develop them into a client.
But that was, I think, a verykey difference when I rode
versus Empire is that thatclient view was very, very
(40:11):
important within the dealershipand 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 justknow, I'll call you when I need
you, which is fine.
That there may become a pointor time when you can convert
them to a client typerelationship.
Speaker 1 (40:34):
That goes back to the old fashioned market
segmentation, doesn't it?
Yeah, the small, medium, largefleet, abcd buyers, 80-20,
whatever the different rules are.
And that goes back to EdwardDeming and Duran in Japan with
the continuous qualityimprovement deal.
Employee development is alsosomething that's been let go.
(41:00):
Employee development is alsosomething that's been let go?
I don't.
I don't.
Too many companies, I think,look at employees like tools in
a toolbox and if, if the needchanges, they'll replace the
tool, they let the employee goand bring in a new one.
Speaker 2 (41:12):
They don't train them .
Yeah, the employee that.
So we're, we're in a, we'relike there's five generations
working in the workforce todayand that's just that's really
unbelievable, isn't it?
It really is and I'm looking atoh my gosh, I'm part of the
older generation now, so I'm atthe end of it, but what I've
seen is that there are four keypieces of training on the
(41:33):
employees.
And that's the technical side.
Whether they be an accountantor whether they be a part
salesperson or a technician,there's a technical part of
their job that they need to betrained and developed on.
There's the people skills ofworking across other departments
and peoples within thedepartment.
There's also a personaltraining on you know how do you
behave at work, and it'ssurprising we have to teach
(41:55):
those things, but the peopleskills of working with our
coworkers is so important.
And then there's a safety side.
You know, one thing I learnedwhen I managed field service for
a while is that I was alwaystalking about manage your field
service truck as if it's yourown.
The problem is, I had thechance of riding in an
employee's pickup truck one timeand it was a disaster.
(42:18):
Yeah, so that managing it wasyour own didn't mean anything to
that individual, because theirpersonal how they manage their
personal vehicle was not what wewanted.
So learning how to adapt fromsomeone's how they do things in
real life, or the personalskills or managing an asset, or
(42:39):
you it that you have to getthose in line with the corporate
structure yeah, yeah, and thatyou're absolutely right.
Speaker 1 (42:47):
I like that four-step thing.
One's the technical side of thejob, what's the interpersonal
relationship with otherdepartments side of the job,
what's the safety and andtidiness, etc.
Part of part of the job andwhat's the personal motivation
to do it, and it's all you know.
(43:09):
That takes me back to a simplequestion Did you do performance
reviews of employees?
Speaker 2 (43:14):
Yes, absolutely.
Speaker 1 (43:16):
Did you ever get trained on how to do them?
Speaker 2 (43:19):
Yes, now, probably not as thorough as we should
have been, but I went throughone of my change roles at Empire
.
One of my responsibilities whenI took the new role was that I
have a layoff, and one of myresponsibilities when I took the
new role is that they're goingto have a layoff.
And I was given direction okay,you need to let go 60 people.
(43:40):
And so when I pulled all the,so of course I asked the
managers you know what's yourlist?
And I got the list.
Well, I pulled all theperformance reviews for all
those people and, oh, mygoodness, I was surprised that
they all walked on.
Well, not them, but walked onwater and what you're?
You're saying this personshould be let go, what I don't.
So we had to really get back andbegin training on how do you do
assessments and evaluations andand um, yeah, so most it's.
(44:04):
It's easier not to do themeffectively.
Just get done.
And I think what happens a lotof companies?
They do them at the end of theyear.
So they all have been done atthe end of the year.
So you, they all have to bedone at the end of the year.
So you've got this crunch time,along with budgets you've got
to get.
All the reviews have to be done, and instead of planning them
out during the year and gettingthem done, they do this at the
end of year crunch time, and sowe just kind of do a very poor
(44:26):
job in some cases doing theevaluations.
Speaker 1 (44:29):
In other words, they're checking off a box.
Speaker 2 (44:31):
Yeah.
Speaker 1 (44:32):
It's part of my job.
Click.
I did the performance review.
Speaker 2 (44:37):
Yeah, and they don't want to have that difficult
discussion I mean, it is havinga difficult discussion with
someone that's not performingwell over something specific and
so, I think, training them onhow to have that discussion and
have it early enough during theyear, closer to when the event
happens that they can recognizeoh yeah, I could have done that
a little bit different, closerto when the event happens they
can recognize oh yeah, I couldhave done that a little bit
different.
Speaker 1 (44:54):
I've always held the position that the employee is
the first one to know whenthey're not doing the job.
Do you subscribe to that?
Speaker 2 (45:05):
Yes, absolutely so, as long as the standard is set.
Again, if I talk to theemployee and he got into his
personal pickup truck and it wasa mess, an employee that's
personal life is not a goodspace.
He thinks he may be doing finewithin the work environment and
so as long as the standard hasbeen set, that he's not all like
(45:26):
that.
But some know, yeah, I kind ofmessed that up.
And then there's some theydon't know They've got to be,
and I think the new, newgeneration, especially now with
the folks that are getting theinto the workforce, that were
out during covid, you know,those that were juniors or
seniors or freshmen orsophomores in high school that
went to school, finished highschool at home then goes into
(45:49):
the workplace.
You know they really have nothad the opportunity to develop
those skills yet and theemployer has got to teach those
and we kind of think weshouldn't have to but that, yeah
, we kind of do.
Speaker 1 (46:01):
Yeah, it's really.
You know, I used to tell peopleI've been a consultant most of
my work life in this industry,so 45 years as a consultant and
13 years as an employee and Iget to the point that the
employee knows.
I just bring it to theirattention.
(46:22):
But it's critical that we havereally precise job descriptions,
really precise performancestandards and that we're able to
communicate that, one of thethings that's really remarkable
to me.
Statistics in America say that90% of companies in America fail
(46:46):
to achieve their strategy on anannual basis and it's surveyed
every year and it doesn't varymuch plus or minus two or three
points.
And the follow-up question iswell, why do you think that's
true?
And you ask the employees inthe company what their strategy
is and 90% of them can't tellyou.
It's purely communications,which is nuts.
(47:17):
So with the, okay.
So let me circle backwards whereyou said okay, we do these
reviews once a year.
I want to do them every damnday.
I want to be out with theemployees that I work with my
team, sort of deal.
I'm not the boss, I'm aco-worker, I'm a partner, I'm
here to make you better.
But that means I've got topoint out when you're not doing
(47:38):
it right and I got to have anability to do that such that you
don't think I'm a jerk, I don'tmake you look like a jerk, the
whole world doesn't know aboutit.
It's you and me privatelysomewhere saying okay, ron, this
you know we had a problem doingthis yesterday and it's got to
be close enough to the event,kind of like training a dog.
(47:59):
That's a bad analogy becausethey're people, but I think you
know what I mean.
Yeah, I suspect that's the wayyou did things yourself, wasn't
it?
Speaker 2 (48:09):
Well, yeah, one of the things getting into the
leadership role, I wanted tomake sure that the employees on
the shop floor and field serviceknew who I was and I knew them.
So it was not unusual for me toride in a pickup truck in the
middle of the night on a guythat's R9 at transmission, or
going up one of the mine sitesat two o'clock in the morning
and talk with the technicianthere in the shop the Empire
(48:32):
technician there in the shop.
But I really wanted them tohave the opportunity, whether
they want to share something ordon't, and then if there's a
challenge going on, I cansupport that supervisor as well
on hey, how's this going, andnot get in their way.
But I'm there to support boththe lead person or manager,
supervisor and the employee tokind of.
(48:54):
This is why this is importantto us.
So and I don't think managersdo that much it's, you know,
wandering by, managed, bywandering around.
You know that is being seen,being visible.
Speaker 1 (49:05):
Yeah, patrick Lencioni is an author that I
recommend to everybody.
He writes very simple tounderstand books I call them
fables and they're small.
They're 100 to 150 pages, smallformat, easy to read, and he
has.
One of them is the three signsof a miserable job, and you
(49:28):
mentioned one characteristicright away you wanted them to
get to know you and you to getto know them.
The first character you know.
First sign of a miserable jobis anonymity.
The employee doesn't, thecompany doesn't know who the
employee is.
They married, they got children?
Are they in school?
You know what are they, who arethey Then?
(49:49):
You know so, anonymity.
Irrelevance the employeedoesn't know where their job
fits in the overall organizationand structure.
And finally, a word he createdcalled immeasurability, so that
at the end of the day, atechnician has a really big
advantage At the end of the day.
(50:09):
They know if they did a good jobor not.
Today, they know how many unitswere kicked out.
We can't do that in the officeas well, right?
Speaker 2 (50:19):
Yep.
Speaker 1 (50:20):
And I think we missed the boat there.
I think we're today.
I think one of the biggestchallenges we're going to have
going forward is finding skilledpeople.
I don't think the educationcommunity is delivering what
they're supposed to, and if youlisten to the current
discussions politically inAmerica about the Department of
Education, we spend a trilliondollars and we score 40th out of
(50:41):
40 countries in performance andreading, writing and arithmetic
I mean that's ridiculous Ron.
