Fleetco Trailer Builds Nationally Recognized Organization

An understanding of the trailer business, the realization that capital has to be invested in the company's infrastructure, and the policy of having every new sales person apprentice in the shop for several weeks has made Fleetco Trailer in Nashville, Tennessee, the number one Lufkin Dealer for the past sixteen years.

More than that, it has made the company an effective marketing organization that has outpaced many competitors with its revenue growth. "It's important that we consistently stay in our core business," says Dale Broadrick, president of Fleetco Trailer LLC. "However, don't confuse consistency with a desire to not change things. Change occurs naturally in this business, and it's taking place today. We've had consistent growth through the changes, and that's very important to us." Paradigms that define successful businesses do seem to change daily. Companies that boast about the dollar amount of completed-product inventory or raw materials held-for-manufacturing soon find themselves challenged by those who tout just-in-time product manufacturing or as-needed raw material delivery.

"There has to be an understanding that you shouldn't change a business practice just because it fell from favor," says Broadrick. As an example, Broadrick points out that Fleetco keeps a substantial amount of long term capital fully invested in the parts inventory. "We want our customers to know that we have the parts they need," says Broadrick. "Our other efforts are to reach out and let buyers know that we have new and used trailers available today." The marketing plan seems to work for the company.

Fleetco's parts sales have grown by at least 8% each year for the last sixteen years. Dealerships utilize financial modeling to determine both the overall health of the company and its individual parts. Parts sales are traditionally analyzed as a percentage of total dealership sales. When asked about this, Broadrick explains that both new and used trailer sales have grown steadily over the past sixteen years to some record numbers for the company. He says it isn't accurate to limit the dealership by using a traditional percentage figure of parts sales contrasted against total sales revenue.

"We compare our present and past parts sales to what is going on in the industry today," says Broadrick. Fleetco analyzes sales percentages and follows the growth patterns that they represent. Company management first looks for growth opportunities and then develops the measuring and benchmarking tools as new profit frontiers are recognized.

"We will go out of our way to gain access to the parts business," says Broadrick. "For example, Fleetco is a Trailmobile parts dealer, but not a Trailmobile trailer dealer.

That's okay by us. We welcome the opportunity to sell Trailmobile parts." Fleetco management has stayed in step with the core business by changing the product offerings and introducing new services for its customer base. "We've done all the normal things such as add new trailer lines," says Broadrick. "But it is the unusual things that we do that really help us to offer more products and services to our customers.

We've added a leasing group and an appraisal service that's being used by many publicly traded companies. We also have increased our used trailer inventory to meet customers expectations."

Investing for in-house Technology One of the keys to Fleetco's success is the efficiency of information processing. "Information technology isn't just the wave of the future. It is a tool that helps us to make money," says Broadrick. "All of us here can do things more efficiently if we use technology correctly.

"The company has an information technology program that's designed to train our people to use the software. Our controller works with the implementation of that program."

"It costs money to send people to training seminars," says Kevin Hopkins, controller and information technologies officer for Fleetco. "When we look at the return, it's an improvement for the company. Lots of companies add new software but they don't train personnel on how to work with it. Our budget includes the cost of training and software acquisition."

Fleetco leverages its technology by making sure that all the affected personnel know how to use it. "We have a systems administrator and a telemarketing group that are linked to our buyers and sellers database, and our salespeople have laptop computers that they use to turn in marketing and contact reports," says Hopkins. Fleetco finds advantages to operating the companies sales efforts with the assistance of electronic measures.

"Our past challenge was setting up a more comprehensive accounting operation," says Hopkins. Fleetco set up the accounting hardware to provide management with a daily operational overview of the financial situation. "We have taken the time out of sorting and transferring data to the people that need it."

Fleetco has also implemented bar-coding in the trailer repair shop. "We are adding transparency to the internal process of accounting for a repair. We know what technician has performed specific procedures of the repair, what parts were used, and we can track our profit and cost information much easier than before."

Fleetco is urging trailer manufacturers to adopt the newer technology-based, information transfer techniques available in the automotive industry. For example, Hopkins explains that Fleetco would like to receive new trailer inventory with bar-coding in place. "We would like to receive our new trailers with the serial numbers and the other chassis information bar-coded into a delivery sticker," says Hopkins.

Hopkins cites the way car dealers are able to take in large amounts of new car inventory without getting bogged down in the data entry system. "Those dealers seem to have a much greater amount of data transferred more rapidly to internal systems than trailer dealers," says Hopkins. "The industry is going to have to look at better ways of transferring the new delivery data and especially for large fleet orders."

According to Broadrick, some companies might believe they are too small to benefit from the information technologies that are available today. Broadrick doesn't feel this applies to Fleetco. He points to the fact that the company's growth in the used and new trailer sales area can be traced to the technological investments made in both the customer-contact management software and internal communications systems.

"We build our contact database around the ACT software program," says Hopkins. "All sales and telemarketing people share information and are able to transfer data to each other very easily." A telemarketing person inputs new buyers and sellers to the database. The sales people have access to the database and follow through by contacting the perspective buyers and sellers. Fleetco looks at every active used trailer buyer as a potential customer for parts or additional pre-owned trailers.

However, Fleetco telemarketers also monitor the sales prices and quantities of used trailers being transacted for in the national marketplace. "Most of that information comes from our salespeople because of the personal contact involved; however, our telemarketers do ask for pricing information if we missed a deal," says Hopkins. "We will analyze that information and use it if we feel it is accurate."

