Learning Without Scars
As a third-generation educator, it is easy to say that teaching and training are in the blood for Ron Slee. From his beginnings as a coach, through his time at McGill University, Ron developed a foundation for the work he does today. From working within dealerships, to operating a consulting company, creating a training business and running twenty groups, Ron has been directly involved in this Industry since 1969. Ron has been known as the industry expert for years, and has brought this expertise to bear through his training programs. Today, Ron provides specialized, job function based internet based subject specific classes, job function skills assessments, as well virtual seminars and webinars. These courses are designed for manufacturers and their dealers, as well as independent businesses in the construction equipment, light industrial, on-highway, engine, and agricultural industries through Learning Without Scars (www.LearningWithoutScars.com). This platform is a continuation of the work begun by Quest, Learning Centers which was established in 1996. This training is aimed at improving dealer parts and service operations through qualified people that are knowledgeable in using operational metrics and current market and operational best practice methods.
Learning Without Scars
Ron Wilson's Insights on the Future of Machinery
What if you could unlock four decades of industry secrets from a heavy machinery veteran? Join us for an eye-opening conversation with Ron Wilson as he takes us through his 40-year journey in the heavy machinery industry. From his humble beginnings at Empire to his influential roles in launching a Komatsu dealership in California, Ron offers profound insights into the consolidation of dealerships, the competitive landscape with giants like Komatsu and Caterpillar, and the impact of corporate influences like Mitsui on U.S. operations. Gain a glimpse of the future, as Ron speculates on what the industry might look like by 2060, amidst the ongoing consolidation trends.
Explore the complex dance between mining and construction companies as we dive into dealer strategies in the face of Komatsu's strategic division of operations and Caterpillar's machine rebuild programs. Understand the intricate balance dealers must maintain between parts and service to stay profitable, and discover innovative ways they align sales and product support to enhance machinery lifecycle management. Unpack the challenges of cost-per-hour contracts and learn why maintaining high customer service standards is critical, even as the workforce shrinks.
The episode doesn't shy away from tackling tough topics like the declining market share of parts and the evolving customer purchasing behavior influenced by online shopping. Ron sheds light on the importance of effective employee evaluation and communication, drawing from his rich career experiences. With a focus on bridging the skills gap between generations, the conversation also delves into preparing for potential industry downturns and the crucial role of preserving historical knowledge for future leaders. Listen in as we discuss strategies for navigating the ever-changing heavy machinery landscape, ensuring your business remains resilient in the face of uncertainty.
Visit us at LearningWithoutScars.org for more training solutions for Equipment Dealerships - Construction, Mining, Agriculture, Cranes, Trucks and Trailers.
We provide comprehensive online learning programs for employees starting with an individualized skills assessment to a personalized employee development program designed for their skill level.
Hello and welcome to another, the Clouds Are Upside Down podcast. This is a situation where we look at things through fresh eyes and try and come to some place of providing background information and history with talented people who have been in the industry for a long time. So that's a complimentary introduction to Ron Wilson, who's not as old as I am, but he's been around a while. You can see from the color of his hair, Ron, I think. Did you retire from Empire or did you retire from somebody else?
Speaker 2:No, I retired from Empire. This is my fourth year of retirement, so I ended my career at Empire.
Speaker 1:So this is our second podcast covering background and tomorrow in this industry. The first one was with Steve Day, and Ron has listened to it and we're just going to have a conversation about the same thing. So perhaps, if you would, ron, you could go back to the beginning and in your background and bring us up to today. You're retired now, but when did you start? How did you get there? What made you come?
Speaker 2:Let's see, I started at the finished college, at uh college at asu, and it's 1980. I went to work for the cat dealer there, working night shift in the warehouse um, and I worked there for 23 years and then uh left there and went to work for a, a company in california that was starting up a kamatsu dealer. They were a cummins distributor, uh, and took the Kamatsu line and that was very exciting because starting up a dealership, which is what this was, that was very exciting to be a part of that organization. Good organization Was there for about five years. Then realized they were not going to grow much bigger because they were really a Cummins. They were not going to grow much bigger because they were really a Cummins. Had them on a pretty tight rope for one thing.
Speaker 2:And so I went to work for Rode Machinery as vice president of product support and then it was a few years later they took on the California territory and asked if I would go over and help with the transition, pulling the two together. Help with the transition, pulling the two together. Then the last probably 10 or 15 years I worked at Road in various roles, from working the data analytics for marketing side of the business, worked in the training department but also part of the role of leading a pricing team. We're establishing pricing for all the service work and, primarily, component rebuilds. So I had a lot of opportunities to do different roles within the organization, different organizations, and I really enjoyed it.
Speaker 1:Yeah, and Road had a pretty significant component rebuild group, didn't they? Yeah, they did. Yeah, the Cummins dealer that was Shanahan Equipment, right Based up in San Francisco yes, yeah, yeah, kevin Shanahan and Paul Bleeker were the two guys, the two owners.
Speaker 2:I worked with Gail Plummer he was the guy leading up the tractor side of the business. But Kevin Shanahan and Paul Bleeker, very good guys.
Speaker 1:I've been fortunate to work some good dealers and dealer principal people, that some savvy business people knew the markets and were really good at what they did. So I'm going to say 40 years, from 1980 to 2020, roughly right, yep. So go up in the helicopter and what would you say is the biggest change that you've seen in the industry.
Speaker 2:The biggest change is the. Of course we've all seen that the smaller dealers becoming fewer. Of those, very difficult to get in to become a dealer unless you're a very large organization, like Roe Machinery was owned by Mitsui. So having to work across a very large organization, the people changes, the workforce coming in and the workforce beginning to retire, customer base changing, changing. You know you get the corporate accounts, national accounts, becoming a bigger, bigger deal.