Speaker 2 (50:57):
Yes, yes, which is that you know the people skills,
the technical skills, thesafety skills and team building
skills.
We don't want to do it, but wereally need to be successful.
We're going to have to.
Speaker 1 (51:07):
Yeah, yeah, I agree with you 100%.
The other thing is today.
So let me draw a line and callit 45.
So employees from 20 to the ageof 45 and employees from the
age of 45 to 70 have completelydifferent backgrounds and bring
to their work a completelydifferent skill set.
(51:30):
The people that are 45 and down, they know how to manage from
the office.
They can't do the job, theydon't know how to do the job and
they really don't want to dothe job.
And schools are kind ofteaching universities,
particularly, are kind ofteaching them that way.
Do you see that as well?
Speaker 2 (51:51):
Yeah, there is, and there's several places in the
roles I had.
I'm not a technician, never wasa technician but put into
positions to manage serviceoperations.
I was very fortunate that I hadthe strong technical people
around me that I didn't you know.
My job wasn't to troubleshootand how well they did
troubleshooting.
My job wasn't to troubleshootand how well they did
(52:11):
troubleshooting.
My job was to make sure wesupport 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 tobring my skill set in for that,
but have a strong technicalbalance.
(52:32):
That helped me with those kindof decisions for the technicians
out in the field.
Speaker 1 (52:35):
I don't see that with the current, the 45 down
generations, do you?
Speaker 2 (52:39):
No, no, because I think the technical side is
that's going away as well.
So you know, I had people workfor me that had 20, 30 years
experience as technicians, soI'm very, very fortunate.
Otherwise, it would have been avery difficult role for me to
help manage a service department, for example, if it was just me
by myself and I didn't trustand rely on those people with
(53:03):
the skills of the technicians.
Speaker 1 (53:05):
I remember early in my career I got involved in the
service department.
I put overalls on and went outon the floor and after a couple
of weeks the guy said why don'tyou go back to the office
because you're screwing too manythings up here.
But I was very lucky, ron.
I was put into places as to fixproblems, find problems to find
(53:30):
solutions and then implementthem.
Fix problems, find problems tofind solutions and then
implement them.
And we had ordering stations onthe shop floor, I'm going to
say in 1971 or 72, where thetechnician would walk from his
bay to an ordering station andit might have been 20 feet and
(53:57):
we had three ladies who hadreally good typing skills and
it's not a sexist thing, butpart of it was to clean up the
language and the communication.
The guys would pick up thephone, it would ring
automatically in the partsdepartment, they would give
quantity, part number, quantitypart number, work order etc.
Their keyboard skills were fastand in those ordering stations
in those days we had microfichereaders.
Remember those things in thepaper books and all the rest of
this garbage.
(54:17):
You know we're going back along way here today.
If that was today and I was outthere, I'd have a terminal in
every damn bay.
Every technician would have hisown computer yep, or an ipad or
something.
Speaker 2 (54:31):
Don't know how to use it.
So, uh, instead of instead ofnot allowing that kind of
technology in the bay, they'lluse it.
There's parameters around that.
We had to always worry aboutthe technician not exactly
knowing how to do this.
They'll YouTube it.
Well, we don't want that.
You've got to be careful withthe stuff on the YouTube thing.
But how to adapt the technologyfor that generation that's
(54:54):
using it into a manner thatmeets the business needs and
practices?
Speaker 1 (54:57):
Yeah, one of the things that's interesting today,
I think the technicians aresome of the smartest people we
have in the dealership.
Being a technician is anextremely complex, highly
technical job today and thoseguys are, you know, it's kind of
(55:18):
like they're the surgeonsmaintenance is.
I'm going to say, is your yourprimary care physician?
You go in once a year and youget the blood pressure and the
blood work and all the rest ofthat stuff and they, you know
you're okay or not and then, ifaren't, they direct you to a
specialist on one side or theother, our technicians on the
floor.
I subscribe to the theory thatcustomer calls in or brings in a
(55:41):
machine and they've got acomplaint and they tell us what
the complaint is, but I want toinspect the machine to be sure
that that complaint is the cause, not a symptom.
I don't think enough dealers dothat.
Speaker 2 (55:58):
No, no, no.
Yeah, you can't hardly get thatdone on your own personal
vehicle.
Now take it to a shop.
Yeah, that's kind of missingnow is taking it to the next
step, and there may be somethingelse that may be the real cause
.
But, by the way, if I just fixthat when you take it back, that
this other part's going to falloff.
I mean it's uh.
But looking beyond is just uhand we're saying we're seeing
(56:22):
competitors offering things.
I took my car I usually usuallytry and use a dealership because
I want to support the dealer aswell and I was having a
challenge with the, the dealer Iwas going to, so I took it to
this private shop and I get somuch better service.
I mean, they washed my vehicle.
When it's over with uh.
The lady did the, plugged inand got the diagnostics.
(56:44):
I had a short on an injectorline, the number one cylinder,
troubleshot that and of coursedidn't know what the root cause
was.
But we knew what the issue wasand followed up on the phone
calls.
Um, so even dealers have got torealize the competitors are
getting better and we we have torealize and you know, if you
take my pickup to this, thisprivately owned small shop and
(57:08):
and uh, the least, once you waita few minutes, you were having
your pickup washed.
We'll be back here in just asecond.
That's going above and beyondthat, you think, but that can
happen at a dealership as well.
The competitor could be on muchbetter service.
So you have to be aware ofwhat's going on.
Speaker 1 (57:25):
Yeah, it's really, really funny.
We all deal with personalexperiences as reference points.
And I bought a used Cadillacone year in the desert that the
owner had had of the dealership,so it had every toy known to
man heads up in the windshield.
(57:47):
And I'm talking 20 years ago,maybe more, and I went in.
I traveled with my work, as youknow.
So whenever I went to adealership, my wife and I would
go together and a maintenanceservice is typically an hour or
two, so we would go and havecoffee and talk with each other
and do that kind of stuff.
And one particular instance I'man hour and a half in, I go in
(58:11):
and you know how's it going, andthe guy actually said to me
well, we haven't started yet.
I said, well, it's supposed tobe finished in 30 minutes.
What do you mean?
You haven't started yet?
Well, we ran into a problem Onmy car no, on somebody else's
car.
So I paid the price forsomebody else's problem that
you're solving and I said well,how much longer do you think
(58:33):
it's going to be?
Well, I'll get the bossinvolved.
So I went back and I sat down.
30 minutes later they came outand said your car is ready.
So I went to pay and the cardealers you've got to pay before
you take your vehicle.
In our world it goes to anaccount which is, in my mind,
all wrong.
So I went and I said let me seethe work order.
(58:58):
And I was looking forinspections, I was looking to
see what they found, what theydid, and I said can I take this
with me to the woman that I wasgoing to pay?
I want to go talk to the boss.
So I go back there and I saidwhat'd you do?
(59:18):
And he started hammering.
I said you know there's oneperson you don't want to do that
to.
It's me.
Why did you do that?
Well, you came through lookingfor it and I said so to satisfy
me.
You didn't do the job I'mpaying for.
And he said yeah, and I said soto satisfy me.
You didn't do the job I'mpaying for.
And he said yeah, and I saidyou know I'm going to talk to
(59:44):
the boss.
Do you want to come with me?
And he said yes, and I knew theboss because I bought his car.
So the three of us are sittingthere and I told him about their
story.
I said what are you going to doabout it.
He said give me the bill.
I said you think that satisfiesthe problem.
He said it satisfies yourproblem, but it doesn't satisfy
my problem.
I said what's your problem,george?
(01:00:06):
There?
Didn't do his job.
There's an active case ofleadership that I don't think
happens nearly enough yeah.
Speaker 2 (01:00:16):
Yeah.
Speaker 1 (01:00:19):
It's remarkable.
We had a guy.
I was working at a John Deeredealership in Southern
California and I was standing inas a service manager two weeks
a month.
I did it for a long time andone of the clients had a small
rental company 2025 John DeereMachines that he rented with an
operator His name was Dave andhe would hold his invoices for
(01:00:46):
two or three months.
Then he'd go into the servicemanager and he'd go through it,
invoice by invoice by invoice,and say I'm not paying this, I'm
not paying that, and he'd get adeal.
So I'm there one time he comesin and he's got this stack of
papers and he sits down and hewas like a sailor.
Every bloody word was an F-bomb.
(01:01:08):
And this is an open office.
There's women up there.
He said well, wait a second.
Before we go into the four-year, you got to clean up your mouth
.
There's ladies here.
And he didn't change.
So I stood up and I said that'sit and I left him and we were
on the second floor so I couldlook down on the shop floor had
20, 30 shop mechanics and thenfields, et cetera, medium size,
(01:01:28):
and he followed me out into theyard.
He said what are you doing andI said well, I'm not going to
deal with you if you're going toswear, like that period.
He said well, ok, I promise Iwon't swear.
And I said that's fine.
I want you to go upstairs andapologize to the ladies, which
he did.
So we went through and he wentback and forth and whatever the
(01:01:49):
hell he wanted, I gave him andhe paid his bill and he went on.
Three months later, same thinghappens.
We go through the whole thing.
He didn't swear.
So I'm thinking to myself thisis cool, he's trainable and we
go through the deal.
