Palmer Trucks: Down Shift
Corporate Spotlight
Written by John Zorabedian   
Saturday, 01 March 2008
Palmer Trucks: Down Shift - American Executive - RedCoat Publishing
As an economic slowdown dings sales in commercial trucks, CEO John Nichols leads this dealership group through the tough times.
Premier Business Partners:

Beau Roc
Like any CEO, John Nichols doesn’t like to mention the “R” word. He doesn’t have to read an expert’s report, however, to know that the US economy has hit a slowdown or an outright recession.

Nichols’ company, Indianapolis-based Palmer Trucks, sells heavy-duty and medium-duty commercial trucks from manufacturer Kenworth. From Nichols’ perspective, it looks like a recession is upon us. Paccar, Inc., which makes Kenworth trucks, reported that its fourth-quarter earnings declined 31%, and the world’s largest automaker, GM, reported a staggering $38 billion loss for the year.

Palmer Trucks: Down Shift - American Executive - RedCoat Publishing
John Nichols, CEO
“We read the headlines like anybody else, and our business is off dramatically from what it was a year ago,” Nichols said. Truck sales were down approximately 40% in 2007, at the six Palmer Trucks sales locations in Indiana and Ohio. “If we read about recession—the ‘R’ word—we already think we’re there.”

As Nichols explained, when the economy hits a rough patch, trucking is one of the first areas to feel the impact. “Trucks are not only moving product, they’re also really a warehouse for just-in-time delivery of clothing, electronics, and food,” he said. “When the economy is slowing down, the just-in-time becomes ‘we don’t need it that quick anymore.’ We will feel a business slowdown probably before any industry.”

Nichols has had to shift gears a bit to keep the operation going, focusing more on parts and service than sales. Providing parts and services at enough of a profit to cover the company’s overhead is key. Keeping employee overtime to a minimum is also necessary, he said.

Yet Nichols said he can’t really afford to lay off too many salespeople because it is too hard to find people with the right technical knowledge. “We’re a relationship business, where you have to really get to know your customer. It typically takes a long time from the first contact to when we actually deliver a truck,” he said. “A salesman has to be pretty technical because these are custom-built trucks for the most part.”

Maximizing efficiencies through improved technology, such as customer relationship management software and wireless networks for shop-floor order entry, can improve the way the business runs. But keeping his team’s spirits up is perhaps more important than monitoring metrics like the absorption rate.

“It’s really easy to get down right now,” Nichols said. To buck his people up, Nichols enforces Palmer Trucks’ “eight-feet, meet and greet” customer service philosophy, which applies to everyone in the company. Everyone is expected to greet people within that eight-foot radius. “It’s not just a customer philosophy; it’s an employee, coworker philosophy where everybody deserves respect,” he said. “That gets contagious. It keeps us positive, and it keeps us focused, when it would be really easy to be crummy with each other.”

Full service
One way in which Palmer Trucks keeps revenue coming in is through its offering of full service for commercial clients in captive shops located at the client’s operations center and staffed by Palmer Trucks’ employees. These shops can maintain and service trucks for companies that prefer to focus on other aspects of their business, Nichols said.

One such company is OmniSource, a Fort Wayne-based scrap metal salvage business. Palmer Trucks customizes, maintains, and services hundreds of trucks for OmniSource. The requirements for this business are highly technical. Each truck must be equipped with a winch for loading heavy containers capable of carrying several tons of scrap.

Palmer Trucks runs five captive shops for different clients. “There tends to be more interest in that sort of thing,” Nichols said. “Our equipment is getting more and more complicated, and it takes special training and tooling to fix and maintain it. We have that expertise, so some look to do it that way instead of training and recruiting the technicians.”

Recruiting and training of highly skilled technicians and salespeople is Nichols’ greatest concern. “Technology is expensive and takes a lot of our time, but it would never substitute for bad management,” he said. “Finding the right technicians, the middle managers, and the branch managers keeps me up more at night than anything, even more so than a slow economy.”

With a healthy dose of humility, Nichols admits that his business is not the sort that attracts people looking for high-profile, romantic work. “We’re probably not the most glamorous industry,” he said. “We don’t have the ‘Hollywood’ that a lot of places do, so we have to really get some dedicated folks. Once they get a taste of what we do, they get excited about it, but there’s not much glamour in this.”

Keeping all of the individual shops and dealerships profitable is of course the company’s overriding goal, and Nichols’ primary focus is keeping tabs on how his managers are handling their markets. To do that, Nichols meets often with his branch managers and inspires a friendly competition between the shops.

As a leader, Nichols works to set expectations for his managers and helps them meet their goals when they fall short. “We make sure we reward them when we get them, and when we don’t, we work together to fix them,” Nichols said. “I’m not looking for heads. I’m looking for solutions.”
 
< Previous Story   Next Story >