Speaker 2:But yet how to take care of the smaller uh contractor trying to come into the business and that owns a skid steer or a backhoe and and it became very, very competitive. I mean just uh. I started about 1980s when kamatsu came into the us. I remember working with with empire and you walk down this long hallway between the corporate office and the shops and uh, john whiteman at the time was had a list of the uh, some some type of japanese logos along the hallway and I don't remember what those, what those said now, but that was to remind all of us of the competitive nature that kamatsu was bringing into the marketplace and that so really saw the competitive change within uh empire with john uh and then later with jeff coming on, jeff's very, very competitive, um, and you know jeff's, all in his heart is his. His heart is all there, well.
Speaker 1:I think in 1980, caterpillar had 50 dealers in the US. They had 10 dealers in Canada. Today in Canada there's two. Any idea how many Caterpillar dealers there are in the States today? No, I do not. I've heard rumbles that they're heading towards 15. Wow, I don't know that that's true or false, but clearly the number of dealers has shrunk. One of the other things that you mentioned, mitsui, was a trading company, one of the larger corporations in the world. How much did they interfere with the operations in the US, or did they let you have your own head?
Speaker 2:MARK BLYTH. No, the Mitsui structure. The CEO was from Japan, the CFO was from Japan and the rest of the organization, for the most part, was from the US. So we had the president and the vice presidents. They were folks from the industry.
Speaker 1:Was the president, then Mike Bose.
Speaker 2:No, this is after Mike Bowes. This was Chuck. Paul had just come on board. I got you Yep, he had just come on board and I knew Chuck. I'd worked with Chuck at Empire, so I knew him pretty well.
Speaker 1:Yeah, he's a pretty good guy. Yeah, so here we are now in, I'm going to say 2020. What do you think?
Speaker 2:it's going to look like in 2060? Well, I think, like you said, I think that their dealerships will continue to get smaller, the first number of dealers individual dealers getting much bigger. I think Empire is very lucky, very fortunate, because they got into the mining market. I was there when they sold the first 789 truck to the Cypress Corporation in Tucson. I didn't know what a haul truck was At that time. The director of parts brought me a parts book of a 789. He said order the inventory of spare parts for this.
Speaker 2:I didn't know what truck to even look like and I'm standing in the shop floor of Cypress and the maintenance manager said Empire knows tractors, they know dozers, they're all trucks. You guys never make it. And of course, a few years later, that's pretty much the cat truck is pretty much dominant in the Arizona mining market now. So that allowed Empire Market to really grow. If you remove the mining business from Empire and then visualize what it would look like it would be a totally different animal Then the mining has really provided the chance to expand services and rebuild component shops and hydraulic shops and things that would have been very typical to do if it had not been for the mining side of business.
Speaker 1:Was Rod Bull at Komatsu at the time you retired.
Speaker 2:I don't recognize that name.
Speaker 1:Okay, he's now the president of Komatsu Mining.
Speaker 2:Okay, yeah, I don't think so.
Speaker 1:Okay, and he's a former cat guy out of cat mining. He and another fellow, michael McClanahan, came over. They changed the pension retirement compensation programs at Caterpillar and a whole bunch of younger guys left and went elsewhere. Rod's a pretty talented guy. My guess is he's destined for bigger places. But Comatose split the company into two pieces mining and construction. Can you see?
Speaker 2:Caterpillar doing that? David ROSENBERG? I would doubt it because of the integration of everything's all intertwined. Now, do have uh they did have the mining dealer uh requirements and non-none mining. You know they had things to look at. If you're going to be a mining dealer, you had to have these kind of capabilities, right. So I do think, uh, but hopefully they don't do that. I think that's really a and actually the road. Now, if I remember, in arizona it's now split into two. There's a mining which is Komatsu side and their road is a non-mining side.
Speaker 1:I think that's what they're doing all across North America. Now it might be they take it all around the world. P&h with their large shovels had, I think, a sector, a division, called PartsPro, so they did their own distribution. In other words, the dealers were owned by, operated by, p&h. So when Komatsu came in, it's an interesting situation where Komatsu and OEMs in general make between 40% and 50% gross market on parts when they sell to their dealers. With PMH, they were making the money at the dealer level and the OEM level together and as a result of that, their customer price was significantly lowered. In other words, they'd taken a layer out of the supply chain and passed it back to the customer. Do you think that's sustainable?
Speaker 2:Well, I don't know that. I know for the dealer their parts side. Well, parts and service, you know the absorption rate thing, I mean, those are so critical for the dealer to survive, yep. So I think messing with that equation in any way whatsoever would make makes it much more difficult for the dealers to survive and prosper, and that's one thing. So working at Shanahan, we're looking at bringing on our very first lube truck.
Speaker 1:Yep.
Speaker 2:And so put the information together and it's pretty hard to justify the return on investment of a lube truck strictly on the sale of oil, and oil changes the labor side. And the owners, kevin and Paul said noul said no, no, that's not how we do that here. Okay, we'll look at the total parts and service. What does that bring to the company overall? And we'll base the return on investment. And parts will pay for part of that loop truck as well, because they'll get the revenue too. So, uh, you know. So it's interesting how some dealers will take and manage the business a little bit different. But uh, but me impacting the balance of that parts or labor side can be very tough for a dealer to survive on that.
Speaker 1:Especially in the construction side, where one of the things that used to be interesting to me sales per employee and productivity has always been something I've been concerned with. And I'm going to say, over the last 20 years, plus or minus, dealers have shrunk the number of people. I say they put profit over people, which means customer service has eroded. Customer service has eroded and I'm going to say we have three different businesses within product support One's the maintenance business, one's the rebuild business and one's the traditional parts and service, repair and maintenance business. And Shanahan was one of the few that recognized that. The maintenance business. You got to look at both parts and service together. Traditionally we've had every department stand on their own. Parts department is required to do this in absorption and this in sales, and same thing with service, et cetera. And then you were involved, I'm sure, with the caterpillar machine rebuild program, and that changed the game as well, didn't it?
