STS: It's a Truck Equipment House, Trailer Dealer, All in One

THE first hurdle was overcome in 1989, 13 years after George and Barb Jacobs purchased Syracuse Trailers Sales: They changed the name to STS Truck Equipment and Trailer Sales.

The company had been started in 1949 as a small repair facility for trailers and truck bodies. It had roots in truck equipment because the original owner dabbled in kits from Hewitt-Lucas Body Co Inc, and STS continued that for many years as a service for the customer base.

When Fruehauf Trailer Services Inc — which was an even more powerful force in truck equipment than it was in trailer sales in Syracuse — decided to close its branch, product lines were freed up. So with the name change, the Jacobses wanted to emphasize that the company would be more than simply an outlet for trailer sales.

The final hurdle was cleared between 1996 and 1999, when the company executed its expansion plan by establishing branches in two other New York cities — Buffalo and Utica — and in Scranton, Pennsylvania.

Shawn Jacobs, who took over as president 10 years ago when his father and mother semi-retired to become CEO and vice-president, respectively, admits that it is unusual for a company to operate four shops that integrate trailer sales and truck equipment. But he says each branch serves a specific marketing area.

“Each branch needs to be allowed to develop its own personality,” he says. “We have branches that are very strong in fleet sales or trailers. We have branches that are strong in service. And the products they're selling at each are different.

“When we adopted the plan to open up branches, we decided to proceed with a cookie-cutter mentality — to try to have standard operating procedures for all of the branches. But we found when we opened the first two that that works as a foundation, but it needs to be able to be flexible and adaptable to the local market conditions.

“So although our systems — from computer to paper flow — and procedures are all done the same, we allow flexibility with our marketing and inventory levels, with the focus on our service departments.”

He says one of the problems he encounters is that the truck-equipment industry is not as organized as the trailer business. Potential suppliers have traveled halfway across the country and arrived at STS' Syracuse office without an appointment.

“STS is not your typical truck-equipment house,” he says. “STS has adapted into a larger business. I think we are a typical trailer dealership, but not a typical truck-equipment house. Typically, at a truck-equipment house, the owner is part of the installation team and he's part of the process, standing behind the parts counter, and all the business is conducted there. Our truck-equipment business is a division of our company and is a profit center, and it's treated as a department.”

The power emanates from the corporate headquarters in Syracuse, 154 miles east of Buffalo, 54 miles west of Utica and 130 miles north of Scranton. Syracuse is home for the company's upper-level administrative personnel and has the largest parts department, devoting to it nearly 40% of its 40,000 sq ft of under-roof space. Jacobs looks at the parts department as a support unit for truck equipment and trailer sales.

Utica, primarily a service location, has a large snow-removal customer base, but a limited amount of walk-in parts business. The establishment of a Wal-Mart distributor in nearby Marcy has provided a significant upsurge in business for STS, which performs the upfitting and upgrades.

Jacobs says Buffalo is probably the “most challenging store” in STS' portfolio because the market's fragmentation offers competition with numerous service-only and parts-only businesses. He says it probably does the best job of the four in servicing its fleet customers.

Geared Toward Service

Scranton, unlike Syracuse, is oriented to servicing trucks. Jacobs says the market was ripe for a supplier, and the staff he hired there were professionals with an intricate knowledge of the area. Jacobs has given the service department the flexibility to pursue a wide variety of work, with the objective of keeping the shop full.

“Being our newest store, we have tried to perfect all the areas we weren't pleased with in opening the other branches,” Jacobs says. “I hired the best mangers I could hire. As opposed to allowing them to grow with the branch, I hired the best I could find for that market in our industry. It has meant a much better return on the investment than what we had seen in our other branches.”

Sales volume in Syracuse is divided between new and used trailers (55%), parts (15%), truck equipment (15%), service (10%), and rentals (5%).

Syracuse, Buffalo, and Scranton have a combined trailer inventory of nearly $6 million. (“I'd be a lot happier if it was $3.5 million,” Jacobs quips.) Utica is out of the loop because that area is covered by salesmen based in Syracuse. Buffalo is used as a stop point because of its proximity to the Toronto plant of Trailmobile, its primary vendor, and most of the rest of the inventory is in Syracuse because of its central location.

Jacobs is not finished branching out. He wants to open up more shops, going wherever Trailmobile has opportunities. It has been a long-standing relationship. George Jacobs, prior to buying STS, was a branch manager in Syracuse for Trailmobile and had worked at various Trailmobile branches for the previous 15 years.

