IF YOU are serious about taking care of your customers, what better place to locate your business than on the corner of Service and Support Road?
That’s the new home for AG Van & Truck Equipment, an established truck equipment distributor based in the Dallas area. The company moved out of its old shop near downtown Dallas two years ago, opting to take over a facility that previously had been owned by Delta Airlines. The AG location sits right next to Dallas/Fort Worth International Airport. A chain-link fence is just about the only thing separating the AG parking lot from the tarmac.
Despite being committed to taking care of its customers, AG Van & Truck Equipment can’t take credit for the name of the two roads. Support Road provides access to several of the companies that provide support services for the airport. Service Road runs parallel to the toll road that connects busy highways that bring traffic in from the north and the south of the airport. Even so, the intersection is a great place for a service business—and not just because of the name.
“We had been looking to relocate,” says Wayne McElreath, general manager. “The truck industry had been centered just outside downtown Dallas for many years, but that’s not the case anymore.”
As is the case in many major cities, aging facilities, rising property values, higher taxes, and traffic congestion are combining to lead established truck-related companies to the suburbs. Ease of access is now far more important to customers than doing business with someone located in the middle of town.
The new AG Van & Truck Equipment facility provides both—easy access and a central location. Dallas and Fort Worth are 32 miles apart, with DFW Airport in between. AG moved out of central Dallas but into the center of its trade area—with easy freeway access in every direction.
The airport is located in its own town—DFW Airport, Texas. As such, it has its own municipal government, including fire and police protection.
The 70,000-sq-ft facility is built on 8½ acres, all of which is paved. The pavement helps to keep chassis clean, and being located next to the airport helps keep them safe. Cleanliness and safety are both important factors for distributors operating a chassis pool.
“Being located next to a major airport has to be one of the most secure places imaginable,” McElreath says. “Not one but three law enforcement agencies patrol the area—airport security, the local police department, and Homeland Security. And the area around an airport is always well lit.
“The perimeter of our property is fenced, and we have a security system, just like we did at our old location. But since we moved here two years ago, we haven’t had any incidents. At our old place, the phone rang constantly with calls from our security company.”
Rethinking shop layout
AG Van & Truck Equipment found its current location after an extensive search.
“Most of the properties that we saw were merely warehouses,” McElreath recalls. “I liked this building from the start because it gave us plenty of parking, security, and the potential to grow. Before we moved in, though, we had to rethink things, including the traditional work bay concept and how chassis, bodies, and equipment would flow. The landlord was helpful, designing the lot and figuring out how truck parking would work.”
The distributor’s previous shop had individual doors that provide access to each work bay. The new building houses a long, rectangular shop with three roll-up doors along the length of the building. Clearly this is not enough to have one per bay, but it is sufficient to enable trucks to enter the building at one end, angle park, and leave out the other end.
In a sense, AG Van & Truck Equipment has two shops in one. The building is divided longitudinally into thirds. Van and light truck equipment is installed in one side of the building. Heavier equipment such as dump bodies is installed in another third. Separating the two shops is a warehouse that serves both sides.
“We have a much more efficient layout here than we ever had before,” McElreath says. “The warehouse is the center of our production. Everything is right there that we need to complete the truck. If we don’t have all the parts and equipment that the job requires, we don’t schedule the truck.
“We have less inventory than we had before, and we have reduced the number of places where it’s stored. We stored things in five different places at the old location. Here it’s either in the yard or in the warehouse.”
AG Van & Truck Equipment also has added a spray booth and paint kitchen which McElreath says has enabled the company to substantially upgrade paint quality.
Keeping it coordinated
A couple of coordinators help keep the work flowing at AG Van & Truck Equipment.
“We have quite a bit going on,” McElreath says. “Two lots capable of storing a total of 400 vehicles, and a shop that really has been busy.”
AG has one person responsible for the trucks in the company’s yard. McElreath estimates that the lot coordinator is outside 90% of the time, stocking, delivering truck bodies from the yard, and managing vehicles.
The company also has a stockroom coordinator. Between the two, technicians receive what they need to complete the work order and maximize the amount of time that they are on the job.
Keeping track of trucks
The company also is benefitting from a new discovery—a tool within its Spokane Computer management software that AG now uses to improve shop management.
“We have developed a production schedule that tracks commitment dates for our customers,” McElreath says. “It’s a weekly scheduler that we use throughout the week to update the status of vehicles as they flow through the shop.”
The tool, TE Quote, is an upgrade to the company’s Spokane system. Because it integrates with the base system, it does not require data to be rekeyed.
“We had been using an Excel spreadsheet to keep track of chassis,” McElreath says. “That approach was very time consuming.”
Each sales person carries a tablet computer that can access the database. With the tablet, the sales person can create a quote on site and e-mail it immediately to the customer. The tablet also can be used to access the AG Van & Truck Equipment website and show the customer digital versions of company sales literature.