Speaker 2:it did and and kamatsu had that as well, but the so in road, uh, but they had not when I there had not rebuilt any machines. So we took they've got. Komatsu has some great spreadsheets or whatever it was for a machine rebuild. And Albuquerque had a really nice road machinery store, corporate office at one time Yep Big shop. So they actually did a rebuild of a Komatsu dozer, which was the first time in many, many, many years that anyone from Rode had ever done that. So but that, yeah, having the shop to do those kinds of rebuilds, you know it's great doing the lube service, but you got to be able to rebuild the machines as well.
Speaker 1:Yeah, and they took it right down to the frame, didn't they?
Speaker 2:Right down to the frame.
Speaker 1:yeah, and gave it a new serial number.
Speaker 2:Yeah, kamasai, the same thing as the CAT did. I don't remember the Kamasu dealers I visited. I don't remember many of them ever doing that. That was fairly common with us. Most CAT dealers would do that. But Empire was big and that was a great program. They marketed very well and they included the account managers, sales folks, into the process so that it wasn't you don't want to have the sales guy trying to sell the machine and product support trying to rebuild the machine. They've got to be in the same boat. So Empire developed around round to where it would work with the salespeople, compensation-wise as well with the PSSR.
Speaker 1:You remember cost per hour? Yes, when customers would buy a machine on an hourly rate, 5,000 hours, at 20 bucks an hour. And you get to a certain point and we'll give you another machine.
Speaker 2:Yeah, yeah, and that's kind of difficult.
Speaker 2:The marketplace puts a lot of risk on the dealer.
Speaker 2:I mean, when you're taking on the responsibility and the life of the component and the cost per hour and trying to average in at the beginning of the of the machine's life what it's going to cost in five years or whatever it is that, what the break-even point is, uh, that's just a road.
Speaker 2:Uh, struggle with that because they had that on their haul trucks. Uh, empire, struggled with that when they first got on board as well, and uh, so that that's um and cat had developed a program I forgot what it was called now, but it was a program to certify, kind of a certification for the customer as well as for the dealership. And if you are a, under the agreement you had to make sure the haul profile was correct and the payload was within this range, plus or minus, whatever it was and opened the book so we could see that. So that I really the assurance program I believe Cat called it was really where the Cat and the dealer was trying to work with a client to what they call work together, because it you know, especially the mining side, they really had to work together in order to get the availability and the productivity there.
Speaker 1:Well, mining is all about availability, isn't it? Machine availability. The other thing that was interesting that mining today is probably. 10 companies worldwide have maybe 80%, 90% of the mining business. I think a lot of the mines in Arizona and New Mexico were owned out of Mexico. It's a really interesting marketplace and there's so much money in every respect the customer, rio Tinto and all of the rest of them. There's Valet and out of the South America, britain's got a few, australia's got a few, and then Caterpillar had a special program I think it's still out there that they would give rebates back to these customers based on and it was a small number of customers, not just miners, others as well where, based on their performance criteria, the dealer would give them back a rebate based on how much they purchased. Were you ever involved in that?
Speaker 2:Yeah, a little bit, and one of the challenges with that. The concept is really good but usually those rebates would go back to the corporate office side of it and the local operation, the maintenance manager, the folks on site. They didn't have any. There's nothing there for them. So that was a little bit of a challenge in some cases because there's no incentive for them. They didn't get a bonus on it, they were not part of it. It was more applied towards future purchases or whatever it was. So, yeah, it was a great concept but it wasn't to me, wasn't implemented down into the shop floor side, on the mining side yeah, I agree with you.
Speaker 1:I was involved with that at finning and I was basically running the um parts business and I would go out once a year and give a check of the rebate to the mine manager and the mine manager would tell them operations people buy from Finning and the operations people weren't particularly happy about that. So, just like you say, it drove a wedge between and, as a result of that, unionization came in pretty heavily in mining and at Finning we weren't unionized. I don't think you were at Empire either, were you no? And it was hard like hell to get into the repair business. We finally were able to get in there on the basis that we'd come in once a year and give a certification, a machine inspection to basically give. It's almost like a kid at school. That graded the mine technicians and it exposed them, because they don't have the training that the Caterpillar people have, they don't stay current with the equipment, they don't have the documentation and as a result of that we were able to start getting into some guaranteed cost per hour for components. So we'll rebuild an engine, give it out to you, you just install it, but it creates friction.
Speaker 1:I like the incentive program. I think the concept's great, but I'd like to see it better distributed, more logically. Let me call it so same thing for employees at dealerships. Incentive programs are very difficult, in my view, to administer. I want to give them rewards for performance. I want to be able to define and describe the performance and get agreement with the employee that that's what the performance really is. But then corporate screws around with it.
Speaker 2:Yeah.
Speaker 1:You know, one of the things that bothers me is this profit over people thing. Gross domestic product has become a real political football, whether it's here or Europe or anywhere else in the world, and GDP is a function of goods and service produced in a country divided by the workforce. So if you want to fix the number, if you want the number to go up, you just reduce the number of people, and in America we get a little bit misled because the percentage of the working age population that actually works is shrinking what they call a participation rate, and that's partly what's going to bother me over the next 10, 20, 30 years. I think we're moving from a transaction world a part sale, a labor hour, a machine, a rental to a data world where we're going to be much more involved in predicting when that next transaction should take place and how come we didn't get it. Did you experience that with either Road or Empire or anybody along the way?
Speaker 2:Yeah, probably more with. Empire was really good on tracking participation and sales deals, yeah, which to me was a great measure and there's good things in it. And the one thing about Empire is they were really good about balancing that. That wasn't the only thing that drove the number. I mean Cat would come in, for example, or it could be Kamasi or John Deere would come in, and this is how you do this. But Empire won because, as good of a dealer as they were, cat was a little more flexible and understanding probably than some others.
Speaker 2:But Empire did a good job of balancing the partition rate and why and the lost sales and what happened and doing the analysis on it.
