Morgan Olson finds a large market desiring to transform their old vehicles into nearly new products for 65% of new price
For fleets with walk-in vans that are high on mileage, Morgan Olson has an answer.
Al Freve, Morgan Olson's service center sales manager, says the time was right in January 2009 to re-establish the company's refurbishment business — and remains right for it to prosper.
“With the economy, we felt this was a good time to offer a new idea to this market — refurbish what our customers currently own, any body style, not just Morgan Olson vehicles,” he said. “We felt that fleets would be holding off from purchasing new vehicles, but if we could demonstrate that for 65% of the price of a new vehicle, they could essentially have a new vehicle.”
Marketing manager Kenneth Klein says every company has enjoyed the day it acquired a new walk-in van.
“The miles started adding up,” he says. “Over time, that new walk-in van became ‘experienced,’ and then comes the downward spiral of maintaining your vehicle and the upward costs of maintenance. When the new paint became old and the decal package began pealing, you considered new paint and decals. That bought you some time, but the miles on the engine and the frame continued to grow.
“After carefully weighing your options and being informed your walk-in van's ‘depreciated asset value’ was now at a zero, you have to make a decision. Scrap the old truck for its metal value and buy a new van. It was the only good business decision you had to make. That's where Morgan Olson has stepped in and said, ‘We have a better idea. The majority of your van still has value. Why scrap everything if we can help businesses save what they have and create a better option than the scrap yard?’”
The cost of new technology on the chassis has driven fleets to re-think buying new versus restoring what they already own. The bodies are designed to last 20 years but chassis components such as the engine, transmission, tire, and brakes will need to be replaced in seven to 10 years. The bodies typically require new rear doors, paint, and decals, as well as cab interior cleanup. These updates provide a refreshed vehicle as well as a new warranty to offset maintenance cost in the future.
Says director of sales Scott Sargent, “That's a very exciting dynamic to our service center — the fact that we can begin with a 1990 and newer vehicle and restore it for roughly half the cost of a new van. Of course, we would like to sell our new vans, but with tough economic times that businesses are facing, we must look at different ways to help our customers. This refurb process can be the perfect fit for any company, and then when it's time to buy new, we hope they remember Morgan Olson and the benefits of doing business with us.”
Freve says fleets can choose many options ranging from remounting the body onto a new chassis or refurbishing the entire vehicle.
“Quite frankly, the option of refurbishing the chassis and body has been the more popular,” he says. “That way, when you actually take a 7-10-year-old vehicle and bring it to us, we can refurbish the chassis bumper to bumper. We change out the engine, transmission, brakes, fuel lines, and tires, if necessary. It's a menu-driven deal. It's not one-price-fits-all. We say to the customer, ‘Here are some of the areas we can refurbish on both the body and your chassis. You tell us how deeply you want us to refurbish your vehicle.’ It goes anywhere from, ‘Well, just take the old decals off, prep the body and repaint it and re-decal, and don't even touch my chassis’ to ‘Not only do I want you to refurbish the body, but also upgrade the interior on the walk-in and give me a new engine, transmission, brakes.’ That comes in anywhere from 50-65% of what a new truck would cost.”
Providing value
He says that when the idea is first pitched to a fleet, there is skepticism. There is a bit of doubt that Morgan Olson can do that kind of refurbishment at 65% of the cost of a new truck.
“The fleets then find that there's enough potential dollars in savings worth sending several trucks Morgan Olson's way to prove they can do what they say,” he says. “That's how this cycle typically starts. We bring their one to two trucks in, refurbish their body and chassis according to the menu the customer selects. Then we generally have them come in and look at the finished product. We often hear, ‘Oh, wow, this looks like a new truck.’ They generally bring that truck down to their corporate office and have management review it, and that has led to an expansion in quantities of trucks that come our way.”
Says Sargent, “Understanding the challenges that fleets face has allowed our service centers to focus on areas that most affect the bottom line of business today. With improvements to driver safety, ergonomics and load-design efficiencies, refurbishment done correctly can be a real game-changer, even with an aged fleet. We continue to work diligently with clients to identify and improve these key areas. We all know that retaining drivers and keeping them safe is a priority as well as improving their day-to-day efficiencies.”
Freve says the company is primarily refurbishing vehicles for linen companies, but also is working with bakery and other customers as well. Customers have made many specific requests, from changing cargo configurations to extending the van itself.
“For one client, we lifted the existing body from the old chassis and remounted onto a brand new chassis,” he says. “We improved the cab area with non-skid material in the step well, added a handrail and an acoustical floor mat, then an updated HVAC system and a new driver and passenger's seat. The truck looked practically new, and the new chassis gave them a new warranty.”
Even though some requests are standard, like new paint and decals, each vehicle has its own unique needs. Every truck in a fleet may not need a new transmission or bumper, so each truck is given a complete estimate upfront so the customer can determine if it makes financial sense to proceed.
Freve launched this department on a shoestring budget with the help of Gregg Hersberger, Morgan Olson's warranty/service manager. The inspiration was for Morgan Olson, headquartered in Sturgis, Michigan, to be more of an all-service manufacturer and provider, not only to its customer base but to competitors' customers. The company wanted to try to expand on its core competencies of manufacturing, fabricating components that went into the body and chassis, and also the paint process.
Morgan Olson wanted to do all of that with the people and expertise it already had. Morgan Olson uses the same equipment, engineering, and personnel that build the new vehicles.
Freve says the company shuffled some aspects of the plant setup and acquired some additional lifts, tools and equipment, but almost everything is made on the same machinery that is used to manufacture the new components for new trucks.
“We're just utilizing existing structures that weren't being used before,” he says. “In some cases, they were used for storage, and we just had other areas where we could store material outside. One of the areas we claimed had high overhead doors and ceilings, which really helped us. One of the ways we refurbish a body and chassis is, the customer buys a new chassis and we lift the old body off the old chassis and mount it on a new chassis. Obviously you need lots of head room and overhead cranes to be able to do that. This facility in Sturgis already had that capacity. It was just being used as storage. We were better able to utilize that space and expand into this new service.”
