When money is tight, you watch your spending closely and hesitate before buying anything new. From your car to your toothbrush, all possessions are depended on to last longer in a recession.
Unfortunately, the customers of truck equipment distributors are no different. When money and credit are hard to find, it's just not feasible for many to make a significant investment on a new truck.
The result is that many distributors experienced a steep decline in their 2008 sales — as much as 40 percent. To adjust, some have accordingly slashed their inventory by 40 percent across the board — from truck chassis to mud flaps. However, while truck sales may have fallen off a cliff, many have found that sales of salt and sand spreaders are holding steady. Many customers in the snow and ice management industry are bringing in their old trucks to be fitted with new spreaders.
Upgrade opportunity
Several factors make spreaders an ideal upgrade for old trucks. The most important factor is that people in snow and ice management have money to spend. This industry continues to do well in the poor economy because even in tough times, commercial properties need to have their lots deiced to protect themselves from costly lawsuits. Slip-and-fall claims are a bigger threat than ever, since many on the unemployment list are looking to make a quick buck and even more lawyers are willing to help them out. And unlike most other industries, snow and ice management is dependent on Mother Nature, which has been generous with snow and ice storms the past couple winters.
Besides contractors, government fleets also need to keep their equipment updated to maintain safe roads. Lately, municipalities have been scrambling to spend their stimulus dollars in the short time allotted by the federal government, and many have been using the money to replace the spreaders on their entire fleet.
Among contractors and municipalities, demand for spreaders is high when compared with other winter maintenance equipment. This is because ice events are much more widespread than snow, and they happen in almost every state in the union. The city of Dallas, Texas, for instance, continually updates its fleet to prepare for the two to four ice events received per year. Since ice poses a health and safety threat, almost every part of the country must have spreaders on hand to manage it — no matter how little winter weather they see.
Finding customers
While the demand for new spreaders is real, customers are not always easy to find, and distributors must take an active approach to make sales. A couple avenues can be explored when looking to fit new spreaders on old trucks, but as with any newly added service, the first place a business should check is within its current customer base.
Because spreaders carry highly corrosive material, they usually need to be replaced within the lifetime of the truck on which they're installed. While a person may keep a truck for 10 to 12 years, even a high quality spreader may need to be replaced after only five years. This provides excellent opportunity for distributors to follow up with the customers that had new trucks fitted with spreaders several years ago.
Also, many people are looking to fit a new spreader on an old truck for the first time. If they already own a truck, they can make a relatively small investment to equip it with a spreader and start making money in the snow and ice business. Furthermore, budget cuts are causing both municipalities and contractors to expand the capabilities of their current fleet vehicles. For example, a municipality may use a flatbed truck for drilling signposts in the summertime, but the truck sits idle during the winter. In just a few hours, a spreader can be installed and the truck transforms into an all-season machine.
Risk-reward
Distributors have much to gain by selling spreaders. To maximize profits, customer orders can be supersized with additional accessories or complementary equipment, such as liquid brine tanks. Due to rising technology and increasing availability of brine, more people in the snow and ice management industry want to get into pre-wetting, which is the practice of spraying granular material with liquid before it is spread. Using the same equipment as pre-wetting, they can also perform anti-icing, or spraying brine on the ground before a snow event.
Like spreaders, pre-wetting and anti-icing equipment fits easily on old trucks. Electric-powered units eliminate the dependency on hydraulic hookups, and various tank configurations are available to match the spreader setup. Even though this combination of spreaders and brine tanks may still not equal the profit margin that new trucks provide, the sales will certainly help a distributor pay its bills when the rest of the business is slow.