Sub-stantial sales of snowplows
Sep 1, 2004 12:00 PM
A LOT of snow falls in Minnesota and with the snowfall comes high demand for snow and ice control equipment — more than one distributor can handle comfortably.
Rather than trying to cover the entire market on its own, Aspen Equipment in Bloomington, Minnesota, has developed its own network of 25 subdistributors.
Different manufacturers have different sales territories for Aspen. In some cases, it is the entire state of Minnesota. Sometimes the territory also extends into northern Iowa. In either case, the distributor and its network of subdistributors cover the market in a way that none of them could do on their own.
The subdistributors come in a variety of shapes and sizes. They include companies such as auto dealers, repair shops, and recreational vehicle dealers. The common thread is that they all have service facilities and the ability to sell and install the product.
“All of our subdistributors must sell at least 10 plows per line,” says Steve Sill, president. “In return, we provide them with sales and service training, co-op advertising, and financial assistance.”
Part of the training is directed at installation of snowplows. Aspen makes sure its subdistributors are current on which new chassis models are approved by the manufacturer to be equipped with snowplows and what specifications — including front spring capacity — that the vehicles must have in order to retain OEM certification.
Aspen recently completed its annual sales training session. Held each August ahead of the start of the season, the company brings its subdistributors into the Aspen shop to review features and benefits of the snow and ice control products that Aspen handles. Factory personnel also attend, lending their expertise.
“Plow season kicks off in Minnesota with the state fair,” Sill says. “We have a big display every year on ‘Machinery Hill’ where agricultural and truck equipment are displayed. We will display 12 trucks equipped with snowplows. Our subdistributors help us staff the booth, and our suppliers are also there part of the time.”
Aspen also helps its subdistributors financially. The company typically takes delivery on its snow and ice equipment in May and carries the inventory for its subdistributors until their sales begin, usually in October.
“Not many master distributors will do that, but we want our guys to be pros,” Sill says.
Part of being a pro in the eyes of Aspen is a disciplined approach to ordering. For example, the company insists that orders are placed via fax, rather than over the phone.
“We also encourage them to consolidate their orders,” Sill says. “They understand that it costs them and us every time an order is placed. One of our objectives is to drive down the frequency that they place orders with us so that we in turn can drive down the cost of doing business. We understand that emergencies sometimes come up, but we still want to reduce the cost of placing orders. If we can do that, both of us can become more profitable.”
The ordering guidelines can be found in the manual Aspen developed for its subdistributors. The manual covers the common issues such a relationship involves. The relationship is further spelled out in a contract that both parties sign annually.
Other assistance Aspen provides includes multiple marketing initiatives, including direct mail pieces, newspaper ads that list the subdistributors, and sponsored sporting events such as stock car racing.
Covering the territory
Aspen has scattered its subdistributors throughout the company's sales territory.
“We have a responsibility to set up subdistributors that are spread out geographically,” Sill says. “But there is nothing that precludes someone from buying from anyone he wants to. Our subdistributors are free to sell to any customer, regardless of his location. Realistically, though, few if any of our subdistributors are out making sales calls. The sales they get generally come from walk-in business, and the customer comes to them because of their location.”
Aspen also has to provide service for the equipment in its the territory, and the subdistributors help out here, too. These satellite shops install snowplows and handle basic repairs — including warranty work.
“We serve as a clearing house for all warranty work,” Sill says. “They bill us for the work they perform, and we in turn bill the manufacturer. Snowplow manufacturers are better than most suppliers about honoring warranties. We usually get paid fairly quickly.”
Snow and ice control equipment is a major market for Aspen, but the company also is heavily involved in serving utility companies and railroads.
“The railroad market is coming back for the first time in three years,” Sill says. “Until recently, CN had been spending its capital budget on locomotives and other equipment that we don't sell.”
The utility business is one where Aspen has had to make significant adjustments in recent years. With the consolidation of suppliers in the utility industry, the company has shifted its focus from the high-volume, lighter duty trucks used in the distribution side of the utility industry. Aspen now works primarily with the larger (but lower volume) trucks that the electrical transmission segment requires.
“We are in a wide range of businesses,” Sill says. “We can sell a $300 ladder rack or an aerial truck approaching a million dollars.”
Aspen Equipment celebrated its 10th anniversary July 1, but its roots can be traced back to 1926 when Michael Sill (Steve's grandfather) started Road Machinery & Supplies and his dad and uncle (twin brothers Michael and Mitchell) helped the company continue to grow when they joined the business in the 1950s.
As it matured, the company grew in two directions — construction and utility equipment. The distinct paths proved to be advantageous a decade ago when, for the purposes of estate planning, the two brothers decided to split the company in half. Mitchell Sill and his family took ownership of Aspen Equipment and the former Truck Equipment Division (renamed Reach Equipment). Mike Sill and his family took the heavy construction, forestry, and mining products.
“It was tough to divide the company, but it was something we needed to do,” Sill says. “My cousin Mike and I needed a structure to build upon as our fathers approached retirement.”
Employment has been stable since Aspen was formed. Sill says that most of the employees have been with the company since its start 10 years ago.
Sill says Aspen was deeply involved in heavy truck equipment even before the company split from RMS.
“We like the added value that we can provide customers,” he says. “It allows us to differentiate our products from other nationally distributed products.”
Light-duty trucks are a growing part of the Aspen mix.
“It's a completely different approach than what we had been used to with utilities,” Sill says. “With utilities, we receive a request to bid, and we usually have a couple of weeks to respond. With light-truck equipment, we may have 30 minutes.”
Aspen's decision to diversify into light truck equipment goes back to the days when it was part of RMS.
“Snowplows were the first products we sold,” Sill says. “Getting into the business was our parts manager's idea, and we sold 200 plows our first year. We still were primarily a utility equipment distributor, but our plow business continued to grow.
At the request of one of its utility equipment customers, Aspen added its second line of light-truck equipment — Adrian van interiors.
“Even after we took on these two lines, we didn't even have an outside salesman to promote them, Sill says. “When our sales of these products reached $1 million a year, we asked ourselves what would happen if we really got into this business.”
Making the commitment
In an effort to get into the light-truck business the right way, Aspen commissioned a market research project of the truck equipment market in the Minneapolis area.
The study was designed to get objective feedback in that those being surveyed did not know who was commissioning the study.
“It was expensive to conduct, but the survey provided us with information that we were able to use to ramp up fast,” Sill says.
Aspen has been able to continue that momentum. The company now has a staff of 10 in outside sales. The two based in Iowa and Nebraska sell everything the company represents, but the nine based in Minnesota are specialists. They call on specific markets, including governments, construction, utilities, truck dealers, fleets, and railroads.
The company recently strengthened its commitment to truck equipment with the opening of its third location — this one in Omaha. The 11,000-sq-ft shop is a general truck equipment facility that opened in November. The other company location is Ankeny, Iowa (suburban Des Moines).
With an 11,000-sq-ft expansion three years ago, the company's headquarters in the Twin Cities now covers 60,000 square feet.
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