BUYING tractors and trailers at the same location can be a convenience for the customer and a challenge for the entrepreneur who tries to offer both.
Tractors and trailers may be designed to work together on the highway, but they don't always mix well at the dealership. They require different parts to keep them operating, a separate set of skills to service them, and distinct systems for selling them (and rewarding the sales staff for doing so).
But for the dealer that can sell both successfully, the rewards are there for the company and for its customers.
Utility Trailer Sales of Kansas City is one of the companies that can make it work. And as a result, when combined with Kansas City Peterbilt, the operation serves as a one-stop source for power and equipment.
“The truck business and the trailer business really complement one another,” says Chris Geis, president. “And being able to buy tractors and trailers from the same source certainly makes it convenient for customers. They can make one trip and get complete service performed on their trucks and trailers.”
For that reason and a variety of others, the trailer dealership is on a roll. Management expects trailer sales to double in 2007. The company has a sound basis for its optimistic outlook.
“We already have the orders,” Geis says.
The sales growth is coming from fleets of all sizes — small, medium, and large. In terms of types of trailers, the orders the company already has for delivery in 2007 come primarily from refrigerated fleets — a reflection in part of Utility's strength as a manufacturer of refrigerated trailers. However, the dealership also has a strong order bank for MAC and Clement dump trailers.
Over on the truck side of the business, the Peterbilt dealership is off to a good start in 2007.
“We knew that we would have a good first quarter because of the inventory of engines built to last year's emissions regulations,” Geis says. “But it looks now like new truck sales will remain good at least into May.”
Geis believes truck customers will be pleasantly surprised by the fuel economy of the new engines. Conventional wisdom had it that the new engines would burn more fuel if for no other reason than they need fuel to incinerate soot trapped in the particulate filter — a fuel consumption process that does nothing to move the truck farther down the road.
“We are hearing good reports about the fuel economy of engines built to the new 2007 emissions standard,” Geis says based on early reports presented at a recent Peterbilt dealer meeting. “There aren't a lot of trucks out there yet that have the new engines in them. But based on limited numbers, the fuel economy of these engines is actually better than last year's models.”
Like everyone else, Geis expects a decline in truck sales as the year progresses.
“Even so, a number of our customers have been showing interest in trucks equipped with the 2007 engines,” he says. “Their view is that they haul freight, and they are going to need trucks.”
Utility Trailer Sales of Kansas City management has extensive experience in making the dual dealership concept work. Leon Geis, Chris' father, had been the general manager of Allstate Peterbilt and Utility in Saint Paul, Minnesota, one of the largest dual dealerships in the country. Allstate has locations stretching along the northern tier of states from Ohio to Montana.
After a stint with a leasing company in Colorado, Leon Geis was brought in to be the general manager of the Freightliner dealership in Kansas City. But when the Peterbilt dealer in Kansas City lost his son in an automobile accident, he also lost his plan for succession. The dealership went on the market, and Leon Geis bought it.
The year was 1987. Some 10 years later, a struggling Utility dealership became available, and Geis acquired it, too.
“Utility Trailer does not have a problem with common ownership,” Leon Geis says. “They simply want to be well represented. Part of that involves having a separate building for the trailer operation.”
There never was much question about being well represented.
During the time Geis only had the Peterbilt dealership, the company remained in the facility where Kansas City Peterbilt operated when he bought it. The Peterbilt dealership, which started operation in 1975, was housed in a 25,000-sq-ft facility near downtown. But when he obtained the Utility brand in 1997, it was time to move.
The company left its leased facility and constructed a new building conveniently located near the intersection of two major freeways: Interstate 70 and 435. The relocation put the company just off the service road of a heavily traveled truck route while simultaneously providing ample room for separate truck and trailer facilities.
Today, the Utility shop is almost as big as the one that used to serve the Peterbilt dealership — 23,000 square feet. The Peterbilt facility measures 63,000 square feet. They share the same 22-acre site.
“We built this building in 1998,” Chris Geis says. “We first moved our Utility operation into our body shop, but we constructed a separate building for our trailer dealership the next year.”
Getting it right
The Utility dealership had been struggling when Geis took it over.
“It took about four years to get it turned around,” he says. “One of the areas we had to improve was the way warranties were handled. If there is a problem with any of the trailers we sell, we make it a point to get it taken care of right away.”
Management understands the damage that an unhappy customer can give a company's reputation.
“Even after all these years, we still deal with some of the stereotypes some of our customers have from the prior owner,” Chris Geis says. “It's imperative that we take care of customers in everything we do and that we stand behind our work.”
Customers appear to like the way Kansas City Peterbilt does business. The company opened a dealership in Sedalia, Missouri, in 1993 and Olathe, Kansas, in 1995 to accommodate the ever-increasing growth of the company.
Making them mesh
The truck business and trailer business complement one another at Kansas City Peterbilt and Utility Trailer Sales of Kansas City.
“For the Utility dealership, we mirror what we do at Peterbilt,” Geis says. “For example, we have a sales manager for both operations. And, of course, we have separate shops. It may sound like a redundant system, but there is no question that we would not be as successful in the trailer business if we did not keep the two operations separate. As is it, everyone has responsibility for their own bottom line. About the only common area we have is the accounting department.”
The two sales departments may be separate, but that does not mean they are isolated from one another.
“We have staff meetings once a month,” Geis says, “and we communicate all the time.”
Management also has seen an intertwining in the parts department. It is not unusual for the company to get its truck parts from the Utility Trailer parts distribution center.
“We buy our parts wherever we can get the best deal,” Geis says. “And Utility has decided to get very competitive in the parts business — including truck parts. For example, Utility is now our source for Luber-finer filters. We have even bought wheels for trucks through the Utility parts system.”
Utility made itself a more appealing parts supplier for Utility Trailer Sales of Kansas City when the manufacturer opened a parts distribution center in Cincinnati a few years ago. Until that happened, Utility was shipping parts to Kansas City from California. Paccar's parts warehouse in Oklahoma City remains slightly closer to Kansas City. But the Utility PDC in Cincinnati is 1,000 miles more convenient than shipping parts from the West Coast.
“We've been growing almost any way you want to measure it,” Chris Geis says. “Our parts sales were up 39% in 2006, and the shortage of technicians is the only thing limiting the growth of our shop. We have 14 in our trailer shops, and we could use another 10. We have the space to do it, and we would love to add second and third shifts if we could staff them. And our trailer sales are booming. With twice the trailer orders that we had last year, we are looking forward to a good year.”