Hopkins says that the next step for Fleetco will be the in-house addition of a server network for complete internal linkage and housing a web site for Fleetco. Broadrick is looking into ways the company would profit from this activity. "We use an intra-office e-mail system to transfer information in the company. I am moving towards a digital showroom; but I want to learn more about the protections available and concept of how we'll make money from doing this," he says.

Broadrick adds that the greatest use he sees for the web site will be in the used truck sales effort. "We are already incorporating the e-mail aspect into the purchasing of used trailers. This next step will be very natural."

Used Trailers and the Link with Technology "When our buyers go into the field and purchase a large trailer fleet, which may be 200 to over 1,000 trailers, they send digital photos to us by e-mail while the units sit at the sellers lot," says Hopkins. "We download from the private transfer site, and then we can input those into our sales presentations or they can be digitally transferred to possible buyers.

"We have to be knowledgeable of where the market is going, whether that's up or down," says Hopkins. "We sometimes keep over 1,000 units in our used trailer inventory. It's important to know the direction we have to move to meet the market and not get loaded down with carrying charges on the inventory."

Fleetco management thinks of used dry van trailers almost as a commodity product. Broadrick makes the example of Management focuses on how the market is reacting to the existing national population of used 40-ft trailers, the bid and ask price for 40-ft trailers, and shifting Fleetco's pricing to reflect the overall market.

Fleetco's growth is because the company takes a larger geographic view of where it sells used trailers. "Nashville isn't our only market anymore. We want to sell trailers anywhere we can," says Broadrick. "And we don't take a casual view of trailer sales. We aggressively go after customers that use a lot of trailers.

"Buyers of pre-owned trailers are different from the new trailer buyer," says Broadrick. "They are looking for quantity that can be supplied immediately, the specifications, the condition of the trailers, and then price per unit."

New trailer buyers have the same considerations. However, new trailer buyers are more concerned about the ratio between specifications and pricing than delivery, although new-trailer build-out schedules are becoming a strong factor in the purchasing decision.

New Trailer Sales GrowthFleetco aggressively goes after new trailer sales within its territory. The company represents Lufkin, Dorsey, Hyundai, and Ravens aluminum dump and flatbeds. "I work very hard at new trailer sales because I still consider myself a new trailer sales person," says Broadrick.

Fleetco is one of the top retail sales leaders in the country for new trailer sales because of customer-oriented sales efforts, Broadrick says.

"People still buy from people in the trailer business. Fleetco makes it easy for the customer to talk with the trailer sales staff. All of our sales reps, including new, used, and outside parts sales staff, are expected to use their mobile phones.

I'm also visiting with customers," says Broadrick. "Mobility and communications are so much more important today than even ten years ago."

Part of Broadrick's business philosophy is to view communications as directly servicing customer needs. "Sometimes offering more services means providing better and quicker ways for the customer to contact us."

When asked about adding locations, Broadrick says that although anything is possible, the trailer dealership industry isn't necessarily set up as a multi-territory endeavor. "I feel the best way to expand is to promote service, sales, appraisal work, and leasing from the Nashville area," says Broadrick.

Nashville Provides Service Business Service is an important part of Fleetco's business. "Nashville is in a good location to get service business from freight shippers," says Broadrick. "Our shop is always filled with trailer work. I really think that is because we have the parts to fix the trailers, and we have the trailer technicians.

"We don't have a big turnover in shop personnel," says Broadrick. "Most of our shop personnel have been here for a significant number of years." Broadrick points out that experienced trailer technicians have an unusual mixture of many skill sets.

"To work with trailers, you have to be a machinery mechanic, a sheet metal mechanic, a body repair expert, and knowledgeable about axle-tracking and alignment issues," says Broadrick. These skills are in demand in many parts of the country. Nashville attracts many skilled applicants. "There is a good selection of skilled workers here in the city."

Leasing Adds To Customer Service Trailer leasing is a growing part of the Fleetco operation. The subsidiary company has a separate location in the Nashville area from which it leases approximately 1,500 trailers for various lease periods. "We have a target ratio of day rental and short term versus long term leases," says Broadrick. "We want to make sure that the trailers are being used; but we still want a few around the leasing yard so we can handle any of our customers' emergency needs."

"The unspoken panic of any operator that leases trailers is that one day you wake up and you don't have any trailers on the lot. The next day they're all on the lot."

Broadrick says that it's important that to have an accounting system that can take care of the proper paperwork for customers of the leasing operation. Proper documentation and billing is critical to the leasing customer. There are numerous insurance and documentation issues that have to be handled by the leasing company. This can be onerous on the operator.

The mathematics to a leasing company is viable once the company gets past the up-front cost, says Broadrick. "You don't have catastrophic engine failures in the trailer leasing business. It's the same with every product and service that we have. To be successful you've got to sell yourself and your company. The business math will ultimately make the company viable if the resources are there; but only enthusiasm and hard work coupled with successful people skills will make the viable business a success.

"My favorite book is How To Win Friends and Influence People by Dale Carnegie. I recommend that all employees read it. It has helped me. I read it the first time when I left school in the ninth grade and started working in the trailer industry for Brown Trailer Company. I've been in the trailer business ever since."

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