Twin Companies Manufacture, Distribute Utility Equipment

A truck equipment distributor is off to a quick start. The 18-month-old Utility Truck Equipment Company opened for business in a new facility and added a second building earlier this year after acquiring an aerial device manufacturer in February.

Utility Truck Equipment Company (UTEC) opened for business in its 5,000-sq-ft shop just south of Waco, Texas, February 1, 1998. As its name implies, the company specializes in distributing utility equipment, selling primarily in central Texas.

The nature of the business, however, took a new twist at the beginning of 1999 when the utility equipment distributor added manufacturing to its mix. This past February, the company purchased assets that will enable the firm to manufacture the Waldon Skyjacker line of aerial devices.

A trio of industry veterans-Mike Hermansen, Randy Breyer, and Terry Harrison-bought the assets from Waldon, a construction equipment manufacturer based in Fairview, Oklahoma. Waldon management spun off the aerial devices because they did not fit the rest of the company's product line-articulating loaders and graders.

Hermansen, Breyer, and Harrison formed Utility Truck Equipment Manufacturing (UTEM) to produce the aerial products for worldwide distribution. These products include SkyJacker (a non-overcenter aerial device), the SkyTracker (an overcenter articulating unit), the SkyVan (a telescopi ng van-mounted aerial device), and the SkyTel (a telescoping aerial device mounted on a chassis).

"We started UTEC as a distributor of truck equipment, as well as a fabricator of parts for the utility, municipal, and construction markets," says Mike Hermansen, general manager of the truck equipment operation. "When the opportunity to purchase the assets of Waldon came along, we recognized the advantages. The products that we manufacture go to the same markets that we serve as utility equipment distributors."

Initial production of the aerial devices was cramped because UTEM had to share space with the truck equipment operation. However, the manufacturing company moved into its own 8,200-sq-ft facility at the beginning of this summer.

UTEM will use its sister company, UTEC, to distribute its aerial devices in a portion of Texas. Outside of this area, UTEM will market internationally through what is planned to be a network of 35 distributors. "Our agreement with Waldon called for the cancellation of their existing distributors. This freed us to set up our own distributors," Hermansen says. "We made our first trip to set up distributors June 13."

With the completion of the new manufacturing plant immediately across the street from the UTEC facility, the distributor can concentrate its efforts on selling and installing new equipment and refurbishing existing utility trucks. "During our first year, between 60% and 70% of our business came from service work," Hermansen says. "We do a lot of rebuilds and transfers of utility equipment."

UTEC offers a one-year parts and labor warranty on the utility equipment it rebuilds. The warranty covers defects in materials and workmanship. "We are confident in our knowledge of utility equipment," Hermansen says. "That's why we can offer a one-year warranty. We don't cover the truck itself, but we do offer it on the equipment we have rebuilt."

Digital Truck Equipment Sales In its brief history as a truck equipment distributor, UTEC has made extensive use of the Internet. Management has found it to be an effective way to sell used equipment.

"We list equipment that we have for sale, and we also use the Internet to search for equipment," Hermansen says.

The Web has helped to significantly expand the company's market geographically. Hermansen uses a digital camera to photograph the equipment UTEC has for sale and posts it on the Internet.

"We do a lot of digital photography," he says. "It's quick, inexpensive, and the quality is good. And for those customers that are shopping for used equipment, it's easy for us to e-mail the digital photographs to them." UTEC has marketed its products via the Internet without having a web site of its own. To date, the company simply has posted its products on sites dedicated to selling used trucks.

Export Orders UTEC has developed a decent amount of export business, As a manager for utility equipment manufacturers, Hermansen traveled internationally. Personal contacts, particularly in Latin America, have helped the company sell truck equipment internationally.

"We have people on staff who speak Spanish and who understand the culture," Hermansen says. "I am convinced that the most important thing in selling internationally is knowing the culture and the ways that other people do business."

UTEC has sold truck equipment in Argentina, Bolivia, and Chile. Mexico is the largest source of international sales. Some of the things about doing business in Mexico that have impressed Hermansen: * The importance of the family * Not scheduling business between 3 and 5 pm * The level of competition.

"These are good, competitive business people," Hermansen says. "It has been effective for us as a company to establish relationships with independent business people. Our experience has been that if you treat them right, they will do business with you again and again."

The company's location also helps. UTEC and UTEM face Interstate 35, the primary highway linking most of the United States with Mexico. An estimated 5,000 vehicles per hour pass the company's facilities. Conspicuous signage and a display of completed trucks out front help the new company get noticed by those who drive by.

"Probably half our business comes to us as a result of our location," Hermansen says.

Separate Operations UTEC represents a variety of manufacturers, including truck bodies from Omaha Standard, Stellar Industries, and Maintainer Corp, along with Venco/Ventura and Maxilift cranes, winches from dp Winch, Eagle Lift liftgates, and Signalier street lamp aerial platforms. UTEC also represents Baker Rental and Leasing, one of the largest utility equipment rental companies in the nation. It now also represents its own line of aerial devices.

"We keep the two companies separate," Hermansen says. "It makes it easier to measure the success of both. Based on what we have seen so far, we look for continued growth. We have found our niche, and we plan to grow slowly within that niche. We plan to be a small, financially strong company that is a good place to work."