The company also introduced a “van package calculator” that enables customers to sketch out a fully equipped van by visiting the company’s website. The company started with Adrian CAD files that can be dropped onto a generic van drawing. The van packages can be “installed” in the various zones inside the van, enabling the customer to visualize how the interior packages will fit and look like. Ladder racks can be added on the outside.
“We hired a developer to take our concept and develop the tool,” McElreath says. “We have now added all brands and models of vans to the tool. Our dealers are excited about it because it empowers them to expedite the sale without having to contact us for quotes.”
As evidence that AG Van & Truck Equipment truck dealers are using the tool, the company points to the fact that its inside sales team has seen a reduction in daily van quotes. However, van product sales have increased for the year.
Getting more with less
Like many in the truck equipment business, AG Van & Truck Equipment was profoundly impacted by the 2009 down in the economy in general and in truck equipment specifically. The company, a wholly-owned subsidiary of Adrian Steel, navigated through the downturn using core principles as a guide.
“’People, product, and profits’ is the corporate philosophy at Adrian,” McElreath says. “So as business conditions declined, we used that philosophy to guide some of the decisions we had to make. We faced some tough choices here at AG, especially those decisions that affected our employees.
“We also looked closely at our products. We had to ask ourselves what we do best—profitably. And we also had to evaluate our competitive position. That goes beyond just price. It takes us to the corner of Service and Support. We can’t allow ourselves to talk price first. If we do, we have lost the deal before ever getting out of the gate.”
The most objective metric for how AG Van & Truck Equipment handled the downturn may be the number of employees who work there. The company employs 33 people today, down from 49 in 2008. Yet those 33 people are doing more business today than the 49 did before the downturn, McElreath says.
Part of the savings comes from having a more efficient building in which to work. For example, the new facility has a bridge crane that serves the side of the shop where dump bodies and other heavy products are installed.
“Using the bridge crane, one person can mount a truck body,” McElreath says. “We needed three people at the previous location. Because we are much more productive today, we have not grown our workforce back to where it was before the recession.”
McElreath joined AG Van & Truck Equipment in 2008, just in time to make some of the tough decisions that were required.
“General Motors was having its axle strike back then,” he recalls. “A recession was starting, and it was clear that AG needed to make some changes.
“When I was hired, I was told I needed to make this company profitable. Part of that had to do with the products we were selling. We were trying to be all things to all people. We took a close look at all the things we were selling and tried to find the ones that were the best for us. We chose three core products and decided to do those three things to the best of our ability.”
As an Adrian subsidiary, it’s not surprising that one of those three areas involved van interiors. Other products that management considered to be key for the company included service bodies and platform bodies.
“In addition to our Adrian Steel line, we are concentrating on CM flatbeds and our own branded service body—the “WorkRedi” body,” McElreath says. “Certainly accessories, liftgates, and cranes play a role. However, the ability to focus on quick turn, profitable sales was a key in the turnaround.”
Working with dealers
Truck dealers can play a key role in the marketing of each of the three types of products that AG Van & Truck Equipment chose as areas of specialty.
To meet the needs of truck dealers, AG has engaged in several special truck dealer programs. For example, the company is an approved chassis pool account for Chevrolet, GMC, Ram, and Nissan.
AG Van & Truck Equipment is heavily involved in the GM Depot program in which dealers make an annual commitment to buy a specific number of trucks for basic upfitting.
“It’s basically a vehicle management program,” McElreath says. “We have done a good job with GM dealers, in part because of this program. Dealers receive money for specific truck bodies, and they get a price advantage over non-program dealers. We in turn cut checks to dealers for the upfits that flow through us. Dealers can earn a fair amount of marketing dollars with this program. One of our dealers last year earned enough to buy I-pads for everyone in their sales force.
“There are financial incentives for the dealers who participate in this program, but that’s really secondary. The biggest incentive for the dealer is that he does not have to stock the chassis.”
Expanding the idea
McElreath says no other chassis manufacturers have anything that compares to the GM Depot program, but he sees no reason why it can’t be implemented elsewhere. AG Van & Truck Equipment has been working on a similar program that the company was scheduled to introduce in mid-July.
“We have done a good job with GM,” McElreath says. “We are confident that we can expand the program to other chassis manufacturers and their dealers.”
The next major step is to reveal the plan to a group of Dallas area Ram dealers as part of a driveaway meeting that AG Van & Truck Equipment was scheduled to hold in mid-July. The meeting will involve Ram Business Link dealers. AG will equip the vehicles with service and platform bodies.
“We have significant interest and support from our local Ram OEM representatives,” McElreath says.
Meanwhile, the company also reports sales growth with Nissan’s commercial vans. AG also expects additional upfits on GM products as the manufacturer begins production of the new City Express van. AG attended a product preview in May and ordered 50 pool units for its location.
“We have pre-sold all of them,” McElreath says. “Plus, we are working closely with our Ford dealers. Ford has introduced the new Transit Connect, and the new Transit is hitting dealer locations now.”
All of which adds up to heavy traffic on the corner of Service and Support. ♦