March 31, 2025 • 60 mins
Troy Ottmer brings a unique perspective to the equipment and commercial truck industry that few consultants can match. Having started as an automotive technician in 1987, Troy deliberately worked across every dealership department, developing a comprehensive understanding of how each function impacts the whole. This hands-on experience across automotive, construction equipment, forestry, ag, medium and heavy-duty trucks gives him insight that's increasingly rare in today's leadership landscape.
What makes this conversation particularly valuable is Troy's analysis of the fundamental shifts reshaping the distribution channel. He highlights how the medium-duty truck segment is booming while industry analysts remain fixated on Class 8 freight tonnage - a blind spot creating both challenges and opportunities. Troy's description of Amazon's strategy to place multiple distribution centers within minutes of population centers reveals how last-mile delivery is transforming logistics networks.
Perhaps most provocative is Troy's challenge to conventional industry metrics. While dealerships have traditionally targeted 100% absorption rates, Troy argues that return on assets (ROA) represents a more meaningful measure of business health. His benchmark of 50% ROA - achieved by turning assets five times annually - provides a revealing contrast with rental companies who consistently hit this target while many dealerships struggle.
The conversation takes a concerning turn when discussing workforce development. With reading comprehension at grade level for only 32% of fourth-graders and America facing a projected shortage of 3.8 million employees by 2033, the industry confronts a looming crisis that technological advances alone cannot solve. Troy's work with high schools and OEMs to develop vocational education programs represents an essential response to this challenge.
Whether you're a dealer principal, department manager, manufacturer representative, or customer, Troy's insights offer valuable perspective on navigating industry transformation. His practical experience combined with strategic vision provides a roadmap for those willing to evolve rather than cling to "we've always done it this way" thinking. How might your organization benefit from this kind of candid, experienced-based assessment?
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):
Aloha and welcome to another Candid Conversation.
We're joined today by one of myfavorite men, troy Otmer.
He's coming on for a secondbeating on a podcast which we
call Candid Conversation.
So I'm going to pass it to Troypretty quickly, on the basis
that he's been in the industry.
(00:24):
He's worked at dealers, he'sworked at customers, he's
independent now as a consultant.
And with that as theintroduction, troy, why don't
you tell people who the hell youare, where you came from, what
you do, how you do and all ofthat?
And we'll just see where thisthing goes?
Speaker 2 (00:42):
and all of that and we'll just see where this thing
goes.
Well, thank you, ron,absolutely.
So in a nutshell I'll give theshort version today.
Started out in the industry asan automotive technician all the
way back in 1987.
Took a couple, two or threeyears after high school to
figure out the direction I wasgoing, and initially it wasn't
(01:12):
college, and that led me to theautomotive vocational side of
the world, which I participatedin.
That in high schools and maybelater, if we depend on where we
end up.
I'd like to mention some of thethings that I'm working on today
relative to vocationaleducation at the local level, et
cetera.
However, 38 years in theindustry approximately 12 of the
38 were on the customer side,as a mobile technician, a fleet
(01:36):
manager, construction equipmentag, forestry and obviously
automotive, but then medium dutyand heavy duty truck, and also
I got the wonderful opportunityto work on the alternative fuel
side, working with the railroadstaking cross ties out of
(01:56):
service, repurposing them intoalternative fuel source power
boilers with paper mills orother co-gen facilities.
And that's probably anotherpodcast, ron.
So we'll save that one foranother day, but, excuse me, the
motivation for me today, afterworking in the dealer world, on
(02:19):
the automotive, constructionequipment, forestry, ag, c&e,
utility, commercial truck, heavyand medium duty.
You know I've worked in everydepartment and I wanted to do
that.
That was really by design.
I would raise my hand for someof the craziest job tasks that
(02:40):
would come along and peoplewould scratch their head and go
something's wrong with that boyfor sure.
But you know, the overallmotivation for me was to learn
as much as I could about theother department, because I
really would.
I want to know why thatdepartment does what that
department does.
Whether it's right, wrong,indifferent, doesn't matter.
(03:01):
I wanted to understand what'sgoing on behind the scenes and
as I found my way intoleadership over the years, it
became abundantly clear that thesuccesses, the failures,
whatever of my own departmentbut how would it impact the
service or sales or rentaldepartments?
And, like most people thatprobably interact with your
(03:39):
podcast, the vast majority ofthem come out of the equipment
world where there's a rentaldepartment.
So it's a four-legged stoolinstead of a three-legged stool.
Maybe it's a bench in that casetoo, because sales and rental
are on one end and parts andservice on the other end.
And I say it that way because Iwant to bring the parts and
(03:59):
service together and then bringthe sales and or rental
departments together to be acohesive unit.
And spending time in thosedepartments in the sales
capacity, in the leadershipcapacity, working in the
trenches has given me awell-rounded view of the world
Not always right, but gives mean idea of what I think
(04:25):
improving the employee andcustomer experiences is what
that's really about and that,ultimately, is what led me into
pursuing a consulting career.
And you know, I want to be ableto facilitate change in an
effective manner.
I want to be able to facilitatechange in an effective manner
(04:50):
and I feel, while I could dothat and I just recently left
Rush Enterprises, a greatcompany, and I had the good
fortune of learning from MarvinRush and other people close to
him, his sons and other foundersthat helped him, and a lot of
people in today's world can'tappreciate that opportunity to
learn from some of the founding.
You know members of these largecompanies and trucking
(05:12):
dealerships and that's 60 yearsago for them, and so you know,
learning and adapting and thenimparting that knowledge is
really what's driving me today,and I'm talking with dealers and
customers alike.
I'm not trying to be a jack ofall trades, you know.
(05:33):
I'm trying to be very specific,very intentional, about who I
work with and why I work withthem.
And I may not be the rightconsultant for everybody, ron,
why I work with them and I maynot be the right consultant for
everybody, ron, either, andthat's okay.
That doesn't mean I don't likethat dealer or they don't like
me.
At the end of the day it needsto be a good fit and it's a
(05:54):
two-way street.
And you know, it kind of leadsme to some of the most recent
projects I'm working on and itreally involves more of the
medium-duty truck marketplace,what it looks like, how that
continues to evolve.
Over the last five years to 10years.
(06:14):
In particular, covid was a gamechanger for the industry as a
whole.
The Class 8 freight market isupside down, Freight tonnages
are down.
It's a eight freight market isupside down, freight tonnages
are down.
It's a depressed freight market.
Um, class eight products notmoving as much, but regional,
medium duty or intra-regional asI would call it, you know, in
(06:37):
the major metros, minor metrosand rural and that would stack
up.
For example, just to qualifythat, a major metro is simply
the greater Houston major market.
Minor metros would be thosecontiguous cities that interact
with greater Houston metro areaand the rural markets would be
the middle ground betweengreater Houston metro and minor
(07:01):
metro and Dallas-Fort Worth orAustin and San Antonio, there's
a lot of activity that doesn'tpopulate, on the truck freight
radar, for example.
So when the industry, when Iwork with other consulting firms
on fleet utilization and I'mlooking at it from an analyst
standpoint, like maybe someoneon Wall Street or investment
(07:23):
firms they often talk aboutfreight tonnage and I have to
remind them well, what you'rereporting on is class eight.
Centric doesn't include mediumduty movement last mile right
local regional hubs.
Within where I live, I have sixAmazon distribution centers.
(07:43):
I can drive to all of themwithin five minutes.
You ask yourself, how wouldthey do that?
Well, here's why they'restocking to be more local and
cater to a major minor and ruralmarketplace.
So I'll kind of stop there andsee if I'm going the right way
for you.
Speaker 1 (08:02):
Oh, that's perfect.
And then let me try and comeback on two specific things.
Number one consulting.
And in the consulting world,how long have you been dabbling
in this now?
Speaker 2 (08:21):
I officially started dabbling at a very low level
probably a decade ago where Iwould do small projects and kind
of refining my skill, but Ireally didn't do anything
substantial until last NovemberI really jumped in.
(08:43):
I went to the edge of the pool,took off my shoes and jumped in
.
Speaker 1 (08:47):
Okay, so let's start with last November, and let's
call that six months.
It's not quite that close.
How many consultants have youfound in this space that people
are able to use?
Speaker 2 (09:01):
Very few.
Isn't that a surprise?
It's very interesting becausethey look at me like I'm a
three-headed hydra sittingacross the table from them and
they said your experience isinteresting because you're
bringing something to the tablewe didn't think about.
(09:22):
And I get this a lot withprivate equity and venture
capital that I'm talking with.
So the PE and VC groups spend alot of time working with those
folks looking at the marketsegments that intersect with
commercial truck, off-roadequipment, et cetera, and
there's a lot they don'tunderstand very clearly.
(09:45):
So I'm one of a handful andit's interesting because I was
expecting there's more of usrunning around out there but
there's not.
Speaker 1 (09:55):
So that's one track.
The other track is how manypeople in your experience in the
last 40 years have you run intothat learned at the foot of a
guy like Marvin Rush?
Speaker 2 (10:13):
Well, I would say, in 40 years earlier on, in that
say, the first 10 or 20, I raninto a lot more.
Speaker 1 (10:21):
Okay, so that's exactly so.
What's been happening is thedetailed understanding of what
the distribution channel does islacking.
We just continue to do whatwe've been doing the last 10, 20
, 30, 40 years.
Speaker 2 (10:40):
And we don't know why we're doing it, we're just
doing it.
Speaker 1 (10:43):
You ask the question.
And well, because we've alwaysdone it that way, that's what I
lovingly call a sacred cow,right, you know?
So I don't have very manyconsultants, I don't have very
many people that are in theindustry that actually
understand it.
And then here's the third track, and let me throw it at the
(11:07):
ages of 40 and down.
That are the leaders in theindustry, whether it's the OEM,
whether it's the customer,whether it's the dealer,
distributor, whatever jargon.
They came out of school.
They were taught how to dotheir job by schools.
They don't have any damn dirtyfingernails.
(11:27):
They very rarely go outside oftheir office and they don't know
what they're going to find whenthey go out there.
They don't even know thequestions to ask.
Speaker 2 (11:34):
True, right yeah.
Speaker 1 (11:36):
And that's scary, it's very scary.
Speaker 2 (11:39):
Well, and I'll give you a good example of that.
And you, I would have placed,if we were betting when you and
(12:02):
I first met, 26 some odd yearsago, I would have bet money that
I would have pursued a careerSame path I went but I would
have stuck myself in parts andservice and never left that
realm.
And something told me not to dothat.
Something told me to learn thefull spectrum of the dealer
world and interact with dealerprincipals at every possible
opportunity, whether it's MarvinRush or Rusty or Robin Rush and
so on and so on.
And you know the JerrySwanson's of Empire and
(12:24):
Stripling and he, jerry, was afabulous mentor to me as well
and and I could think of many,many more, and including
yourself.
So.
But I would have bet money thatI would have been in parts and
service.
I would retire, probably, andmaybe would have been a
consultant.
But where I'm finding myselftoday, it's not ignoring parts
(12:49):
and service, it's actuallyhelping dealers, dealer
principals, understand theviability of their dealership
centers around parts and service, absorption, etc.
You know, the standard is still100 hundred percent to be
absorbed, fully absorbed Dealers.
