STAY in business long enough and there will be a good chance that the very reason you got into business in the first place may not appear as lucrative as it was at first.
When that happens, what do you do?
STS Truck Equipment is a multi-location truck equipment distributor and trailer dealer in New York State. While the market for the company's products is still good, management has seen some fundamental changes in the economy where the company does business — New York and parts of New England. And these changes are affecting the long-term demand for commercial truck equipment and trailers.
One of the most significant changes impacting truck equipment in the region has been the economy's transition from one with a strong manufacturing base to one that is highly dependent on technology.
While a growing technology industry may be good for the economy, it doesn't do a lot for those in the truck equipment business. Technology tends to travel over wires or wireless signals, not in the back of a truck or trailer. The growth areas now involve the shipment of ideas and information, rather than the transportation of materials and finished goods.
Management recognized that for the company to grow in this changing market, it had to make some changes. One of the most noticeable has been a commitment to acquiring other companies.
“We have had to adapt,” says Steve Jacobs, vice-president of sales. “The types of businesses that really drive demand for trucks and trailers would not be able to allow us and others in truck equipment to grow the way we want to. With less manufacturing going on and the service and tech sectors growing, we knew that our growth would have to come through acquisitions.”
STS continues to repair trailers and sell parts, but the company has become a major player in the Upstate New York truck equipment business following the acquisition of two established distributorships — White Bear Equipment in Albany and T-W Truck Equippers of Buffalo.
With the acquisition of these two truck equipment shops, STS now has 170 employees companywide and locations in Buffalo, Rochester, Syracuse, and Albany, New York.
The acquisitions of White Bear and T-W have given STS additional expertise in truck equipment.
“T-W had the facilities, the products, and expertise in selling to municipalities,” Jacobs says. “These were all attractive reasons to acquire T-W.”
STS had a similar experience in 1988. The company had been a trailer dealer when George Jacobs bought it in 1976. But in 1988, Fruehauf sold its Syracuse branch to STS. Suddenly STS was in the truck equipment and trailer business.
“Few people sell truck equipment and trailers,” Jacobs says. “We had separate teams for trailers and for truck equipment.”
Making it work
Of course, it's one thing to acquire other truck equipment distributors and an entirely different challenge to actually merge the companies. Once the acquisition is complete, the challenge of integrating different corporate cultures into a single organization begins.
In an unusual managerial twist, STS does not have branch managers in charge of each of its locations. Instead, senior managers rotate through the stores. They include Gretchen Barfoot, corporate business manager; Pete Krais, corporate trailer sales manager; Bob Siver, truck equipment retail and municipal sales manager; Mike Jacobs (Steve's brother), vice-president of service sales; and Barb Mudge (Steve's sister), parts systems administration manager.
“We visit each location regularly,” Steve Jacobs says. “We arrive with a specific agenda, which makes everyone very focused on what we are doing.
“But the key to making a system like this work is the staff at each location. We have to have strong management at the local level — parts, service, and office.”
One advantage that the STS approach to branch management provides is uniformity between branches.
“We want all of our locations to meet the same standards,” Jacobs says. “That means having the same look, selling the same products, and doing the same way. Don't think that we are trying the ‘big box’ store approach. But we do want to be consistent.”
So far, the branches are an easy drive from one another.
“I can get from Buffalo to Albany in four hours,” Jacobs says of the longest trip he has to make. “But we certainly would consider adding additional locations that are farther away than the ones we currently have. After all, we can fly anywhere along the East Coast in the same amount of time that we spend driving now.”
Open and close
STS has opened and closed locations as the market has changed.
Most recently, the company opened a new shop for White Bear Equipment. The facility includes six drive-through service bays, along with parts department and sales offices. The new location will make it easier to service trailers. The previous White Bear shop was purely a truck equipment facility.
Another upgrade is being planned for the company's Rochester location. Management is in the process now of acquiring property that will enable STS to better serve its customers in that area of the state. It, too, is being upgraded in order to accommodate trailers and truck equipment.
Opening locations is nothing new for STS. The company opened its first location in Utica, some 50 miles away from company headquarters in Syracuse. The branch served as an extension of the company's snow and ice control equipment business until 2003 when STS acquired White Bear Equipment, a truck equipment distributor that had served the Albany area for almost 20 years before STS acquired it in 2003. Because of its proximity to the White Bear shop, the Utica branch was no longer needed.
The company also opened a branch in Scranton, Pennsylvania, primarily as a Trailmobile dealership. When Trailmobile filed for bankruptcy, STS became a dealer for Utility Trailer Manufacturing in New York. However, Utility already had representation in the Scranton area, and the location closed.