Same thing Doesn't want to paythis, doesn't want to pay that.
And I said we've done thisbefore, right?
He said yeah.
(01:02:10):
I said the last time I gave youeverything, right?
He said yes.
He said well, this time we'regoing to split it 50-50.
I'm not going to give youeverything.
I'm going to give you half ofwhat you're looking for.
He said okay.
I said by the way, you don'thave an open account anymore.
You're going to pay cash forevery order, as it happens, or
(01:02:35):
I'm not going to do businesswith you.
I ended up doing his taxreturns because I basically
dealt with him the way that hewanted to be and needed to be
dealt with.
He was a great guy.
He just was able to get awaywith something and we trained
him.
It was okay, because theservice managers in that time
were not strong enough to standup to him, had not been trained.
Ron, that was the fundamentalfault, right.
Speaker 2 (01:02:53):
Yeah.
Speaker 1 (01:02:56):
If you were going to look at the next 20, 40 years
and you had advice, one piece ofadvice just one for the dealers
that would make a difference.
Speaker 2 (01:03:12):
What would it be?
I think the one would be forthe dealer principals whose
children are coming into thebusiness is that they have a
really good understanding of thedifficulties that prior
president CEOs went through.
Know the history, know thepeople, and not just the grandma
and grandpa and those folks,but the key salesman that was
(01:03:34):
able to strike a deal of a wholefleet of 79 trucks.
What caused that?
Or we had a downturn in themarket, because I think that's
one of my concerns is it's beena long time in this industry
that we've had a downturn of anymajor significance.
So we've got generations ofsenior leaders that have not
(01:03:55):
been through a mass layoff orreduction of workforce of any
kind.
So how do you handle one ofthose when that comes up?
So know what the challenge theywent through and how did they
address it.
May be different now, but howdid they address it that you can
learn from and apply in yournew role, because I think
there's just a lot of legacythings and decisions made that
(01:04:15):
were really good and some not sogood, but you need to know the
ones that weren't so good eitherand why, so you don't make the
same mistake again.
But I really worry about thelegacy that the young folks
coming up and taking on thedealerships that their dad and
granddad and great-granddad andgrandma, grandma they all did a
lot of sacrifices to them forthe business and and they don't
(01:04:39):
won't really know the wholelegacy of why that happened,
when it happened and what theoutcome was.
Speaker 1 (01:04:44):
So the loss of loss of information is I guess I
worry about that I think that'sa good place to stop ron and
that I think that's wonderfuladvice, and I thank you.
I thank you for yourcontribution here and in the
industry for all these years,and to the audience out there.
I'd like to thank you, mahalo,for another the Clouds Are
(01:05:04):
Upside Down podcast.
We'll see you again soon,mahalo.
Hello and welcome to another, the Clouds Are Upside
Down podcast.
This is a situation where welook at things through fresh
eyes and try and come to someplace of providing background
information and history withtalented people who have been in
the industry for a long time.
(00:23):
So that's a complimentaryintroduction to Ron Wilson,
who's not as old as I am, buthe's been around a while.
You can see from the color ofhis hair, Ron, I think.
Did you retire from Empire ordid you retire from somebody
else?
Speaker 2 (00:40):
No, I retired from Empire.
This is my fourth year ofretirement, so I ended my career
at Empire.
Speaker 1 (00:49):
So this is our second podcast covering background and
tomorrow in this industry.
The first one was with SteveDay, and Ron has listened to it
and we're just going to have aconversation about the same
thing.
So perhaps, if you would, ron,you could go back to the
beginning and in your backgroundand bring us up to today.
(01:11):
You're retired now, but whendid you start?
How did you get there?
What made you come?
Speaker 2 (01:19):
Let's see, I started at the finished college, at uh
college at asu, and it's 1980.
I went to work for the catdealer there, working night
shift in the warehouse um, and Iworked there for 23 years and
then uh left there and went towork for a, a company in
california that was starting upa kamatsu dealer.
(01:40):
They were a cummins distributor, uh, and took the Kamatsu line
and that was very excitingbecause starting up a dealership
, which is what this was, thatwas very exciting to be a part
of that organization.
Good organization Was there forabout five years.
Then realized they were notgoing to grow much bigger
(02:01):
because they were really aCummins.
They were not going to growmuch bigger because they were
really a Cummins.
Had them on a pretty tight ropefor one thing.
And so I went to work for RodeMachinery as vice president of
product support and then it wasa few years later they took on
the California territory andasked if I would go over and
help with the transition,pulling the two together.
(02:22):
Help with the transition,pulling the two together.
Then the last probably 10 or 15years I worked at Road in
various roles, from working thedata analytics for marketing
side of the business, worked inthe training department but also
part of the role of leading apricing team.
We're establishing pricing forall the service work and,
(02:46):
primarily, component rebuilds.
So I had a lot of opportunitiesto do different roles within
the organization, differentorganizations, and I really
enjoyed it.
Speaker 1 (02:55):
Yeah, and Road had a pretty significant component
rebuild group, didn't they?
Yeah, they did.
Yeah, the Cummins dealer thatwas Shanahan Equipment, right
Based up in San Francisco yes,yeah, yeah, kevin Shanahan and
Paul Bleeker were the two guys,the two owners.
Speaker 2 (03:11):
I worked with Gail Plummer he was the guy leading
up the tractor side of thebusiness.
But Kevin Shanahan and PaulBleeker, very good guys.
Speaker 1 (03:33):
I've been fortunate to work some good dealers and
dealer principal people, thatsome savvy business people knew
the markets and were really goodat what they did.
So I'm going to say 40 years,from 1980 to 2020, roughly right
, yep.
So go up in the helicopter andwhat would you say is the
biggest change that you've seenin the industry.
Speaker 2 (03:53):
The biggest change is the.
Of course we've all seen thatthe smaller dealers becoming
fewer.
Of those, very difficult to getin to become a dealer unless
you're a very large organization, like Roe Machinery was owned
by Mitsui.
So having to work across a verylarge organization, the people
(04:17):
changes, the workforce coming inand the workforce beginning to
retire, customer base changing,changing.
You know you get the corporateaccounts, national accounts,
becoming a bigger, bigger deal.
But yet how to take care of thesmaller uh contractor trying to
come into the business and thatowns a skid steer or a backhoe
(04:38):
and and it became very, verycompetitive.
I mean just uh.
I started about 1980s whenkamatsu came into the us.
I remember working with withempire and you walk down this
long hallway between thecorporate office and the shops
and uh, john whiteman at thetime was had a list of the uh,
some some type of japanese logosalong the hallway and I don't
(05:02):
remember what those, what thosesaid now, but that was to remind
all of us of the competitivenature that kamatsu was bringing
into the marketplace and thatso really saw the competitive
change within uh empire withjohn uh and then later with jeff
coming on, jeff's very, verycompetitive, um, and you know
(05:22):
jeff's, all in his heart is his.
His heart is all there, well.
Speaker 1 (05:26):
I think in 1980, caterpillar had 50 dealers in
the US.
They had 10 dealers in Canada.
Today in Canada there's two.
Any idea how many Caterpillardealers there are in the States
today?
No, I do not.
I've heard rumbles that they'reheading towards 15.
(05:48):
Wow, I don't know that that'strue or false, but clearly the
number of dealers has shrunk.
One of the other things thatyou mentioned, mitsui, was a
trading company, one of thelarger corporations in the world
.
How much did they interferewith the operations in the US,
(06:13):
or did they let you have yourown head?
Speaker 2 (06:17):
MARK BLYTH.
No, the Mitsui structure.
The CEO was from Japan, the CFOwas from Japan and the rest of
the organization, for the mostpart, was from the US.
So we had the president and thevice presidents.
They were folks from theindustry.
Speaker 1 (06:42):
Was the president, then Mike Bose.
Speaker 2 (06:44):
No, this is after Mike Bowes.
This was Chuck.
Paul had just come on board.
I got you Yep, he had just comeon board and I knew Chuck.
I'd worked with Chuck at Empire, so I knew him pretty well.
Speaker 1 (06:57):
Yeah, he's a pretty good guy.
Yeah, so here we are now in,I'm going to say 2020.
What do you think?
Speaker 2 (07:08):
it's going to look like in 2060?
Well, I think, like you said, Ithink that their dealerships
will continue to get smaller,the first number of dealers
individual dealers getting muchbigger.
I think Empire is very lucky,very fortunate, because they got
into the mining market.
I was there when they sold thefirst 789 truck to the Cypress
(07:30):
Corporation in Tucson.
I didn't know what a haul truckwas At that time.
The director of parts broughtme a parts book of a 789.
He said order the inventory ofspare parts for this.
I didn't know what truck to evenlook like and I'm standing in
the shop floor of Cypress andthe maintenance manager said
Empire knows tractors, they knowdozers, they're all trucks.
(07:55):
You guys never make it.
And of course, a few yearslater, that's pretty much the
cat truck is pretty muchdominant in the Arizona mining
market now.
So that allowed Empire Marketto really grow.
If you remove the miningbusiness from Empire and then
visualize what it would looklike it would be a totally
different animal Then the mininghas really provided the chance
(08:17):
to expand services and rebuildcomponent shops and hydraulic
shops and things that would havebeen very typical to do if it
had not been for the mining sideof business.