Speaker 2:And to me, what I saw was really how they managed was very well, because if a deal was lost, salesman lost a deal. He wasn't so much on the fire, it was let's see what happened, because chances are there may have been something else that lost the deal than the salesman was responsible for, so it could have been parts that showed up late or something else that prevented a rebuild on something that the salesman really didn't have any role in that except maybe to manage and overcome the challenge. So, um, but I think that empire is very good about balancing the benchmarks between the dealer and capped and uh, but they were always pushing the limit, you know, and the dealers are kind of going to squeeze between what, what, the, what the customer wants and what the dealer I mean what the, uh, what the oem wants. They're right kind of in that middle of the parts pricing or machine sales or availability, whatever it is. The dealer's in a very tough spot of balancing that pressure.
Speaker 1:Yeah, they really are. And the other thing about the equipment sales side is again, as an outside observer for a long time, and you probably have the same view Caterpillar, comenzu, john Deere and Volvo to me throw Hitachi in there as well are the five largest large equipment dealer networks, and each of them has lost market share over your work life and mine big time. Did you see that?
Speaker 2:at empire no, the empire that that uh uh market share was very important to them. They knew and it was kind of like you know, if you drive down the road and you see a job along the freeway and what I still do today is, wherever I am in the country, drive down the road and how many cap machines are as a total population kind of represents what their market share is. So no, they were all over that market share piece.
Speaker 1:They're very protective of their pins and parts sales percentage, the machine market share, we get really very definitive. I'm going to say four-digit, four-decimal place market share numbers on equipment, association Equipment Manufacturers, the OEM. They do all of these tests. I don't see a lot of good market share calculations for labor or parts.
Speaker 2:Yeah, no.
Speaker 1:Do you?
Speaker 2:No, no, now the information's there. Well, I guess market share and no, really there really isn't actually. You know they can measure, there's some measurements there, but not enough. That really drives too much of anything. You know we don't really worry about.
Speaker 2:In part did worried a lot about the competition. That was one of my roles on the in the marketing side is every month I did a a competitive research on on the competitors on the service side and uh, you know we were down. We're data analytics wise. We could pull the parts list that the competitor bought. I was tracking road because road did a lot of cat rebuild components so, but I could track what kind of what kind of parts they bought and from there could determine what kind of level rebuilds they were doing. Uh, so we did a lot of analysis every month I would do a report and get it back to the product support side on. We looks like we lost an engine deal here because of what this competitor bought and what size it was, and sometimes we'd like they would even give us a serial number because they needed to buy the parts anyway.
Speaker 1:So so taking that place and going forward. We used to sell parts to all of the machine owners and I'm going to go back. I started in 1969. And I was able to get a report. That was in 1965 was the last time Caterpillar did this, but every five years they personally interviewed every machine owner in the world and then in 1970, they changed it because that was a rather expensive proposition. Again, profit over people. And Ray Paul Hill, who's an associate, lives in North Carolina today, retired, really talented guy. He drove that survey. But I remember seeing survey data based on that face-to-face stuff where 83% was the number that Caterpillar said their market share was on parts to Caterpillar machines.
Speaker 1:I'm at a Caterpillar conference in Mississippi in the early 2000s and the man who drove United States Commercial Division, the US side of the business was in the crowd. There was a couple of hundred people and I don't know if you've seen me in a classroom. I have a lavalier and a mic and I wander around amongst the crowd like an idiot because I'm an old time teacher and I went up him and I put the microphone in his face. It wasn't particularly good, it was kind of rude. I said I'm going to ask a question and you don't need to answer it because it might be difficult. I said when I started, the parts market share was 83%. Do you know what it is today? He didn't hesitate, he said it's 38.3% and I thanked him.
Speaker 1:So let's call that 2010, just to put a number on it, and let's go back to 1970. So that's 40 years, from 83% to 38. Let me change that and make it 80 to 40. And I say to the Caterpillar dealers today the same thing's true for Comatose, the same thing's true for Deere, et cetera. I say to the Caterpillar family well, don't worry about that, in another 40 years you're still going to have 10% of the marketplace. So it should be okay, or 20%, whatever the hell the number is. If you take that much of the parts business away, kind of like the electric car business, the dealer can't survive. You agree with?
Speaker 2:that Absolutely yeah, yes, and so we get to tracking by client, which you might call them clients, not customers and there's a reason for that. We get tracking by client and we would identify which of our clients are not doing engine rebuilds with us, or transmission rebuilds, or hydraulics or welding. And why not? Because for the most part, you just look at, well, total volume of customer and you pick out, maybe lube services, but if you really get into digging into why and parts of the business they won't do business with you. For example, customers would rebuild their own engines or have road rebuild or somebody else, but they typically would not do transmissions themselves.
Speaker 2:Yeah, a little more concern the technicality of those, um so, or welding, or hydraulic cylinders. So if you start drilling into which of this the business are you not getting and then modify your programs to figure out, well, what's wrong here, what's happening here, and is it their marketing strategy or is there something else? And then go back after that business. But that's where the competitors would come in. They would come in and pick up the and is it their marketing strategy or is there something else? And then go back after that business, but that's where the competitors would come in. They would come in and pick up the hydraulic business. We'll just do hydraulic cylinders for a while and then they get into the pumps and motors and next thing you know they're into something else. So yeah, but I don't think a lot of the dealers are drilling down far enough to really figure out where are we losing that business and why, specifically for that type of component type.
Speaker 1:Yeah, Caterpillar, a number of years ago, made the statement that the dealers were leaving too much of the parts and service business to chance. It wasn't a driven program, problematic market coverage, and they did a really nice job with commodity codes identifying families of parts. They did a really nice job with lifecycle management how long is the transmission supposed to last? Hydraulic pump blah, blah, blah. What you did was ahead of the curve, finding not just what they bought but what they didn't buy. That was important. Yeah, that's almost more important.
Speaker 1:And then I like to touch all of those customers and say, okay, and they're there to help you. So where did you go? And they'll tell you. And then my next question used to be well, what is it you like about doing business with them? And whatever the hell they said, then we weren't doing it and that's why we lost the business. If you look at the electric car business, I think the number of dealers that you're going to see going forward is going to shrink even more in the automotive side. Yeah, and that's because of parts market share and I'm going to translate that over to Amazon has changed people's buying habits.
Speaker 2:Yeah.
