Lessons Worth Sharing - From the Chairman
Construction Equipment Distribution magazine is published by the Associated Equipment Distributors, a nonprofit trade association founded in 1919, whose membership is primarily comprised of the leading equipment dealerships and rental companies in the U.S. and Canada. AED membership also includes equipment manufacturers and industry-service firms. CED magazine has been published continuously since 1920. Associated Equipment Distributors
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SECTION: From the Chairman

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Lessons Worth Sharing

Written By: Dale Leppo

Article Date: 08-01-2006
Copyright(C) 2008 Associated Equipment Distributors. All Rights Reserved.

The business cycle, consolidation...and water lily roots.

Recently I attended the AED Industry Round Table meeting and the Canadian AED Annual Meeting and learned some lessons that I think are worth sharing.

AED held its annual Industry Round Table (IRT) in June. For those of you who are not familiar with the IRT, it is an annual meeting of key executives from distributor, manufacturer and rental company AED members. The goal of the group is to discuss hot topics in our industry, look for trends, and provide input to the AED Board of Directors.

At the recent IRT, we divided into three groups: under 100 hp, over 100 hp and industrial (engines, crushing, etc.). The first topic was general business conditions and where we are in the cycle.

My conclusion from the discussion is that the Federal Reserve's efforts to attenuate the business cycle will not be 100 percent successful. We will continue to have ups and downs that will affect different segments of our membership at different times, and geography has a lot to do with the impact on your business. The residential housing market appears to be softening in some areas, but commercial and industrial activity are up. In some markets (mining, for example) demand continues to be strong.

Today's construction equipment economy seems to be a mixed bag. There's not a lot of upside potential, but the sky is not falling. In my day job, I spend several days a month traveling with our salesmen, and I'm hearing much the same message from our customers.

Our second topic was consolidation. Consolidation has had a significant impact on our industry in the last eight years. The group feels consolidation will continue, but at a much slower pace than we saw in the late 1990s. Funding for consolidation, however, could be tough to find in today's financial markets.

Two things stick in my mind. The first is that we may end up with an industry with some very large, efficient players and a fair number of more nimble smaller companies that can be closer to their customers. The conventional logic is that there won't be many firms left in the middle.

The second is that consolidation is driven by "aspiration or desperation," and that it is a whole lot better to decide where you want to go than it is to be pushed by forces outside of your control. No earth-shaking news there, but input that is important for AED's strategic planning process.

The Canadian Association of Equipment Distributors (CAED) Annual Meeting was held in Halifax, Nova Scotia. Many of the issues faced by our neighboring AED members to the north are similar to ours. There are differences in economic conditions in different parts of Canada. The most obvious is the huge economic impact of the oil sands in Alberta. Those projects are pulling people and equipment from all over the world.

Consolidation has also had an impact in Canada. It is not uncommon for political or regulatory trends in the United States to spread north, and CAED members pay more attention than I realized to some of our political efforts and to the outcomes of those efforts.

I spent some time getting to know Pierre Bernard, the incoming CAED Chairman. I enjoyed discussing business models with Pierre, but the most interesting conversation we had was about eating water lily roots while in the North Woods. If you meet him, ask him about the best way to prepare this Canadian delicacy.

CAED closed their meeting with a presentation by Pete Luckett of Pete's Frootique. Pete's Frootique sells fruits and vegetables and has been named "Grocer of the Year" in Canada. When I saw Luckette on the agenda, I wondered what a fruit and vegetable seller would have to say that might apply to our business. It turns out that he is a popular speaker because he focuses on a topic that is important in all businesses: how to recruit, train and retain the front-line people that are so important to every company.

His message is a simple one: Nothing matters more than having your front-line people motivated to make your customers happy. The challenging part of Luckett's message is that it is the job of owners and managers to create an environment where that type of success is possible. Easy to say, but tough to accomplish.

On a personal note: Cindy and I became grandparents in May. Samuel Eric Lanier was born May 23. We feel really blessed by his birth, as Sam is a healthy and happy baby. Cindy and I would like to thank everyone who has congratulated us. Special thanks go out to those who have said "Congratulations! You both look way too young to be grandparents."

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