AFTER more than 20 years of running Southwest Trailers & Equipment, it’s probably safe to say that President Mike Dye has come up with a good recipe—start with a trailer dealership, mix in about 20% truck equipment, solid parts and service departments, and then blend in multiple generations of employees to make sure that the mix continues to percolate.
He picked up the basic recipe from Fruehauf Trailer Corporation where he had served first in his hometown of Memphis and later after being “temporarily” transferred to Oklahoma City.
In its day, the vertically integrated trailer manufacturer provided many people in the trailer business—and to a lesser extent the truck equipment business—with a solid education in commercial trucks and trailers. Fruehauf, of course, was first and foremost a trailer manufacturer, but many of the company’s branches also actively sold truck bodies and equipment. The emphasis on truck equipment varied from branch to branch. When Dye arrived at the Oklahoma City location in 1990, truck equipment was a big part of the mix.
“We did some truck equipment in Memphis, but nothing like what they were doing in Oklahoma City,” he says.
Dye had only served three years at the Oklahoma City branch when he had the opportunity to buy the operation from Fruehauf—trailers and truck equipment.
“One day we were Fruehauf. The next day we were Southwest,” Dye recalls. “And I had to transition from being a branch manager to business owner just about as fast.”
One of the differences between the two roles is that it’s fairly easy for a manager to move from one branch to the next, but when Dye bought the company, he also had to buy into life in Oklahoma City. The stint Dye and his family thought would be temporary has become permanent.
“We love it here,” he says. “Oklahoma City has been a great place to raise a family and grow a business.”
Truck equipment is one of the activities Dye continued from his days managing the Fruehauf branch.
“I like having the diversity of it,” Dye says. “Truck equipment to us seems to be a little less prone to the cycles that the trailer business experiences. We have been working to strengthen our truck equipment business in recent years. It is now more than double what it was five years ago.”
A diversified product line can be vital in a market like Oklahoma City where the local economy hinges on the strength of the oil and gas business.
Oil and gas is known for its booms as well as its busts. While the drop in the price of oil is beginning to be felt, truck equipment sales help provide stability. Few things have been as stable in the company’s history as being awarded the state dump body contract. Southwest Trailers has been awarded that contract for 32 consecutive years.
“We had some major blizzards here five and seven years ago,” Dye says. “It showed that we here in Oklahoma were not prepared for major weather events like those. The state has worked to get ready for them now. The same holds true for municipalities.”
The 89 trucks associated with that order are beginning to roll into the truck equipment side of his shop now. Dye attributes his company’s success to a combination of competitive pricing, good relationships with those involved in the buying process, and some expertise in hydraulics that have proven popular with the state DOT.
“We work very well with our state and municipal customers,” Dye says. “We know their needs and how to deliver a quality product to them at a competitive price.”
In a time where most people in this business face a shortage of technicians and other personnel, Southwest Trailers has at least a partial solution—grow your own.
“It’s surprising how many multi-generational families work here,” says Dye, who recently completed his term as president of the National Trailer Dealers Association. “Through the years, we have had 11 families with at least two generations that have worked here. One family had a father, son, and grandson who worked for us. Kurt Olson is our truck equipment manager. His dad was also our truck equipment manager. L J Scarberry, our former service manager, started with Hobbs Trailers in 1966. His son Wade is now our trailer sales manager. And we have had a number of father-son teams working in our shop, including two father-son teams who are with us now.
“We really don’t have much turnover. Most of the turnover is with people we recently hire. If employees stay with us three years, we find that they generally will stay with us for 25.”
So what’s the key to building longevity?
“We really try to look after our employees and their families,” Dye says during one of the monthly lunches the company holds for its employees. Today’s menu on a cold Friday afternoon: chili. “Our employees are the ones responsible for making Southwest Trailers successful. We really do appreciate them, and it’s important that our employees know that.”
One other family that is now in its second generation at Southwest Trailers: Dye’s son Adam has been with Southwest Trailers since graduation in 2007. He started out helping the company with IT and serving as credit manager. He now is responsible for sales on the north side of Interstate 40, a highway that essentially cuts the state in half. The company also has added a new trailer salesperson to cover the area south of Interstate 40.