Speaker 1:They're today the largest retailer in the world. You can buy Caterpillar parts there, John Deere parts there, Bobcat parts there, and a lot of our customers now are shopping online. And what percentage of the dealer business the Caterpillar, Camacho, Deere, Volvo, Hitachi business is conducted online? It's a tiny amount. Is it because the dealers don't want to change or their systems aren't good enough for that? What do you think the cause is of that? Is it attitudinally or is it technology?
Speaker 2:I think probably some of both, and some on the customer side as well, because some of the uh now this has been a while since I've been there on the dealer side but the um, the old school customers, you know they're used to having that paper parts book and and uh and then calling the parts line and it's busy. Or they get on the line, you get somebody on the phone you're talking to and they're trying to take care of the customer in front of them, kind of thing, and so they're used to. They're used to that. But but then we started seeing the customer buying the online, the cat online, or come out, come out as well, online parts ordering. And then on the cat side at some of the stores they set up a a customer will call pickup place. You just go pick it up and leave. You don't even come in the door.
Speaker 1:Yep.
Speaker 2:So a customer actually order something online and go pick it up and never see the parts guy. And you know, first we thought, well, there's going to be going to lose parts and but we found very there. I can't think of any time that they're worried about parts being stolen by another customer, that we may, the warehouse person may put the wrong, the right part in the wrong customer bin. But those customers I brought them back. Hey, this is an hour, this is XYZ Construction Company and I thought, bring them back that relationship between the contractors. But it was possible for them to actually buy a part and pick it up and we'll call and they never actually physically go into the store.
Speaker 2:And then, of course, delivery services. The dealer is starting to do deliveries, um, and there's kind of a disadvantage with that. I was riding with a parts person and we're going along their route and we pulled on this customer shop area and we're stepping over hydraulic cylinders cores they're going to be rebuilt by a competitor and we're delivering going around them to deliver these parts. Uh, and the thought was, well, if we can train this parts delivery person, hey, can I take these with me? And are we know something to on the delivery side to generate some um sales opportunities, and recognizing there's a sales opportunity could increase the part sales too. There are a lot of disconnects between the employees how to use technology. We make it easier but we don't make it better.
Speaker 1:That's a good way of saying it. I say a lot of our systems have just gone from paper to glass, yeah, but we've left the method, the procedure, the system pretty much the same. You know, a customer calls in to the parts department. I used to tease that. You know what's the first question you ask the customer and essentially the answer that came back to me is who the hell are? You Give me your customer name first and I say to them well, why the heck is that important? Well, we want to have a different pricing structure for them.
Speaker 1:Well, wait a second. What do you think the customer's wanting when they call in? What's the questions they want answered? And I say it's have you got it? How much is it and how long do I have to wait to get it? And I don't know that. We've adapted that way and today, with the internet, you can dan nearby any part for any machine from the people that made the part, not the OEM, who's a middleman. They're an assembler of machines. They don't make. Caterpillar doesn't make very many parts, neither does Komatsu or Deere.
Speaker 2:Anybody Can you imagine how big those factories would be. Oh yeah.
Speaker 1:So younger generations? I don't. We're not young anymore, ron, as we're both going to admit, but the guys that are 30 years old and down in this business, they're going to go on the internet as their first option. They can find out how to repair something, they can find out what the life is of that, they can track when the next maintenance service should be, and they're acting on it, yeah.
Speaker 2:Did you use drop boxes? Yeah, use drop boxes was real big, so that was an. I implemented that on the on the road machinery side as well. So I drop box and in that drop box it's if it's freeway job, there may be multiple customers parts in that drop box and so, yeah, that was a, that was a, definitely a convenience. Uh, we also used the implemented the empty shopping cart. So if a, if a customer went online and clicked a bunch of parts and they never bought them, then okay, then he's price and there's doing himself, but he's not buying parts from us, he's just checking price or he's going to give the list to a competitor who's going to wind up. Uh, or they may buy the parts and then give them to the competitor to do the rebuild. But we use the empty shopping cart as part of our competitive analysis as well.
Speaker 1:Yeah, with technology it used to be HTML and then it went to XML so I can track how long you cursor stayed where on the screen. So I'd know who looked last night at what. Did they check availability, Did they check price, Did they buy? And the next morning, if they didn't buy, I'd call them say I noticed you. Look at this. Did you find a source? Because I can help you. I've got it on hand now and it changed the whole dynamic. But there are not very many dealers that do that.
Speaker 2:No, no. And then that takes people a little bit of people. It's more of the data crunching part of it. But again, some of these things we're talking about cutting headcount. They're trying to get down to the headcount of where they think it needs to be, but these other roles can really increase the revenue and provide increased market share. So a lot of the sum dealers just don't understand that part of it.
Speaker 1:The other thing that happens, I think, ron, is you and I both were involved in product training schools back at Factors, the works and wares of undercarriage, how filters work, bearings, et cetera, et cetera, the part sales kit for Caterpillar, defining and describing all that stuff. The internet can give that to anybody anywhere now and I don't know that. That profit over people thing comes back to the headcount thing that you were mentioning. I think the relationship that we've got with customers is eroding and for some time we've had the situation where loyalty in America everybody kind of says this loyalty is no longer an issue and people aren't loyal anymore. I think we forced that and people aren't loyal anymore.
Speaker 2:I think we forced that. We've created that, yeah yeah, we sure added to it. If we didn't create it, we sure added to it. That was one of the things when Jeff Whiteman came on with the leading empire separating the client versus customer is that if you go to the grocery store, you're a customer, you're picking up whatever produce you want, Whereas if you're a client it's more like going to your accountant or to your doctor. Is that you're there asking questions and and.
Speaker 2:But not all customers want that. Some want to be a client and they want your input, they want your suggestions, and others may start off as a customer and you may develop them into a client. But that was, I think, a very key difference when I rode versus Empire is that that client view was very, very important within the dealership and I think those customers recognize that they are a client. They're not just a customer. Not all wanted to be the client. Some wanted to be I'll just know, I'll call you when I need you, which is fine. That there may become a point or time when you can convert them to a client type relationship.