The company's willingness to expand, either by opening its own branches, upgrading existing locations, or by acquiring other distributors is evidence that management is not averse to taking risks to serve its customers.
“We are in-your-face direct when it comes to finding out what the customer needs, and we respond ASAP,” Jacobs says. “If you wait too long, whether it's adding new lines or training your technicians, you do your customers a disservice.”
Parts, both for trucks and trailers, account for a major portion of sales at STS.
“We average $600,000 per month in parts sales,” Jacobs says. “We sell parts every way we can — to the shop, over the counter, and through route sales.”
Of the $40 million that STS generates in sales, the parts and service departments each contribute about $7.5 million per year, Jacobs says. Truck equipment sales account for approximately $10 million, with trailer sales generating about $15 million.
“All of our stores sell parts and accessories,” Jacobs says. “They sell everything from light duty truck accessories to parts for Class 8 trucks. Most people here have a service truck and a four-wheel drive truck. That gives us a lot of opportunities for accessory sales — maybe not appearance accessories, but accessories for commercial applications.”
The weather works in the company's favor.
“We have three months of summer and some pretty tough winters,” Jacobs says. Customers have to keep stuff dry, and they buy a lot of toolboxes and commercial pickup caps.”
Making the sale
STS uses a variety of tools to market parts, including point-of-purchase displays, inside sales, and telemarketing.
“We run a lot of corporate specials,” Jacobs says. “They are the best price we can possibly offer, and these specials represent a great price for our customers.”
The specials run monthly. In addition, corporate management gives local branches the freedom to run special promotions on a local basis.
STS uses a variety of means to communicate these specials to customers — including direct mail, fax, e-mail, and flyers that sales representatives deliver.
“We are really well staffed for parts sales,” Jacobs says. “Twenty percent of our employees — 35 people in all — work in our parts departments.”
The inside sales staff field does telemarketing and fields incoming phone calls. Each STS customer is assigned a specific inside sales and outside sales rep in order to have specific representation at all times.
“We are convinced that response time is critical,” Jacobs says.
STS operates a fleet of trucks to reach out to customers — including parts vans and mobile service trucks.
The company has seven Dodge Sprinters that it uses as route trucks for parts sales and delivery.
“We love them,” Jacobs says. “We have had what we call our ‘Parts Liners’ for years. They have helped us serve parts customers, especially in rural areas.”
But the market changed and the cost of fuel skyrocketed, and the economics of the Parts Liners were becoming marginal. The original Parts Liners were medium-duty trucks equipped with 18-22-ft van bodies. These trucks were getting five or six miles per gallon. By contrast, STS is getting 24-30 miles per gallon with the Sprinters.
“Suddenly the Parts Liner concept has become viable again,” Jacobs says.
The company still operates two of the Parts Liner trucks. Mobile parts operation calls on 10-20 customers per day. Each van has its own inventory of parts, which STS manages based upon computer-generated weekly sales reports. As a result, the route sales rep can fill about 90% of the requests he receives directly from the stock that is kept in the truck.
“Customers would begin to repair a truck knowing that we would be there with the parts they need the next morning,” Jacobs says.
The decreased capacity of the Sprinter has caused STS to modify its approach to mobile parts sales. The heavier trucks were capable of carrying a much larger parts inventory. The company now relies on telemarketing to communicate with customers and improve fill rates.
“Customer expectations are higher today,” Jacobs says. “People are no longer content to wait until Tuesday. They want next-day service. We do what we must to make sure the customer is properly served.”
In addition its the mobile parts, STS also reaches out to service customers.
Each of the STS stores has a mobile service truck — an International 4300 or similar chassis equipped with a van body.
While the company can use the Sprinter for parts sales, a medium-duty truck is require to enable the technician to provide the level of remote service that the company offers.
Each truck is equipped with a generator and air compressor. With it, STS can provide on-site preventive maintenance and most emergency repairs.
“We don't run them 24/7," Jacobs says. “We generally are performing scheduled repairs on trucks and trailers. Increasingly, those repairs are on trailers.”
Out from under
The STS locations had their work cut out for them recently when a February storm buried the Northeast in snow.
“It was crazy around here,” Bob Siver says. “We got between three and four feet of snow in a 24-hour period, and people north of us got as much as 11 feet. It just kept snowing, and it just kept piling up.”
The blizzard put snowplow sales in overdrive and flooded the shops with repair work.
“Our snowplow sales suddenly doubled, and our service work quadrupled,” Siver says.
Demand for repair was even stronger than might be expected because of the relatively mild winters that the area had been experiencing recently. It was almost as if all the snow — and all the service requirements for the equipment that moves it — hit at once.
“People had not been maintaining their equipment,” Siver says. “When the storm hit, it caught all of us by surprise.”