Using industry knowledge, unwavering courage, indefatigable work ethic, and Internet savvy, George McMahon has turned a $10,000 advance off his MasterCard into a $16-million company.
He could die a happy man right now. But he's not stopping there. By the end of this year, Utility Fleet Sales is expected to be a $20-million company. And McMahon's business forecasts — which have been accurate so far — say the numbers will be $45 million in the next three years and perhaps $70 million by 2020.
While many other companies have cowered in the face of the worst modern-day recession the United States has seen, Utility Fleet has increased market share and become what McMahon believes is the largest independent used bucket truck dealer in the country, with an inventory that also includes digger derricks, pressure diggers, boom trucks, and cranes.
“This was a 15-year plan, and we got here in 5½," the 34-year-old McMahon says. “We're moving along at a pretty good pace. We've grown 30% over the past three years. Our compounded annual growth rate from the days when we started with $10,000 is 150%. Even last year, in the worst economic environment in my lifetime, we were at 30% growth. Every other truck dealer was dropping 30%.
“It's been a lot of hard work. We focused on capturing market share at all cost. We are a very aggressive group.
“The upside and potential are there. We didn't let the down economy take our business down. We adjusted our inventory and marketing and made sure we were still going to capitalize on the business that was still out there. You have to be able to be nimble and adjust to the changing market.”
In the beginning, it was just McMahon and a dream.
McMahon was working for Altec Industries as a factory rep for the Texas/Oklahoma/New Mexico region, living in Bryan, Texas, and dealing with the major utilities in south Texas as well as all major telecoms in the three states. He decided to leave because he saw an opportunity with the changing dynamics of the used-equipment market.
For many years in the utility market, a power company, investor-owned utility, or city municipal agency would keep a piece of equipment 15 years until it had no life left. In 1997, Altec decided to start its own leasing company and put everybody on five-year true leases, turning a 15-year life cycle into five years. Altec tripled its manufacturing in a short period of time.
“That was a completely new trend,” McMahon says. “The issue was, ‘What do you do with the thousands of pieces of utility equipment that come back off those five-year leases?’ There was no infrastructure in place to deal with it, no dealer network. And an auction world would not be ready to handle the equipment because there was no market.”
Understanding used equipment
McMahon, whose father ran a Chevrolet medium-duty truck dealership in New York, understood the auction and used-equipment worlds.
“I realized you have to have a company that specializes in that,” he says. “A manufacturing company isn't always the best-suited organization to get into the used-equipment retail business. I knew all this equipment would be coming down the pipeline and there weren't many dealers in the US that had experience in the equipment or utility markets.”
January 15, 2005, was his last day with Altec. He rented a 400-square-foot office trailer on a vacant, two-acre lot at Highways 6 and 21 in Bryan. He served as mechanic, driver, receptionist — well, everything.
He flew to Eldorado, Texas, and used his $10,000 MasterCard advance to buy a truck, then drove it back to Bryan. He refurbished it, detailed it, and marketed it on the Internet. Then he took the proceeds and bought another truck and did the same thing. Now he had enough to buy two trucks. After six months, he had an inventory of five trucks.
“I'd have the cell phone to my ear in the pouring rain, with no garage or shop — nothing but a parking lot,” he says. “I'd be working on a sales call while I was fixing a truck, thinking, ‘What the heck am I doing?’” He brought in a secretary so he could focus on refurbishing the trucks. Then, in January 2006, he upgraded to a three-bay, 4,000-square-foot, 40-year-old shop that used to be a salvage yard. He brought on mechanics and salesmen, continuing to grow and market his business.
That shop soon wasn't big enough to handle the work. The banking industry had not gone through the financial crisis at the time, and he was able to get a local bank to fund the purchase of a 42-acre commercial tract of land in December 2007.
He sectioned off a 10-acre piece for Utility Fleet, keeping another 20 acres for future expansion. He sold eight acres to FedEx for what will be a 60,000-square-foot distribution warehouse and left another four acres for what he hopes will host a local truck dealership.
He sketched the design for his facility on a cocktail napkin — a design that could not resemble that of a traditional truck dealership because it had to incorporate the company's very specific needs for cranes and doors that would accommodate work on bucket trucks. McMahon presented it to engineers to “make sure my plan was not terribly crazy,” and received approval. On December 26, 2008, they moved into their new 27,000-square-foot facility, which includes an 18-bay service facility, body and paint shops, and 5,000 square feet of office space.
“I rolled the dice and gambled,” he says, “and it worked out.”