“We had found that to succeed, we need the support of our primary product lines,” he says. “This is best accomplished where they have a need. Trailmobile has been a very significant partner in the growth of STS. Its parts programs and support are second to none. The investment that Trailmobile has made in production facilities — mainly the opening of the trailer facility in Toronto — has continued to provide STS with the capacity to service its customers in the Northeast.”

Staff Eases Impact of Transition

Jacobs, explaining the transition to truck equipment and the addition of three branches, says it has been “easy” because of the staff he has assembled.

“We had all the infrastructure in place for the transition,” he says. “The sales philosophy is very similar to selling trailers. The tooling required in the shop to install was already in place. It needed a more specific industry knowledge for installation. But we had all the infrastructure in place.

“The parts department and inventory took the most significant adapting. I don't know if we still have our arms totally wrapped around it, because there's so much seasonality, especially in snow removal. It's dissimilar to any of the other product lines I have because of the large inventory requirements.”

Jacobs says he perceived that he had a great opportunity to grow the parts departments, but in seizing it, he also recognized that it would be the most challenging department to govern successfully.

“With trying to capture a market, the margins are not great enough in the trailer business to where you can shock someone with wonderful pricing,” he says. “And the industry today is requiring good service, and typically customers are getting it. It may take multiple vendors. So as we try to usurp market share, that's a very challenging thing to do in a market area for us. It's the largest area we need to exercise patience in.”

In Syracuse, STS installed a mezzanine earlier this year to accommodate its increased emphasis on parts and to more efficiently stock them. The store does a healthy walk-in business, has five outside parts salesmen, and delivers on a next-day basis.

Jacobs says he is in the process of evaluating which parts need to be upstairs and which need to be downstairs, closer to the employees. He has installed an access gate where they can load with a tow motor. STS hasn't simply increased the quantity of parts; it has added a variety of new product lines, particularly in suspension and cargo control.

Last year, STS installed a Karmak computer system in all branches, which are connected via a dedicated line to Syracuse. Jacobs says that has helped the company better understand the parts needs of its service department and its customers while giving the company information to make sound business decisions.

Service is paramount at STS. Perhaps that's why Jacobs has this motto framed in black in his office: RULE #1: IF WE DON'T TAKE CARE OF THE CUSTOMER … SOMEONE ELSE WILL.

STS has 20 bays and devotes 20,000 sq ft to its service area. The newer bays are primarily designed for longer trailers. So STS has the versatility to handle a platform trailer and a 53' trailer.

Four service bays have been allocated to be the primary truck-equipment bays. So in the busy leadup to snow season, they can put snowplows two-deep in each bay and accommodate eight vehicles at one time.

Most of the work in the trailer department is fabrication. As Jacobs talks, an employee installs a snowplow on a truck for the Village of Homer. The manufacturer did not make the components that would fit exactly, so STS had to do a significant amount of fabrication.

“He (the employee) has been fabricating for 20 years — that has allowed us to take on a challenge such as this job,” Jacobs says. “Some other suppliers probably wouldn't accept this challenge.”

Next to that job, technicians are completely rebuilding the suspension on a furniture trailer. Next to that, they are repairing a wreck. They handle any type of work, from normal maintenance to accident repairs.

Ten Snowplows a Day

Of course, the snowplow business is big. About 500 snowplows are installed in a 90-day period. During the peak time, STS will install 10 per day.

Among US cities with a population of over 100,000, none get more yearly snowfall than Syracuse's 108 inches. Jacobs says almost every household in the area has a 4-wheel-drive vehicle, and 60% of snowplow sales are based on new truck sales. Starting with the first significant snowfall, usually in mid-November, STS will log over 100 phone calls per hour from customers or potential customers seeking information.

“If we get a good snowfall in October, life is good,” he says. “It inundates our whole operation. The biggest challenge is trying to service those trailer customers who have been with us all year long.

“I'm going to be sitting on $3 million worth of snowplow equipment, and I'm going to be having an opportunity to see those customers you only see once or twice a year in the winter, and I'm going to be having an opportunity to generate a lot of business in a short period of time. In a good year, that can be very positive.”

Each one of STS' stores has the capability of offering on-the-road service. Syracuse and Buffalo have two full-time vehicles on the road. Scranton has one, and Utica has an emergency-repair unit. Jacobs sees it as a service to STS' customers and also as a tool to attract new ones.

Jacobs is continually trying to find ways to serve his customers and employees. He's not afraid to try something that might be viewed as unusual. Five years ago, he hired a woman with no technical knowledge — Gale Peterson — to be his service manager. And two years later, he instituted a flat-rate program for his technicians and now has 14 of 20 on it.

