Tell Me the Truth - Contractor Connection
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Tell Me the Truth

By G.C. Skipper

Article Date: 09-01-2010
Copyright(C) 2010 Associated Equipment Distributors. All Rights Reserved.

Straight-shooting water-sewer contractor Dan East, doesn’t want things sugar-coated from his dealers, whether it’s a sales pitch or news about his specialty parts order. For all dealers, his perspectives on the relationship provide a good reminder about what customers need from their business partners.

If you want to do business with Daniel K. East, the district manager for Reynolds Southwest, Inc., in Albuquerque, N.M., he has one word for you: honesty.
Reynolds, Inc. is a national, highly diversified construction company today that has been in business for almost 70 years. Its customer base extends to the private, municipal and industrial markets throughout the U.S. The company offers its customer sectors design and construction services for treatment plants, pump stations, water/wastewater and process pipelines, wells and groundwater source studies, sewer rehabilitation and concrete forming.
“We are fortunate,” East said. “We are a very strong organization in a weak market. We’ve been picking up work throughout the U.S. that is competitively bid and we’re doing well.”
What has helped the company do well, of course, is astute management – and solid dealer relationships play a vital role in their success. In commenting on these relationships and other topics, East confined his remarks to the Southwest market area, where he conducts his day-to-day business.
That said, East’s business philosophy rests on trust and fairness, a two-way street that runs between him and his dealers. That philosophy, he said, is the essential cornerstone of any business relationship if it is to be successful.
In fact, relationships are more important than the equipment being sold, in East’s opinion. “It’s not the product,” he said, “it’s the relationship that matters. Excavators move dirt. Scrapers move dirt. They’re all pretty much the same, but it is the good relationship with the dealer that makes you profitable, and if the dealer is taking care of me, I’ll take care of him.”
That type of partnering, especially in the construction industry, is not without its demands, which can sometimes can be a 24/7 commitment.
“I have a very strong relationship with my dealers here in the Southwest, said East, “and I don’t feel embarrassed calling them on a Sunday afternoon at 4 o’clock to tell them I need a part. And they know they can do the same with me. If I do need to call them, I know they will do whatever needs to be done. It goes both ways,” he said. “I appreciate that. Tell me what the problem is; tell me what the issues are so that I can deal with it. Don’t tell me what you think I want to hear,” he said.
“I don’t have time for that,” he continued. “If I find out that has happened,” he said, “then I’m through. I’ll go to another dealer.”
A guy who doesn’t go for sugar-coating, he expects straight talk from his dealers. “You have to be up front and fair,” he said. “Don’t up-sell when you really don’t need to up-sell.”
Speed and efficiency matter, too, naturally. “If I need a specialized part, for example, I expect the dealer to get it to me in a timely fashion,” he said. And if there’s bad news about what East needs, just serve it up straight. Being armed with raw, unsweetened facts, he said, allows him to make a decision and move forward. “I’m not always going to like what I hear, but you know what? Those are the facts and we have to deal with them. So let’s do what we can to go forward.” He emphasized, “This is a very big issue – just be truthful.”
Price Matters
Another tip for dealers: “Come in with a very competitive price. It’s a tough market, but again it’s not just the cost of equipment. That is just the beginning of the process,” he said.
He expects dealers to keep him informed of projects they know about. In other words, “They need to be very aware of the market they are dealing in...It helps to have lots of eyes looking. That’s part of the relationship and knowing your customer.”
Also, the dealer needs to come in backed by a strong service organization. This is very important, according to East, because it creates good relationships and good relationships bond. “It’s simply taking care of your customer,” he noted.
If the “Do” column on the page includes such things as honesty and fairness, competitive prices and a quality parts and service mindset, what about the “Don’t” column? East replied: “Don’t be so darn pushy. Just present your product with all the facts and faces around it. Dealers are in just as tough a market as we are; and that market is not only tough, it is technologically advancing every day. If I don’t have a comfort level with the dealer, I’ll go out and do my own investigation.”
East continued, “If you are trying to sell your product, then know your customer. Know what equipment the customer uses. Know what services he needs.” That may be more challenging than it sounds when it comes to Reynolds, East said. “We have an extremely diverse fleet and an extremely large fleet of equipment.” In other words, the homework may be difficult, but the rewards are there if you make the grade.
With good dealer relationships in place, Reynolds Southwest already has an eye on the future. Although there are no unique projects coming up for the remainder of 2010-2011, and there are no projects that require specialized equipment, the company, nevertheless, has its work cut out for it. Coming up are a couple of large plant projects and an alternative energy project that includes the design and building of the facility in the southern part of New Mexico. “We’re doing well, he said. “We have a lot of waterline projects going on right now and we have a tremendous amount of plant work.”
Watching Washington