Of course, it was more than simply rolling the dice. McMahon placed the company at the forefront because he understood the unleashed power of the Internet and of smart, aggressive web marketing.
While pursuing an agricultural business degree at the University of Nebraska, he had taken courses on international marketing and the emergence of the World Wide Web. He believed it was going to be “the real estate of the future” and that domain names would be valuable, so he taught himself the vagaries of search engine optimization (SEO).
Once Utility Fleet was established, he did research on the most commonly searched terms, then went out and bought key-word domains. Nothing would be more important to his company than buckettrucks.com — except that a dealer in Pennsylvania happened to own the domain name.
“We paid well into six figures to get it (in January 2006),” McMahon says. “In our estimation, it was worth it. Everybody else thought we were crazy, but it has become the name plate of our company. Buckettrucks.com … you can't put a value on that when you actually sell bucket trucks.”
Then he bought 19 other domain names, including www.utilityfleetsales.com, diggertruck.com for digger derricks, pressuredigger.com for pressure diggers, and buckettrucks.org as an information and marketing website, with a plan to include links to Occupational Safety and Health Administration (OSHA) standards and the Department of Transportation for every state so visitors can understand the regulations that pertain to them: What are the CDL requirements? Are there exceptions for utility equipment?
“Our goal is to become not just the largest sales organization in the industry, but also an informational resource,” he says. “I don't feel manufacturers and companies put enough information out there for people to gather and do their own research. We feel once people have the right information, they make the right decision.
“We bought some names from domain holders and some for $9. It was a fantastic push at the right time. It's all in an effort to expose ourselves to the largest potential market we can. For each specific piece of equipment, each site has unique content. There's no ‘ghosting.’ Each has a unique web page and serves a unique purpose.”
McMahon believes the Internet provides his company with an “instant global audience” and has generated 75% of its business.
“Once you control the right domain names, you can control the message and media going out to the world,” he says. “We've always been cutting edge in web design and international marketing out to other countries. We were the first in the industry to have a multi-lingual website, where you click and translate it into different languages.
“Even though we were a small operation in the middle of nowhere, we were able to capture a global audience. This equipment is specialized enough that you can't just go around the corner and get it. There are five to 10 major utility equipment dealers in the entire country. Only one or two have the piece of equipment you need when you need it. It's a niche industry, which is great and bad at the same time. People are willing to travel to get equipment. They ship it anywhere — across continents if need be.
“We took a lot of expense to develop our website, and ironically have pulled our competitors with us. For a strange little niche industry, the web marketing and web presence has become extremely competitive over the past five years — driven by our company continuing to push. Nobody wants to lose market share. Bucket trucks are probably a more sophisticated web marketing niche than anything in the trailer or chassis industry. Most chassis dealers are so focused on the local market — because they have to be — that they aren't focused on a global push. With bucket trucks, you'd go broke if you just focused on the local market.
“We have some of the most sophisticated websites of any truck dealership in the world. My five or six biggest competitors are probably more sophisticated than any chassis dealer in the US. We are all cutting edge. We all spend ungodly amounts of money competing with each other, but it has elevated the quality of our websites and our user experience. Customers buying on the Internet are getting a pretty darned good experience. They can search through and find a good piece of equipment.”
Utility Fleet does business in the US, Canada, Central America, South America — pretty much “anywhere there's power, phone, and cable TV.” It ships equipment as far away as Guam. It has a contract with the US Virgin Islands Water and Power Authority to supply all utility equipment and parts. It also has worked deals with the Surinamese government.
“I didn't even realize Suriname was a country in South America,” McMahon says. “I've gone to school in geography over the past five years.”
He estimates that international sales make up 35% of the company's annual business, with some months topping 50%.
“We have a strong group of Canadian customers,” he says. “We do as much in Canada as the state of Texas. Canada has lagged behind us in telecommunications infrastructure. TELUS Canada is making a push, doing major rebuilds in the market. We have a telecommunications-specific truck designed for pulling coaxial and fiber cables.
“Everybody in the US is so scared to invest in infrastructure. Business will come from expanding markets. There are a lot of international markets that are untapped. We continue to gain market share domestically as our presence becomes more known and our customer base expands. We give customers a good buying experience. We're the only utility equipment company that does what we do that has a rating and is accredited with the Better Business Bureau. We were the first in our industry to put a warranty on equipment (30 days, 3000 miles). We bend over backwards to take care of our customers.