Speaker 1 (08:28):
Was Rod Bull at Komatsu at the time you retired.
Speaker 2 (08:33):
I don't recognize that name.
Speaker 1 (08:35):
Okay, he's now the president of Komatsu Mining.
Speaker 2 (08:40):
Okay, yeah, I don't think so.
Speaker 1 (08:42):
Okay, and he's a former cat guy out of cat mining
.
He and another fellow, michaelMcClanahan, came over.
They changed the pensionretirement compensation programs
at Caterpillar and a wholebunch of younger guys left and
went elsewhere.
Rod's a pretty talented guy.
(09:03):
My guess is he's destined forbigger places.
But Comatose split the companyinto two pieces mining and
construction.
Can you see?
Speaker 2 (09:14):
Caterpillar doing that?
David ROSENBERG?
I would doubt it because of theintegration of everything's all
intertwined.
Now, do have uh they did havethe mining dealer uh
requirements and non-none mining.
You know they had things tolook at.
If you're going to be a miningdealer, you had to have these
kind of capabilities, right.
(09:35):
So I do think, uh, buthopefully they don't do that.
I think that's really a andactually the road.
Now, if I remember, in arizonait's now split into two.
There's a mining which isKomatsu side and their road is a
non-mining side.
Speaker 1 (09:49):
I think that's what they're doing all across North
America.
Now it might be they take itall around the world.
P&h with their large shovelshad, I think, a sector, a
(10:11):
division, called PartsPro, sothey did their own distribution.
In other words, the dealerswere owned by, operated by, p&h.
So when Komatsu came in, it'san interesting situation where
Komatsu and OEMs in general makebetween 40% and 50% gross
(10:33):
market on parts when they sellto their dealers.
With PMH, they were making themoney at the dealer level and
the OEM level together and as aresult of that, their customer
price was significantly lowered.
In other words, they'd taken alayer out of the supply chain
(10:54):
and passed it back to thecustomer.
Do you think that's sustainable?
Speaker 2 (11:01):
Well, I don't know that.
I know for the dealer theirparts side.
Well, parts and service, youknow the absorption rate thing,
I mean, those are so criticalfor the dealer to survive, yep.
So I think messing with thatequation in any way whatsoever
would make makes it much moredifficult for the dealers to
survive and prosper, and that'sone thing.
(11:23):
So working at Shanahan, we'relooking at bringing on our very
first lube truck.
Speaker 1 (11:27):
Yep.
Speaker 2 (11:29):
And so put the information together and it's
pretty hard to justify thereturn on investment of a lube
truck strictly on the sale ofoil, and oil changes the labor
side.
And the owners, kevin and Paulsaid noul said no, no, that's
not how we do that here.
Okay, we'll look at the totalparts and service.
(11:49):
What does that bring to thecompany overall?
And we'll base the return oninvestment.
And parts will pay for part ofthat loop truck as well, because
they'll get the revenue too.
So, uh, you know.
So it's interesting how somedealers will take and manage the
business a little bit different.
But uh, but me impacting thebalance of that parts or labor
side can be very tough for adealer to survive on that.
Speaker 1 (12:13):
Especially in the construction side, where one of
the things that used to beinteresting to me sales per
employee and productivity hasalways been something I've been
concerned with.
And I'm going to say, over thelast 20 years, plus or minus,
dealers have shrunk the numberof people.
(12:36):
I say they put profit overpeople, which means customer
service has eroded.
Customer service has eroded andI'm going to say we have three
different businesses withinproduct support One's the
maintenance business, one's therebuild business and one's the
(12:58):
traditional parts and service,repair and maintenance business.
And Shanahan was one of the fewthat recognized that.
The maintenance business.
You got to look at both partsand service together.
Traditionally we've had everydepartment stand on their own.
Parts department is required todo this in absorption and this
(13:19):
in sales, and same thing withservice, et cetera.
And then you were involved, I'msure, with the caterpillar
machine rebuild program, andthat changed the game as well,
didn't it?
Speaker 2 (13:35):
it did and and kamatsu had that as well, but
the so in road, uh, but they hadnot when I there had not
rebuilt any machines.
So we took they've got.
Komatsu has some greatspreadsheets or whatever it was
for a machine rebuild.
And Albuquerque had a reallynice road machinery store,
(13:57):
corporate office at one time YepBig shop.
So they actually did a rebuildof a Komatsu dozer, which was
the first time in many, many,many years that anyone from Rode
had ever done that.
So but that, yeah, having theshop to do those kinds of
rebuilds, you know it's greatdoing the lube service, but you
(14:19):
got to be able to rebuild themachines as well.
Speaker 1 (14:24):
Yeah, and they took it right down to the frame,
didn't they?
Speaker 2 (14:26):
Right down to the frame.
Speaker 1 (14:27):
yeah, and gave it a new serial number.
Speaker 2 (14:30):
Yeah, kamasai, the same thing as the CAT did.
I don't remember the Kamasudealers I visited.
I don't remember many of themever doing that.
That was fairly common with us.
Most CAT dealers would do that.
But Empire was big and that wasa great program.
They marketed very well andthey included the account
(14:50):
managers, sales folks, into theprocess so that it wasn't you
don't want to have the sales guytrying to sell the machine and
product support trying torebuild the machine.
They've got to be in the sameboat.
So Empire developed aroundround to where it would work
with the salespeople,compensation-wise as well with
(15:11):
the PSSR.
Speaker 1 (15:13):
You remember cost per hour?
Yes, when customers would buy amachine on an hourly rate,
5,000 hours, at 20 bucks an hour.
And you get to a certain pointand we'll give you another
machine.
Speaker 2 (15:29):
Yeah, yeah, and that's kind of difficult.
The marketplace puts a lot ofrisk on the dealer.
I mean, when you're taking onthe responsibility and the life
of the component and the costper hour and trying to average
in at the beginning of the ofthe machine's life what it's
going to cost in five years orwhatever it is that, what the
break-even point is, uh, that'sjust a road.
(15:55):
Uh, struggle with that becausethey had that on their haul
trucks.
Uh, empire, struggled with thatwhen they first got on board as
well, and uh, so that that's umand cat had developed a program
I forgot what it was called now, but it was a program to
certify, kind of a certificationfor the customer as well as for
(16:15):
the dealership.
And if you are a, under theagreement you had to make sure
the haul profile was correct andthe payload was within this
range, plus or minus, whateverit was and opened the book so we
could see that.
So that I really the assuranceprogram I believe Cat called it
was really where the Cat and thedealer was trying to work with
(16:37):
a client to what they call worktogether, because it you know,
especially the mining side, theyreally had to work together in
order to get the availabilityand the productivity there.
Speaker 1 (16:48):
Well, mining is all about availability, isn't it?
Machine availability.
The other thing that wasinteresting that mining today is
probably.
10 companies worldwide havemaybe 80%, 90% of the mining
business.
I think a lot of the mines inArizona and New Mexico were
(17:08):
owned out of Mexico.
It's a really interestingmarketplace and there's so much
money in every respect thecustomer, rio Tinto and all of
the rest of them.
There's Valet and out of theSouth America, britain's got a
(17:34):
few, australia's got a few, andthen Caterpillar had a special
program I think it's still outthere that they would give
rebates back to these customersbased on and it was a small
number of customers, not justminers, others as well where,
based on their performancecriteria, the dealer would give
them back a rebate based on howmuch they purchased.
(17:54):
Were you ever involved in that?
Speaker 2 (17:57):
Yeah, a little bit, and one of the challenges with
that.
The concept is really good butusually those rebates would go
back to the corporate officeside of it and the local
operation, the maintenancemanager, the folks on site.
They didn't have any.
There's nothing there for them.
So that was a little bit of achallenge in some cases because
(18:19):
there's no incentive for them.
They didn't get a bonus on it,they were not part of it.
It was more applied towardsfuture purchases or whatever it
was.
So, yeah, it was a greatconcept but it wasn't to me,
wasn't implemented down into theshop floor side, on the mining
side yeah, I agree with you.
Speaker 1 (18:35):
I was involved with that at finning and I was
basically running the um partsbusiness and I would go out once
a year and give a check of therebate to the mine manager and
the mine manager would tell themoperations people buy from
(18:59):
Finning and the operationspeople weren't particularly
happy about that.
So, just like you say, it drovea wedge between and, as a
result of that, unionizationcame in pretty heavily in mining
and at Finning we weren'tunionized.
I don't think you were atEmpire either, were you no?
And it was hard like hell toget into the repair business.
(19:22):
We finally were able to get inthere on the basis that we'd
come in once a year and give acertification, a machine
inspection to basically give.
It's almost like a kid atschool.
That graded the minetechnicians and it exposed them,
(19:43):
because they don't have thetraining that the Caterpillar
people have, they don't staycurrent with the equipment, they
don't have the documentationand as a result of that we were
able to start getting into someguaranteed cost per hour for
components.
So we'll rebuild an engine,give it out to you, you just
install it, but it createsfriction.
I like the incentive program.
(20:04):
I think the concept's great,but I'd like to see it better
distributed, more logically.
Let me call it so same thingfor employees at dealerships.