If you make a hundred, you'redoing good.
(13:10):
But I would, I would challengethat you better be 125% plus to
be absorbed.
In today's world, with thecyclical nature of the markets,
with the interest rates andmarket share challenges and all
the other variables that comewith the business, and where I'm
finding myself in these firstsix months, is an overwhelming
(13:33):
demand for sales operationoversight, more of a general
management view rather than aproduct support management view.
Not dismissing that, I think itall goes hand in hand and I
counsel accordingly.
But the questions that arecoming at me routinely and the
(13:54):
cadence has increased becausesome people have figured out hey
, talk to this Troy guy.
And you know that's not athat's not an egotistical or
arrogant statement.
That's not an egotistical orarrogant statement.
It's actually a compliment whenI have some 25-year-old analyst
sitting somewhere in ahigh-rise building that is
(14:15):
querying me for my knowledge onwhy are dealer groups doing this
.
And you know, why are we seeing?
Why are the OEMs doing this?
What are the OEMs doing?
What's the motivation behindthat, you know?
And what does that look like?
And here's the most popularquestion lately is why are OEMs
(14:35):
wanting to go direct at everypossible opportunity?
Right, and you know that thingis kind of never gone away, but
they dabble in that, that theythink they can go direct and
they can do it better than abrick and mortar dealer, and
(14:57):
that's a whole nother podcast.
I'm sure groups or let me flipover to the customer side and
put in parallel with a largedealer group, large national
fleet or large regional fleetsthat have utilization problems
or struggle with findingtechnicians or struggle with the
same things dealers deal within their large fleets, or they
(15:21):
struggle with the dealer or thedealer struggles with them, and
it's a whole laundry list.
Speaker 1 (15:27):
I had an occasion yesterday where I had to deal
with a credit card which dealtme with a company that was with
my late wife and I called themand I was on hold before I got
(15:51):
my first response for 23 minutesand I heard they were
apologetic about every 90seconds and that person wasn't
able to deal with the issue.
So they transferred me toanother number and I was on hold
with that number another 31minutes before I finally got a
(16:14):
person and that takes me to andyou heard me say this or write
it we've put profits over peoplefor the last 40 years
Absolutely, which has taken usto a place that customers in
America think that customerservice sucks so bad they don't
even complain anymore.
(16:35):
Yeah, so I translate that and Ino longer call it profits over
people like I translate that andI no longer call it profits
over people like I used to.
Now I talk about it'stransactions over data, so
everybody's measuring, and youknow Bill Blackie introduced
(16:56):
absorption back in the 50s and Ihad the joy of offering to work
for him and you know he thoughtthat the time, the amount 500
bucks or whatever the hell itwas a month was too much, but
that absorption basis has beenin place for 75 years, correct?
(17:19):
I think we need another measure.
I would agree, and the measureI want people to start thinking
about is return on assets.
And come up a little further inthe helicopter with me.
We've seen over the last 20years, and then the last 40
years, an exponential curve ofreductions of the number of
(17:44):
supply points in thedistribution channel.
So, as an example, in Canadawhen I started with the
Caterpillar dealer, there were10 in let me call it, 1970.
Now there's two In Canada.
There used to be a multiplicityof dealers and I'll just stay
with construction for a second.
Now there's two In Canada.
There used to be a multiplicityof dealers, and I'll just stay
with construction for a second.
Now there's one, volvo one,komatsu one, et cetera, et
(18:12):
cetera, and then I think we getinto a different place.
I was given another one thatreally rattled me.
I think we get into a differentplace.
I was given another one thatreally rattled me that we've
gotten ourselves into a positionthat we're more interested in
short-term greed and that's theword that was given to me than
(18:32):
we are in our grandchildren'sfuture, which gets you right
where you live.
So the return on assets is whywe've had the number of
distributors disappear.
Right, the number I wanteverybody to look to is I want
(18:54):
you to have a 50% return onassets.
That's all assets, fixedworking capital, the whole smash
.
So let's look at net pre-tax,let's say 10%, and if I want 50%
return on assets, I have toturn my assets five times.
(19:19):
Now you get in a plane with me.
We go around the country andwe'll stop at 100 dealers.
We won't find two that turntheir assets four times and they
don't even think about thatasset.
The rental companies that Iwork with none of them are below
50% return on asset, correct?
(19:41):
So, being the devious guy thatI am, I used to go into dealers
and sit at the counter and justhave a chat and a cup of coffee
and I'd find out more in that 30minutes than you can imagine.
So, dealing with the rentalcompanies, none of them that I
work with are under 50% returnon assets None.
None of them that I work withare under 50% return on assets
(20:05):
None.
So that means we've got toreframe the business completely.
So go back to where I started.
How many people are there thatlearned at the master's knee
like Marvin?
How many consultants are outthere that have dirty
fingernails, that know how tooperate, can pick up a phone and
do a sales order, can go in anddo an inspection, and who the
(20:26):
hell is going to lead us to thispromised land?
So big circle on that Amazon.
Everybody talks about Amazon asthe largest retailer in the
world, and look at howsuccessful they are.
And they're at the verybeginning of having four or five
distribution centers withinfive minutes of where you are.
Interesting statistic thoughWalmart still has more product
(20:50):
sales than any other company inthe world, and they deliver in
24 hours in a manner that Amazonis trying to figure out how to
do.
That's true too, is trying tofigure out how to do.
That's true too.
So this whole world is changing, and change scares everybody,
absolutely, and there's very fewpeople that are out there that
(21:11):
are able to analyze a situation,to make a conclusion, to come
to a conclusion, to make asuggestion, which is why I'm
intrigued with you getting inthe consulting business, because
I think you're one of the fewthat can do that.
Well, thank you.
Well, it's not necessarily acompliment, it might be a burden
.
Speaker 2 (21:29):
I know I think it's a little of both, but my dad
raised me the right way to stillsay thank you, even if they
just kicked you square in theback of the pants, right?
So sometimes the best lessonsare those hard and challenging
ones.
So, ron, one thing that I can'tremember which of your recent
(21:51):
podcasts, I can't remember whichgentleman I listened to them
all just to say because there'svaluable information there, not
only from yourself, but fromyour guests.
Kevin Launders was the mostrecent one I listened to.
He's another rarity.
There are not enough of him orpeople like him to go around.
(22:14):
My wife works in commercialinsurance for a large global
insurance brokerage, andeverything you guys talked about
about cybersecurity, therequirements to have a policy
and the due diligence to do thateverything he said was spot on.
(22:35):
I can't go into the detailsthat I overhear her talking
about, but I can tell you thatyou guys are spot on and
companies, dealers, whoever,that are not paying attention to
their cyber side.
That's an exposure and,coincidentally, you had
mentioned you know people thatare in the consulting space,
like we're talking about,typically don't do that.
(22:57):
Well, that is part of my bookof business to talk about and I
got the idea from my wife.
She said you know, when you dothese dealer reviews, you need
to be asking them aboutcybersecurity.
And I kind of ribbed her and Isaid, hey, are you trying to get
me to sell some policies foryou or what you know?
And?
But she goes.
(23:17):
No, but she goes.
They need to know that.
They don't know that they'renot doing that.
They're hugely exposed.
And you know the the FTC thing.
Nobody talks about that either.
And look, I'm not an expert inthat particular field, but it
does overlap into what I do on adaily basis from an operational
(23:38):
mode of thinking.
And and I take it a step further, going back to another recent
podcast, you were talking aboutall the data points that dealers
or any company for that matterbut let's just stick with
dealers they deal with.
There's so many data pointsthat none of us can keep up with
them.
It's this massive white noiseall around us, so we're just
(24:01):
picking and choosing the onesthat are the hot buttons today
and a reference was made by youor the other gentleman how you
guys looked at this, and I'veprobably learned this from you
at some point in the past.
But when I look at a marketreview, even today I don't look.
I don't really care about allthe business system information
(24:24):
other than I want to knowtransactions, I want to know
who's buying from me, what theybought it for, what my profit
margin was, when did they stopbuying from me, when did they
start, when did they fall off,and so on and so on.
And I want to see that bydepartment and I've used that
methodology very successfully totake the operations large and
(24:47):
small and, you know, to achievehigh levels of absorption.
You know we weren't calculatingreturn on assets in the manner
but I would venture to say thatwe were probably in those
high-performing operations therewas probably a tendency to be
better at return on assets thannot.
(25:08):
But is it still where it neededto be relative to the standard
you set?
Speaker 1 (25:13):
Well, the other side of that, one of the guys that
you're probably referencing, hisname is Nick Maverick has a
company called Built Data.
It was Nick.
There you go.
Yes, he talks about threeclicks Right.
And so go backwards.
It's 1970.
I'm kind of the parts manager ina Caterpillar dealer head
(25:35):
office and Caterpillar used usas a prototype for product
support, selling First ones inthe world.
And the primary prerequisiteand I thought it was a scream
was that the writing was neat.
And the second criteria waswe're going to pay commission on
(25:59):
competitive items.
Second criteria was we're goingto pay commission on
competitive items and none ofthe competitive items were items
that Caterpillar manufactured,which I also found intriguing.
And to put a circle on thatthing, we'd interview people,
we'd hire the people, we'd givethem a customer list, we'd give
(26:21):
them the keys to the truck andpoint them to the door.
And we still do that andthere's no real training.
Don Buttrey does a great jobfor pillars.
Xerox has had a program foryears called Professional
Selling Skills that does a goodjob, has had a program for years
(26:42):
called Professional SellingSkills that does a good job, but
nobody's telling a salesman howto manage their damn time.
No, none of the salesmen putforward an objective by customer
for next year, right.
And then if it wasn't Nick andhas built three cliques.
And then if it wasn't Nick andhis built three clicks.
(27:03):
The salesman spends nights goingover what they're going to do
tomorrow.
I used to for a while 20 or soyears ago I'd do evaluations of
salesmen.
I'd get in a truck with the guyand we'd go around and they had
the day all scoped out.
But I'm sitting with theircustomer list and everything's
fine until about the middle ofthe day.
Then I say, well, we're closeto this guy, why don't we go in
(27:24):
there?
And that's when it fell apart.
Yep.
So I'm doing a survey for adealer in the northwest of the
US and one of the customers wasa woman.
In the Northwest of the US andone of the customers was a woman
(27:45):
and a dealer had created aproduct support salesman that
was a woman and this boss of thecustomer had two comments.
One your female salesman istaking my managers out at night
and their wives are gettingupset.
Right, had not considered thatfor a minute.
(28:07):
The other was that damn Napatruck delivery person with her
shorts and tank top.
Everybody in the shop stoppedto go see what she's up to today
.
And then I'm talking to a guy.
Last week this isn't my exampleof 23 or 18 minutes, whatever
(28:29):
that I was waiting and thisperson said to me I called three
or four suppliers, I gotvoicemail with everybody but one
.
I got a real person with oneperson.
He said who do you think I didthe business with?
We've got this whole marketcoverage sales mystique.
(28:52):
They're clerks, troy, yep,that's it.
Speaker 2 (29:09):
They're PR clerks.
What can I do for you today?
Hey, how'd you like thatfootball game on Sunday?
This is ridiculous and theydon't have it.