“I have known Mitchell Brown since he was 11,” Dye says of his 26-year-old salesman. “It’s great to see the energy and enthusiasm that we have in our sales department.”
Mixing truck equipment, trailers
At a time when the price of oil is adding uncertainty to the economic outlook in Oklahoma, Southwest Trailers management is grateful for its mix of trailers and truck equipment.
“The general economy has actually picked up, and that is good for our truck equipment sales,” Dye says. “And trailer sales have been great—like they have been for most people.”
Margins are a little higher in truck equipment than they are for new trailers, he adds.
“Trailer sales, by dollar volume, are Number One with us,” he says. “That’s because trailers are an expensive item. You sell a few of those and all of a sudden, there’s quite a bit of dollar volume. But where are the profit margins? For us, it’s our service department, then parts, followed by truck equipment, and then trailers. You sell trailers to perpetuate the rest of your business. It’s kind of a trickle-down thing. As diversified as we are, when one falls off, the others tend to pick up.”
The company’s 70,564-square-foot facility has room to accommodate both trailers and truck equipment. It contains 24 repair bays, a separate paint facility with an 85-ft paint booth, a four-bay steam rack, and a two-bay frame straightening rack. The 12 acres of asphalt parking are lighted and fenced for security. Together, the operation occupies 18 acres on the west side of the city.
The shop is organized by teams. One team handles truck equipment installations, another specializes in tank trailers, and the third is responsible for all other trailers.
The shop is currently configured with six truck equipment bays, 12 general trailer repair bays, and six more for tank repair.
“Tank repair is big for us here in Oklahoma City,” Dye says. “Tinker Air Force Base is close by, and we do a lot of work on their refueling trailers.
Trailer lines represented include Wabash, Clement, Travis, Landoll, Polar, and Holden. Truck equipment lines Southwest Trailers handles include Galion, Morgan, Omaha Standard, Adrian, Maxon, Warren, and Monroe.
Parts sales contribute substantially to the company’s sales. Southwest Trailers keeps more than $1.3 million in its 22,000-sq-ft parts warehouse—including $500,000 in truck equipment inventory.
Four inside and two outside sales people serve Southwest parts customers.
“Our outside guys do most of the pickup and delivery for us in addition to sales,” says Ben Tallant, parts manager. They both have F-450 diesels with a flatbed mounted on the back. They mostly serve customers in the petroleum industry. Some of those orders can be pretty heavy, which is why they drive the trucks that they do.
Southwest Trailers has more than 760,000 part numbers in its system. The company keeps more than $1 million in parts inventory—a figure that used to be significantly higher.
“Our biggest focus lately has been to identify and rid ourselves of obsolete inventory,” Tallant says. “We also have tried to make sure that we have our fast sellers in stock. For us, that includes LED lights, Hendrickson suspension parts, overfill protection for tank trailers. And based on what has been happening the past few winters, we want to be sure we have the parts our snow and ice customers need.”
“LED strobe kits seem to be selling really well right now,” Dye says.
Over on the trailer side of the parts department, Southwest Trailers relies heavily on Aurora Parts & Accessories to consolidate its purchases.
Much of the company’s truck equipment inventory consists of van interior packages.
“Vans seem to be a real trend,” says Kurt Olson, truck equipment manager. “Ram, Ford, GM, Nissan. All the truck manufacturers have introduced new commercial vans recently. It has happened so quickly. Some truck dealers aren’t quite sure how to respond or what to order.”
One happy business owner
Who can blame Mike Dye for being pleased with how things have unfolded for Southwest Trailers & Equipment? Trailer sales are strong. Truck equipment sales are strong. Trucks for the annual state dump truck order are beginning to roll into the shop. And at a time in his life when successful business owners are considering ways to perpetuate the business, a new generation is joining the company.
Not to mention that his daughter Kendall recently qualified for the LPGA tour and played in her first LPGA golf tournament in February. Since the beginning of 2015, she has competed in tournaments in Orlando, the Bahamas, and Melbourne, Australia.
And just in case someone is curious about future generations at Southwest Trailers, Adam Dye and his wife are anticipating the arrival of twins—Davis and Millie—in April. ♦