There's No Stopping Machine ControlBy Joanne Costin
Article Date: 08-01-2010
Copyright(C) 2010 Associated Equipment Distributors. All Rights Reserved.
There is more than one way to approach the machine control opportunity, but approach it you must.
With construction activity down, contractors are understandably reluctant to purchase new machines. Yet adoption of machine technology shows no sign of stopping, as contractors look for ways to cut costs and win jobs in a tight market. With approximately 10 percent of applicable machines currently equipped with machine control, it’s a market ripe with opportunity.
The productivity improvements with machine control are impressive. “Utilization of the equipment will at least increase by a third, the productivity by a minimum of a third or sometimes as much as half,” said Roger Croft, sales director of Lengemann, a Florida-based Topcon dealer.
Word is spreading among contractors.
“It is a contagious technology,” said George Allport Jr., vice president of Keystone Precision Instruments, a Trimble dealer serving the Northeast U.S. “In highly competitive geographic areas, that virus spreads much quicker.” Typically one or two contractors get it, forcing others into adopting the technology.
“The opportunity is broad and growing,” said Jeff Gartz, sales manager for technology products at Wagner Equipment, a Caterpillar and Trimble Dealer with locations in Colorado, New Mexico and Texas.
And Adam Gilbertson, general manager, RDO Equipment Co., the John Deere dealer based in Fargo, N.D., added that “adoption is nowhere near market saturation.”
Manufacturers are now developing systems for different industries and applications. What started with dozers, graders and excavators, is now being installed on pavers, milling machines, trimmers and roll compactors. “There will be no stopping it,” said Randy Noland, vice president of business development for Carlson Software and director of machine control.
In a 2010 survey conducted by Clear Seas Research for Site Prep magazine, 72 percent of 213 responding subscribers currently use machine control products. And among current users, 79 percent said they would purchase in the next year. Two out of five non-users said they would purchase within the next year.
On the Sidelines vs. Jumping In
Despite the growing opportunity, some dealers have remained on the sidelines while others have delved into machine control deeply.
“When you talk to some of the equipment dealers about it, it’s like a deer in the headlights,” said Croft. “I will tell you, the equipment dealers that haven’t gotten in on it are suffering.” Croft believes the successful ones have the commitment of their top management and are quoting it on every deal.
What has kept dealers from taking full advantage of this opportunity?
“I think it is the fear of the unknown,” said Johan Smet, director of marketing, Trimble, Highway and Heavy Division. “Salesmen don’t like to talk about something they are not completely comfortable with. They don’t want to go out there and talk about something if they are not 100 percent certain that there will be an organization behind them to back them up.”
Getting iron salesman to have a comfort level with selling the technology is an on-going challenge, even for dealers who have been in it for some time. “The general line salesman has a natural resistance to talk about technology,” said Gartz. “My job is to take the fear away.”
The technology dealers and suppliers say the first step for heavy equipment dealers is to accept the fact that this technology is here to stay. “They are experts in iron sales and they are kind of reluctant to spend time training their personnel on technology,” said Croft. “But their customers are demanding it and the demand is here for the duration. They have to invest in their salespeople.”
Growing the market means educating the market, and construction equipment dealers are in a great position to do that. Allport believes one of the biggest drivers of the machine control brand decision is the recommendation of the dealer, a position that is supported by Smet. “Customers are going to look for the technology and many of them will go to their equipment dealer to get advice.”
Wagner has approximately 65 salespeople available to sell technology products in the territory. “That is twice as many salespeople as all the Topcon and Leica people combined in our territory,” said Gartz. “Our opportunity to get out there and really get the product in front of these people is huge.”
Choosing the Right Approach
There are differing views on the best way to approach the business: Either get into it yourself or partner with a local technology firm (or firms) to deliver what the customer wants. The right approach may very well depend on the brands you sell and the potential technology partners in your local area.
In April 2009, after selling technology products for four years, RDO Equipment Co. formed a separate technology division, RDO Integrated Controls, and became a master distributor in Montana and Wyoming for Topcon, as well as an authorized distributor in six other states.
“We saw that this is where the market was going,” said Gilbertson. “We view ourselves as a solutions provider, and we really see this as the technology of the future.”
Gilbertson believes a heavy equipment dealer has some inherent advantages promoting machine control technology. First, the customer base is one they are already calling on, and second, dealers have equipment on hand to facilitate demonstrations.
Wagner is among 10 Caterpillar dealers nationwide that are Trimble dealers, and when they embarked upon the venture six years ago, Wagner management thought long and hard about the decision, realizing that they did not have the expertise they needed, according to Gartz. They went out and hired the necessary experience in surveying and machine control, and the move has proved to be a good one.
The company made a commitment to training its people, sending them to Trimble Boot Camp and CAT AccuGrade training. The learning continues with each new situation, problem or configuration they face. “We are learning as we go,” said Gartz.
Making a huge investment in people, training and inventory isn’t right for every dealer and others have elected to partner with local technology companies to provide customers with what they need. However, the heavy equipment iron dealer needs to make money on the deal, either through finder’s fees, or a mark-up on machine technology or other services.