“Every single person who works here has to put themselves in the shoes of the customer. If you received this equipment and just spent this money, would you be happy if this was just delivered off our truck? If you pause for just a second, we have to make it right. We have trucks getting loaded on semis, and if I see anything on there I don't like, we fix it. We get one time to make a first impression. With that, we gain customers' trust. There were some days when I was questioning my thought and my rationale: ‘This may not actually ever pay out.’ But we did it anyway. It was the right thing to do.”
Once Utility Fleet acquires a unit, it undergoes an extensive service and inspection program on the boom, hydraulic system, service body, chassis, and drivetrain. The work is done by a team of certified technicians whose specialties include aerial devices, hydraulic fluid power, electrical/wiring, computer diagnostics, gas and diesel engine repair, chassis, and bodywork.
The trucks are cleaned in the wash area, where two to three workers spend an entire eight-hour shift on one unit.
“When they come in off power lines, they're filthy dirty,” McMahon says. “It'd be a great episode of Mike Rowe's Dirty Jobs. It's tough work. They come in after being dragged through power lines for three or four years. We probably spend at least 20 man-hours steam cleaning, getting up underneath the chassis for mud and debris, and clean out the bins.
“We use diesel-fired pressure washers and high heat to get off any grease and mud. That makes it easier for mechanics to work on. In order to ensure that they pass dielectric tests, you have to steam clean the inside of booms to make sure there's no hydraulic fluid leaking or accumulating on insulating portions of the boom that cause potential arc-over from power. It's a way other people cut corners, but if it's done right, you have to steam clean the inside of booms.”
All trucks go through a DOT inspection so they comply with all federal regulations. Utility fleet does a complete chassis check on all ETI packages. After a dielectric test and boom certification, the truck is DOT- and OSHA-certified on the aerial device.
The paint booth, custom-designed by a local company, is 45 feet long by 20 feet high by 16 feet wide, so it's able to accommodate the largest bucket truck, digger, or crane the company deals with. The aerial device can be elevated to allow the technician to get into all the nooks and crannies on a boom.
When they're finished, the trucks are guaranteed to be in 100% ready-to-work condition.
A tour of the service facility reveals McMahon's philosophy of efficiency and cleanliness. The sparkling floor looks virtually identical to the promo shots that appear on the company's website.
“I'm obsessed about keeping it clean and organized,” McMahon says. “An organized shop is an efficient shop. When everybody knows where everything is supposed to be, we're a lot more efficient, and safer.”
They use a just-in-time parts inventory strategy, bringing in only what they need when they need it. As they acquire equipment, they track it by VIN number and code everything about the truck, including the transmission and engine. Parts are brought in and staged at the facility so there is no unnecessary capital outlay. All work is done in-house.
The service facility was designed specifically for the work that needs to be done. In most shops, all air lines and oil lines come down from the ceiling. Because Utility Fleet deals with aerial devices and needs clear span, McMahon built racks — he used Reelcraft reels but fabricated all supply lines to come from holding tanks — so everything moves from the ground up. Thus, technicians can raise the boom, move it around, and articulate it without overhead obstructions.
An overhead five-ton crane runs from one side of the building to the other, assisting with boom remounts or replacement of lift cylinders or extension cylinders, or if technicians have to pull an engine.
The entire facility is insulated and heated — using a waste-oil heater — so technicians can work in comfort during the winter.
“Because we service so many chassis on an annual basis, with every single one that comes in, we change the oil and store bulk motor oil from the chassis and never dispose of it,” he says. “We burn off all the motor oil, and it heats our entire facility. It has a boiler inside that completely burns off the motor oil. We don't have to pay to have it hauled off or pay for heat.”
Everything is color-coded: red for “not serviced,” yellow for “waiting on parts,” green for “mechanically completed,” blue for “body shop work required,” purple for “non-skid required,” and pink for “updated pics required.”
“These are methods we developed internally as part of the Rapid Continuous Improvement (RCI) that everybody talks about,” he says. “We feel we have the nicest shop and facility for 100 miles. Everybody wants to work here, so we're in a great position to be able to pick and choose which mechanics and technicians we bring on. When you have the nicest shop and best pay scale and unlimited overtime because business is growing 30% each year, you're in a unique situation here locally. We have guys leaving major multinational corporations and coming here because of the working environment. We have benefits, with 401(k), paid vacations, paid holidays, and a very competitive wage. Combine that with the nicest facility and it works out well.”
