Manufacturing Exec Says Change is Inevitable in this Business By Mary Sedor
Article Date: 09-01-2008
Copyright(C) 2008 Associated Equipment Distributors. All Rights Reserved.
Just a few months away from retiring, Multiquip's president Roger Euliss reflects on 28 years in the construction equipment industry.
Multiquip, based in Carson, Calif., is a global leader in the manufacturing and distribution of light and medium equipment lines. Founded in 1972, Multiquip has grown to become one of the largest and most diversified suppliers to the construction and equipment rental industries. Roger Euliss, president, has been with Multiquip for 28 years, and he has announced his retirement effective at the end of December. CED interviewed Euliss about what he’s witnessed in his tenure and his advice for future generations. How did you get your start in the CE industry, and with Multiquip? What attracted you to the industry?
Just after leaving active duty in the U.S. Air Force, I was a starving stock broker with a young family in the early 1970s. I started working for a friend of mine with his own specialty construction business doing concrete work. We were successful bidders on a couple of small jobs and I left a nice air-conditioned office to cut concrete and do runway repairs on the Charleston Air Force Base in South Carolina. By the late 1970s I wanted to learn the equipment side of the business and was hired by Target to sell diamond blades and cutting equipment. A couple of years later, Target wanted me to move from Florida to Kansas City, but an opportunity came up to join Multiquip and stay in Florida. Less than two years later, I became a regional manager for the Eastern region, covering Maine through Florida, then later my coverage switched to the Southern U.S. Through the years I’ve served as Multiquip’s national sales manager, vice president of sales, executive vice president and chief operating officer, and then in 2001 I was appointed president. Did you imagine back then that you’d stay with Multiquip this long?
When I first started, I told Irv Levine, Multiquip’s founder, that I wanted to learn the business so that I could start my own in a couple of years. So here I am, just 28 years later!I have truly grown to love and respect the industry, given the high quality of the hard-working, real people that make it up. Once you get in the industry, you find out it’s a darn good one with good people to be associated with and you don’t want
to leave. What do you view as some of your most significant accomplishments with the company?
The people – the team that I have helped pull together to join the “Multiquip family” – they are the real success for me. So many of our current team members were brought on board back in those early days, and we truly learned the industry together, stayed together and helped build Multiquip from less than $9 million in sales in 1981 to over $400 million today. The “Take Care of the Customer” philosophy from those days remains in place still today. Irv Levine’s philosophy was always to take care of the customer first and the rest of it will fall in place. It is much more a pride in our people and our customers, the true friendships that have been forged over the years that make me feel so good about my Multiquip career.
Another accomplishment that I think is important is that once we bought Whiteman Manufacturing in 1989 (a brand of concrete power trowels) and started manufacturing some of our own products, I got us started in international sales. Especially in today’s market, our international sales have become extremely important for us since the market is as soft as it is. What were Multiquip’s biggest hurdles during your tenure, and how did you overcome them?
In the early days, Multiquip was really an import distributor. We imported a line of light compaction equipment from Japan, Mikasa, and sold it to dealers and directly to rental stores throughout the U.S. Selling Japanese products in the early years was challenge enough, but selling directly to the rental stores created a real challenge when it came to trying to also sell to distributors. We made it work and just look at the industry today. The second big hurdle – a big change for Multiquip – was when we entered into the manufacturing of our own equipment with the purchase of Whiteman Manufacturing. With the economic downturn of the early 1990s we frequently asked ourselves just why we did what we did. However, the Multiquip team again prevailed, and now we manufacture over half of everything we sell in various locations in the U.S. and Mexico, and even some for the Asian markets in our Shanghai, China plant. That initial acquisition changed the complexion of Multiquip to become a true producer as well as a quality import-distributor. What are the most significant changes you’ve witnessed in the construction equipment industry?
To me, the single biggest change was the roll-up of so many of the independent rental operations into a few very large national rental accounts. This challenged and frightened manufacturers, distributors and rental operators in many different ways. If you sold directly to the rental industry, which Multiquip did and does, you had several thousand independent customers and all of them were very important but none of them were a significant percentage of the total business. Over a period of about five years, from the mid-’90s to the early 2000s, over a third of those customers rolled up into very large customers. Those of us who did a lot of business with the new rolled up entities all of sudden had big players that were significant percentages of our businesses. That can be a scary position to be in because if you lose favor, if that big company all of sudden gets into any financial or other difficulty, then a tremendous portion of your business can disappear very quickly. From what I was hearing on the distributor side, they were not really happy with the large rental companies being able to buy direct and bypass them. The large rental companies were actually buying more equipment than many of the independent distributors were selling in a year’s time to their traditional customer base. This didn’t make the distributors happy. They didn’t know what they were going to be faced with from a competition standpoint as rental gained more acceptance.
