What the most successful equipment dealers do right

An equipment sale still comes down to having it or not. That fundamental was in place during the last major economic downturn, and it remains true in 2022. Photo: P&Q Staff

Equipment dealers can’t sell a portable plant or a piece of mobile equipment if they don’t have it on hand.

Equipment availability is not so simple anymore, though, with lead times stretched out 12 to 18 months. Ninety-day lead times might be a thing of the past – or, perhaps, gone until an economic slowdown produces a business environment in which supply can catch up to demand.

Until then, the dealers who excel will likely be the ones who have equipment in the yard. But dealers say there are significant risks with taking on too much inventory – and that striking the right balance is easier said than done.

“Inventory is key right now, and that is probably our biggest concern from an inflation standpoint,” says Chris Kimball, COO of Belt Tech Industrial. “We are able to raise our prices because people need the products, but what about when inflation turns to deflation?”

Once prices go down, no dealer wants to get caught with high-priced inventory. So what then?

“[It’s] just trying to hedge that and looking ahead – whatever it might be,” Kimball says. “How are we going to protect ourselves in the long term when, eventually, prices stabilize?”

Others weigh in

Kirk Rainbolt, CEO of Kimball Equipment Co., agrees an effective inventory management plan is essential for dealers to successfully navigate the inflationary environment. New inventorying risks are inherently surfacing for every dealer, he says.

“If you don’t take the risk and put the inventory in, then you don’t have a business,” Rainbolt says. You’re already lost. The game’s over before you’ve started. It’s not an option.”

A dealer’s choice at this point, he adds, is essentially making a bad choice or one that’s merely a little less bad.

“The option is to put the inventory in place, roll the dice and maybe you get lucky, did the right thing and everything worked out well – and you have a good business,” Rainbolt says. “Or, it goes bad, and then you don’t have a business. But if you don’t do anything at all then you don’t have a business.”

Goodfellow Corporation, which serves several states in the Western U.S., is typically aggressive on the inventorying front. Goodfellow vice president of sales Chris Baron says his company increased its raw parts inventory in the last 12 months by 30 to 40 percent.

Goodfellow’s goal with that approach is to take care of customers and maintain the many positive relationships it has. Because if Goodfellow doesn’t have something on hand, then a relationship could be soured.

“What we’ve really done is sat down and tried to forecast what our needs are going to be for 2023 and even into 2024,” Baron says. “We’ve taken a really aggressive approach on capital equipment and spares and wares for that equipment.”

Dale Bianco, CFO at US Equipment Sales & Rentals, says his company reworked its inventorying approach in light of recent supply constraints.

“What we’ve done in our business to protect our relationship with our core customers is actually take a bunch of equipment off the market for sale and made it rental only, because I don’t want to be caught three [or] four months from now when my absolute best customer comes in and goes: ‘My permanent plant is down, I need a portable’ – and I don’t have it because I sold it to a one-off customer in your territory,” Bianco says.

“We strategically moved a big portion – almost one-third of our equipment – into rental-only mode,” he adds.
Chris Harris, con/agg manager at Ohio Cat, says owner Ken Taylor urges him and others to plan ahead as best they can for customers.

“If you don’t have it, you can’t sell it,” Harris says. “At Ohio Cat, we’re encouraged to look out into the future and get as much equipment as we possibly can into inventory that makes sense,” Harris says.

Still, not every dealer takes such an aggressive approach.

“There are dealers I’ve dealt with who like to buy out of the factory,” Harris says. “Instead of [them] buying several million-dollar plants from IRock, Lippmann or Screen Machine, I think [they’re] going to see if [they] can get the deal, and then [they’ll] order the plants. But those days are gone because it goes back to there aren’t a lot of opportunities to sell certain pieces of equipment in Ohio.”

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