Speaker 1:That goes back to the old fashioned market segmentation, doesn't it? Yeah, the small, medium, large fleet, abcd buyers, 80-20, whatever the different rules are. And that goes back to Edward Deming and Duran in Japan with the continuous quality improvement deal. Employee development is also something that's been let go. Employee development is also something that's been let go? I don't. I don't. Too many companies, I think, look at employees like tools in a toolbox and if, if the need changes, they'll replace the tool, they let the employee go and bring in a new one.
Speaker 2:They don't train them. Yeah, the employee that. So we're, we're in a, we're like there's five generations working in the workforce today and that's just that's really unbelievable, isn't it?
Speaker 2:It really is and I'm looking at oh my gosh, I'm part of the older generation now, so I'm at the end of it, but what I've seen is that there are four key pieces of training on the employees. And that's the technical side. Whether they be an accountant or whether they be a part salesperson or a technician, there's a technical part of their job that they need to be trained and developed on. There's the people skills of working across other departments and peoples within the department. There's also a personal training on you know how do you behave at work, and it's surprising we have to teach those things, but the people skills of working with our coworkers is so important. And then there's a safety side.
Speaker 2:You know, one thing I learned when I managed field service for a while is that I was always talking about manage your field service truck as if it's your own. The problem is, I had the chance of riding in an employee's pickup truck one time and it was a disaster. Yeah, so that managing it was your own didn't mean anything to that individual, because their personal how they manage their personal vehicle was not what we wanted. So learning how to adapt from someone's how they do things in real life, or the personal skills or managing an asset, or you it that you have to get those in line with the corporate structure yeah, yeah, and that you're absolutely right.
Speaker 1:I like that four-step thing. One's the technical side of the job, what's the interpersonal relationship with other departments side of the job, what's the safety and and tidiness, etc. Part of part of the job and what's the personal motivation to do it, and it's all you know. That takes me back to a simple question Did you do performance reviews of employees?
Speaker 2:Yes, absolutely.
Speaker 1:Did you ever get trained on how to do them?
Speaker 2:Yes, now, probably not as thorough as we should have been, but I went through one of my change roles at Empire. One of my responsibilities when I took the new role was that I have a layoff, and one of my responsibilities when I took the new role is that they're going to have a layoff. And I was given direction okay, you need to let go 60 people. And so when I pulled all the, so of course I asked the managers you know what's your list? And I got the list. Well, I pulled all the performance reviews for all those people and, oh, my goodness, I was surprised that they all walked on. Well, not them, but walked on water and what you're? You're saying this person should be let go, what I don't.
Speaker 2:So we had to really get back and begin training on how do you do assessments and evaluations and and um, yeah, so most it's. It's easier not to do them effectively. Just get done. And I think what happens a lot of companies? They do them at the end of the year. So they all have been done at the end of the year. So you, they all have to be done at the end of the year. So you've got this crunch time, along with budgets you've got to get. All the reviews have to be done, and instead of planning them out during the year and getting them done, they do this at the end of year crunch time, and so we just kind of do a very poor job in some cases doing the evaluations.
Speaker 1:In other words, they're checking off a box.
Speaker 2:Yeah.
Speaker 1:It's part of my job. Click. I did the performance review.
Speaker 2:Yeah, and they don't want to have that difficult discussion I mean, it is having a difficult discussion with someone that's not performing well over something specific and so, I think, training them on how to have that discussion and have it early enough during the year, closer to when the event happens that they can recognize oh yeah, I could have done that a little bit different, closer to when the event happens they can recognize oh yeah, I could have done that a little bit different.
Speaker 1:I've always held the position that the employee is the first one to know when they're not doing the job. Do you subscribe to that?
Speaker 2:Yes, absolutely so, as long as the standard is set. Again, if I talk to the employee and he got into his personal pickup truck and it was a mess, an employee that's personal life is not a good space. He thinks he may be doing fine within the work environment and so as long as the standard has been set, that he's not all like that. But some know, yeah, I kind of messed that up. And then there's some they don't know They've got to be, and I think the new, new generation, especially now with the folks that are getting the into the workforce, that were out during covid, you know, those that were juniors or seniors or freshmen or sophomores in high school that went to school, finished high school at home then goes into the workplace. You know they really have not had the opportunity to develop those skills yet and the employer has got to teach those and we kind of think we shouldn't have to but that, yeah, we kind of do.
Speaker 1:Yeah, it's really. You know, I used to tell people I've been a consultant most of my work life in this industry, so 45 years as a consultant and 13 years as an employee and I get to the point that the employee knows. I just bring it to their attention. But it's critical that we have really precise job descriptions, really precise performance standards and that we're able to communicate that, one of the things that's really remarkable to me.
Speaker 1:Statistics in America say that 90% of companies in America fail to achieve their strategy on an annual basis and it's surveyed every year and it doesn't vary much plus or minus two or three points. And the follow-up question is well, why do you think that's true? And you ask the employees in the company what their strategy is and 90% of them can't tell you. It's purely communications, which is nuts. So with the, okay.
Speaker 1:So let me circle backwards where you said okay, we do these reviews once a year. I want to do them every damn day. I want to be out with the employees that I work with my team, sort of deal. I'm not the boss, I'm a co-worker, I'm a partner, I'm here to make you better. But that means I've got to point out when you're not doing it right and I got to have an ability to do that such that you don't think I'm a jerk, I don't make you look like a jerk, the whole world doesn't know about it. It's you and me privately somewhere saying okay, ron, this you know we had a problem doing this yesterday and it's got to be close enough to the event, kind of like training a dog. That's a bad analogy because they're people, but I think you know what I mean. Yeah, I suspect that's the way you did things yourself, wasn't it?