Incentive programs are verydifficult, in my view, to
administer.
I want to give them rewards forperformance.
(20:27):
I want to be able to define anddescribe the performance and
get agreement with the employeethat that's what the performance
really is.
But then corporate screwsaround with it.
Speaker 2 (20:38):
Yeah.
Speaker 1 (20:40):
You know, one of the things that bothers me is this
profit over people thing.
Gross domestic product hasbecome a real political football
, whether it's here or Europe oranywhere else in the world, and
GDP is a function of goods andservice produced in a country
divided by the workforce.
So if you want to fix thenumber, if you want the number
(21:03):
to go up, you just reduce thenumber of people, and in America
we get a little bit misledbecause the percentage of the
working age population thatactually works is shrinking what
they call a participation rate,and that's partly what's going
(21:24):
to bother me over the next 10,20, 30 years.
I think we're moving from atransaction world a part sale, a
labor hour, a machine, a rentalto a data world where we're
going to be much more involvedin predicting when that next
transaction should take placeand how come we didn't get it.
(21:45):
Did you experience that witheither Road or Empire or anybody
along the way?
Speaker 2 (21:51):
Yeah, probably more with.
Empire was really good ontracking participation and sales
deals, yeah, which to me was agreat measure and there's good
things in it.
And the one thing about Empireis they were really good about
balancing that.
That wasn't the only thing thatdrove the number.
I mean Cat would come in, forexample, or it could be Kamasi
(22:14):
or John Deere would come in, andthis is how you do this.
But Empire won because, as goodof a dealer as they were, cat
was a little more flexible andunderstanding probably than some
others.
But Empire did a good job ofbalancing the partition rate and
why and the lost sales and whathappened and doing the analysis
on it.
And to me, what I saw was reallyhow they managed was very well,
(22:37):
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 mayhave been something else that
lost the deal than the salesmanwas responsible for, so it could
have been parts that showed uplate or something else that
prevented a rebuild on somethingthat the salesman really didn't
(23:00):
have any role in that exceptmaybe to manage and overcome the
challenge.
So, um, but I think that empireis very good about balancing
the benchmarks between thedealer and capped and uh, but
they were always pushing thelimit, you know, and the dealers
are kind of going to squeezebetween what, what, the, what
the customer wants and what thedealer I mean what the, uh, what
(23:22):
the oem wants.
They're right kind of in thatmiddle of the parts pricing or
machine sales or availability,whatever it is.
The dealer's in a very toughspot of balancing that pressure.
Speaker 1 (23:33):
Yeah, they really are .
And the other thing about theequipment sales side is again,
as an outside observer for along time, and you probably have
the same view Caterpillar,comenzu, john Deere and Volvo to
me throw Hitachi in there aswell are the five largest large
equipment dealer networks, andeach of them has lost market
(24:02):
share over your work life andmine big time.
Did you see that?
Speaker 2 (24:10):
at empire no, the empire that that uh uh market
share was very important to them.
They knew and it was kind oflike you know, if you drive down
the road and you see a jobalong the freeway and what I
still do today is, wherever I amin the country, drive down the
road and how many cap machinesare as a total population kind
(24:32):
of represents what their marketshare is.
So no, they were all over thatmarket share piece.
Speaker 1 (24:39):
They're very protective of their pins and
parts sales percentage, themachine market share, we get
really very definitive.
I'm going to say four-digit,four-decimal place market share
numbers on equipment,association Equipment
(24:59):
Manufacturers, the OEM.
They do all of these tests.
I don't see a lot of goodmarket share calculations for
labor or parts.
Speaker 2 (25:08):
Yeah, no.
Speaker 1 (25:09):
Do you?
Speaker 2 (25:10):
No, no, now the information's there.
Well, I guess market share andno, really there really isn't
actually.
You know they can measure,there's some measurements there,
but not enough.
That really drives too much ofanything.
You know we don't really worryabout.
In part did worried a lot aboutthe competition.
That was one of my roles on thein the marketing side is every
(25:30):
month I did a a competitiveresearch on on the competitors
on the service side and uh, youknow we were down.
We're data analytics wise.
We could pull the parts listthat the competitor bought.
I was tracking road becauseroad did a lot of cat rebuild
components so, but I could trackwhat kind of what kind of parts
they bought and from therecould determine what kind of
(25:52):
level rebuilds they were doing.
Uh, so we did a lot of analysisevery month I would do a report
and get it back to the productsupport side on.
We looks like we lost an enginedeal here because of what this
competitor bought and what sizeit was, and sometimes we'd like
they would even give us a serialnumber because they needed to
buy the parts anyway.
Speaker 1 (26:10):
So so taking that place and going forward.
We used to sell parts to all ofthe machine owners and I'm
going to go back.
I started in 1969.
And I was able to get a report.
(26:31):
That was in 1965 was the lasttime Caterpillar did this, but
every five years they personallyinterviewed every machine owner
in the world and then in 1970,they changed it because that was
a rather expensive proposition.
Again, profit over people.
(26:51):
And Ray Paul Hill, who's anassociate, lives in North
Carolina today, retired, reallytalented guy.
He drove that survey.
But I remember seeing surveydata based on that face-to-face
stuff where 83% was the numberthat Caterpillar said their
(27:12):
market share was on parts toCaterpillar machines.
I'm at a Caterpillar conferencein Mississippi in the early
2000s and the man who droveUnited States Commercial
Division, the US side of thebusiness was in the crowd.
There was a couple of hundredpeople and I don't know if
(27:35):
you've seen me in a classroom.
I have a lavalier and a mic andI wander around amongst the
crowd like an idiot because I'man old time teacher and I went
up him and I put the microphonein his face.
It wasn't particularly good, itwas kind of rude.
I said I'm going to ask aquestion and you don't need to
answer it because it might bedifficult.
(27:57):
I said when I started, theparts market share was 83%.
Do you know what it is today?
He didn't hesitate, he saidit's 38.3% and I thanked him.
So let's call that 2010, just toput a number on it, and let's
(28:18):
go back to 1970.
So that's 40 years, from 83% to38.
Let me change that and make it80 to 40.
And I say to the Caterpillardealers today the same thing's
true for Comatose, the samething's true for Deere, et
cetera.
I say to the Caterpillar familywell, don't worry about that,
(28:44):
in another 40 years you're stillgoing to have 10% of the
marketplace.
So it should be okay, or 20%,whatever the hell the number is.
If you take that much of theparts business away, kind of
like the electric car business,the dealer can't survive.
You agree with?
Speaker 2 (29:01):
that Absolutely yeah, yes, and so we get to tracking
by client, which you might callthem clients, not customers and
there's a reason for that.
We get tracking by client andwe would identify which of our
clients are not doing enginerebuilds with us, or
transmission rebuilds, orhydraulics or welding.
And why not?
(29:26):
Because for the most part, youjust look at, well, total volume
of customer and you pick out,maybe lube services, but if you
really get into digging into whyand parts of the business they
won't do business with you.
For example, customers wouldrebuild their own engines or
have road rebuild or somebodyelse, but they typically would
not do transmissions themselves.
Yeah, a little more concern thetechnicality of those, um so, or
welding, or hydraulic cylinders.
(29:47):
So if you start drilling intowhich of this the business are
you not getting and then modifyyour programs to figure out,
well, what's wrong here, what'shappening here, and is it their
marketing strategy or is theresomething else?
And then go back after thatbusiness.
But that's where thecompetitors would come in.
They would come in and pick upthe and is it their marketing
strategy or is there somethingelse?
And then go back after thatbusiness, but that's where the
competitors would come in.
They would come in and pick upthe hydraulic business.
We'll just do hydrauliccylinders for a while and then
they get into the pumps andmotors and next thing you know
(30:09):
they're into something else.
So yeah, but I don't think alot of the dealers are drilling
down far enough to really figureout where are we losing that
business and why, specificallyfor that type of component type.
Speaker 1 (30:24):
Yeah, Caterpillar, a number of years ago, made the
statement that the dealers wereleaving too much of the parts
and service business to chance.
It wasn't a driven program,problematic market coverage, and
they did a really nice job withcommodity codes identifying
families of parts.
(30:45):
They did a really nice job withlifecycle management how long
is the transmission supposed tolast?
Hydraulic pump blah, blah, blah.
What you did was ahead of thecurve, finding not just what
they bought but what they didn'tbuy.
That was important.
Yeah, that's almost moreimportant.
And then I like to touch all ofthose customers and say, okay,
(31:08):
and they're there to help you.
So where did you go?
And they'll tell you.
And then my next question usedto be well, what is it you like
about doing business with them?
And whatever the hell they said, then we weren't doing it and
that's why we lost the business.
If you look at the electric carbusiness, I think the number of
(31:37):
dealers that you're going tosee going forward is going to
shrink even more in theautomotive side.
Yeah, and that's because ofparts market share and I'm going
to translate that over toAmazon has changed people's
buying habits.
Speaker 2 (31:58):
Yeah.
Speaker 1 (32:00):
They're today the largest retailer in the world.
You can buy Caterpillar partsthere, John Deere parts there,
Bobcat parts there, and a lot ofour customers now are shopping
online.