East wears another hat in the construction industry, one with considerably greater visibility. He is the 2010 president of the National Utility Contractors Association (NUCA), an organization that frequently partners with AED on national legislative issues. In this capacity, he has been able to see beyond his own borders. While tightly tuned in to all the nuances of his own market in the Southwest, his 20-year membership – and now leadership – in NUCA has kept him focused on the proverbial big picture as it relates to national and public policy issues that are important to the water infrastructure sector.
Because of East’s thorough grasp of local and national market conditions, industry issues and opportunities, he was recently asked to address a congressional subcommittee on Capitol Hill. He paraphrases the essence of his message in his characteristically candid, and non-sugar-coated way: “If you want to get this economy going, put the money in the infrastructure.”
East reminded legislators that the United States’ infrastructure – clean water, telecommunications, the power grid – is falling apart, “right under our feet,” and he warned, “If we neglect it, we are not going to be any better than a Third World country.”
His strong words may have caused Congress to listen, but that’s only half the battle. “Getting them to understand is difficult and frustrating at times, East said. “Literally, our economy would go through the roof if federal funds were available for the infrastructure. I guess the message is too simple and too logical for them to grasp,” he added.
If adequate funding is provided, he said, “the positive consequence is huge. As the funding occurs and contractors go to work, we obviously will need equipment and materials. From that, the suppliers and distribution industries benefit – housing, restaurants, entertainment, retail – everything. And that’s just from a work side.”
Clean water studies show that for every billion dollars invested, a total of 27,000 to 30,000 new jobs are created, East explained. “[Good funding] triples our economic output and increases our household spending and increases local tax revenue.”
There are a lot of positive consequences, as well, for the government to fund these water infrastructure projects, East noted. But even with federal investment there is still a problem, namely with the banks. “Funding is tight right now. It shouldn’t be, but it is,” East said. “We have a government that is in a deficit spending mode, but the government is not necessarily getting the biggest bang for the buck.”
While East beats the drum for expansion of infrastructure programs, there are other construction industry issues that need serious attention as well, he noted. For one thing, unemployment in the industry is now at 20 percent. “This unusually high rate of unemployment is complicated further by the lack of financing for projects,” East said. “In June of this year alone, the construction industry lost 22,000 jobs. Funding is very, very important,” he added, “but, for instance, one of the primary sources for funding, the community bond market, is in turmoil. Cities and states are struggling.”
Organizations such as NUCA and AED are lobbying hard on behalf of their members for various pieces of legislation they feel will help put an end to problems plaguing the economy and the industry. East gave this overview – which is not exhaustive – of some of the major issues the two groups are actively involved with: 
  • Eliminating the cap on private activity bonds that are issued for water and wastewater projects.“These bonds could generate over $6 billion annually in this industry,” East said. “That would be an extremely low cost to the government. A $6 billion infrastructure investment would cost the federal government less than $37 million. That’s a pretty darn good investment,” he said. A bill has already passed the House, East pointed out, and, “we are working to get it through the Senate right now.”
  • Expanding Build America Bonds through 2013, which is another source for funding.
  • Pushing EPA clean drinking water programsto increase and keep funding levels up.
  • Stop the Employee Free Choice Act (EFCA) legislation.East, whose company comprises both union and nonunion personnel, said, “This legislation is not good for America.” Also known as Card Check, the worst part, according to East, is that it removes the democratic process from the trades. “If a company and the union fail to reach an agreement over an issue, the EFCA would allow the government to negotiate binding arbitration.” said East. “In effect, it allows the government to dictate terms of the contract, such as salaries, compensation, time-off, and so forth.”
  • Fighting to stop a 3 percent withholding tax, slated to go into effect next year. East said the government is trying to catch up on back taxes by withholding an additional 3 percent on contractors’ projects. “This is going to hurt all companies because it cuts into their cash flow,” said East.
  • The issue of illegal immigration.“We don’t want to see the construction industry – or any business, for that matter – act as border agents with employee applications.”
  • Monitoring the advent of Tier 4 regulations for off-road equipment.“From what I understand,” East said, “Tier-4 regulation is another burden on the private sector. As we move forward in cutting emissions, the costs are passed on, ultimately to the taxpayer. It’s my understanding that there are only a few engine manufacturers that have the resources available to meet this new requirement.” Meeting the regulations also has consequences. Engine life will decrease, East said, cost of operating the machine will increase, and possibly, he believes, engines will be less efficient.
He added, “As an industry we must be diligent with our advocacy programs to inform our elected officials so that they have the correct information before they pass laws and regulations.”

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