You ask them what are thealternatives to find something
that is comparable, because myunit's down or whatever.
And the answer is silence forthe most part.
(29:33):
Now, those companies that haverobust e-commerce platforms they
kind of fill the void there andAI is helping in a lot of areas
do a lot of things.
But even with AI and I knowwe're kind of deviating again,
but this is good because this isan evolutionary conversation
(29:54):
when you look at the humancapital and let's talk about
going back to your comment,return on assets let's talk
about the human asset that youhave in the dealership.
Dealerships are running leanerthan they've ever ran before and
a lot of times and it's notjust anyone.
I've interacted with 30different dealer groups over you
(30:16):
know small, large over the lastsix months in conversations
right, I'm out making cold calls, I'm selling who I am, what I
am, why I am, and one thing I'venoticed that pretty much every
dealership is long lines ofcustomers, phones ringing, not
being answered and unhappyemployees and a lot of dealers
(30:40):
across everywhere.
And it's interesting, and it'snot just in commercial truck,
it's everywhere.
Speaker 1 (30:49):
Let me interrupt for a second.
At one point I was supervisingthe office and the counter in a
parts department.
Yes, sir, and I might have toldyou this story in the classroom
because I tell it to everybody,and I might have told you this
story in the classroom because Itell it to everybody.
I'm in a cubicle that's lookingat the front door of the
dealership and to my right theleft of the door.
(31:11):
But to my right, looking at thedoor, is the receptionist, the
telephone operator.
There's a small table, a coupleof comfortable chairs and a
courtesy telephone.
To my left is the parts counterand there's eight guys.
Now, this is Hewitt Equipmentand Bob was a wonderful guy,
classy guy, a little bit of aside story.
(31:34):
I'm out doing a physicalinventory in the warehouse and
I'm wearing jeans and asweatshirt and I'm dirty and
sweaty.
And Bob comes out elegant in athree-piece suit and he puts his
arm around my shoulder andlooks me square in the eye and
says I'm really disappointed inyou, and you know the kind of
guy I am.
And my response to him was yeah, me too, bob.
(31:57):
What's your disappointment?
And you can see his whole bodystart to fall apart.
He says talk about this.
Later, when you get a moment,come see me.
But what what it gets down to is, nobody really understands.
They're putting the people thatI call your heroes, the ones
(32:21):
that build the relationship withyour customers, the contact
points.
I don't care who they are it'sa receptionist, a telephone
person, a sales rental, I don'tcare but they're the ones that
build the relationship andthey're under unbelievable
stress.
So what I want to do and I'mtalking to all kinds of people
about this I want your personnel, your human resources.
(32:50):
I want that on the balancesheet.
And they look at me.
Well, how the hell would we dothat?
It's pretty simple, goodness.
You know how much you pay them.
You know what the benefits are.
Put it on the balance sheet.
Well, what do you want me to doit?
It an asset or a liability?
It's an asset, oh, so how muchdo you pay these guys?
Let's just take a number.
Let's make it easy.
Let's say we pay $120,000 ayear.
(33:13):
All in, it's too high, butlet's use that because it makes
the arithmetic easy.
If my return on assets is goingto be valid, that I want it to
be 50%, and my assets are 10grand on the balance sheet and
there's nothing else, then Ihave to generate $20,000 every
month of net income.
(33:34):
If $20,000 a month of netincome is my number and let's
just say, for instance, I make10% return on sales, which is
strong, not very many dealersget there that means that I have
to sell $200,000.
With that one human asset everymonth, that means I need to
(34:00):
sell $2.4 million worth ofproduct every year.
So I go down to the partsdepartment and you might have a
million dollars a year as astandard for a parts and service
person on the counter.
You might have $250,000 a yearfor a technician.
(34:23):
How the hell do we get this done?
Well, we don't.
That's why the number ofdealers is shrinking.
And then let me just close itbefore you start.
Internet's coming along,technology's coming along.
We'll get in another plane.
We'll go visit 100 dealers andI bet you we won't find two that
have 20% of their personalservice sales on the internet.
(34:45):
Oh yeah, I can see that.
Speaker 2 (34:47):
Yeah, back then, right, even today, yeah, even
now.
Speaker 1 (34:52):
Well, it may even be worse now I'm just being gentle,
as I usually am right, or I tryto be, but this whole world is
so ripe for change.
Artificial intelligence it wasin a blog a while back, was at a
Dartmouth conference in 1954.
That's 70 years ago and hardlyanybody uses it today.
(35:14):
I'm talking to Joseph Albright,who's getting his doctorate
this spring.
He's doing lecture series forus on supply chain.
He teaches classes at Bradleyand Indiana University and I
said what's the student liketoday?
He said oh geez, you know,they're not even smart enough to
use chat, gpt and understandwhen they submit the paper, that
the grammar's wrong.
(35:35):
That's a problem.
We've got a problem.
Fundamentally we do, and sothat's why I wanted to kind of
get you out into the public view, because there's so few of you
and because I know what you cando and starting is a bit of a
(35:56):
problem.
I still remember that when Idid it in 1980.
Of course, I was 25 yearsyounger than you are now, so I
had a lot of time to makemistakes.
Your medium-duty truck is aperfect example.
Oh, absolutely.
Yeah.
Well, even just local delivery,for goodness sake, is a perfect
(36:17):
example.
I designed warehouses as aconsultant early in my career
with the railways in Canada andone of the trips that I was on
was in Germany, was in Stuttgartat a Kodak distribution center
(36:37):
for all of Europe, somethinglike 1973.
So it's a long time ago.
And you walk in the door ofthis distribution center and the
lights come on.
There was nobody working there,it was all computerized.
My chin hit the ground becausewe're looking at handing a guy a
(37:00):
piece of paper.
Every time an order comes in,there's three to five items on
the piece of paper and say gopick it up.
And we try to question the same, whether it's a field, a shop,
a walk-in, a branch, whatever,it didn't matter, and I'm kind
of taken aback.
Then I go to Chicago and I gotanother distribution center and
(37:21):
the men in the warehouse aregiven a full day's work when
they arrive.
So every item they weresupposed to pick was given to
them at 8 o'clock in the morningand the statement was when you
finished it you can go home.
So the productive guys wereleaving in five hours and the
(37:42):
slugs were leaving at 10 hours,right, but the slugs could see
the prize at the end of the lineand they were motivated to
catch up.
We have none of that today.
Troy None.
Speaker 2 (37:54):
No, well, before I joined the automotive technician
world I worked at a springfactory that made mattress
springs and I worked inwarehouse and distribution.
Then I got a chance to actuallyin Texas.
You could be union or not union.
I was not union, but some werewire bend it X number of times.
(38:29):
I take eight of them at a timeand as fast as you could go, and
you were paid your base ratehourly, but you were paid by the
piece.
Yep, that's right.
And I'm like, wow, wow, I kindof, I kind of like this well,
but like any unionized cyclicalbusiness there, there are
(38:50):
challenges and and that reallyisn't what I wanted to do in my
life, but but it did motivate meand yet some people that just
would do their own thing, but I,you know, so you get this new
kid.
Now I'm ruffling feathers ofunion guys and I'm making more
money than them and you know,and it wasn't my kind of thing,
but at the end of the day it ittaught me to hustle, and when I
(39:13):
jumped into the automotive,world.
It's the same thing.
It's flat rate and techniciansstruggle in today's world with
flat rate, in part becausedealers may not be doing it
right.
I'll just say that in part.
I don't think we've educatedour incoming techs well enough
to be able to adapt to a fastpaced flat rate world.
(39:34):
Right they're.
They're expecting it to be anhourly payout and you know
technicians can make a ton ofmoney, ron, if you're highly
skilled.
I mean you could make $150,000,$250,000 a year if you pay
attention and you're good andyou hustle.
Speaker 1 (39:53):
You're absolutely right.
But the other failure in thatwhole thing is we'll go and ask
100 people how they determinewhat the standard time should be
for the job and I would submitto you.
Maybe 90% of them will say it'sthe average Correct, and a man
drowned in a river of averagedepth of six inches.
(40:16):
It ain't the average at all.
No, now I'm not going to.
You know, one of my of my minorwas statistics.
I'm not going to get into heavyduty math, but what you're
looking at is pick a time andthen what's the standard
deviation off that time?
It's not average at all.
It'll fall on your nose onaverage.
So there's so many aspects ofthe business that are just
(40:40):
screaming for somebody toprovide exposure.
When I started in the consultingbusiness in 1980, there was
hardly anybody doing what I wasdoing.
I called myself a rentalmanager and I charged the same
rate as a field servicetechnician did.
So my challenge to the dealerwas you know, I can run your
(41:01):
business better than you can andyou're going to pay me to prove
it, but I'm not going to chargeyou more than what you charge
your customers for yourtechnician.
So they were going to beembarrassed if they were going
to say no, because what the hellare they going to lose?
Right, yeah, right.
And son of a gun, the son of a,made money for me doing it that
way.
And, and he was right, yeah.
(41:22):
And I had one guy who was theson of a caterpillar deer that
got canceled because he didn'twant to get in the rental
business, who used to have me dopersonality profiles for every
job that he wanted me to do.
And it was kind of cute becauseI worked in a prison and I was
taught how to do those things.
I did it for criminals todetermine treatment patterns.
(41:45):
So Fred was the guy's name,that's all I'll go with, and he
gave me this to hire me thefirst time.
He said you're perfect, this isgreat.
And about a year later he hadanother job.
We'd worked seven or eightmonths together and he said do
you know anybody?
I said well, what are youlooking for?
He said well, you don't havethose characteristics.
So what are you looking for, hetold me.
(42:06):
I said, well, send me thequestionnaire, the profile.
I sent it back to him.
The next thing was I got a phonecall.
I said how the hell do you dothat?
I said what he said.
That was a completely differentprofile and it fit this job
perfectly.
(42:26):
How do you do that?
My answer, little flip, was I'mnot just a pretty face and you
know, looking at me it ain'ttrue.
But we have to be able to findopenness Right and that's
another aspect of leadership.
That's kind of interesting.
We've got two assessments thatwe're putting on the site this
week on leadership.
One is called Reflect EF, whichdetermines are you a strategy
(42:50):
person, are you animplementation person, are you a
doer?
And the other one is called atabletop exercise, and it's are
you open minded or closed?
Right.
So that's six variables, and Ilook at everything like a sports
team.
The manager, the leader, neverhits the field of play.
They're on the sideline, and mymetaphor for that is a
(43:13):
conductor.
The conductor is the onlymusician that has their back to
the audience, to the customerabsolutely right, and they're
totally dependent on the peoplein front that have the
instruments in their hands andhe doesn't have, or she doesn't
have, one anywhere near it.
Speaker 2 (43:28):
Well, you know, it's a struggle and that triggered a
thought.
I was in a conversation theother day with a group of people
.
People and I asked or asked avariety of questions and then I
ultimately asked this may seemdirect, maybe blunt, but I need
(43:50):
to ask has anyone in this roomasked this simple question Am I
part of the problem?
And I get some weird looks.
And then I get silence and Isay look, it's not meant to to
be hurtful, but it is meant tomake you think.
And I said you know, that's oneof the hard lessons I learned a
(44:11):
long time ago when runningoperations.