And what percentage of thedealer business the Caterpillar,
Camacho, Deere, Volvo, Hitachibusiness is conducted online?
(32:24):
It's a tiny amount.
Is it because the dealers don'twant to change or their systems
aren't good enough for that?
What do you think the cause isof that?
Is it attitudinally or is ittechnology?
Speaker 2 (32:40):
I think probably some of both, and some on the
customer side as well, becausesome of the uh now this has been
a while since I've been thereon the dealer side but the um,
the old school customers, youknow they're used to having that
paper parts book and and uh andthen calling the parts line and
it's busy.
Or they get on the line, youget somebody on the phone you're
talking to and they're tryingto take care of the customer in
(33:02):
front of them, kind of thing,and so they're used to.
They're used to that.
But but then we started seeingthe customer buying the online,
the cat online, or come out,come out as well, online parts
ordering.
And then on the cat side atsome of the stores they set up a
a customer will call pickupplace.
You just go pick it up andleave.
(33:23):
You don't even come in the door.
Speaker 1 (33:25):
Yep.
Speaker 2 (33:26):
So a customer actually order something online
and go pick it up and never seethe parts guy.
And you know, first we thought,well, there's going to be going
to lose parts and but we foundvery there.
I can't think of any time thatthey're worried about parts
being stolen by another customer, that we may, the warehouse
person may put the wrong, theright part in the wrong customer
(33:47):
bin.
But those customers I broughtthem back.
Hey, this is an hour, this isXYZ Construction Company and I
thought, bring them back thatrelationship between the
contractors.
But it was possible for them toactually buy a part and pick it
up and we'll call and theynever actually physically go
into the store.
And then, of course, deliveryservices.
The dealer is starting to dodeliveries, um, and there's kind
(34:11):
of a disadvantage with that.
I was riding with a partsperson and we're going along
their route and we pulled onthis customer shop area and
we're stepping over hydrauliccylinders cores they're going to
be rebuilt by a competitor andwe're delivering going around
them to deliver these parts.
Uh, and the thought was, well,if we can train this parts
delivery person, hey, can I takethese with me?
(34:32):
And are we know something to onthe delivery side to generate
some um sales opportunities, andrecognizing there's a sales
opportunity could increase thepart sales too.
There are a lot of disconnectsbetween the employees how to use
technology.
We make it easier but we don'tmake it better.
Speaker 1 (34:56):
That's a good way of saying it.
I say a lot of our systems havejust gone from paper to glass,
yeah, but we've left the method,the procedure, the system
pretty much the same.
You know, a customer calls into the parts department.
I used to tease that.
You know what's the firstquestion you ask the customer
(35:19):
and essentially the answer thatcame back to me is who the hell
are?
You Give me your customer namefirst and I say to them well,
why the heck is that important?
Well, we want to have adifferent pricing structure for
them.
Well, wait a second.
What do you think thecustomer's wanting when they
call in?
What's the questions they wantanswered?
And I say it's have you got it?
(35:41):
How much is it and how long doI have to wait to get it?
And I don't know that.
We've adapted that way andtoday, with the internet, you
can dan nearby any part for anymachine from the people that
made the part, not the OEM,who's a middleman.
(36:02):
They're an assembler ofmachines.
They don't make.
Caterpillar doesn't make verymany parts, neither does Komatsu
or Deere.
Speaker 2 (36:07):
Anybody Can you imagine how big those factories
would be.
Oh yeah.
Speaker 1 (36:13):
So younger generations?
I don't.
We're not young anymore, ron,as we're both going to admit,
but the guys that are 30 yearsold and down in this business,
they're going to go on theinternet as their first option.
They can find out how to repairsomething, they can find out
(36:33):
what the life is of that, theycan track when the next
maintenance service should be,and they're acting on it, yeah.
Speaker 2 (36:44):
Did you use drop boxes?
Yeah, use drop boxes was realbig, so that was an.
I implemented that on the onthe road machinery side as well.
So I drop box and in that dropbox it's if it's freeway job,
there may be multiple customersparts in that drop box and so,
yeah, that was a, that was a,definitely a convenience.
Uh, we also used theimplemented the empty shopping
(37:06):
cart.
So if a, if a customer wentonline and clicked a bunch of
parts and they never bought them, then okay, then he's price and
there's doing himself, but he'snot buying parts from us, he's
just checking price or he'sgoing to give the list to a
competitor who's going to windup.
Uh, or they may buy the partsand then give them to the
competitor to do the rebuild.
But we use the empty shoppingcart as part of our competitive
(37:28):
analysis as well.
Speaker 1 (37:30):
Yeah, with technology it used to be HTML and then it
went to XML so I can track howlong you cursor stayed where on
the screen.
So I'd know who looked lastnight at what.
Did they check availability,Did they check price, Did they
buy?
And the next morning, if theydidn't buy, I'd call them say I
noticed you.
Look at this.
Did you find a source?
(37:53):
Because I can help you.
I've got it on hand now and itchanged the whole dynamic.
But there are not very manydealers that do that.
Speaker 2 (38:02):
No, no.
And then that takes people alittle bit of people.
It's more of the data crunchingpart of it.
But again, some of these thingswe're talking about cutting
headcount.
They're trying to get down tothe headcount of where they
think it needs to be, but theseother roles can really increase
the revenue and provideincreased market share.
So a lot of the sum dealersjust don't understand that part
(38:25):
of it.
Speaker 1 (38:30):
The other thing that happens, I think, ron, is you
and I both were involved inproduct training schools back at
Factors, the works and wares ofundercarriage, how filters work
, bearings, et cetera, et cetera, the part sales kit for
Caterpillar, defining anddescribing all that stuff.
The internet can give that toanybody anywhere now and I don't
(38:51):
know that.
That profit over people thingcomes back to the headcount
thing that you were mentioning.
I think the relationship thatwe've got with customers is
eroding and for some time we'vehad the situation where loyalty
(39:12):
in America everybody kind ofsays this loyalty is no longer
an issue and people aren't loyalanymore.
I think we forced that andpeople aren't loyal anymore.
Speaker 2 (39:24):
I think we forced that.
We've created that, yeah yeah,we sure added to it.
If we didn't create it, we sureadded to it.
That was one of the things whenJeff Whiteman came on with the
leading empire separating theclient versus customer is that
if you go to the grocery store,you're a customer, you're
picking up whatever produce youwant, Whereas if you're a client
it's more like going to youraccountant or to your doctor.
(39:47):
Is that you're there askingquestions and and.
But not all customers want that.
Some want to be a client andthey want your input, they want
your suggestions, and others maystart off as a customer and you
may develop them into a client.
But that was, I think, a verykey difference when I rode
versus Empire is that thatclient view was very, very
(40:11):
important within the dealershipand 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 justknow, I'll call you when I need
you, which is fine.
That there may become a pointor time when you can convert
them to a client typerelationship.
Speaker 1 (40:34):
That goes back to the old fashioned market
segmentation, doesn't it?
Yeah, the small, medium, largefleet, abcd buyers, 80-20,
whatever the different rules are.
And that goes back to EdwardDeming and Duran in Japan with
the continuous qualityimprovement deal.
Employee development is alsosomething that's been let go.
(41:00):
Employee development is alsosomething that's been let go?
I don't.
I don't.
Too many companies, I think,look at employees like tools in
a toolbox and if, if the needchanges, they'll replace the
tool, they let the employee goand bring in a new one.
Speaker 2 (41:12):
They don't train them .
Yeah, the employee that.
So we're, we're in a, we'relike there's five generations
working in the workforce todayand that's just that's really
unbelievable, isn't it?
It really is and I'm looking atoh my gosh, I'm part of the
older generation now, so I'm atthe end of it, but what I've
seen is that there are four keypieces of training on the
(41:33):
employees.
And that's the technical side.
Whether they be an accountantor whether they be a part
salesperson or a technician,there's a technical part of
their job that they need to betrained and developed on.
There's the people skills ofworking across other departments
and peoples within thedepartment.
There's also a personaltraining on you know how do you
behave at work, and it'ssurprising we have to teach
(41:55):
those things, but the peopleskills of working with our
coworkers is so important.
And then there's a safety side.
You know, one thing I learnedwhen I managed field service for
a while is that I was alwaystalking about manage your field
service truck as if it's yourown.
The problem is, I had thechance of riding in an
employee's pickup truck one timeand it was a disaster.
(42:18):
Yeah, so that managing it wasyour own didn't mean anything to
that individual, because theirpersonal how they manage their
personal vehicle was not what wewanted.
So learning how to adapt fromsomeone's how they do things in
real life, or the personalskills or managing an asset, or
(42:39):
you it that you have to getthose in line with the corporate
structure yeah, yeah, and thatyou're absolutely right.
Speaker 1 (42:47):
I like that four-step thing.
One's the technical side of thejob, what's the interpersonal
relationship with otherdepartments side of the job,
what's the safety and andtidiness, etc.
Part of part of the job andwhat's the personal motivation
to do it, and it's all you know.
(43:09):
That takes me back to a simplequestion Did you do performance
reviews of employees?
Speaker 2 (43:14):
Yes, absolutely.
Speaker 1 (43:16):
Did you ever get trained on how to do them?