McMahon walks outside and spots a truck that is near the end of the refurbishment cycle. The entire service body has been repainted, with repainted wheels, new tires, and new, non-slip coating on all walk surfaces. An employee is buffing the cab. It looks almost like a new truck. But instead of selling for $90,000, it will go for $45,000.
“If you're a contractor or small municipality and don't have a budget in today's tighter world, we're offering a good alternative. That truck looks like a new one for literally half the cost,” he says. “If you're the city of Granite, Oklahoma, and are on a limited budget, and put only 5,000 to 10,000 miles a year on the truck, why would you ever spend money on a new one? It just wouldn't make sense to do it.
“The real trick is to do all this reconditioning and be able to sell the product at 50% of the cost of a new one and still return a profit. We can't come in at 70% of the cost of a new one, because then we're too close to the cost of a new one. We can't price ourselves out of the market, so we have to build efficiencies in our operation to capture the revenue.
“We don't have a bluebook value for this equipment, so it's difficult for people to comprehend the value. The value comes from our own books and our own historical records and what we feel the market is going to bear. We've got to set our own bluebook values. We've got to do all that internally. And that's why there are a limited number of people who do it. You have to be really in tune with what the market wants and what the market can bear.
“We're giving a turn-key package, so that when it leaves here, it's in a position to go to the job site and start work immediately. The end user is not going to have any need to get it fixed or serviced. Even if he tried to do it himself, there's no way he could do it as efficiently and cost effectively as we could. So even if he bought the truck and did the same level of refurbishment we did, there's no way he could match our price. And we do it for him. That's the ‘win’ for all these utilities. That's why we exist. That's not even taking into account your personal time or the manpower needed to make that happen. Because we're able to do the repairs as efficiently and seamlessly as we do, that's where we build in our profit.”
Adapting to recession
He says the big push for the company involves smaller cities and municipalities that don't have the budget in today's world. Utility Fleet adapted to the recession and rolled over its marketing plan from its traditional base, which was contractors, to the municipal markets that had traditionally been new-truck customers.
“I do believe that when the markets rebound, cities and municipalities might go back to their old habits and buy new,” he says. “At that point, our contractors — who have been sitting on the sideline and haven't been buying equipment — will then roll in and take the place of municipalities we have been dealing with. Municipalities always have money. They may not have as much, but they'll always have it. They've gone from buying new to buying used.
“Contractors have been making what they have last a while longer, which actually plays into our hands, too, because over the past two to three years, they may not have been buying in the buying cycles they should have been, and when it comes time to replace, there's going to be a big surge to replace a lot of equipment very quickly. We hopefully will be in a position to supply them with that when the times comes. Just like any major fleet, if you put off your needed acquisitions, when it comes time, you eventually have to pull the trigger and buy equipment. And when you do, instead of buying five units a year, now you're going to be forced to buy 15 a year because you haven't bought for two years. The need is not going to go away. It can be delayed. It can be postponed. But it's never going to go away.”
What does the future hold?
McMahon hopes to grow the Hino truck franchise he took on a year ago. He said the Toyota group was looking to expand into new vocational markets and didn't understand the needs of the utility industry, so Utility Fleet worked with them, giving them data and input regarding specific chassis needs.
“Through that relationship, we were able to secure a Hino truck franchise in central Texas, which was no small feat,” he says. “We're surrounded by the largest Hino dealership in the world: Rush Enterprises. Hino still awarded us a franchise in the middle of their backyard.
“It's been a great relationship so far. I think it's going to be a good chassis. In the next five to 10 years, it'll gain more acceptance in the utility industry. We think it's going to be the premier chassis, now that they're beginning to focus on it and are accommodating body upfitters more so than in the past. When it was introduced in ‘05, they focused on the box-truck market simply because it was a numbers game. There were a whole lot more box trucks than anything else. All they did was build that truck to be able to slap a box on the back. That's easy. Just slap it on top of frame rails and anchor with six U-bolts and you're good to go.
“This equipment is more complicated. Now that they secured a good portion of the box-truck market, they're coming back for smaller and more specialized markets.”
He says he's also seeking to acquire Mack, International, and Western Star dealerships and expand the company's presence and ability to pull in chassis.
He didn't expect to be in this position. Not now. Not after fewer than six years.
It's pretty heady stuff. Although he's focusing primarily on what he can do to grow the business, it's hard not to occasionally reflect on how much it has already grown.
“We had some people willing to work very hard in the beginning days with little resources,” he says. “They saw the potential in the company and stuck with us. When I look back on those days, I can't believe they were willing to work for us.”