If, if I'm struggling, I damnwell better be asking am I part
of the problem or am I part ofthe solution?
I may think I'm part of thesolution, but my actions or
inactions may be creating theproblem.
Or I'm giving my team toocomplex a process to where they
(44:38):
can function properly, or notenough training, or the business
system we have is antiquated,it's slow, it's cumbersome.
You know it could be a lot ofthings, and so it's not really a
personal attack on anyparticular person, but you got,
you have to have thatself-reflection, and a dealer
(45:00):
review is exactly that.
When you come in and you talkabout that, you're forcing that
dealer principal and theirleadership team to look in the
mirror, and oftentimes nobodyasks that question because they
don't want to know the answer.
Speaker 1 (45:15):
Oh, and they wouldn't know.
They typically and I don't meanthis as a smack Are you part of
the problem, part of thesolution?
What are your pain points?
What keeps you awake at night?
Yeah, and then you know thismethodology we use.
(45:38):
You mentioned computer systemsand that's a classic.
I call it paper to glass.
All we've done is we've taken apiece of paper and a manual
process, put it on a computerand made it happen faster, right
.
And I always go back to whatdoes the customer need and what
does the customer want, and wedon't ask those questions.
So the customer calls in to theparts counter and wants to
(46:03):
order parts, and I do this allthe time, or I used to.
I'm not on the road, as I usedto be, but I pick up the phone
and I put it out beside theguy's ear and I said what's that
noise?
And they'd look at me weird andI said you don't hear that
noise, do you?
What do you mean?
Well, that's the dial tone.
Do you ever pick up the phoneand dial out?
(46:24):
Or do you pick up the phone andthere's somebody there?
Oh, there's somebody there,correct?
And then I say well, what's thefirst thing you ask the customer
.
Well, they got to tell me whothey are and I said, yeah,
that's kind of cool.
So a customer's coming into youand you ask who they are.
What do you think the questionis?
(46:44):
They want to ask Well, have yougot it?
How much is it?
So all we did is we went frompaper to glass.
We didn't try and figure outwhat the base problem was or
find a solution to it, and wecontinue to do that, and have
been doing it my whole work life, which now, believe it or not,
is 55 years.
Right and before long I'llfigure it out.
Speaker 2 (47:08):
Well, it's always good that you're motivated and
well, you know it was a mutualfriend of ours, miss Kim Phelan.
You know she and I were havinga conversation last week and one
of the the as the conversationdeveloped and, by the way, going
back to the other conversationI mentioned when I asked them if
they were part of the problem,it was we were discussing what
(47:32):
their pain points were and theywere.
It was random, it was, itcouldn't answer the question.
Yeah, nobody.
And these people all work inthe same building, same group.
They weren't even aligned withwhat their pain points really
were, interdepartmentally orextradepartmentally.
(47:53):
I mean, it was an interestingconversation, to say the least.
Speaker 1 (47:57):
But you can have that conversation, troy, with
probably 80 or 90% of thedistributors in this country, if
not the world.
Right, you know it's remarkable.
So how do we know we'resuccessful?
Well, our financial statements.
They come out every month.
Gee, I didn't hit my goals thismonth.
(48:19):
Well, that's last month.
What the hell is that?
You know?
So now I spend my first week ortwo looking backwards to find
out what I should have donedifferently.
That caused that problem, and Imake so now I'm.
It's kind of like going onvacation for two weeks and
nobody does your job, and youcome back the first day, first
week, you're catching up all ofthe stuff that should have been
(48:41):
done by somebody else.
Speaker 2 (48:43):
it drives me crazy well, and, and it's, it goes
back to, like the phone call youhad you're on hold for 23
minutes.
Finally get someone, you'reback on hold, and so on and so
on.
And with what kim and I hadmentioned the other day is it
and I pulled up my notes itdealers don't get in business
(49:04):
just because, hey, we're goingto be a dealer today, we have
the capital to do it, and we'regoing to open a branch and we're
going to sell widgets, andeverybody's going to buy widgets
, just because we got the bestwidget in town not necessarily
and cat dealers gone.
They've gone through severaliterations over the many decades
(49:25):
that you know.
They weren't always thatfavored, but people still
favored them for a variety ofreasons.
But it was only because it wasa preferred product.
It wasn't that their dealerswere necessarily respected.
And there's still somestruggling cat dealers out there
, but there are some awesomeones too.
Now and I call it here in mynotes it's called understanding
(49:49):
the customer demand and I'llquote demand is key to aligning
the deep.
Their demand, the customer, iskey to aligning the dealer's
processes and the use of data ina manner that's mutually
beneficial to the dealer, theemployee and the customer.
Because if you get those threegroups of people talking right,
acting.
Right now your market shares up, your absorption's up and the
(50:14):
new KPI that you suggest, returnon assets, is going that way.
But oftentimes people don'twant to have that conversation.
And going back to one of what Iopened with on the medium duty
market relative to freightmovement, everything's judged on
class eight freight movementbut nobody's talking about
(50:37):
between here, Dallas is,depending on which part of
Dallas, let's just say an evenfour-hour number San Antonio's
three, Austin's three.
There's so many medium-dutytrucks now moving and you would
think, well, why would they runmedium duties back and forth?
Because they can't haul as much, why not an 18-wheeler?
Speaker 1 (50:55):
Well, there's a lot of reasons.
Speaker 2 (50:57):
One of the primary reasons you can't find drivers.
You can get a driver for a CDL,for a medium-duty truck,
possibly, but if you keep itunder 26,000 GBW, guess what you
don't need a CDL.
Now you can find more drivers,so a driver shortage contributes
to some of these other things,as well, I'm going to take us
(51:21):
off the table and into acompletely different area.
Speaker 1 (51:24):
Now, in the year 2033 , it's forecast that America is
going to be short 3.8 millionemployees.
Speaker 2 (51:35):
Doesn't surprise me, to be honest with you.
Speaker 1 (51:38):
The current administration wants to bring
more manufacturing back intoAmerica.
That's not going to make 3.8million, it's probably going to
be 7.6 or 15 million orsomething else.
So there's chapter A, chapter Bthe people that are going to be
in the workforce in 2033, whenthis 3.8 million is shortage,
(51:58):
are they are in grade four today.
Yeah, the reading comprehensionin grade four, at grade level,
is 32% in America.
The arithmetic comprehension is37% in America.
That means basically two-thirdsof the people aren't even up to
grade level, correct?
Okay, we're going to be able,with technology and I'm not
(52:23):
going to go through theiteration of all of the things,
but it starts from a computer inthe 40s and 50s, through
telematics, through GPS, throughall of this stuff, we're going
to be able to eliminate throughtechnology probably 50% of the
workers.
But because of that educationlevel, we don't have brainpower
(52:49):
to be able to take advantage ofthe work that they're going to
have, the time they're going tohave to be able to work in their
head, correct?
So here comes Ed Gordon, one ofour contributors.
We got some very smart peoplethat write for us on blogs and
podcasts and other things.
Ed said he's got a PhD ineconomics and another PhD in
(53:10):
history.
You know, one isn't enough.
He's on the board of theFederal Reserve in Chicago.
He teaches at Northwestern.
21 bestsellers in the New YorkTimes.
One of them was called FutureShock.
In that he said in 2030, 50% ofthe workforce in America,
that's about 75 million peopleit's a little higher than that,
(53:32):
but make that number that wayare going to be unemployable
because they won't have theskills.
So here's another stool.
And we say, okay, we've spenthundreds of trillions of dollars
in technology.
How much have we spent onsociology?
So what the hell is America, orany society for that matter?
(53:52):
And America is the one that ismost able because our economy is
the best, with the mix of whatwe've got, with work, etc.
Etc.
Is better than any othercountry in the world, that is,
except for China.
I can force you to work orother places not many.
How the hell do we get thisdone?
And the fourth stool is I'm 78.
(54:16):
Now A lot of my friends arerunning dealerships.
They're the same age.
They're protecting the statusquo.
They're making more money thanthey ever dreamt they would.
They don't want to touchanything for fear it'll blow up,
and they've held back a wholegeneration, the next generation
of leaders, which should have a10 or 15-year gap in the
(54:41):
industry because they're nothaving the opportunity, right?
We so desperately need peoplelike you and what you're going
to do to come in and starthelping us fix this, and there's
enough market out there for youto call up and say, yeah, and
they understand what we'retalking about.
60, 70% don't, but they're 30or 40, you'll be fine, yep.
(55:04):
This is a really difficult timeand nobody realizes it.
Speaker 2 (55:12):
Well, it is scary.
And I was in a meeting thismorning with a client and we
were having a very comprehensiveconversation about how I can
help them and what I bring tothe table.
And again, it's not trying tosay Troy Otmer is all knowing,
but I do bring a unique skillset in this particular case.
(55:34):
This was a governmental centricconversation because I have an
extensive background ingovernmental bid processes,
which most people run frombecause you know it's a stack of
paper on a bid, ron, and itmakes me wonder why I didn't go
to law school.
But at the end of the day it isa challenge.
(55:58):
It's a challenge for dealers orcompanies to work with
governmental entities and thisconversation was more leaning
from the governmental side,asking for help how do we get
more vendors to work with us?
And that was what I was taskedwith today in this conversation
(56:20):
was how can you help us get morevendors?
And I said well, you knowthat's a long conversation, but
it starts here.
You got to simplify the processand I'm not picking on any of
the MWBE or the hub, thehistorically underutilized
businesses or the minoritywomen-owned businesses.
(56:42):
All those things are workableand I can say that, coming from
both a large privately helddealer group and a large
publicly held dealer group youwould think all those things I
just mentioned are negatives.
No, you just have to understandhow they apply to your business
and how you can interact withthose right, and you know it's
(57:03):
part of the whole process.
But they're struggling to findsubject matter experts that have
the knowledge to be able to dothis.
And that was part of my salespitch today, and it really
wasn't a sales call in thetraditional sense or no fancy
presentation, but it was aconversation.
I said what I want to do at 58years old is, by the time I'm 78
(57:32):
, I want to have helped thatnext generation get caught up
for the gap that we have.
And that's exactly how thatconversation went.
We have a gap in our industry,and it's not just our industry.
This is a systemic problem, andthen it's compounded by the
fact that when someone gets oldenough and gets out of high
school, their reading level ismaybe fifth or sixth grade level
(57:55):
or comprehension.
And maybe I'm being generous,maybe I'm being too harsh, but I
don't think so.
And maybe I'm being generous,maybe I'm being too harsh, but I
don't think so.
You know we have to do betterin schools and that's what I
mentioned earlier On thevocational side, one of the
focuses that I've had for thelast decade or so, and more so
in the last couple of years.
(58:16):
I was working with local highschools and OEMs to get junior
and seniors in high school intotheir auto and diesel and
welding tech programs wherethey're doing internships.
They're coming out with anassociate level possibly an
associate degree or collegecourses similar to that, and you
(58:45):
know some of your new productsI got the wheels turning.
Thinking about that's anotherconversation where Ron and Troy
need to talk, and you know.
But you know that's our futureright there in vocational trades
.
You know I'm a product of thatand I'm proud of that, you know.
But I did go back to school ata later date only because I
realized, hey, if I want tolearn all this and be the best I
can be, I need to add some moretools to my toolbox.