Speaker 2 (43:19):
Yes, now, probably not as thorough as we should
have been, but I went throughone of my change roles at Empire
.
One of my responsibilities whenI took the new role was that I
have a layoff, and one of myresponsibilities when I took the
new role is that they're goingto have a layoff.
And I was given direction okay,you need to let go 60 people.
(43:40):
And so when I pulled all the,so of course I asked the
managers you know what's yourlist?
And I got the list.
Well, I pulled all theperformance reviews for all
those people and, oh, mygoodness, I was surprised that
they all walked on.
Well, not them, but walked onwater and what you're?
You're saying this personshould be let go, what I don't.
So we had to really get back andbegin training on how do you do
assessments and evaluations andand um, yeah, so most it's.
(44:04):
It's easier not to do themeffectively.
Just get done.
And I think what happens a lotof companies?
They do them at the end of theyear.
So they all have been done atthe end of the year.
So you, they all have to bedone at the end of the year.
So you've got this crunch time,along with budgets you've got
to get.
All the reviews have to be done, and instead of planning them
out during the year and gettingthem done, they do this at the
end of year crunch time, and sowe just kind of do a very poor
(44:26):
job in some cases doing theevaluations.
Speaker 1 (44:29):
In other words, they're checking off a box.
Speaker 2 (44:31):
Yeah.
Speaker 1 (44:32):
It's part of my job.
Click.
I did the performance review.
Speaker 2 (44:37):
Yeah, and they don't want to have that difficult
discussion I mean, it is havinga difficult discussion with
someone that's not performingwell over something specific and
so, I think, training them onhow to have that discussion and
have it early enough during theyear, closer to when the event
happens that they can recognizeoh yeah, I could have done that
a little bit different, closerto when the event happens they
can recognize oh yeah, I couldhave done that a little bit
different.
Speaker 1 (44:54):
I've always held the position that the employee is
the first one to know whenthey're not doing the job.
Do you subscribe to that?
Speaker 2 (45:05):
Yes, absolutely so, as long as the standard is set.
Again, if I talk to theemployee and he got into his
personal pickup truck and it wasa mess, an employee that's
personal life is not a goodspace.
He thinks he may be doing finewithin the work environment and
so as long as the standard hasbeen set, that he's not all like
(45:26):
that.
But some know, yeah, I kind ofmessed that up.
And then there's some theydon't know They've got to be,
and I think the new, newgeneration, especially now with
the folks that are getting theinto the workforce, that were
out during covid, you know,those that were juniors or
seniors or freshmen orsophomores in high school that
went to school, finished highschool at home then goes into
(45:49):
the workplace.
You know they really have nothad the opportunity to develop
those skills yet and theemployer has got to teach those
and we kind of think weshouldn't have to but that, yeah
, we kind of do.
Speaker 1 (46:01):
Yeah, it's really.
You know, I used to tell peopleI've been a consultant most of
my work life in this industry,so 45 years as a consultant and
13 years as an employee and Iget to the point that the
employee knows.
I just bring it to theirattention.
(46:22):
But it's critical that we havereally precise job descriptions,
really precise performancestandards and that we're able to
communicate that, one of thethings that's really remarkable
to me.
Statistics in America say that90% of companies in America fail
(46:46):
to achieve their strategy on anannual basis and it's surveyed
every year and it doesn't varymuch plus or minus two or three
points.
And the follow-up question iswell, why do you think that's
true?
And you ask the employees inthe company what their strategy
is and 90% of them can't tellyou.
It's purely communications,which is nuts.
(47:17):
So with the, okay.
So let me circle backwards whereyou said okay, we do these
reviews once a year.
I want to do them every damnday.
I want to be out with theemployees that I work with my
team, sort of deal.
I'm not the boss, I'm aco-worker, I'm a partner, I'm
here to make you better.
But that means I've got topoint out when you're not doing
(47:38):
it right and I got to have anability to do that such that you
don't think I'm a jerk, I don'tmake you look like a jerk, the
whole world doesn't know aboutit.
It's you and me privatelysomewhere saying okay, ron, this
you know we had a problem doingthis yesterday and it's got to
be close enough to the event,kind of like training a dog.
(47:59):
That's a bad analogy becausethey're people, but I think you
know what I mean.
Yeah, I suspect that's the wayyou did things yourself, wasn't
it?
Speaker 2 (48:09):
Well, yeah, one of the things getting into the
leadership role, I wanted tomake sure that the employees on
the shop floor and field serviceknew who I was and I knew them.
So it was not unusual for me toride in a pickup truck in the
middle of the night on a guythat's R9 at transmission, or
going up one of the mine sitesat two o'clock in the morning
and talk with the technicianthere in the shop the Empire
(48:32):
technician there in the shop.
But I really wanted them tohave the opportunity, whether
they want to share something ordon't, and then if there's a
challenge going on, I cansupport that supervisor as well
on hey, how's this going, andnot get in their way.
But I'm there to support boththe lead person or manager,
supervisor and the employee tokind of.
(48:54):
This is why this is importantto us.
So and I don't think managersdo that much it's, you know,
wandering by, managed, bywandering around.
You know that is being seen,being visible.
Speaker 1 (49:05):
Yeah, patrick Lencioni is an author that I
recommend to everybody.
He writes very simple tounderstand books I call them
fables and they're small.
They're 100 to 150 pages, smallformat, easy to read, and he
has.
One of them is the three signsof a miserable job, and you
(49:28):
mentioned one characteristicright away you wanted them to
get to know you and you to getto know them.
The first character you know.
First sign of a miserable jobis anonymity.
The employee doesn't, thecompany doesn't know who the
employee is.
They married, they got children?
Are they in school?
You know what are they, who arethey Then?
(49:49):
You know so, anonymity.
Irrelevance the employeedoesn't know where their job
fits in the overall organizationand structure.
And finally, a word he createdcalled immeasurability, so that
at the end of the day, atechnician has a really big
advantage At the end of the day.
(50:09):
They know if they did a good jobor not.
Today, they know how many unitswere kicked out.
We can't do that in the officeas well, right?
Speaker 2 (50:19):
Yep.
Speaker 1 (50:20):
And I think we missed the boat there.
I think we're today.
I think one of the biggestchallenges we're going to have
going forward is finding skilledpeople.
I don't think the educationcommunity is delivering what
they're supposed to, and if youlisten to the current
discussions politically inAmerica about the Department of
Education, we spend a trilliondollars and we score 40th out of
(50:41):
40 countries in performance andreading, writing and arithmetic
I mean that's ridiculous Ron.
Speaker 2 (50:57):
Yes, yes, which is that you know the people skills,
the technical skills, thesafety skills and team building
skills.
We don't want to do it, but wereally need to be successful.
We're going to have to.
Speaker 1 (51:07):
Yeah, yeah, I agree with you 100%.
The other thing is today.
So let me draw a line and callit 45.
So employees from 20 to the ageof 45 and employees from the
age of 45 to 70 have completelydifferent backgrounds and bring
to their work a completelydifferent skill set.
(51:30):
The people that are 45 and down, they know how to manage from
the office.
They can't do the job, theydon't know how to do the job and
they really don't want to dothe job.
And schools are kind ofteaching universities,
particularly, are kind ofteaching them that way.
Do you see that as well?
Speaker 2 (51:51):
Yeah, there is, and there's several places in the
roles I had.
I'm not a technician, never wasa technician but put into
positions to manage serviceoperations.
I was very fortunate that I hadthe strong technical people
around me that I didn't you know.
My job wasn't to troubleshootand how well they did
troubleshooting.
My job wasn't to troubleshootand how well they did
(52:11):
troubleshooting.
My job was to make sure wesupport 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 tobring my skill set in for that,
but have a strong technicalbalance.
(52:32):
That helped me with those kindof decisions for the technicians
out in the field.
Speaker 1 (52:35):
I don't see that with the current, the 45 down
generations, do you?
Speaker 2 (52:39):
No, no, because I think the technical side is
that's going away as well.
So you know, I had people workfor me that had 20, 30 years
experience as technicians, soI'm very, very fortunate.
Otherwise, it would have been avery difficult role for me to
help manage a service department, for example, if it was just me
by myself and I didn't trustand rely on those people with
(53:03):
the skills of the technicians.
Speaker 1 (53:05):
I remember early in my career I got involved in the
service department.
I put overalls on and went outon the floor and after a couple
of weeks the guy said why don'tyou go back to the office
because you're screwing too manythings up here.
But I was very lucky, ron.
I was put into places as to fixproblems, find problems to find
(53:30):
solutions and then implementthem.
Fix problems, find problems tofind solutions and then
implement them.
And we had ordering stations onthe shop floor, I'm going to
say in 1971 or 72, where thetechnician would walk from his
bay to an ordering station andit might have been 20 feet and
(53:57):
we had three ladies who hadreally good typing skills and
it's not a sexist thing, butpart of it was to clean up the
language and the communication.
The guys would pick up thephone, it would ring
automatically in the partsdepartment, they would give
quantity, part number, quantitypart number, work order etc.
Their keyboard skills were fastand in those ordering stations
in those days we had microfichereaders.
Remember those things in thepaper books and all the rest of
this garbage.
(54:17):
You know we're going back along way here today.
