A knack for his niche

THESE DAYS, DAVID NICHOLS operates from a comfortable office, his desk flanked on one side by an aquarium and on the other by the spoils of his hunting success — wall trophies of a double-beard turkey, a Mallard duck, and a pheasant.

It hasn't always been like this.

When he started Nichols Fleet Equipment in February 1991 in Chattanooga, Tennessee, he spent eight months operating out of a 7' × 9' rental trailer, servicing the products he sold while working out of a pickup truck.

Three years later, he bought a 2.5-acre parcel of land adjacent to the trailer repair shop where the company had leased two 20' × 60' bays. He figured it was a “pipe dream” that might materialize in five to 10 years, but he built a facility on it within a year to specialize in mechanics/lube trucks and crane maintenance. In 2000 came an expansion of the building and the purchase of a quirky triangle-shaped parcel of land that would accommodate a warehouse.

As the company prepares to celebrate its 15th anniversary, Nichols can reflect on just how far he has come.

“You look back over it, and it's one of those situations where anytime you do something for the first time, you pretty much go into it blind,” he says. “You don't know what to be afraid of because you don't know what's out there. Knowing what I know now, if somebody would have laid it out for me back then and said, ‘You're going to have these hurdles to overcome in the next 15 years,’ I might have passed, filled out a resume, and tried to find a job someplace else.

“Having said all of that, it has certainly been an interesting 15 years. It sure has been well worthwhile. The thing I enjoy about this business is that it changes every day. The type of work we do is somewhat consistent, but with our customer base, everybody has something a little different. Very few times do we produce exactly the same product time after time. There is variation. I like being with this type of customer. We have to be able to deal with the man who runs the truck as well as CEOs of some of the largest construction companies in the country.”

Clearing the hurdles

The hurdles he speaks of include: the capital-intensive nature of the business, the industry downturn and the accompanying steel-price crisis, and the management skills he had to develop in order to effectively manage his staff and balance the workload between the busy and slow times.

On the capital-intensive nature: “I started with a very limited amount of credit at a major supplier. It was kind of like, ‘We'll give you a shot for a year — $50,000 line of credit. Here you go.’ We both agreed we'd give it 12 months. I said, ‘If it doesn't work, no hard feelings.’ When I started this in '91, we were just coming out of the recession. I'll never forget it. Every sale I had in '91 was critical to the success of this company. I was living month-to-month. There was an election year coming up. When Bill Clinton was elected, I remember hearing, ‘Well, now let's see what he's going to do.’ The business climate was like, ‘Put off, put off, put off.’”

On the steel-price crisis: “That was the most bizarre thing I've ever witnessed. It was one of the most difficult things we've gone through because you could not anticipate what the costs were going to do. We were receiving monthly increases, and with some manufacturers, it was two increases a month. And it wasn't a case of, ‘This is what it's going to be on future orders.’ They were retroactive. Then you have to make a decision: Are you going to eat it? Or are you going to go to the end user and say, ‘It's retroactive to me, and I've got to pass it along to you’? I go back sometimes and look at what we paid for trucks when I started in this business, and the price has more than doubled.”

On balancing the workload: “The difference between what we do and what a lot of general truck equipment businesses do is the fact that service is a very big part of our day-to-day operations. In dealing with large fleets on new orders, there are ups and downs in the year. You have a tremendous influx of trucks at any given quarter of the year when their budgets come up and they spend the money. You get through those times, and then you're going from an 18-, 20-, 30-unit order to a time when all of a sudden there's nothing there. But you still have this consistent service base that is here day in and day out and keeps your mechanics busy. The difficult part is the management of all of that in conjunction with installation and the scheduling of new equipment. It's incredibly difficult to juggle staff. We've had very few occasions where we had to let anyone go. We've always had the service to keep the guys busy. It may not be what they like to do, but it's better than not being here. That hasn't been much of an issue the past few years. We've been able to rock along and stay quite busy throughout.”

He says service work has really “taken off” because, of the two major truck equipment houses in Chattanooga, Nichols Fleet Equipment places a higher priority on service.

“Therefore we have contracts with a lot of customers we don't sell any equipment to,” he says. “We have some fleets, for instance, that buy equipment elsewhere but we maintain their whole fleet of aerial lifts and generators. Our forte is aerial lift and crane maintenance. But we also do liftgates and other things. We have a technician in the shop who's excellent on small engines. So therefore we get into light compressor work, generators.”

Nichols points toward a truck that has just been pulled into one of the bays.

“These guys blow a hose, so you have to take care of them,” he says. “They sit there with a truckload of sheet rock ready to deliver and they have a blown hose. They're only going to go somewhere where you'll stop what you're doing and take care of it. We do that. If you tell the guy, ‘Park it and we'll get to it when we can,’ well, you've lost him. Downed service takes a real precedence with us. We create our own scheduling nightmare or monster by doing this. But that's the value we place on service.”

Expansion helps

Nichols is better equipped to handle the increased service work because of its expansion in 2000, which included:

  • Enlarging the building to add shop space.

    They knocked out a wall and extended the shop, giving them five 80' drive-through bays instead of three, for a total area of 8700 sq ft.

    “I've seen a lot of shops where it's ‘drive in and back out,’” he says. “This has been great.”