“In general, I think all technology dealers are anxious and willing to work out a relationship with the iron dealers,” said Allport. “We understand that they own a lot of the relationships and unified we can be very formidable.”
Working with a technology dealer has the advantage in that the construction equipment dealer doesn’t have to purchase an inventory of expensive products. Also, by cross-promoting both dealerships, the technology company can bring customers to the iron dealer and vice versa. Lengemann regularly puts together “dine and drive” technology road shows for his equipment dealers that bring together customers of both companies.
In some areas of the country, technology dealers and certain iron dealers meet in head-to-head competition, but in Florida, Lengemann works hard to maintain relationships with all of the iron dealers. “We do it a little differently.” said Croft, “The business is so segmented that they may be your competition on one product line, but they are a collaborator on other product lines. We have never taken the attitude that you are our competition, we are not going to deal with you.”
Lengemann competes with local Caterpillar dealers on the AccuGrade products, but sells contractors paver machine control as well as GPS for their ag equipment. And if a CAT customer particularly wants a Topcon tech product on a machine instead of either the AccuGrade or Trimble products available, the CAT dealers can purchase it at wholesale.
While Trimble currently has 10 Caterpillar dealers, its preferred model is a freestanding technology dealer. Trimble is in the process of migrating its current heavy and highway dealer channel to SITECH technology dealers, selling the entire portfolio of products.
“You are not going to be successful by selling machine control technology in a vacuum,” said Smet. “The true value in the technology is that it connects with the rest of the assets on the ground and back to the office. If all you can offer is one part of the solution, you are going to need to figure out a way to make that tie seamlessly together with the rest of technology on the site.”
The other challenge Trimble has found with heavy equipment dealers who are also technology dealers, is that they are too closely associated with one machine brand of iron.
“They need to service mixed fleets, therefore they need a certain degree of independence,” explained Smet. In any case, he acknowledges the two parties need to collaborate to be successful.
Lengemann provides training to dealers and end-users, and Croft doesn’t believe in discounting it. “When we quote an equipment dealer, we quote them a price installed, discounted from the list price, and then we add on top of that the installation and training,” explained Croft. “Our biggest asset is training.”
In the 2010 study among Site Prep subscribers, nearly 46 percent of respondents cited quality of training as an area of machine control technology that needs to be improved upon. Noland believes there are a lot of people with machine control systems sitting on their shelves, because they weren’t properly trained in how to use the system, or the people within their companies who had the expertise have gone.
There’s a lot of hand-holding necessary on the first project to ensure the success of a contractor, and when something goes wrong, you had better be there to support them. “There is nothing worse than a contractor who has a negative experience with the technology,” said Allport.
Wagner has been successful in selling a three-year service agreement on its machine control products that will keep customers up and running within 24 hours, if something goes down. “They really have to have that,” said Gartz.
Regardless of whether you are working with a local supplier or selling and servicing customers, salespeople need to speak to the benefits of machine control. The technology makes such a difference that salespeople can no longer simply talk horsepower and fuel economy.
Both Croft and Gartz believe the best way to call on a customer is to bring a technology person and machine salesperson together, so that any questions about the positioning products will be answered correctly. At Wagner, technology reps are assigned to machine salespeople, and the technology rep puts the quote together. Machine salespersons are incentivized through generous commissions on technology products. “They have to understand the benefits, what the value of technology is to the end users,” said Gartz. “They don’t have to know how to set it up.”
Renting machines equipped with machine control can be a good way for end-users to test the new technology. Ordering machines that are ready to accept the technology will help increase their usage. In the future, Noland thinks rental will be an additional distribution channel for machines equipped with machine technology, as technology becomes more user-friendly. In fact, respondents to the Site Prep studies conducted in each of the past three years have reported fewer problems with installation in each successive year.
Trends in Technology
Most experts agree that more and more technology will be built into the machines, and technology companies are working with OEMS to advance this.
“2-D technology makes a lot of sense to build in, because it is a stand-alone system,” said Smet. “Where it gets more complicated is 3D technology. You need a reference system on the ground, you need a coordinate system; you need site calibration. Somebody needs to support that and set that up,” said Smet.
Experts agree that individual systems will become easier to use and install over time. “I believe we will approach mail-order machine control,” said Noland. “It will be so easy to set up that people will order it over the Internet.”
At the same time, Smet believes implementations of integrated solutions across a construction company’s connected workflows will increase in complexity, forcing dealers to step up their game. One of the improvements end-users hope to see is open data formats for sharing electronic data. Nearly half of Site Prep survey respondents cited this as an area for improvement. “I think the flexibility, portability, simplicity and a more open set of interchangeable standards are inevitable, and that’s what will grow the technology adoptions,” added Noland.
If there’s one message in all of this, it’s that machine control can’t be ignored. Dealers expect adoption rates to soar as high as 50 percent on finishing equipment. If you are not yet in the game, talk to technology suppliers and get trained. Dealers who best promote, sell and deliver all the advantages of machine control, are likely to keep customers coming back for more.
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