If that was today and I was outthere, I'd have a terminal in
every damn bay.
Every technician would have hisown computer yep, or an ipad or
something.
Speaker 2 (54:31):
Don't know how to use it.
So, uh, instead of instead ofnot allowing that kind of
technology in the bay, they'lluse it.
There's parameters around that.
We had to always worry aboutthe technician not exactly
knowing how to do this.
They'll YouTube it.
Well, we don't want that.
You've got to be careful withthe stuff on the YouTube thing.
But how to adapt the technologyfor that generation that's
(54:54):
using it into a manner thatmeets the business needs and
practices?
Speaker 1 (54:57):
Yeah, one of the things that's interesting today,
I think the technicians aresome of the smartest people we
have in the dealership.
Being a technician is anextremely complex, highly
technical job today and thoseguys are, you know, it's kind of
(55:18):
like they're the surgeonsmaintenance is.
I'm going to say, is your yourprimary care physician?
You go in once a year and youget the blood pressure and the
blood work and all the rest ofthat stuff and they, you know
you're okay or not and then, ifaren't, they direct you to a
specialist on one side or theother, our technicians on the
floor.
I subscribe to the theory thatcustomer calls in or brings in a
(55:41):
machine and they've got acomplaint and they tell us what
the complaint is, but I want toinspect the machine to be sure
that that complaint is the cause, not a symptom.
I don't think enough dealers dothat.
Speaker 2 (55:58):
No, no, no.
Yeah, you can't hardly get thatdone on your own personal
vehicle.
Now take it to a shop.
Yeah, that's kind of missingnow is taking it to the next
step, and there may be somethingelse that may be the real cause
.
But, by the way, if I just fixthat when you take it back, that
this other part's going to falloff.
I mean it's uh.
But looking beyond is just uhand we're saying we're seeing
(56:22):
competitors offering things.
I took my car I usually usuallytry and use a dealership because
I want to support the dealer aswell and I was having a
challenge with the, the dealer Iwas going to, so I took it to
this private shop and I get somuch better service.
I mean, they washed my vehicle.
When it's over with uh.
The lady did the, plugged inand got the diagnostics.
(56:44):
I had a short on an injectorline, the number one cylinder,
troubleshot that and of coursedidn't know what the root cause
was.
But we knew what the issue wasand followed up on the phone
calls.
Um, so even dealers have got torealize the competitors are
getting better and we we have torealize and you know, if you
take my pickup to this, thisprivately owned small shop and
(57:08):
and uh, the least, once you waita few minutes, you were having
your pickup washed.
We'll be back here in just asecond.
That's going above and beyondthat, you think, but that can
happen at a dealership as well.
The competitor could be on muchbetter service.
So you have to be aware ofwhat's going on.
Speaker 1 (57:25):
Yeah, it's really, really funny.
We all deal with personalexperiences as reference points.
And I bought a used Cadillacone year in the desert that the
owner had had of the dealership,so it had every toy known to
man heads up in the windshield.
(57:47):
And I'm talking 20 years ago,maybe more, and I went in.
I traveled with my work, as youknow.
So whenever I went to adealership, my wife and I would
go together and a maintenanceservice is typically an hour or
two, so we would go and havecoffee and talk with each other
and do that kind of stuff.
And one particular instance I'man hour and a half in, I go in
(58:11):
and you know how's it going, andthe guy actually said to me
well, we haven't started yet.
I said, well, it's supposed tobe finished in 30 minutes.
What do you mean?
You haven't started yet?
Well, we ran into a problem Onmy car no, on somebody else's
car.
So I paid the price forsomebody else's problem that
you're solving and I said well,how much longer do you think
(58:33):
it's going to be?
Well, I'll get the bossinvolved.
So I went back and I sat down.
30 minutes later they came outand said your car is ready.
So I went to pay and the cardealers you've got to pay before
you take your vehicle.
In our world it goes to anaccount which is, in my mind,
all wrong.
So I went and I said let me seethe work order.
(58:58):
And I was looking forinspections, I was looking to
see what they found, what theydid, and I said can I take this
with me to the woman that I wasgoing to pay?
I want to go talk to the boss.
So I go back there and I saidwhat'd you do?
(59:18):
And he started hammering.
I said you know there's oneperson you don't want to do that
to.
It's me.
Why did you do that?
Well, you came through lookingfor it and I said so to satisfy
me.
You didn't do the job I'mpaying for.
And he said yeah, and I said soto satisfy me.
You didn't do the job I'mpaying for.
And he said yeah, and I saidyou know I'm going to talk to
(59:44):
the boss.
Do you want to come with me?
And he said yes, and I knew theboss because I bought his car.
So the three of us are sittingthere and I told him about their
story.
I said what are you going to doabout it.
He said give me the bill.
I said you think that satisfiesthe problem.
He said it satisfies yourproblem, but it doesn't satisfy
my problem.
I said what's your problem,george?
(01:00:06):
There?
Didn't do his job.
There's an active case ofleadership that I don't think
happens nearly enough yeah.
Speaker 2 (01:00:16):
Yeah.
Speaker 1 (01:00:19):
It's remarkable.
We had a guy.
I was working at a John Deeredealership in Southern
California and I was standing inas a service manager two weeks
a month.
I did it for a long time andone of the clients had a small
rental company 2025 John DeereMachines that he rented with an
operator His name was Dave andhe would hold his invoices for
(01:00:46):
two or three months.
Then he'd go into the servicemanager and he'd go through it,
invoice by invoice by invoice,and say I'm not paying this, I'm
not paying that, and he'd get adeal.
So I'm there one time he comesin and he's got this stack of
papers and he sits down and hewas like a sailor.
Every bloody word was an F-bomb.
(01:01:08):
And this is an open office.
There's women up there.
He said well, wait a second.
Before we go into the four-year, you got to clean up your mouth
.
There's ladies here.
And he didn't change.
So I stood up and I said that'sit and I left him and we were
on the second floor so I couldlook down on the shop floor had
20, 30 shop mechanics and thenfields, et cetera, medium size,
(01:01:28):
and he followed me out into theyard.
He said what are you doing andI said well, I'm not going to
deal with you if you're going toswear, like that period.
He said well, ok, I promise Iwon't swear.
And I said that's fine.
I want you to go upstairs andapologize to the ladies, which
he did.
So we went through and he wentback and forth and whatever the
(01:01:49):
hell he wanted, I gave him andhe paid his bill and he went on.
Three months later, same thinghappens.
We go through the whole thing.
He didn't swear.
So I'm thinking to myself thisis cool, he's trainable and we
go through the deal.
Same thing Doesn't want to paythis, doesn't want to pay that.
And I said we've done thisbefore, right?
He said yeah.
(01:02:10):
I said the last time I gave youeverything, right?
He said yes.
He said well, this time we'regoing to split it 50-50.
I'm not going to give youeverything.
I'm going to give you half ofwhat you're looking for.
He said okay.
I said by the way, you don'thave an open account anymore.
You're going to pay cash forevery order, as it happens, or
(01:02:35):
I'm not going to do businesswith you.
I ended up doing his taxreturns because I basically
dealt with him the way that hewanted to be and needed to be
dealt with.
He was a great guy.
He just was able to get awaywith something and we trained
him.
It was okay, because theservice managers in that time
were not strong enough to standup to him, had not been trained.
Ron, that was the fundamentalfault, right.
Speaker 2 (01:02:53):
Yeah.
Speaker 1 (01:02:56):
If you were going to look at the next 20, 40 years
and you had advice, one piece ofadvice just one for the dealers
that would make a difference.
Speaker 2 (01:03:12):
What would it be?
I think the one would be forthe dealer principals whose
children are coming into thebusiness is that they have a
really good understanding of thedifficulties that prior
president CEOs went through.
Know the history, know thepeople, and not just the grandma
and grandpa and those folks,but the key salesman that was
(01:03:34):
able to strike a deal of a wholefleet of 79 trucks.
What caused that?
Or we had a downturn in themarket, because I think that's
one of my concerns is it's beena long time in this industry
that we've had a downturn of anymajor significance.
So we've got generations ofsenior leaders that have not
(01:03:55):
been through a mass layoff orreduction of workforce of any
kind.
So how do you handle one ofthose when that comes up?
So know what the challenge theywent through and how did they
address it.
May be different now, but howdid they address it that you can
learn from and apply in yournew role, because I think
there's just a lot of legacythings and decisions made that
(01:04:15):
were really good and some not sogood, but you need to know the
ones that weren't so good eitherand why, so you don't make the
same mistake again.
But I really worry about thelegacy that the young folks
coming up and taking on thedealerships that their dad and
granddad and great-granddad andgrandma, grandma they all did a
lot of sacrifices to them forthe business and and they don't
(01:04:39):
won't really know the wholelegacy of why that happened,
when it happened and what theoutcome was.
Speaker 1 (01:04:44):
So the loss of loss of information is I guess I
worry about that I think that'sa good place to stop ron and
that I think that's wonderfuladvice, and I thank you.
I thank you for yourcontribution here and in the
industry for all these years,and to the audience out there.
I'd like to thank you, mahalo,for another the Clouds Are
(01:05:04):
Upside Down podcast.
We'll see you again soon,mahalo.
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