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Texas Trailer Dealer Grows by Specializing in Used Equipment

ACTION Truck and Trailers of Dallas Inc strives to stay on top of the trailer market by stocking a wide range of used equipment and buying trailers for customers' seasonal needs.

Action specializes in buying used trailers at a low price and selling them quickly -- typically within 23 days. Quick inventory turns have spurred the company's growth, says Roger Stebbins, Action's chief executive officer. The company moved to a larger new dealership complex in 1996.

Founded in 1974, Action has experienced continuous growth, despite the cyclical nature of sales generally in the trailer market, Stebbins says.

"Because we're buying used trailers, we're not controlled by the manufacturers," he says. "Other dealers may have to wait for trailer delivery, but we always have an abundance of trailers available."

The same successful operating procedure implemented at Action Truck and Trailers of Dallas is applied at three other trailer branches that are co-owned by Stebbins. They are Omni Trailers in Oklahoma City, founded in 1978; Action Truck and Trailers of Houston, founded in 1980; and Alliance Trailers Inc, Tyler, Texas, founded in 1983.

"We haven't had a quarter (three-month fiscal period) at any of our branches when we didn't make money," Stebbins says. "We've had continuous growth from day one."

Accessible New Facility In 1996, Action moved to a new facility on East Airport Freeway in Irving, Texas, about a mile from its previous location. The new trailer dealership is located near the intersection of State Highways 183 and 114, close to Texas Stadium. The dealership is easily accessible, Stebbins notes, because it is only 10 minutes from either Dallas airport, Love Field or Dallas-Fort Worth International.

The Action dealership is part of a 53-acre complex owned by Stebbins. Action is one of three trailer companies that take up 20 acres. The rest of the land is undeveloped. The Action facility includes a 4,600-sq-ft office building.

"I want to develop a truck and trailer dealership area at this new location," he says. "That way I don't have to go far to see my competitors."

With 33 acres of undeveloped land, Action has plenty of room to expand, Stebbins notes. The company plans to build a service shop behind the new office building. At present, trailer repairs and fabrication are completed at the company's former location. Eight mechanics are employed at a six-bay shop on the old two-acre site.

1,300 Trailers Sold Action sells approximately 1,300 trailers and 200 tractors annually from the Dallas branch. Most sales are used equipment. Flatbeds and vans represent about 70% of trailer sales.

"We buy from any source -- freight companies, leasing companies, and dealers," Stebbins says. "We deal in all types of equipment -- van trailers, reefers, cattle trailers, grain hoppers, lowboys, cargo trailers, domestic containers, and 20- and 40-ft ISO shipping containers."

About 2% of the Action sales are new trailers. Action represents Viking dropdeck trailers, Jet Co grain trailers, and Eager Beaver lowboys.

The eight people in sales at the Dallas branch are provided offices, phones, and computers. Through the company's database, they have access to thousands of sales leads.

"Our computer list contains probably 50,000 names of customers, and it is updated constantly," Stebbins says. "We track every sale we've made for the past 12 years. We sell to customers across the country and from Canada to Latin America."

All salespeople are set up to buy or sell trailers. They work strictly on commission, and actually are paid more for buying than selling, Stebbins says.

"Salesmen all have an inventory," he says. "They receive a percentage of the net profit for equipment they buy, then sell. The salesman who buys a trailer that is sold by another Action salesperson receives a percentage of the net profit. Whoever sells the trailer gets a smaller percentage of the net profit. Buying right is the key to making a good profit."

Quick Inventory Turns Action salespeople have a financial stake in quickly moving the inventory they purchase. They have 90 days to sell trailers without penalty. After that period, they are charged back a percentage of the trailer purchase cost per month for inventory storage.

In practice, however, company sales personnel make quick inventory turns. In 1996, salesmen on average turned each piece of equipment they purchased within 23 days. "We sell 95% of our equipment within 60 days," Stebbins says.

Each salesperson specializes in dealing with one or two particular types of equipment, Stebbins says. For instance, one salesman may deal only in flatbeds and reefers. By concentrating on particular types of trailers, salesmen become more knowledgeable about market prices and can make better deals, he says.

All salespeople travel throughout the country to find the best trailer deals they can. Salesmen typically spend 25% of their time on the road. The company pays full travel expenses.

"Platform trailers may cost less in Pittsburgh than in Dallas," he says. "So we go to Pittsburgh to buy them and bring them back here. The van trailer market in North Carolina may be soft, so we can buy vans inexpensively there. There's usually a good market for any kind of equipment somewhere. The name of the game is to buy trailers and sell them as quickly as possible for a profit."

Though each member of the sales force is in direct competition with the other members, sometimes two salespeople will "split a deal," Stebbins says. Salesmen often join forces to buy and sell larger quantities of trailers -- 50, for example, though the range is from five to 300.

Action and the other dealers co-owned by Stebbins sometimes join forces for large-volume sales, he adds. For example, the Dallas and Houston branches recently bought 300 ISO containers. Half the containers were placed in inventory in Dallas, the other half in Houston. "I sold 150 of the containers the same day we purchased them to a dealer in Chicago," Stebbins says.

Sales data in the Action computer system is available to sales personnel at all four trailer branches co-owned by Stebbins. Any sales representative has access to the information using a personal computer and modem.

Containers Are Refurbished Domestic and ISO containers are replacing Action's inventory of storage trailers, Stebbins says. The Dallas branch has about 450 containers in inventory for sale or rent as storage boxes or portable offices. They include 20- and 40-ft shipping containers and domestic containers that are 28-, 45-, and 48-ft in length.

"I started out in the storage trailer business, and that end of the business is dying out," Stebbins says. "Storage trailers are used trailers with worn out tires that can't be used in fleet service. They are becoming obsolete. People now want storage containers."

Action modifies 40-ft containers into portable offices with storage space for construction companies. Doors and an air-conditioner are installed in the front 15 feet, which is used as an office. The remaining 25 feet are used for storage. Discount stores and schools buy containers from Action for storage.

"In our Houston branch, we've sold 28,000 containers in the last 10 years," Stebbins says. "And they are starting to catch on in Dallas. We can transport them to Dallas from the port of Houston at a freight cost of about $400."

Internet Site Sales In January 1996, Action installed a home page on the Internet. The world-wide web site has brought about 20 to 30 sales, says Bill Krumm, company president.

"We've sold trailers in Maryland and had some inquiries from other locations in the U S, as well as Indonesia and China," Krumm says. "We can e-mail photos of trailers and trucks to potential customers anywhere in the world."

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