  • A five-ton Yale overhead crane.

    “It's a tremendous asset,” he says. “We elected to go with a single-beam, high-capacity crane that will service all the bays. This has been ideal. Very rarely do we find anybody waiting to use the crane. This has been a huge time-saving benefit to offload tractor-trailer loads of bodies. Two men can do this in a couple of hours, whereas it'd take two or three men four to six hours to unload a whole truckload of product before.”

  • A 45' downdraft paint booth and mixing room.

    “We wanted 45' so we could get a full straight truck in — cab and chassis — and still shut the doors,” he says. “The paint booth is one of the most expensive parts of our operation. But I love the availability and accessibility, and the fact that it keeps the work flow going smoothly. Before, we were farming it all out to two or three sources. We had to get in line and wait. It'd take a week and a half to get it done. Now, we'll paint it today and have it back on the truck tomorrow.”

  • A spray-on bed lining system.

    “I have mixed emotions,” he says. “We had a large order from one of our larger accounts that had spray-on bed liner in mechanic's trucks. The cost to outsource it was extravagant, so I went ahead and invested in a machine and trained a worker to do it. On that order, it was certainly beneficial. All things considered, it was the way to go. The problem with it now — with us not being in the retail pickup truck accessory trade — is it's such an intermittent-use thing. It's tying up almost half a bay.”

  • A 4200-sq-ft warehouse and wash bay on a one-third acre parcel of land.

    Nichols acquired the property from an adjacent landowner who could not access the triangle-shaped parcel because of a ditch that runs diagonally through the property — a ditch that can't be filled. Because of the shape of the parcel, Nichols had to build a somewhat quirky design with five sides. Nevertheless, it has been a valuable addition.

    “It has offered us a great place for inside storage, which is the one thing we were desperately needing,” he says. “Before, we had dry-storage trailers: one 40' junk trailer parked and a 24' box van on the grounds, plus one bay that was open on three sides, allowing everything to get soaking wet.”

  • A boost in the work force.

Nichols hired a painter, a painter's assistant, and a full-time maintenance worker. That brings the staff to 20.

Nichols doesn't have any concrete numbers to offer, but says the efficiency and productivity have improved dramatically as a result of the changes made during the expansion.

“We're increasing the throughput of the shop by having additional shop space and the manpower to do it,” he says. “With repetition on certain product lines, you increase your efficiency and the numbers you do. Our mechanic's trucks are one of our main movers. We've seen our hours come down dramatically from when we started, simply because we have a system in place. It's a repetitious process. The mechanics don't have to pick up the books every time. It's ingrained in them. They know what to do. That in itself lends us to become a bit more competitive.”

Wish list

He says that his new wish list is topped by a separate facility for fabrication.

“Having a mix of cutting steel, welding, and torching right next to a bay with new vehicles and bodies is obviously not the best world, but it's what we have and what we're living with,” he says. “I'd like to see in the future an additional building to go into to do fab work. We fabricate bodies — flatbeds primarily, for building supply and propane and monument industries.”

The expansion did not affect Nichols' 1800-sq-ft showroom, which is stocked to supplement the company's every-day construction trade rather than walk-in retail. He stocks primarily what the contractor uses, not what a truck upfitter would need. Catering to fleets, construction, utility, and paving contractors, it features Warn winches and accessory kits, Reelcraft air hose reels, Hannay torch reels, Weatherguard four-drawer cabinets and aluminum saddle boxes, Winco generators, IMT and Boss compressed-air systems, and Champion air compressors.

His original retail goals didn't materialize because the company has limited visibility with a location five blocks from the freeway.

“I bought this property for the simple reason it was 2.5 acres I could afford,” he says. “And it was very accessible to all the heavy-truck dealers. Mack, Kenworth, International, and Ford are all within a one-mile radius. A huge amount of our service base is very close. We do a lot of big-crane service and compressor service, so that was one of our calling cards.”

Beyond a new fabrication building, Nichols is contemplating the addition of branch facilities in Nashville and Atlanta. Chattanooga is almost equidistant between Nashville (135 miles to the northwest) and Atlanta (120 miles to the southeast). The bulk of the company's sales come from the Nashville market east in Tennessee and from south of Atlanta into northern Georgia, with minor markets in northern Alabama and western and southern Kentucky. The company has two salesmen in Atlanta, one in Nashville, and two in Chattanooga.

“We're talking about the pros and cons of expanding into those markets,” he says. “A physical presence there is something we're considering. The disadvantage in the way we're doing it now is the customers' perception of a company that's 125 miles away: ‘Well, how are you going to take care of our problems?’

“Does that justify opening a facility like this just to service a guy who's going to come in once a year? Probably not. That's what I'm looking at. We run field service out of here day in and day out. I can be to one part of Atlanta as quickly as a guy who's on the south side of Atlanta can get to the north side. It's a fact. We can take care of the service from here. With the bulk of what we sell, if there's a problem on new installation, it can be fixed over the telephone usually. If not, we put a man in a service truck and go take care of it. In situations that warrant it because of the large geographic area our products go to, we will put a man in an airplane if required. We simply do whatever we have to do to take care of the customers' needs.”

That's the way it's been for 15 years for Nichols.

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