Without My Dealer, I Wouldn't Be In Business TodayBy Mary Sedor
Article Date: 06-01-2009
Copyright(C) 2009 Associated Equipment Distributors. All Rights Reserved.
The fleet manager of a small mining materials operation says the name on the dealership, not the name on the equipment is what matters most.
Combs Materials, located about 90 miles outside of Tucson in Sierra Vista, Ariz., has seen its share of changes due to the economic downturn. Although the company has been in business since 2002, it has only been in its current configuration since Jan. 1, 2009, having recently reorganized and completed a merger.
The company began as a small mining operation on the back side of a land development, but unfortunately, the credit crunch had a significant adverse impact: The land on which they were working was repossessed by the bank after the developer was unable to refinance his loan. Since then, the company has undergone a name change and merged with another mining operation across town.
Today, Combs Materials is a small mining operation with four partners and nine employees. The company supplies sand, gravel and other byproducts wholesale to local rock companies, Fort Huachuca (a local military base) and other suppliers.
The company operates out of two sand pits located on either side of Sierra Vista. At the sand pit, employees load the sand into trucks for transport to the crushing and washing operation, which produces approximately 500 tons of material per hour. The crushed and washed rock provides the basis for eight different products.
The company’s fleet, worth approximately $3.5 million, includes a Caterpillar D7 bulldozer, Terex screening equipment, a John Deere wheel loader, two LiuGong 856III wheel loaders and four trucks to haul material.
Getting Through the Tough Times
Michael Combs, fleet manager for Combs Materials, says that the company will purchase equipment from wherever it makes the most sense. However, when asked how equipment dealers are successfully serving his needs, Combs couldn’t say enough about his local equipment dealer, Earhart Equipment, a New Holland, Kobelco, LiuGong and Takeuchi dealer in based in Tucson.
“Mitch and Gordon Earhart are pretty much solely responsible for us being able to stay in business right now,” said Combs.
Combs Materials was recently in the market for new loaders, but Combs says brand was not as big a factor in the decision as were cost and performance. Earhart Equipment introduced Combs Materials to LiuGong Construction Equipment, and Combs says he’s glad they did.
“Our business is all about loading material into trucks, getting it to the wash plant and then out to wholesale companies,” he said. “We load maybe 30 trucks a day. Without loaders we would be dead. And we just couldn’t function under the high payments on some of the bigger name brand loaders. I don’t see $100,000 worth of difference between the different loaders out there.”
Another key factor in deciding to purchase the LiuGong loaders from Earhart was the dealership’s willingness to work with Combs Materials to determine affordable financing terms, explains Combs.
“We would not be in business right now if Earhart had not stepped up to the plate as a dealer and gave
us terms that could keep us in business,” he said.
Earhart Equipment’s ability to work out the terms of the purchase has since led to another sale – Combs Materials recently purchased a new truck from them.
“Their willingness to work with us through these hard times has made it possible for us to keep going,” said Combs.
For Combs Materials, it’s all about the bottom line. By purchasing the LiuGong loaders, Combs says his company has been able to save between $2,000 and $3,000 on the monthly payment, plus an additional amount on fuel costs.
“My philosophy has changed a little over the last few years,” said Combs. “We’re watching the bottom line more. I can go out and buy a big name brand and I’ll pay $100,000 more for the same size tractor. In our type of operation, where all we’re doing is loading trucks with those loaders, that money makes a big difference. These LiuGong tractors do the same thing as any other tractor out there at a lot less cost. If you can save a few thousand a month on each tractor, and you’re running three or four, that’s a lot of money.”
Uptime is Critical
Overall, Combs says brand is not the reason he chooses to work with a particular dealer – product support and parts availability are the key influencers.
“It’s not the name that’s on the tractor that matters – it’s the name that’s on the dealership,” said Combs. “What I care about is when I call my dealer and say my loader is broken down, how quickly he can get me a replacement and fix my loader. I could be using any brand loader and if it breaks down and my dealer can’t get me another one in an hour or two, I’m losing money.”
Combs says dealers who aren’t willing to send him replacement equipment when his breaks down aren’t worth his time. He adds that some dealers he’s encountered have lost sight of the fact that when one of his loaders is down he’s losing money – approximately $1,000 per day, and the clock starts ticking the minute a loader or truck goes down.
“If you don’t have a dealer who will bring you another tractor when you need it, then you have the wrong dealer,” said Combs. “If we’re missing equipment, we’re missing dollars and I think some dealers look at it [nonchalantly] as, ‘Hey, we have a loader down.’ Dealers all preach that they will keep you up and running, but it’s hard to get service sometimes.”
He says he believes that sometimes dealers won’t help if they think it’s going to cost them money.
“Sometimes it costs a few bucks to keep your network of people going out there,” said Combs. “The dealers that spend a few dollars on me, I promise it’s going to return to them 10 fold.”
Those dealerships that don’t provide a high level of service aren’t building long-term relationships with their customers, says Combs.
“I called a dealer for service and he literally had a truck right across the street from me, but he’d still charge me as if he were coming from Tucson,” he said. “That type of gouging does not build good relationships. Dealers need to be honest and do the right thing.”
Combs says Earhart Equipment is a good example of a dealer who’s getting
“When I went to the Earharts and described my operation, they made a pledge to me that if one of my loaders goes down they will get me a loader or whatever is within their means,” said Combs. “They’ve stepped up to the plate and I know they’ve spent a few dollars on me, but I promise it’ll come back to them.”
When Combs Materials first started using their new LiuGong loader, Combs says they made a mistake and accidentally broke a part – but Earhart was right there to help.
“They got me another loader almost immediately,” said Combs. “They kept me in business and making money. We’ve probably been a big pain for them, but honestly it’s all about future business.”
We’re All in This Together
What dealers also need to realize is that even if they spend money on one of their contractor customers to keep him up and running, that cost will come back to him, says Combs.
“When things start getting really good again and material starts moving, and we have a lot of money in the company, guess where I’m going to buy our equipment from?” said Combs. “We’ll remember who helped us get through this.”
Combs says the relationship between contractors and dealers is a two-sided coin – contractors also have the responsibility to be champions for their dealers. Combs says he often allows his wholesale customers to drive his LiuGong loaders.
“Some of the owners of the companies come and pick up material from us, and they look over there and see LiuGong and ask what it is,” said Combs. “I tell them it’s a ‘Chinese Caterpillar’ and then I invite them to get up in there and start it.”
Combs says it’s his responsibility to promote his dealer because they are both in this together.
“To be successful you have to advocate for your dealers as well, because if your dealer can’t stay in business, then you aren’t going to stay in business,” he said. “Everyone has to work to together, especially now, to survive.”
Recently, Combs Materials had a special visitor to their mining operation: Ron Hargrave, the president of LiuGong came out to visit.
“He came down and saw us – it was the first time that we have ever had anyone of that level take the time to come down and see us,” said Combs. “I appreciate him taking time to do something like that. It shows he cares and I feel like I can give him a call anytime. That’s how relationships can work in this industry.”
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