The independent rental operators started to pull out of the construction equipment business. It was not until the early 2000s, after the downturn, that the independents finally said we can compete with them and they figured out how. I think now with the current sluggish economy, the independents, the large national rental accounts and the distributors have all realized that there is enough business for all of them, they all go about it in their own unique ways and they’ll survive; they just have to get through this downturn. What kinds of things tend to be enduring in this business?
Things like the continuing demand for higher quality, improved safety, better performance, longer life-cycles, and environmental friendliness of construction equipment are ever present and will continue to be so, but the great people continue to be the enduring glue that makes this industry so great. How have you been involved with AED through your career, and why has it been important?
The dealer/distributor has always been an important part of the Multiquip business model. Because we started out selling direct to the rental industry, we’ve had bigger challenges with a lot of AED-type operations. I’ve been going to AED’s Annual Meeting since the early 1980s, and I’ve participated on a number of different committees. For a number of years we have been a sponsor for CONDEX or a keynote speaker. We will hopefully continue to do that. It’s important to balance our support and involvement in AED, American Rental Association (ARA) and the Association of Equipment Manufacturers (AEM). They are three key organizations in our industry. How have manufacturer/dealer relationships shifted over the years?
As I explained before, the biggest shift I saw was during a period of a few short years in the late 1990s, when a manufacturer’s rental customer base was reduced by 35 percent. Sales and product support suffered as some good servicing dealers were rolled up into the new national rental companies that, in many cases, were not nearly as committed to service, or even resale in most instances during those early roll-up days. We all adjusted, and in many ways the industry improved as a whole as a result. However, a lot of brand loyalty was diminished, product support suffered, market development efforts were diminished and more responsibility for all of this fell on the manufacturer. I think we will continue to see these relationships adjust due to the ever-changing face of the market. So, what kind of changes do you foresee in terms of the distribution channel to market?
We must all change and adjust to the new market demands that we face. Given increasing distribution costs driven by high fuel costs that are here to stay, the influence of new-market imports, especially Chinese, and increased costs due to the very real demand for a more green environment, construction equipment distribution must change. I think that an inevitable direction is for the pendulum to swing back more toward the distributor as the central player. The manufacturer and distributor must forge a much closer and interlocked relationship for inventory management, product support and marketing with both contractor and rental users as the targeted customer. We have to take costs out of the distribution channel without sacrificing availability, and excellent after-sales customer support. I see us all needing to work together much more as a team to accomplish this than what we have ever seen in the past. I see these challenges truly as great opportunities – opportunities, for those open to change, to realize tremendous successes. What advice would you give to dealers on working with their manufacturers?
Dealers and manufacturers will both be more successful by being more open and candid in sharing wants, needs and problems. We must be open to tweaking our business models. If I, as a manufacturer, know and care about your cash flow, product brand preference reasons, marketing knowledge and capability, product support, etc., then I can formulate some solutions that will be mutually beneficial; or I will certainly be open to ideas that you formulate. Our markets are becoming more competitive every day and in areas that were not previously thought about much. We are now competing more and more on environmental considerations, safety/ergonomic considerations, international standards – not just price and performance anymore. I think that each day, more and more people are waking up to the fact that we must live our lives in a manner that helps ensure the lives of our successors on this planet. To me, this provides a tremendous challenge to any type of equipment manufacturer, dealer, distributor, rental operator, contractor – to truly anyone and everyone, to look at our day-to-day operations with the future of our world in mind. You were once quoted as saying that “Multiquip was instrumental in the creation of the North American rental market.” Explain the evolution of rental from your perspective.
The rental industry was made up of predominately small, owner-operated businesses with a “learn as we go” philosophy and with limited resources for outside ideas. Two things happened – other suppliers began selling directly to them, and they strengthened their organization, the ARA. These combinations brought them more shared knowledge of what worked and what didn’t, and they were able to grow and prosper. Very similar to the strength for the independent distributor members of AED, the ARA members grew stronger by sharing knowledge of how to make their rental operations better, and the manufacturers who were calling on them were also providing ideas and training on how to rent more equipment. This, coupled with a growing acceptance of the rental concept, helped really establish the rental industry as an industry of significance in North America. This contributed to today’s status of the industry with Wall Street and large investor groups very interested and involved, and
with international interactions and operations increasing steadily. I do
feel that Multiquip played a role in these developments.
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