Speaker 1 (59:06):
So that's a perfect place to end this particular
podcast, troy, because we haveto get better at our game.
Yes, I'm in workforcedevelopment, adult education,
and I'm starting with the age of16 and going to 76, because
(59:29):
we're going to have to retoolover our lifetime many times
because of technology changesand business changes.
But I think we've covered a lotof ground and we've got two or
three or more.
We should probably plan on oneof these things a month for a
while, maybe for the rest of theyear, because there's enough
for us to be gabbing about, sure.
So I'd like to thank you andI'd like to thank the audience
(59:52):
for listening.
This has been a long podcastfor us, but I think it's been a
meaningful one.
So mahalo to all of you.
And but I think it's been ameaningful one.
So mahalo to all of you andChloe.
I look forward to the next oneand to all the rest of you out
there.
Have a great day, mahalo.
Aloha and welcome to another Candid Conversation.
We're joined today by one of myfavorite men, troy Otmer.
He's coming on for a secondbeating on a podcast which we
call Candid Conversation.
So I'm going to pass it to Troypretty quickly, on the basis
that he's been in the industry.
(00:24):
He's worked at dealers, he'sworked at customers, he's
independent now as a consultant.
And with that as theintroduction, troy, why don't
you tell people who the hell youare, where you came from, what
you do, how you do and all ofthat?
And we'll just see where thisthing goes?
Speaker 2 (00:42):
and all of that and we'll just see where this thing
goes.
Well, thank you, ron,absolutely.
So in a nutshell I'll give theshort version today.
Started out in the industry asan automotive technician all the
way back in 1987.
Took a couple, two or threeyears after high school to
figure out the direction I wasgoing, and initially it wasn't
(01:12):
college, and that led me to theautomotive vocational side of
the world, which I participatedin.
That in high schools and maybelater, if we depend on where we
end up.
I'd like to mention some of thethings that I'm working on today
relative to vocationaleducation at the local level, et
cetera.
However, 38 years in theindustry approximately 12 of the
38 were on the customer side,as a mobile technician, a fleet
(01:36):
manager, construction equipmentag, forestry and obviously
automotive, but then medium dutyand heavy duty truck, and also
I got the wonderful opportunityto work on the alternative fuel
side, working with the railroadstaking cross ties out of
(01:56):
service, repurposing them intoalternative fuel source power
boilers with paper mills orother co-gen facilities.
And that's probably anotherpodcast, ron.
So we'll save that one foranother day, but, excuse me, the
motivation for me today, afterworking in the dealer world, on
(02:19):
the automotive, constructionequipment, forestry, ag, c&e,
utility, commercial truck, heavyand medium duty.
You know I've worked in everydepartment and I wanted to do
that.
That was really by design.
I would raise my hand for someof the craziest job tasks that
(02:40):
would come along and peoplewould scratch their head and go
something's wrong with that boyfor sure.
But you know, the overallmotivation for me was to learn
as much as I could about theother department, because I
really would.
I want to know why thatdepartment does what that
department does.
Whether it's right, wrong,indifferent, doesn't matter.
(03:01):
I wanted to understand what'sgoing on behind the scenes and
as I found my way intoleadership over the years, it
became abundantly clear that thesuccesses, the failures,
whatever of my own departmentbut how would it impact the
service or sales or rentaldepartments?
And, like most people thatprobably interact with your
(03:39):
podcast, the vast majority ofthem come out of the equipment
world where there's a rentaldepartment.
So it's a four-legged stoolinstead of a three-legged stool.
Maybe it's a bench in that casetoo, because sales and rental
are on one end and parts andservice on the other end.
And I say it that way because Iwant to bring the parts and
(03:59):
service together and then bringthe sales and or rental
departments together to be acohesive unit.
And spending time in thosedepartments in the sales
capacity, in the leadershipcapacity, working in the
trenches has given me awell-rounded view of the world
Not always right, but gives mean idea of what I think
(04:25):
improving the employee andcustomer experiences is what
that's really about and that,ultimately, is what led me into
pursuing a consulting career.
And you know, I want to be ableto facilitate change in an
effective manner.
I want to be able to facilitatechange in an effective manner
(04:50):
and I feel, while I could dothat and I just recently left
Rush Enterprises, a greatcompany, and I had the good
fortune of learning from MarvinRush and other people close to
him, his sons and other foundersthat helped him, and a lot of
people in today's world can'tappreciate that opportunity to
learn from some of the founding.
You know members of these largecompanies and trucking
(05:12):
dealerships and that's 60 yearsago for them, and so you know,
learning and adapting and thenimparting that knowledge is
really what's driving me today,and I'm talking with dealers and
customers alike.
I'm not trying to be a jack ofall trades, you know.
(05:33):
I'm trying to be very specific,very intentional, about who I
work with and why I work withthem.
And I may not be the rightconsultant for everybody, ron,
why I work with them and I maynot be the right consultant for
everybody, ron, either, andthat's okay.
That doesn't mean I don't likethat dealer or they don't like
me.
At the end of the day it needsto be a good fit and it's a
(05:54):
two-way street.
And you know, it kind of leadsme to some of the most recent
projects I'm working on and itreally involves more of the
medium-duty truck marketplace,what it looks like, how that
continues to evolve.
Over the last five years to 10years.
(06:14):
In particular, covid was a gamechanger for the industry as a
whole.
The Class 8 freight market isupside down, Freight tonnages
are down.
It's a eight freight market isupside down, freight tonnages
are down.
It's a depressed freight market.
Um, class eight products notmoving as much, but regional,
medium duty or intra-regional asI would call it, you know, in
(06:37):
the major metros, minor metrosand rural and that would stack
up.
For example, just to qualifythat, a major metro is simply
the greater Houston major market.
Minor metros would be thosecontiguous cities that interact
with greater Houston metro areaand the rural markets would be
the middle ground betweengreater Houston metro and minor
(07:01):
metro and Dallas-Fort Worth orAustin and San Antonio, there's
a lot of activity that doesn'tpopulate, on the truck freight
radar, for example.
So when the industry, when Iwork with other consulting firms
on fleet utilization and I'mlooking at it from an analyst
standpoint, like maybe someoneon Wall Street or investment
(07:23):
firms they often talk aboutfreight tonnage and I have to
remind them well, what you'rereporting on is class eight.
Centric doesn't include mediumduty movement last mile right
local regional hubs.
Within where I live, I have sixAmazon distribution centers.
(07:43):
I can drive to all of themwithin five minutes.
You ask yourself, how wouldthey do that?
Well, here's why they'restocking to be more local and
cater to a major minor and ruralmarketplace.
So I'll kind of stop there andsee if I'm going the right way
for you.
Speaker 1 (08:02):
Oh, that's perfect.
And then let me try and comeback on two specific things.
Number one consulting.
And in the consulting world,how long have you been dabbling
in this now?
Speaker 2 (08:21):
I officially started dabbling at a very low level
probably a decade ago where Iwould do small projects and kind
of refining my skill, but Ireally didn't do anything
substantial until last NovemberI really jumped in.
(08:43):
I went to the edge of the pool,took off my shoes and jumped in
.
Speaker 1 (08:47):
Okay, so let's start with last November, and let's
call that six months.
It's not quite that close.
How many consultants have youfound in this space that people
are able to use?
Speaker 2 (09:01):
Very few.
Isn't that a surprise?
It's very interesting becausethey look at me like I'm a
three-headed hydra sittingacross the table from them and
they said your experience isinteresting because you're
bringing something to the tablewe didn't think about.
(09:22):
And I get this a lot withprivate equity and venture
capital that I'm talking with.
So the PE and VC groups spend alot of time working with those
folks looking at the marketsegments that intersect with
commercial truck, off-roadequipment, et cetera, and
there's a lot they don'tunderstand very clearly.
(09:45):
So I'm one of a handful andit's interesting because I was
expecting there's more of usrunning around out there but
there's not.
Speaker 1 (09:55):
So that's one track.
The other track is how manypeople in your experience in the
last 40 years have you run intothat learned at the foot of a
guy like Marvin Rush?
Speaker 2 (10:13):
Well, I would say, in 40 years earlier on, in that
say, the first 10 or 20, I raninto a lot more.
Speaker 1 (10:21):
Okay, so that's exactly so.
What's been happening is thedetailed understanding of what
the distribution channel does islacking.
We just continue to do whatwe've been doing the last 10, 20
, 30, 40 years.
Speaker 2 (10:40):
And we don't know why we're doing it, we're just
doing it.
Speaker 1 (10:43):
You ask the question.
And well, because we've alwaysdone it that way, that's what I
lovingly call a sacred cow,right, you know?
So I don't have very manyconsultants, I don't have very
many people that are in theindustry that actually
understand it.
And then here's the third track, and let me throw it at the
(11:07):
ages of 40 and down.
That are the leaders in theindustry, whether it's the OEM,
whether it's the customer,whether it's the dealer,
distributor, whatever jargon.
They came out of school.
They were taught how to dotheir job by schools.
They don't have any damn dirtyfingernails.
(11:27):
They very rarely go outside oftheir office and they don't know
what they're going to find whenthey go out there.
They don't even know thequestions to ask.
Speaker 2 (11:34):
True, right yeah.
Speaker 1 (11:36):
And that's scary, it's very scary.
Speaker 2 (11:39):
Well, and I'll give you a good example of that.
And you, I would have placed,if we were betting when you and
(12:02):
I first met, 26 some odd yearsago, I would have bet money that
I would have pursued a careerSame path I went but I would
have stuck myself in parts andservice and never left that
realm.
And something told me not to dothat.
Something told me to learn thefull spectrum of the dealer
world and interact with dealerprincipals at every possible
opportunity, whether it's MarvinRush or Rusty or Robin Rush and
so on and so on.
And you know the JerrySwanson's of Empire and
(12:24):
Stripling and he, jerry, was afabulous mentor to me as well
and and I could think of many,many more, and including
yourself.
So.
But I would have bet money thatI would have been in parts and
service.
I would retire, probably, andmaybe would have been a
consultant.
But where I'm finding myselftoday, it's not ignoring parts
(12:49):
and service, it's actuallyhelping dealers, dealer
principals, understand theviability of their dealership
centers around parts and service, absorption, etc.
You know, the standard is still100 hundred percent to be
absorbed, fully absorbed Dealers.
If you make a hundred, you'redoing good.
(13:10):
But I would, I would challengethat you better be 125% plus to
be absorbed.
In today's world, with thecyclical nature of the markets,
with the interest rates andmarket share challenges and all
the other variables that comewith the business, and where I'm
finding myself in these firstsix months, is an overwhelming
(13:33):
demand for sales operationoversight, more of a general
management view rather than aproduct support management view.
Not dismissing that, I think itall goes hand in hand and I
counsel accordingly.
But the questions that arecoming at me routinely and the
(13:54):
cadence has increased becausesome people have figured out hey
, talk to this Troy guy.
And you know that's not athat's not an egotistical or
arrogant statement.
That's not an egotistical orarrogant statement.
It's actually a compliment whenI have some 25-year-old analyst
sitting somewhere in ahigh-rise building that is
(14:15):
querying me for my knowledge onwhy are dealer groups doing this
.