Speaker 2:Well, yeah, one of the things getting into the leadership role, I wanted to make sure that the employees on the shop floor and field service knew who I was and I knew them. So it was not unusual for me to ride in a pickup truck in the middle of the night on a guy that's R9 at transmission, or going up one of the mine sites at two o'clock in the morning and talk with the technician there in the shop the Empire technician there in the shop. But I really wanted them to have the opportunity, whether they want to share something or don't, and then if there's a challenge going on, I can support that supervisor as well on hey, how's this going, and not get in their way. But I'm there to support both the lead person or manager, supervisor and the employee to kind of. This is why this is important to us. So and I don't think managers do that much it's, you know, wandering by, managed, by wandering around. You know that is being seen, being visible.
Speaker 1:Yeah, patrick Lencioni is an author that I recommend to everybody. He writes very simple to understand books I call them fables and they're small. They're 100 to 150 pages, small format, easy to read, and he has. One of them is the three signs of a miserable job, and you mentioned one characteristic right away you wanted them to get to know you and you to get to know them. The first character you know. First sign of a miserable job is anonymity. The employee doesn't, the company doesn't know who the employee is. They married, they got children? Are they in school? You know what are they, who are they Then? You know so, anonymity. Irrelevance the employee doesn't know where their job fits in the overall organization and structure. And finally, a word he created called immeasurability, so that at the end of the day, a technician has a really big advantage At the end of the day.
Speaker 1:They know if they did a good job or not. Today, they know how many units were kicked out. We can't do that in the office as well, right?
Speaker 2:Yep.
Speaker 1:And I think we missed the boat there. I think we're today. I think one of the biggest challenges we're going to have going forward is finding skilled people. I don't think the education community is delivering what they're supposed to, and if you listen to the current discussions politically in America about the Department of Education, we spend a trillion dollars and we score 40th out of 40 countries in performance and reading, writing and arithmetic I mean that's ridiculous Ron.
Speaker 2:Yes, yes, which is that you know the people skills, the technical skills, the safety skills and team building skills. We don't want to do it, but we really need to be successful. We're going to have to.
Speaker 1:Yeah, yeah, I agree with you 100%. The other thing is today. So let me draw a line and call it 45. So employees from 20 to the age of 45 and employees from the age of 45 to 70 have completely different backgrounds and bring to their work a completely different skill set. The people that are 45 and down, they know how to manage from the office. They can't do the job, they don't know how to do the job and they really don't want to do the job. And schools are kind of teaching universities, particularly, are kind of teaching them that way. Do you see that as well?
Speaker 2:Yeah, there is, and there's several places in the roles I had. I'm not a technician, never was a technician but put into positions to manage service operations. I was very fortunate that I had the strong technical people around me that I didn't you know. My job wasn't to troubleshoot and how well they did troubleshooting. My job wasn't to troubleshoot and how well they did troubleshooting. My job was to make sure we support them and taking care of them from the office perspective, and so I was very fortunate when I was placed into a role. To restructure. Do something different is to bring my skill set in for that, but have a strong technical balance. That helped me with those kind of decisions for the technicians out in the field.
Speaker 1:I don't see that with the current, the 45 down generations, do you?
Speaker 2:No, no, because I think the technical side is that's going away as well. So you know, I had people work for me that had 20, 30 years experience as technicians, so I'm very, very fortunate. Otherwise, it would have been a very difficult role for me to help manage a service department, for example, if it was just me by myself and I didn't trust and rely on those people with the skills of the technicians.
Speaker 1:I remember early in my career I got involved in the service department. I put overalls on and went out on the floor and after a couple of weeks the guy said why don't you go back to the office because you're screwing too many things up here.
Speaker 1:But I was very lucky, ron. I was put into places as to fix problems, find problems to find solutions and then implement them. Fix problems, find problems to find solutions and then implement them. And we had ordering stations on the shop floor, I'm going to say in 1971 or 72, where the technician would walk from his bay to an ordering station and it might have been 20 feet and we had three ladies who had really good typing skills and it's not a sexist thing, but part of it was to clean up the language and the communication. The guys would pick up the phone, it would ring automatically in the parts department, they would give quantity, part number, quantity part number, work order etc. Their keyboard skills were fast and in those ordering stations in those days we had microfiche readers. Remember those things in the paper books and all the rest of this garbage. You know we're going back a long way here today. If that was today and I was out there, I'd have a terminal in every damn bay. Every technician would have his own computer yep, or an ipad or something.
Speaker 2:Don't know how to use it. So, uh, instead of instead of not allowing that kind of technology in the bay, they'll use it. There's parameters around that. We had to always worry about the technician not exactly knowing how to do this. They'll YouTube it. Well, we don't want that. You've got to be careful with the stuff on the YouTube thing. But how to adapt the technology for that generation that's using it into a manner that meets the business needs and practices?
Speaker 1:Yeah, one of the things that's interesting today, I think the technicians are some of the smartest people we have in the dealership. Being a technician is an extremely complex, highly technical job today and those guys are, you know, it's kind of like they're the surgeons maintenance is. I'm going to say, is your your primary care physician? You go in once a year and you get the blood pressure and the blood work and all the rest of that stuff and they, you know you're okay or not and then, if aren't, they direct you to a specialist on one side or the other, our technicians on the floor. I subscribe to the theory that customer calls in or brings in a machine and they've got a complaint and they tell us what the complaint is, but I want to inspect the machine to be sure that that complaint is the cause, not a symptom. I don't think enough dealers do that.
Speaker 2:No, no, no.
Speaker 2:Yeah, you can't hardly get that done on your own personal vehicle. Now take it to a shop. Yeah, that's kind of missing now is taking it to the next step, and there may be something else that may be the real cause. But, by the way, if I just fix that when you take it back, that this other part's going to fall off. I mean it's uh. But looking beyond is just uh and we're saying we're seeing competitors offering things.
Speaker 2:I took my car I usually usually try and use a dealership because I want to support the dealer as well and I was having a challenge with the, the dealer I was going to, so I took it to this private shop and I get so much better service. I mean, they washed my vehicle. When it's over with uh. The lady did the, plugged in and got the diagnostics. I had a short on an injector line, the number one cylinder, troubleshot that and of course didn't know what the root cause was. But we knew what the issue was and followed up on the phone calls.