Eschewing Details

Jacobs says Peterson has no desire to become well-versed in the technical side. She fits his idea of the perfect service manager because of her superb administrative skills. Jacobs looks at each department as a separate business. He believes Peterson has to compete with businesses where the president, vice-president, and office staff handle nothing but service. There, to hire someone who does not have strong administrative skills would be limiting the growth of the service department.

“I don't have the time,” Jacobs says. “So what I have chosen to do is hire an administrative person who can run it. Gale might as well be the GM of the STS Service Company. The benefits will outweigh anything else through efficiency, planning, organization, training — all those administrative things that very easily can be pushed underneath the rug.

“It has served our company very well. I think it's one of the reasons our service department in Syracuse is as successful as it is.”

Says Peterson, “It certainly is a different take. It's not the way of the heavy truck business. Most service managers have come up from the floor with a technical background, from service writer possibly to assistant manager. I don't want to make any sexist statements, but you certainly don't see a lot of females doing what I do. But I think if they embraced it and got involved, they would see how much fun it is.”

She says it wouldn't work with a smaller staff. But with 20 technicians, she relies on their expertise.

“If I get into a situation where I need to pull someone else in to solve a customer's problem when they need to have the technical experience, I have the capability to do that,” she says. “It allows me to focus on the administrative functions of a service manager that tech people wouldn't have the time to do.”

Flat-Rate Plan Has Been “Efficient”

As for the flat-rate program, Jacobs says that although there is no industry-accepted plan for trailer technicians, the company's program has been “efficient and profitable for STS and its technicians.”

Peterson, who has an automotive background, pushed for it based on her impressions of its success at the businesses where she worked.

“A lot of people (at STS) fought it and didn't think it could work in this business,” she says. “I didn't see any reason why it couldn't. Bid everything ahead of time. A majority of the time a gentleman walks in off the street. He's a trucker and he broke down. He has to call dispatch and tell them how much the repairs are going to be. If we bid a job for 10 hours and the tech does it in eight, we pay him for 10. It's a benefit to the tech. But we're still going to bill that 10 hours. It won't really be a loss in revenue. They can turn out more work. Productivity increases 120% in a very short period of time.”

Jacobs says that although flat-rate technicians are responsible for any improperly done work, STS' comeback rate has been reduced so significantly that it's “almost a non-issue.” He attributes that to accountability.

“You've got the largest amount of people that are doing the largest amount of serious work that are being held accountable,” Jacobs says.

“Administratively, it's a nightmare because unfortunately, there are no industry-wide programs or systems. We've taken ideas from everybody. It is labor intensive to administrate. But is beneficial. Other companies don't realize what they're missing. It amazes me they wouldn't seize the opportunity.”

Jacobs says he goes to great lengths to make sure the customer doesn't perceive it as an opportunity for the company to increase its prices so that it can offer benefits to its employees.

“It truly is an efficiency- and organization-based incentive program,” he says. “It is most effective with larger jobs. The more organized, the less trips a technician will make to get his parts and to get his supervisor's explanation of what is to be accomplished. It allows us to bid the job tighter to be more successful in getting the business, but also to pass benefits on to the technicians.”

Satisfied Employees Build Stability

Jacobs believes that a happy employee is a productive employee who will stay and help build continuity and stability. He says that has become a major priority, given the shortage of qualified technicians.

“We have developed mentoring programs and hiring bonuses and incentives,” he says, “but those types of efforts will not succeed if, once we get an employee here, he doesn't feel appreciated.”

STS has 110 employees, and all clerical and sales personnel and managers have PCs on their desk. Jacobs has established an Intranet for company communications, along with an employee handbook.

Now all STS needs is more space.

Jacobs hired an architect who designed a state-of-the-art, 65,000-sq-ft building late in 1998 that would be built on 20 company-owned acres in Cicero, about 15 miles north of Syracuse. And then the town, which had courted STS, shot it down in zoning hearings because of protests by disgruntled property owners — after the company had spent $100,000 for various engineering studies requested by the town.

“We basically went down in flames in a surprising defeat,” Jacobs says.

The town has since intimated that it made a mistake and would like to re-open dialogue. But Jacobs has been reluctant to do that, feeling that it had been distracting him from concentrating on the growth of the company.

“I was the project manager, and it consumed huge amounts of my time,” he says. “The fortunate thing is that we have all the information. When we do pick up the ball and start running, we won't be starting from zero.”

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