And you know, why are we seeing?
Why are the OEMs doing this?
What are the OEMs doing?
What's the motivation behindthat, you know?
And what does that look like?
And here's the most popularquestion lately is why are OEMs
(14:35):
wanting to go direct at everypossible opportunity?
Right, and you know that thingis kind of never gone away, but
they dabble in that, that theythink they can go direct and
they can do it better than abrick and mortar dealer, and
(14:57):
that's a whole nother podcast.
I'm sure groups or let me flipover to the customer side and
put in parallel with a largedealer group, large national
fleet or large regional fleetsthat have utilization problems
or struggle with findingtechnicians or struggle with the
same things dealers deal within their large fleets, or they
(15:21):
struggle with the dealer or thedealer struggles with them, and
it's a whole laundry list.
Speaker 1 (15:27):
I had an occasion yesterday where I had to deal
with a credit card which dealtme with a company that was with
my late wife and I called themand I was on hold before I got
(15:51):
my first response for 23 minutesand I heard they were
apologetic about every 90seconds and that person wasn't
able to deal with the issue.
So they transferred me toanother number and I was on hold
with that number another 31minutes before I finally got a
(16:14):
person and that takes me to andyou heard me say this or write
it we've put profits over peoplefor the last 40 years
Absolutely, which has taken usto a place that customers in
America think that customerservice sucks so bad they don't
even complain anymore.
(16:35):
Yeah, so I translate that and Ino longer call it profits over
people like I translate that andI no longer call it profits
over people like I used to.
Now I talk about it'stransactions over data, so
everybody's measuring, and youknow Bill Blackie introduced
(16:56):
absorption back in the 50s and Ihad the joy of offering to work
for him and you know he thoughtthat the time, the amount 500
bucks or whatever the hell itwas a month was too much, but
that absorption basis has beenin place for 75 years, correct?
(17:19):
I think we need another measure.
I would agree, and the measureI want people to start thinking
about is return on assets.
And come up a little further inthe helicopter with me.
We've seen over the last 20years, and then the last 40
years, an exponential curve ofreductions of the number of
(17:44):
supply points in thedistribution channel.
So, as an example, in Canadawhen I started with the
Caterpillar dealer, there were10 in let me call it, 1970.
Now there's two In Canada.
There used to be a multiplicityof dealers and I'll just stay
with construction for a second.
Now there's two In Canada.
There used to be a multiplicityof dealers, and I'll just stay
with construction for a second.
Now there's one, volvo one,komatsu one, et cetera, et
(18:12):
cetera, and then I think we getinto a different place.
I was given another one thatreally rattled me.
I think we get into a differentplace.
I was given another one thatreally rattled me that we've
gotten ourselves into a positionthat we're more interested in
short-term greed and that's theword that was given to me than
(18:32):
we are in our grandchildren'sfuture, which gets you right
where you live.
So the return on assets is whywe've had the number of
distributors disappear.
Right, the number I wanteverybody to look to is I want
(18:54):
you to have a 50% return onassets.
That's all assets, fixedworking capital, the whole smash
.
So let's look at net pre-tax,let's say 10%, and if I want 50%
return on assets, I have toturn my assets five times.
(19:19):
Now you get in a plane with me.
We go around the country andwe'll stop at 100 dealers.
We won't find two that turntheir assets four times and they
don't even think about thatasset.
The rental companies that Iwork with none of them are below
50% return on asset, correct?
(19:41):
So, being the devious guy thatI am, I used to go into dealers
and sit at the counter and justhave a chat and a cup of coffee
and I'd find out more in that 30minutes than you can imagine.
So, dealing with the rentalcompanies, none of them that I
work with are under 50% returnon assets None.
None of them that I work withare under 50% return on assets
(20:05):
None.
So that means we've got toreframe the business completely.
So go back to where I started.
How many people are there thatlearned at the master's knee
like Marvin?
How many consultants are outthere that have dirty
fingernails, that know how tooperate, can pick up a phone and
do a sales order, can go in anddo an inspection, and who the
(20:26):
hell is going to lead us to thispromised land?
So big circle on that Amazon.
Everybody talks about Amazon asthe largest retailer in the
world, and look at howsuccessful they are.
And they're at the verybeginning of having four or five
distribution centers withinfive minutes of where you are.
Interesting statistic thoughWalmart still has more product
(20:50):
sales than any other company inthe world, and they deliver in
24 hours in a manner that Amazonis trying to figure out how to
do.
That's true too, is trying tofigure out how to do.
That's true too.
So this whole world is changing, and change scares everybody,
absolutely, and there's very fewpeople that are out there that
(21:11):
are able to analyze a situation,to make a conclusion, to come
to a conclusion, to make asuggestion, which is why I'm
intrigued with you getting inthe consulting business, because
I think you're one of the fewthat can do that.
Well, thank you.
Well, it's not necessarily acompliment, it might be a burden
.
Speaker 2 (21:29):
I know I think it's a little of both, but my dad
raised me the right way to stillsay thank you, even if they
just kicked you square in theback of the pants, right?
So sometimes the best lessonsare those hard and challenging
ones.
So, ron, one thing that I can'tremember which of your recent
(21:51):
podcasts, I can't remember whichgentleman I listened to them
all just to say because there'svaluable information there, not
only from yourself, but fromyour guests.
Kevin Launders was the mostrecent one I listened to.
He's another rarity.
There are not enough of him orpeople like him to go around.
(22:14):
My wife works in commercialinsurance for a large global
insurance brokerage, andeverything you guys talked about
about cybersecurity, therequirements to have a policy
and the due diligence to do thateverything he said was spot on.
(22:35):
I can't go into the detailsthat I overhear her talking
about, but I can tell you thatyou guys are spot on and
companies, dealers, whoever,that are not paying attention to
their cyber side.
That's an exposure and,coincidentally, you had
mentioned you know people thatare in the consulting space,
like we're talking about,typically don't do that.
(22:57):
Well, that is part of my bookof business to talk about and I
got the idea from my wife.
She said you know, when you dothese dealer reviews, you need
to be asking them aboutcybersecurity.
And I kind of ribbed her and Isaid, hey, are you trying to get
me to sell some policies foryou or what you know?
And?
But she goes.
(23:17):
No, but she goes.
They need to know that.
They don't know that they'renot doing that.
They're hugely exposed.
And you know the the FTC thing.
Nobody talks about that either.
And look, I'm not an expert inthat particular field, but it
does overlap into what I do on adaily basis from an operational
(23:38):
mode of thinking.
And and I take it a step further, going back to another recent
podcast, you were talking aboutall the data points that dealers
or any company for that matterbut let's just stick with
dealers they deal with.
There's so many data pointsthat none of us can keep up with
them.
It's this massive white noiseall around us, so we're just
(24:01):
picking and choosing the onesthat are the hot buttons today
and a reference was made by youor the other gentleman how you
guys looked at this, and I'veprobably learned this from you
at some point in the past.
But when I look at a marketreview, even today I don't look.
I don't really care about allthe business system information
(24:24):
other than I want to knowtransactions, I want to know
who's buying from me, what theybought it for, what my profit
margin was, when did they stopbuying from me, when did they
start, when did they fall off,and so on and so on.
And I want to see that bydepartment and I've used that
methodology very successfully totake the operations large and
(24:47):
small and, you know, to achievehigh levels of absorption.
You know we weren't calculatingreturn on assets in the manner
but I would venture to say thatwe were probably in those
high-performing operations therewas probably a tendency to be
better at return on assets thannot.
(25:08):
But is it still where it neededto be relative to the standard
you set?
Speaker 1 (25:13):
Well, the other side of that, one of the guys that
you're probably referencing, hisname is Nick Maverick has a
company called Built Data.
It was Nick.
There you go.
Yes, he talks about threeclicks Right.
And so go backwards.
It's 1970.
I'm kind of the parts manager ina Caterpillar dealer head
(25:35):
office and Caterpillar used usas a prototype for product
support, selling First ones inthe world.
And the primary prerequisiteand I thought it was a scream
was that the writing was neat.
And the second criteria waswe're going to pay commission on
(25:59):
competitive items.
Second criteria was we're goingto pay commission on
competitive items and none ofthe competitive items were items
that Caterpillar manufactured,which I also found intriguing.
And to put a circle on thatthing, we'd interview people,
we'd hire the people, we'd givethem a customer list, we'd give
(26:21):
them the keys to the truck andpoint them to the door.
And we still do that andthere's no real training.
Don Buttrey does a great jobfor pillars.
Xerox has had a program foryears called Professional
Selling Skills that does a goodjob, has had a program for years
(26:42):
called Professional SellingSkills that does a good job, but
nobody's telling a salesman howto manage their damn time.
No, none of the salesmen putforward an objective by customer
for next year, right.
And then if it wasn't Nick andhas built three cliques.
And then if it wasn't Nick andhis built three clicks.
(27:03):
The salesman spends nights goingover what they're going to do
tomorrow.
I used to for a while 20 or soyears ago I'd do evaluations of
salesmen.
I'd get in a truck with the guyand we'd go around and they had
the day all scoped out.
But I'm sitting with theircustomer list and everything's
fine until about the middle ofthe day.
Then I say, well, we're closeto this guy, why don't we go in
(27:24):
there?
And that's when it fell apart.
Yep.
So I'm doing a survey for adealer in the northwest of the
US and one of the customers wasa woman.
In the Northwest of the US andone of the customers was a woman
(27:45):
and a dealer had created aproduct support salesman that
was a woman and this boss of thecustomer had two comments.
One your female salesman istaking my managers out at night
and their wives are gettingupset.
Right, had not considered thatfor a minute.
(28:07):
The other was that damn Napatruck delivery person with her
shorts and tank top.
Everybody in the shop stoppedto go see what she's up to today
.
And then I'm talking to a guy.
Last week this isn't my exampleof 23 or 18 minutes, whatever
(28:29):
that I was waiting and thisperson said to me I called three
or four suppliers, I gotvoicemail with everybody but one
.
I got a real person with oneperson.
He said who do you think I didthe business with?
We've got this whole marketcoverage sales mystique.
(28:52):
They're clerks, troy, yep,that's it.
Speaker 2 (29:09):
They're PR clerks.
What can I do for you today?
Hey, how'd you like thatfootball game on Sunday?
This is ridiculous and theydon't have it.
You ask them what are thealternatives to find something
that is comparable, because myunit's down or whatever.
And the answer is silence forthe most part.
(29:33):
Now, those companies that haverobust e-commerce platforms they
kind of fill the void there andAI is helping in a lot of areas
do a lot of things.
But even with AI and I knowwe're kind of deviating again,
but this is good because this isan evolutionary conversation
(29:54):
when you look at the humancapital and let's talk about
going back to your comment,return on assets let's talk
about the human asset that youhave in the dealership.
Dealerships are running leanerthan they've ever ran before and
a lot of times and it's notjust anyone.
I've interacted with 30different dealer groups over you
(30:16):
know small, large over the lastsix months in conversations
right, I'm out making cold calls, I'm selling who I am, what I
am, why I am, and one thing I'venoticed that pretty much every
dealership is long lines ofcustomers, phones ringing, not
being answered and unhappyemployees and a lot of dealers
(30:40):
across everywhere.