Speaker 2:Um, so even dealers have got to realize the competitors are getting better and we we have to realize and you know, if you take my pickup to this, this privately owned small shop and and uh, the least, once you wait a few minutes, you were having your pickup washed. We'll be back here in just a second. That's going above and beyond that, you think, but that can happen at a dealership as well. The competitor could be on much better service. So you have to be aware of what's going on.
Speaker 1:Yeah, it's really, really funny. We all deal with personal experiences as reference points. And I bought a used Cadillac one year in the desert that the owner had had of the dealership, so it had every toy known to man heads up in the windshield. And I'm talking 20 years ago, maybe more, and I went in. I traveled with my work, as you know. So whenever I went to a dealership, my wife and I would go together and a maintenance service is typically an hour or two, so we would go and have coffee and talk with each other and do that kind of stuff.
Speaker 1:And one particular instance I'm an hour and a half in, I go in and you know how's it going, and the guy actually said to me well, we haven't started yet. I said, well, it's supposed to be finished in 30 minutes. What do you mean? You haven't started yet? Well, we ran into a problem On my car no, on somebody else's car. So I paid the price for somebody else's problem that you're solving and I said well, how much longer do you think it's going to be? Well, I'll get the boss involved. So I went back and I sat down. 30 minutes later they came out and said your car is ready. So I went to pay and the car dealers you've got to pay before you take your vehicle. In our world it goes to an account which is, in my mind, all wrong. So I went and I said let me see the work order.
Speaker 1:And I was looking for inspections, I was looking to see what they found, what they did, and I said can I take this with me to the woman that I was going to pay? I want to go talk to the boss. So I go back there and I said what'd you do? And he started hammering. I said you know there's one person you don't want to do that to. It's me.
Speaker 1:Why did you do that? Well, you came through looking for it and I said so to satisfy me. You didn't do the job I'm paying for. And he said yeah, and I said so to satisfy me. You didn't do the job I'm paying for. And he said yeah, and I said you know I'm going to talk to the boss. Do you want to come with me? And he said yes, and I knew the boss because I bought his car. So the three of us are sitting there and I told him about their story. I said what are you going to do about it. He said give me the bill. I said you think that satisfies the problem. He said it satisfies your problem, but it doesn't satisfy my problem. I said what's your problem, george? There? Didn't do his job. There's an active case of leadership that I don't think happens nearly enough yeah.
Speaker 2:Yeah.
Speaker 1:It's remarkable. We had a guy. I was working at a John Deere dealership in Southern California and I was standing in as a service manager two weeks a month. I did it for a long time and one of the clients had a small rental company 2025 John Deere Machines that he rented with an operator His name was Dave and he would hold his invoices for two or three months. Then he'd go into the service manager and he'd go through it, invoice by invoice by invoice, and say I'm not paying this, I'm not paying that, and he'd get a deal.
Speaker 1:So I'm there one time he comes in and he's got this stack of papers and he sits down and he was like a sailor. Every bloody word was an F-bomb. And this is an open office. There's women up there. He said well, wait a second. Before we go into the four-year, you got to clean up your mouth. There's ladies here. And he didn't change. So I stood up and I said that's it and I left him and we were on the second floor so I could look down on the shop floor had 20, 30 shop mechanics and then fields, et cetera, medium size, and he followed me out into the yard. He said what are you doing and I said well, I'm not going to deal with you if you're going to swear, like that period. He said well, ok, I promise I won't swear. And I said that's fine. I want you to go upstairs and apologize to the ladies, which he did. So we went through and he went back and forth and whatever the hell he wanted, I gave him and he paid his bill and he went on.
Speaker 1:Three months later, same thing happens. We go through the whole thing. He didn't swear. So I'm thinking to myself this is cool, he's trainable and we go through the deal. Same thing Doesn't want to pay this, doesn't want to pay that. And I said we've done this before, right? He said yeah.
Speaker 1:I said the last time I gave you everything, right? He said yes. He said well, this time we're going to split it 50-50. I'm not going to give you everything. I'm going to give you half of what you're looking for. He said okay. I said by the way, you don't have an open account anymore. You're going to pay cash for every order, as it happens, or I'm not going to do business with you. I ended up doing his tax returns because I basically dealt with him the way that he wanted to be and needed to be dealt with. He was a great guy. He just was able to get away with something and we trained him. It was okay, because the service managers in that time were not strong enough to stand up to him, had not been trained. Ron, that was the fundamental fault, right.
Speaker 2:Yeah.
Speaker 1:If you were going to look at the next 20, 40 years and you had advice, one piece of advice just one for the dealers that would make a difference.
Speaker 2:What would it be? I think the one would be for the dealer principals whose children are coming into the business is that they have a really good understanding of the difficulties that prior president CEOs went through. Know the history, know the people, and not just the grandma and grandpa and those folks, but the key salesman that was able to strike a deal of a whole fleet of 79 trucks. What caused that? Or we had a downturn in the market, because I think that's one of my concerns is it's been a long time in this industry that we've had a downturn of any major significance. So we've got generations of senior leaders that have not been through a mass layoff or reduction of workforce of any kind.
Speaker 2:So how do you handle one of those when that comes up? So know what the challenge they went through and how did they address it. May be different now, but how did they address it that you can learn from and apply in your new role, because I think there's just a lot of legacy things and decisions made that were really good and some not so good, but you need to know the ones that weren't so good either and why, so you don't make the same mistake again. But I really worry about the legacy that the young folks coming up and taking on the dealerships that their dad and granddad and great-granddad and grandma, grandma they all did a lot of sacrifices to them for the business and and they don't won't really know the whole legacy of why that happened, when it happened and what the outcome was.
Speaker 1:So the loss of loss of information is I guess I worry about that I think that's a good place to stop ron and that I think that's wonderful advice, and I thank you. I thank you for your contribution here and in the industry for all these years, and to the audience out there. I'd like to thank you, mahalo, for another the Clouds Are Upside Down podcast. We'll see you again soon, mahalo.
