CARAVAN Trailer has all the makings of a trailer dealership — new trailer sales, used trailer sales, parts, and a spacious shop designed specifically for trailer service.
But the company is not a trailer dealer — it's an agent for someone who is. Under an unusual agreement, Caravan Trailer has trailers in its yard, but it has no inventory. Yet it sells trailers, and the company profits from doing so.
The trailers that the company sells actually are part of the inventory of Wick's Truck Trailers, one of Wabash National's largest dealers. Wick's, a multi-branch operation headquartered in Omaha, provides the inventory, and Caravan sells the trailers in Kansas and Missouri. The two companies split the profit on the sale, and the Caravan salesman is compensated based on the profit Caravan makes on the sale.
The arrangement goes back to the early days of the company, when Caravan was just getting established as a trailer repair operation. John Vandel had just quit his job as a sales rep for the Trailmobile branch in Kansas City and had just taken out a home equity loan to buy a couple of trucks and start a mobile trailer repair business.
“I didn't have any money to buy inventory, and Wick's didn't have any representation in the Kansas City area,” Vandel says. “When Gale Wickersham (president of Wick's) called, he wanted me to go to work for him, but I had just started the company and had a commitment to the people I had hired. Instead of going to work for him as a sales rep, we worked out an arrangement for our company to sell his trailers. It was a great way for a young company like ours to get established quickly and with credibility.”
By serving as a sales agent for Wick's, Caravan got instant access to inventory and, just as important, key customers with whom Wick's and Wabash had long-standing relationships — major fleets such as Schneider National and Werner. These relationships provide Caravan with a source of new trailer sales as well as parts and service revenue.
From modest beginnings as a mobile service business in December 1996, Caravan has grown into a sizable operation. The company's shop has 13 service bays, along with dedicated bays that house a shotblast booth, paint kitchen, and a downdraft paint booth. Caravan has 13 mechanics in the shop, plus another six who provide on-site service with the help of a fleet of six mobile service trucks.
The shop, which opened three years after Caravan Trailer was founded, is 140 feet wide.
“We chose that width because we wanted to be able to work on two 57-ft trailers and still have a service aisle in between,” Vandel says. “Although 53-ft trailers are still the standard, we have the ability to handle longer ones, too.”
Fighting lost shop time
Vandel and Brad Basye, a stockholder in the company and its service manager, spent two years touring truck and trailer shops before designing its present location.
“It seemed that almost every shop we visited was set up the same way. They had a parts department with a counter for the shop. And at that counter, we would see three or four mechanics waiting in line for parts. It was great for morale — the mechanics always seemed to be laughing and enjoying one another's company. But it had to be murder for the profitability of the shop.”
Vandel and Basye decided to do something about it. Their shop eliminates the parts counter and makes the parts department responsible for supplying the materials that will be needed for each trailer repair.
“We decided that we would not bring a trailer into our shop until we have our parts guys verify that we have everything needed to complete the job,” Vandel says. “That means everything — right down to the amount of caulk we will need.”
The Caravan shop is equipped with a series of telephones. When the mechanic is within an hour of completing his present repair, he phones the shop supervisor to let him know. This in turn triggers a call to the parts department, giving them time to compile the parts that the next job requires. As the next trailer comes into the shop, parts department personnel deliver the materials to the bay.
The system is designed to keep technicians doing what they do best — repair trailers.
“Mechanics are good at putting trailers back together,” Vandel says. “Some shops require their guys to do a lot of paperwork on top of that. Usually mechanics aren't paperwork guys. We have relieved them of that burden.”
Vandel acknowledges that the system isn't foolproof. It requires good communication between the shop and the parts department. Sometimes a part or component is missing or insufficient. In those cases, the mechanic places a call to the parts department in order to have what is needed delivered to his bay.
While geared to making the technicians as productive as possible, the system does not include a flat-rate pay system.
“Flat rate causes fights in the shop and generates undue pressure,” Vandel says. “Someone always feels cheated by the job assignments. Sometimes mechanics complain that the job was bid with insufficient labor hours. We want to avoid those kinds of conflicts.”
Caravan management recognizes the value of technicians' time.
“Besides getting the work out, our shop is our best parts customer,” Vandel says. “We want to treat them the best we can.”
Making mobile service work
Caravan was built on mobile service work, and the company continues to repair customer trailers on site. Despite its spacious shop, Caravan has a fleet of six mobile service trucks — shops on wheels that can perform major repairs or minor maintenance wherever the customer chooses.
“This is just part of our history,” Vandel says. “When we first started Caravan, we had no shop. We repaired major wrecks wherever we needed to. We don't do as many heavy repairs now that we have our shop, but we still do some. If necessary, our mobile service can fix wrecked trailers, replace side panel or axles. We have even built out a set of doors. Whatever is convenient for the customer. We recently installed tracking systems on 70 trailers for Schneider National. Doing that at their location made it very easy for them.”
The service trucks, 14-ft van bodies mounted on a mix of Ford E-350 cutaways or Isuzu low-cab-forward chassis, are fully stocked with tools and parts — one mechanic per vehicle.
“We try to set each truck up the same way so that every driver knows where things are, regardless of the truck he drives,” Vandel says.
Bring it on
Caravan applies the same principle to its service trucks that it uses in the shop — if the mechanic needs a part, someone from the parts department delivers it. Each service truck is equipped with a Nextel phone that the mechanic can use to place the order or to find out where he needs to go next.
Incoming service calls are handled by Karen Hopkins, whose responsibilities include scheduling the service trucks, invoicing, and drayage. If the call comes in after hours, an automated system takes over, giving the customer the option of paging the service truck operator who is on call.