And it's interesting, and it'snot just in commercial truck,
it's everywhere.
Speaker 1 (30:49):
Let me interrupt for a second.
At one point I was supervisingthe office and the counter in a
parts department.
Yes, sir, and I might have toldyou this story in the classroom
because I tell it to everybody,and I might have told you this
story in the classroom because Itell it to everybody.
I'm in a cubicle that's lookingat the front door of the
dealership and to my right theleft of the door.
(31:11):
But to my right, looking at thedoor, is the receptionist, the
telephone operator.
There's a small table, a coupleof comfortable chairs and a
courtesy telephone.
To my left is the parts counterand there's eight guys.
Now, this is Hewitt Equipmentand Bob was a wonderful guy,
classy guy, a little bit of aside story.
(31:34):
I'm out doing a physicalinventory in the warehouse and
I'm wearing jeans and asweatshirt and I'm dirty and
sweaty.
And Bob comes out elegant in athree-piece suit and he puts his
arm around my shoulder andlooks me square in the eye and
says I'm really disappointed inyou, and you know the kind of
guy I am.
And my response to him was yeah, me too, bob.
(31:57):
What's your disappointment?
And you can see his whole bodystart to fall apart.
He says talk about this.
Later, when you get a moment,come see me.
But what what it gets down to is, nobody really understands.
They're putting the people thatI call your heroes, the ones
(32:21):
that build the relationship withyour customers, the contact
points.
I don't care who they are it'sa receptionist, a telephone
person, a sales rental, I don'tcare but they're the ones that
build the relationship andthey're under unbelievable
stress.
So what I want to do and I'mtalking to all kinds of people
about this I want your personnel, your human resources.
(32:50):
I want that on the balancesheet.
And they look at me.
Well, how the hell would we dothat?
It's pretty simple, goodness.
You know how much you pay them.
You know what the benefits are.
Put it on the balance sheet.
Well, what do you want me to doit?
It an asset or a liability?
It's an asset, oh, so how muchdo you pay these guys?
Let's just take a number.
Let's make it easy.
Let's say we pay $120,000 ayear.
(33:13):
All in, it's too high, butlet's use that because it makes
the arithmetic easy.
If my return on assets is goingto be valid, that I want it to
be 50%, and my assets are 10grand on the balance sheet and
there's nothing else, then Ihave to generate $20,000 every
month of net income.
(33:34):
If $20,000 a month of netincome is my number and let's
just say, for instance, I make10% return on sales, which is
strong, not very many dealersget there that means that I have
to sell $200,000.
With that one human asset everymonth, that means I need to
(34:00):
sell $2.4 million worth ofproduct every year.
So I go down to the partsdepartment and you might have a
million dollars a year as astandard for a parts and service
person on the counter.
You might have $250,000 a yearfor a technician.
(34:23):
How the hell do we get this done?
Well, we don't.
That's why the number ofdealers is shrinking.
And then let me just close itbefore you start.
Internet's coming along,technology's coming along.
We'll get in another plane.
We'll go visit 100 dealers andI bet you we won't find two that
have 20% of their personalservice sales on the internet.
(34:45):
Oh yeah, I can see that.
Speaker 2 (34:47):
Yeah, back then, right, even today, yeah, even
now.
Speaker 1 (34:52):
Well, it may even be worse now I'm just being gentle,
as I usually am right, or I tryto be, but this whole world is
so ripe for change.
Artificial intelligence it wasin a blog a while back, was at a
Dartmouth conference in 1954.
That's 70 years ago and hardlyanybody uses it today.
(35:14):
I'm talking to Joseph Albright,who's getting his doctorate
this spring.
He's doing lecture series forus on supply chain.
He teaches classes at Bradleyand Indiana University and I
said what's the student liketoday?
He said oh geez, you know,they're not even smart enough to
use chat, gpt and understandwhen they submit the paper, that
the grammar's wrong.
(35:35):
That's a problem.
We've got a problem.
Fundamentally we do, and sothat's why I wanted to kind of
get you out into the public view, because there's so few of you
and because I know what you cando and starting is a bit of a
(35:56):
problem.
I still remember that when Idid it in 1980.
Of course, I was 25 yearsyounger than you are now, so I
had a lot of time to makemistakes.
Your medium-duty truck is aperfect example.
Oh, absolutely.
Yeah.
Well, even just local delivery,for goodness sake, is a perfect
(36:17):
example.
I designed warehouses as aconsultant early in my career
with the railways in Canada andone of the trips that I was on
was in Germany, was in Stuttgartat a Kodak distribution center
(36:37):
for all of Europe, somethinglike 1973.
So it's a long time ago.
And you walk in the door ofthis distribution center and the
lights come on.
There was nobody working there,it was all computerized.
My chin hit the ground becausewe're looking at handing a guy a
(37:00):
piece of paper.
Every time an order comes in,there's three to five items on
the piece of paper and say gopick it up.
And we try to question the same, whether it's a field, a shop,
a walk-in, a branch, whatever,it didn't matter, and I'm kind
of taken aback.
Then I go to Chicago and I gotanother distribution center and
(37:21):
the men in the warehouse aregiven a full day's work when
they arrive.
So every item they weresupposed to pick was given to
them at 8 o'clock in the morningand the statement was when you
finished it you can go home.
So the productive guys wereleaving in five hours and the
(37:42):
slugs were leaving at 10 hours,right, but the slugs could see
the prize at the end of the lineand they were motivated to
catch up.
We have none of that today.
Troy None.
Speaker 2 (37:54):
No, well, before I joined the automotive technician
world I worked at a springfactory that made mattress
springs and I worked inwarehouse and distribution.
Then I got a chance to actuallyin Texas.
You could be union or not union.
I was not union, but some werewire bend it X number of times.
(38:29):
I take eight of them at a timeand as fast as you could go, and
you were paid your base ratehourly, but you were paid by the
piece.
Yep, that's right.
And I'm like, wow, wow, I kindof, I kind of like this well,
but like any unionized cyclicalbusiness there, there are
(38:50):
challenges and and that reallyisn't what I wanted to do in my
life, but but it did motivate meand yet some people that just
would do their own thing, but I,you know, so you get this new
kid.
Now I'm ruffling feathers ofunion guys and I'm making more
money than them and you know,and it wasn't my kind of thing,
but at the end of the day it ittaught me to hustle, and when I
(39:13):
jumped into the automotive,world.
It's the same thing.
It's flat rate and techniciansstruggle in today's world with
flat rate, in part becausedealers may not be doing it
right.
I'll just say that in part.
I don't think we've educatedour incoming techs well enough
to be able to adapt to a fastpaced flat rate world.
(39:34):
Right they're.
They're expecting it to be anhourly payout and you know
technicians can make a ton ofmoney, ron, if you're highly
skilled.
I mean you could make $150,000,$250,000 a year if you pay
attention and you're good andyou hustle.
Speaker 1 (39:53):
You're absolutely right.
But the other failure in thatwhole thing is we'll go and ask
100 people how they determinewhat the standard time should be
for the job and I would submitto you.
Maybe 90% of them will say it'sthe average Correct, and a man
drowned in a river of averagedepth of six inches.
(40:16):
It ain't the average at all.
No, now I'm not going to.
You know, one of my of my minorwas statistics.
I'm not going to get into heavyduty math, but what you're
looking at is pick a time andthen what's the standard
deviation off that time?
It's not average at all.
It'll fall on your nose onaverage.
So there's so many aspects ofthe business that are just
(40:40):
screaming for somebody toprovide exposure.
When I started in the consultingbusiness in 1980, there was
hardly anybody doing what I wasdoing.
I called myself a rentalmanager and I charged the same
rate as a field servicetechnician did.
So my challenge to the dealerwas you know, I can run your
(41:01):
business better than you can andyou're going to pay me to prove
it, but I'm not going to chargeyou more than what you charge
your customers for yourtechnician.
So they were going to beembarrassed if they were going
to say no, because what the hellare they going to lose?
Right, yeah, right.
And son of a gun, the son of a,made money for me doing it that
way.
And, and he was right, yeah.
(41:22):
And I had one guy who was theson of a caterpillar deer that
got canceled because he didn'twant to get in the rental
business, who used to have me dopersonality profiles for every
job that he wanted me to do.
And it was kind of cute becauseI worked in a prison and I was
taught how to do those things.
I did it for criminals todetermine treatment patterns.
(41:45):
So Fred was the guy's name,that's all I'll go with, and he
gave me this to hire me thefirst time.
He said you're perfect, this isgreat.
And about a year later he hadanother job.
We'd worked seven or eightmonths together and he said do
you know anybody?
I said well, what are youlooking for?
He said well, you don't havethose characteristics.
So what are you looking for, hetold me.
(42:06):
I said, well, send me thequestionnaire, the profile.
I sent it back to him.
The next thing was I got a phonecall.
I said how the hell do you dothat?
I said what he said.
That was a completely differentprofile and it fit this job
perfectly.
(42:26):
How do you do that?
My answer, little flip, was I'mnot just a pretty face and you
know, looking at me it ain'ttrue.
But we have to be able to findopenness Right and that's
another aspect of leadership.
That's kind of interesting.
We've got two assessments thatwe're putting on the site this
week on leadership.
One is called Reflect EF, whichdetermines are you a strategy
(42:50):
person, are you animplementation person, are you a
doer?
And the other one is called atabletop exercise, and it's are
you open minded or closed?
Right.
So that's six variables, and Ilook at everything like a sports
team.
The manager, the leader, neverhits the field of play.
They're on the sideline, and mymetaphor for that is a
(43:13):
conductor.
The conductor is the onlymusician that has their back to
the audience, to the customerabsolutely right, and they're
totally dependent on the peoplein front that have the
instruments in their hands andhe doesn't have, or she doesn't
have, one anywhere near it.
Speaker 2 (43:28):
Well, you know, it's a struggle and that triggered a
thought.
I was in a conversation theother day with a group of people
.
People and I asked or asked avariety of questions and then I
ultimately asked this may seemdirect, maybe blunt, but I need
(43:50):
to ask has anyone in this roomasked this simple question Am I
part of the problem?
And I get some weird looks.
And then I get silence and Isay look, it's not meant to to
be hurtful, but it is meant tomake you think.
And I said you know, that's oneof the hard lessons I learned a
(44:11):
long time ago when runningoperations.
If, if I'm struggling, I damnwell better be asking am I part
of the problem or am I part ofthe solution?
I may think I'm part of thesolution, but my actions or
inactions may be creating theproblem.
Or I'm giving my team toocomplex a process to where they
(44:38):
can function properly, or notenough training, or the business
system we have is antiquated,it's slow, it's cumbersome.
You know it could be a lot ofthings, and so it's not really a
personal attack on anyparticular person, but you got,
you have to have thatself-reflection, and a dealer
(45:00):
review is exactly that.
When you come in and you talkabout that, you're forcing that
dealer principal and theirleadership team to look in the
mirror, and oftentimes nobodyasks that question because they
don't want to know the answer.
Speaker 1 (45:15):
Oh, and they wouldn't know.
They typically and I don't meanthis as a smack Are you part of
the problem, part of thesolution?
What are your pain points?
What keeps you awake at night?
