“We knew that one of the wonders of the world was in Niagara Falls and that if we could ever get Caterpillar dealers talking to each other it would be another wonder of the world.”
That’s G.N. “Jerry” Volk, recalling the first Caterpillar Used Equipment Managers Meeting in October 1984, at Niagara Falls, NY, which he and M.W. “Murf” Murphy organized.
2004 has been the 20th anniversary year of that first meeting, in which 84 attendees represented approximately 40 dealers. In October of this year, 350 people representing 12 countries met in Palm Springs, CA, for the 20th annual conference, the single largest meeting of Cat dealers in the United States.
This year’s meeting was on Oct. 3 to 5, just like the first one, and likewise convened on Sunday and broke up on Tuesday. It was the ideal setting for Jerry and Murf to receive a standing ovation from their peers. Why not? The pair had organized the first meeting, and dealers had been talking ever since.
First Meeting
In 1984, Volk and Murf worked in the used equipment department of Syracuse Supply, a Caterpillar dealership in Syracuse, NY, now known as Milton CAT. Volk was used equipment manager. Murf worked with him.
Volk represented U.S. dealers at a European Cat Used Equipment Manager’s Meeting in Finland that year. He was very impressed. The meeting allowed dealers like Syracuse — which was an aggressive player in the used equipment market — to meet other distributors and discuss common problems and challenges.
“The meeting set off a light bulb,” Volk recalled. Why not have a similar meeting for U.S. dealers? He returned home and shared his excitement with Murf. The two decided that the time had come for such an event.
“I had been communicating with many used equipment managers for years, but had never met them personally,” said Murf. “There’s nothing like meeting a person face-to-face to firm up a relationship. That’s really where we felt we needed to go with this meeting.”
The two selected Niagara Falls as a drawing card. They mailed invitations to dealers across North America. Surprisingly for such a first event, approximately one third of the Cat dealers in the United States and Canada sent representatives.
“What this meeting did was create good strong communication between Cat used equipment dealers,” Volk said. “Back in those days, it seemed as if used equipment managers suffered from the Rodney Dangerfield syndrome: ’I get no respect.’ Yet, what they did was a very important part of the dealership.
“They established a value of the trades. If the value was too low, they didn’t get the deal and, if the value was too high, they couldn’t sell the trade. If gaps occurred in inventory from under-ordering, they located some of that inventory at other dealerships and brought it in. If used inventory got too large, they took action. The meeting helped them realize their importance and gave them the opportunity of discussing common problems.”
Needed to Talk
Many forces were working in the used equipment marketplace in the fall of 1984, including new issues that the managers hadn’t usually addressed before.
Large auction companies were beginning to take hold. Companies like Forke and Ritchie Brothers were beginning to account for more and more of the re-distribution of Cat machines, particularly late-model units. Brand-new Cat equipment sometimes showed up at auctions.
A phenomenon called the “gray equipment market” was developing out of Asia and Europe.
Due to changing economic conditions in Asia and Europe, and currency exchange rates, machines, not originally designed to be sold into the U.S. market, could be purchased at very, very low prices and were being re-distributed throughout the United States. The gray market has become quite common over the years and has re-surfaced several times since 1984.
Certainly, it was becoming more evident that the auction market would continue to get bigger. For example, the Yoder & Frey auctions in Florida were starting to hit stride. They had become two-day events by 1984, which was unheard of previously. It also was becoming clear that Cat dealers were starting to play in a world market and needed to start thinking globally.
Used equipment brokers also were becoming quite common. These brokers could satisfy the needs of a used equipment dealer on the West Coast, by locating used equipment in Asia, Europe or at the next-door Cat dealer.
“It’s quite common today, all across the country, for one used equipment dealer to market stressed or excessive inventory to another used equipment dealer,” Volk said. “It certainly made sense for the Cat dealers to be dealing directly.”
Hot Topics
Topics at the original meeting focused on helping used equipment managers better understand how Cat dealerships were compartmentalized and how various aspects of the operation affected what the managers did.
“We considered subjects like how a dealer is charged when he takes in a trade, and the machine needs to go into the shop,” Murf recalled. “The dealer would be charged an hourly rate by the shop — a cost for the repairs — and an hourly rate for the service. These charges were passed on when the machine was resold.
“We also presented seminars explaining how to get equipment into good saleable condition,” said Murf, “but the hottest topic was the newly emerging gray market. In those days, gray market machines were virtually identical, except for some differences in the ROPs.”
Volk commented, “The problem we faced wasn’t really that daunting. We had the best product, the best support, and the best financing on the market, and equipment that was priced extremely competitively. That certainly makes the job of creating a nationwide network for moving the used equipment less challenging than for other manufacturers.”
A People Business
Communications have improved greatly since that first meeting.
“Today it’s well-known that the used equipment managers within a Cat dealership actually communicate more often, and more effectively, than the principals who actually own the dealership,” Volk said.
Murf agreed. He said the advantages are obvious, “People still buy from people. This has always been a relationship-oriented business. The single biggest ingredient is trust. In our business, quite often you have to communicate with someone half a world away and take their word for it that a machine is exactly what he says it is. As long as you have that trust, you will continue to buy and work with that person. If that trust has been damaged, everything changes.”
Thoughts on Internet
What’s the biggest change that Volk and Murf have witnessed in the marketing of used equipment? Both said without hesitation: The Internet. But they added that the changes are not all good.
“The Internet has done some shameful things to our business,” said Murf. “It has taken some very talented people and reduced them to sending out e-mails and tracking auction numbers instead of being in the business of communicating and marketing. That [communications] part of our job seems to be disappearing. Those relationships, with that level of trust, are not made on the Internet. They are made eyeball-to-eyeball. Even though the Internet has broadened our horizons, at the end of a year over 80 percent of our business comes from the same handful of people.”
New Attitude
Volk and Murf have since formed their own independent used equipment dealerships. Volk is president of Prima International Trading, Fayetteville, NY. Murf is president of Best Tractor, East Syracuse, NY.
They both relish memories of the anniversary meeting.
“We were both flown out to Palm Springs and were recognized by the dealers on the closing night,” recalled Murf. “When we were introduced, they put the spotlight on us on the stand and we got the standing ovation. I have to tell you, that was quite a thrill, being recognized by my peers. It gives you the feeling that you have left behind a legacy, something very positive for the industry you have grown up in.”
Dealerships now view used equipment departments much differently than 20 years ago. In the years of the early meetings, owners or principals saw used equipment as “a trade-in problem.” Today Cat dealers across the nation regard them as important profit centers.
Jerry Volk and Murf Murphy have helped make that happen.
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