“Our customers get a recording only if they call after hours,” Vandel says. “We want to be as customer friendly as possible.”
Caravan has one service truck operator on call at all times. The fact that the company provides extra pay to the technician on duty has made being on call something to be desired instead of dreaded. One of Caravan's mechanics recently picked up an extra 40 hours of overtime in one week.
It takes a special person to repair trailers at all hours of the day and night. Caravan looks for those with good problem-solving skills.
“Our guys are resourceful,” Vandel says. “They are people who have been on the job for a while and who know their way around. They have to be. If you are working on a trailer at a customer's location in the middle of the night, and you need a part, what do you do?”
Vandel says his company's mobile mechanics know all the parts stores that stay open late, but they also know how to improvise. One Caravan mechanic recently cannibalized parts from his own truck to get a customer's trailer fixed before morning.
“We schedule our jobs as they come in. Some are for work that can be done a day or so after we are called, but most of our calls are for work our customers want done right away. We do what it takes to meet the customer's expectations. In emergencies, we have taken mechanics off long-term projects and sent them out to work on trailers.”
In terms of trailer sales, Caravan is partnered with Wick's and Wabash. Caravan is responsible for selling new trailers in its market, and its relationship with Wick's and Wabash provides flexibility in terms of how trade-ins are handled.
“We can take the customer's trailers in trade, but Wabash and Wick's also handle trade-ins,” Vandel says.
When it comes to trades, Caravan no longer uses its own tractors to move them. That job is now outsourced to independent contractors.
“We were spending $200,000 a year operating our own equipment,” Vandel says. “Outsourcing saves us about $100,000 per year. And it gives us a better handle on what our true cost is for moving our trades. Because we know that cost, we can build it into the price of the trailer.”
The independent contractor sometimes can move trailers faster than what Caravan did operating its equipment — at a lower cost.
“We are glad now when we see one of our competitor's tractors on the road,” Vandel says.
Lots of trailers
In addition to the property on which its shop is built, Caravan owns 47 acres across the street that it leases to customers to store trailers.
The company bought the property for use as a depot for intermodal fleets. There the multitudinous piggyback trailers that are loaded and unloaded in Kansas City could be checked in, checked out, inspected, and stored. While there, Caravan mobile service technicians would provide whatever service work the trailers required.
That business has dropped off significantly in recent years as increasingly containers (particularly double-stacked containers) have replaced piggyback trailers as the means of choice for intermodal transportation.
Caravan has been working to offset that loss of revenue by developing the property as a place where major fleets can store trailers. Caravan charges the fleets a daily rate per trailer. While there, however, the trailers can be repaired or have maintenance performed by Caravan mobile service trucks.
“We now have several major tenants,” Vandel says, “all of whom have placed temporary office buildings on their portion of the property. They are different trucking companies who use the property as a drop lot.”
The entire 47-acre site sits atop an underground warehouse operation developed by Hunt Midwest, a mining and real estate operation owned by the Lamar Hunt family — owners of the Kansas City Chiefs.
SubTropolis is built inside a hollowed-out hill from which limestone has been excavated. At almost five million square feet, the developers consider it the world's largest subterranean business complex. Refrigerated warehouses take advantage of the consistent temperatures, while the original versions of major Hollywood movies are stored deep within the hillside where they are protected.
The fleets that use the Caravan property, however, remain above ground. All they have to do is make it to the top of the hill. Thanks in part to Hunt Midwest, the yards are flat, paved, and spaces marked.
Fleets have staked out their areas with chain-link fences and have small, portable office buildings.
Among the services Caravan performs: warranty work for Hyundai, Stoughton, and Wabash. The company also services and installs liftgates for all of the major liftgate manufacturers.
Caravan may have property at the top of the hill now, but that was not always the case. Vandel laughs about his company's early days, when his wife was forced to call customers back because the baby was crying and when he did business in a place he called the “weed patch.”
Vandel's wife Rhonda is the company's accountant, office manager, and controller. But when the company first started 10 years ago, she also was the fulltime mother of a four-month-old baby. John Vandel spent much of his time calling his contacts for a shot at doing service work. Customers who phoned in for service while the baby was sleeping were able to speak to Rhonda the office manager. But if they called at a time that the baby was crying, Rhonda the mom had to call them back when she could again slip into her role as office manager.
Other wives were not nearly as involved as Rhonda.
“My first mechanic (Mike Gienappe, now the company's shop manager) had more faith in the company than I did,” Vandel says. “He quit his job to come to work here without telling his wife. It wasn't until she saw his first paycheck and asked ‘Who is Caravan Trailer?’ that he told her, ‘oh, didn't I tell you I went to work for a new company?’”
The company, consisting of a couple of service trucks and the people who operated them, soon obtained a piece of property where it could lay down roots — a 1.25-acre lot called the “weed patch.”
“It had a fence, but a truck had knocked part of it down,” Vandel recalls. “Our ‘shop’ was a 40-ft ISO container that we used for storing an air compressor, a couple of welders, and some toolboxes. Later we added an office trailer so that telephone calls didn't have to go to my house.”
Caravan operated in the weed patch for less than six months before moving into a shop owned by one of its customers. The facility included eight service bays plus a break room for technicians. The company remained there for several years before the owner decided he wanted to sell the building.
“We were happy there and thought about buying it, but the property formerly was used as a truck stop. We were concerned about potential environmental problems. That's when we built our present shop. By that time, we had a pretty good business going, including six service trucks. We didn't have any money. But because we had plenty of business, we were able to get a loan to finance our shop. That's been typical for us. Every time we have picked up business, we have had to figure out how to deliver on our commitment. Customers ask us to do something, and we just don't know how to say no.”