Yeah, and then you know thismethodology we use.
(45:38):
You mentioned computer systemsand that's a classic.
I call it paper to glass.
All we've done is we've taken apiece of paper and a manual
process, put it on a computerand made it happen faster, right
.
And I always go back to whatdoes the customer need and what
does the customer want, and wedon't ask those questions.
So the customer calls in to theparts counter and wants to
(46:03):
order parts, and I do this allthe time, or I used to.
I'm not on the road, as I usedto be, but I pick up the phone
and I put it out beside theguy's ear and I said what's that
noise?
And they'd look at me weird andI said you don't hear that
noise, do you?
What do you mean?
Well, that's the dial tone.
Do you ever pick up the phoneand dial out?
(46:24):
Or do you pick up the phone andthere's somebody there?
Oh, there's somebody there,correct?
And then I say well, what's thefirst thing you ask the customer
.
Well, they got to tell me whothey are and I said, yeah,
that's kind of cool.
So a customer's coming into youand you ask who they are.
What do you think the questionis?
(46:44):
They want to ask Well, have yougot it?
How much is it?
So all we did is we went frompaper to glass.
We didn't try and figure outwhat the base problem was or
find a solution to it, and wecontinue to do that, and have
been doing it my whole work life, which now, believe it or not,
is 55 years.
Right and before long I'llfigure it out.
Speaker 2 (47:08):
Well, it's always good that you're motivated and
well, you know it was a mutualfriend of ours, miss Kim Phelan.
You know she and I were havinga conversation last week and one
of the the as the conversationdeveloped and, by the way, going
back to the other conversationI mentioned when I asked them if
they were part of the problem,it was we were discussing what
(47:32):
their pain points were and theywere.
It was random, it was, itcouldn't answer the question.
Yeah, nobody.
And these people all work inthe same building, same group.
They weren't even aligned withwhat their pain points really
were, interdepartmentally orextradepartmentally.
(47:53):
I mean, it was an interestingconversation, to say the least.
Speaker 1 (47:57):
But you can have that conversation, troy, with
probably 80 or 90% of thedistributors in this country, if
not the world.
Right, you know it's remarkable.
So how do we know we'resuccessful?
Well, our financial statements.
They come out every month.
Gee, I didn't hit my goals thismonth.
(48:19):
Well, that's last month.
What the hell is that?
You know?
So now I spend my first week ortwo looking backwards to find
out what I should have donedifferently.
That caused that problem, and Imake so now I'm.
It's kind of like going onvacation for two weeks and
nobody does your job, and youcome back the first day, first
week, you're catching up all ofthe stuff that should have been
(48:41):
done by somebody else.
Speaker 2 (48:43):
it drives me crazy well, and, and it's, it goes
back to, like the phone call youhad you're on hold for 23
minutes.
Finally get someone, you'reback on hold, and so on and so
on.
And with what kim and I hadmentioned the other day is it
and I pulled up my notes itdealers don't get in business
(49:04):
just because, hey, we're goingto be a dealer today, we have
the capital to do it, and we'regoing to open a branch and we're
going to sell widgets, andeverybody's going to buy widgets
, just because we got the bestwidget in town not necessarily
and cat dealers gone.
They've gone through severaliterations over the many decades
(49:25):
that you know.
They weren't always thatfavored, but people still
favored them for a variety ofreasons.
But it was only because it wasa preferred product.
It wasn't that their dealerswere necessarily respected.
And there's still somestruggling cat dealers out there
, but there are some awesomeones too.
Now and I call it here in mynotes it's called understanding
(49:49):
the customer demand and I'llquote demand is key to aligning
the deep.
Their demand, the customer, iskey to aligning the dealer's
processes and the use of data ina manner that's mutually
beneficial to the dealer, theemployee and the customer.
Because if you get those threegroups of people talking right,
acting.
Right now your market shares up, your absorption's up and the
(50:14):
new KPI that you suggest, returnon assets, is going that way.
But oftentimes people don'twant to have that conversation.
And going back to one of what Iopened with on the medium duty
market relative to freightmovement, everything's judged on
class eight freight movementbut nobody's talking about
(50:37):
between here, Dallas is,depending on which part of
Dallas, let's just say an evenfour-hour number San Antonio's
three, Austin's three.
There's so many medium-dutytrucks now moving and you would
think, well, why would they runmedium duties back and forth?
Because they can't haul as much, why not an 18-wheeler?
Speaker 1 (50:55):
Well, there's a lot of reasons.
Speaker 2 (50:57):
One of the primary reasons you can't find drivers.
You can get a driver for a CDL,for a medium-duty truck,
possibly, but if you keep itunder 26,000 GBW, guess what you
don't need a CDL.
Now you can find more drivers,so a driver shortage contributes
to some of these other things,as well, I'm going to take us
(51:21):
off the table and into acompletely different area.
Speaker 1 (51:24):
Now, in the year 2033 , it's forecast that America is
going to be short 3.8 millionemployees.
Speaker 2 (51:35):
Doesn't surprise me, to be honest with you.
Speaker 1 (51:38):
The current administration wants to bring
more manufacturing back intoAmerica.
That's not going to make 3.8million, it's probably going to
be 7.6 or 15 million orsomething else.
So there's chapter A, chapter Bthe people that are going to be
in the workforce in 2033, whenthis 3.8 million is shortage,
(51:58):
are they are in grade four today.
Yeah, the reading comprehensionin grade four, at grade level,
is 32% in America.
The arithmetic comprehension is37% in America.
That means basically two-thirdsof the people aren't even up to
grade level, correct?
Okay, we're going to be able,with technology and I'm not
(52:23):
going to go through theiteration of all of the things,
but it starts from a computer inthe 40s and 50s, through
telematics, through GPS, throughall of this stuff, we're going
to be able to eliminate throughtechnology probably 50% of the
workers.
But because of that educationlevel, we don't have brainpower
(52:49):
to be able to take advantage ofthe work that they're going to
have, the time they're going tohave to be able to work in their
head, correct?
So here comes Ed Gordon, one ofour contributors.
We got some very smart peoplethat write for us on blogs and
podcasts and other things.
Ed said he's got a PhD ineconomics and another PhD in
(53:10):
history.
You know, one isn't enough.
He's on the board of theFederal Reserve in Chicago.
He teaches at Northwestern.
21 bestsellers in the New YorkTimes.
One of them was called FutureShock.
In that he said in 2030, 50% ofthe workforce in America,
that's about 75 million peopleit's a little higher than that,
(53:32):
but make that number that wayare going to be unemployable
because they won't have theskills.
So here's another stool.
And we say, okay, we've spenthundreds of trillions of dollars
in technology.
How much have we spent onsociology?
So what the hell is America, orany society for that matter?
(53:52):
And America is the one that ismost able because our economy is
the best, with the mix of whatwe've got, with work, etc.
Etc.
Is better than any othercountry in the world, that is,
except for China.
I can force you to work orother places not many.
How the hell do we get thisdone?
And the fourth stool is I'm 78.
(54:16):
Now A lot of my friends arerunning dealerships.
They're the same age.
They're protecting the statusquo.
They're making more money thanthey ever dreamt they would.
They don't want to touchanything for fear it'll blow up,
and they've held back a wholegeneration, the next generation
of leaders, which should have a10 or 15-year gap in the
(54:41):
industry because they're nothaving the opportunity, right?
We so desperately need peoplelike you and what you're going
to do to come in and starthelping us fix this, and there's
enough market out there for youto call up and say, yeah, and
they understand what we'retalking about.
60, 70% don't, but they're 30or 40, you'll be fine, yep.
(55:04):
This is a really difficult timeand nobody realizes it.
Speaker 2 (55:12):
Well, it is scary.
And I was in a meeting thismorning with a client and we
were having a very comprehensiveconversation about how I can
help them and what I bring tothe table.
And again, it's not trying tosay Troy Otmer is all knowing,
but I do bring a unique skillset in this particular case.
(55:34):
This was a governmental centricconversation because I have an
extensive background ingovernmental bid processes,
which most people run frombecause you know it's a stack of
paper on a bid, ron, and itmakes me wonder why I didn't go
to law school.
But at the end of the day it isa challenge.
(55:58):
It's a challenge for dealers orcompanies to work with
governmental entities and thisconversation was more leaning
from the governmental side,asking for help how do we get
more vendors to work with us?
And that was what I was taskedwith today in this conversation
(56:20):
was how can you help us get morevendors?
And I said well, you knowthat's a long conversation, but
it starts here.
You got to simplify the processand I'm not picking on any of
the MWBE or the hub, thehistorically underutilized
businesses or the minoritywomen-owned businesses.
(56:42):
All those things are workableand I can say that, coming from
both a large privately helddealer group and a large
publicly held dealer group youwould think all those things I
just mentioned are negatives.
No, you just have to understandhow they apply to your business
and how you can interact withthose right, and you know it's
(57:03):
part of the whole process.
But they're struggling to findsubject matter experts that have
the knowledge to be able to dothis.
And that was part of my salespitch today, and it really
wasn't a sales call in thetraditional sense or no fancy
presentation, but it was aconversation.
I said what I want to do at 58years old is, by the time I'm 78
(57:32):
, I want to have helped thatnext generation get caught up
for the gap that we have.
And that's exactly how thatconversation went.
We have a gap in our industry,and it's not just our industry.
This is a systemic problem, andthen it's compounded by the
fact that when someone gets oldenough and gets out of high
school, their reading level ismaybe fifth or sixth grade level
(57:55):
or comprehension.
And maybe I'm being generous,maybe I'm being too harsh, but I
don't think so.
And maybe I'm being generous,maybe I'm being too harsh, but I
don't think so.
You know we have to do betterin schools and that's what I
mentioned earlier On thevocational side, one of the
focuses that I've had for thelast decade or so, and more so
in the last couple of years.
(58:16):
I was working with local highschools and OEMs to get junior
and seniors in high school intotheir auto and diesel and
welding tech programs wherethey're doing internships.
They're coming out with anassociate level possibly an
associate degree or collegecourses similar to that, and you
(58:45):
know some of your new productsI got the wheels turning.
Thinking about that's anotherconversation where Ron and Troy
need to talk, and you know.
But you know that's our futureright there in vocational trades
.
You know I'm a product of thatand I'm proud of that, you know.
But I did go back to school ata later date only because I
realized, hey, if I want tolearn all this and be the best I
can be, I need to add some moretools to my toolbox.
Speaker 1 (59:06):
So that's a perfect place to end this particular
podcast, troy, because we haveto get better at our game.
Yes, I'm in workforcedevelopment, adult education,
and I'm starting with the age of16 and going to 76, because
(59:29):
we're going to have to retoolover our lifetime many times
because of technology changesand business changes.
But I think we've covered a lotof ground and we've got two or
three or more.
We should probably plan on oneof these things a month for a
while, maybe for the rest of theyear, because there's enough
for us to be gabbing about, sure.
So I'd like to thank you andI'd like to thank the audience
(59:52):
for listening.
This has been a long podcastfor us, but I think it's been a
meaningful one.
So mahalo to all of you.
And but I think it's been ameaningful one.
So mahalo to all of you andChloe.
I look forward to the next oneand to all the rest of you out
there.
Have a great day, mahalo.
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