A moving experience
Earth moving equipment trader Euro Machinery has been undergoing an internal revolution over the past eight months, expanding the concept and scope of its operation from a family-run sales business to a comprehensive service provider, as Gay Sutton discovers from Henk Uphoff.
There are some unexpected parallels between the desires and ambitions of the general population and the cultural thinking of a business. Perhaps the most curious is ownershipÔÇöjust as many families prefer the security of owning the roof over their heads, many companies like the reassurance of owning the equipment they use. But that is slowly changing.
Certainly, outsourced logistics has been delivering benefits for many companies over the years. But just as the public is beginning to consider leasing rather than purchasing a car, the concept of leasing and renting is migrating into the construction and mining sectors. Earth moving equipment retailer Euro Machinery is one company that is adapting its internal culture and business model to fulfil this need.
Headquartered in Hardenberg in the Netherlands, Euro Machinery has been buying and selling used earth moving equipment since its launch in 1997. But the driver for change came in 2007 when it was acquired by Australian earth moving machinery giant, Emeco Group. With subsidiaries in North America and Indonesia, Emeco had developed a business model with a much wider and more comprehensive range of services, including rental, leasing, sales, parts and asset management. Its strategy for Euro Machinery was to expand into these areas and make it the fully operational arm of Emeco in Europe.
The process of change began slowly but soon began to accelerate. Then, sales and marketing general manager Henk Uphoff was brought in to oversee further changes. ÔÇ£One of my main tasks, along with my team, is to instil our goal, vision, main mission and strategy into the company,ÔÇØ he says. In essence, the company is migrating from a family-run, sales-oriented business to an integral part of a global corporation with a focus on long-term customer service. No small task.
As with all change management programmes, communication is one of the keys to success, and it began with a re-defining of the corporate goalÔÇöthat of superior profitability. ÔÇ£That may be a bit obvious, but I think every company should have that as its goal,ÔÇØ he says. The groupÔÇÖs global vision is to be the world leader in providing earth moving equipment solutions; for the staff at Euro Machinery, the strategy by which this will be achieved means fundamental business and behavioural change.
The company is to re-focus on renting and selling; the product it will be handling is low-hour, late-model earth moving equipment in Europe exclusively from the top echelon brands: Caterpillar, Komatsu, Hitachi and Volvo. It will also have the freedom to export equipment to previous customers in the Middle East and Africa.
All of this was articulated in writing and through presentations to the staff, ÔÇ£telling people in understandable language what we were doing,ÔÇØ Uphoff explains. ÔÇ£And we did this from the executive level down through sales and marketing and financial services to the people in the workshop. We also listed our internal valuesÔÇöintegrity, ethics, safety and the environment, and made the document visible so everybody could read it day in, day out.ÔÇØ However, the essence of instilling a new concept is persistence, and living the message thatÔÇÖs given. ÔÇ£This has to be reinforced in every decision-making process and every communication to the internal organisation. Then people will begin to understand. Finally, they will begin to behave in that way.ÔÇØ
In addition, changes have been made to the loose structure that existed in what had essentially been a family-run company. An organisational diagram was drawn up and a performance management programme implemented. ÔÇ£It sounds pretty heavy but we have kept it simpleÔÇöand that was one of the things people simply werenÔÇÖt used to. We began with job descriptions and outlined responsibilities and accountabilities, i.e. who was responsible for what within the organisation.ÔÇØ
Considerable time was also spent working out the sales budgets and targets. ÔÇ£A lot of companies create an annual budget of X million euros in turnover. But even for very well trained sales and marketing professionals, thatÔÇÖs an abstract thing to work with. So weÔÇÖve chopped it into monthly pieces, taking into account the seasonal effects, and which markets weÔÇÖre operating in.ÔÇØ
The markets, meanwhile, have been divided into four regions, each with its own set of sales targets. There is the greater Scandinavia region, which includes the Baltic States and some parts of Eastern Europe such as Poland; the Mediterranean region, which also extends into Morocco and Turkey; Benelux and part of Germany; and EMEA, which basically includes everywhere not in the other three.
The company then began to examine its main processes, mapping them as they were and then creating a map of how they ought to be. ÔÇ£We then looked at how we could remove any bottlenecks in the process. ItÔÇÖs something organisations need to do constantly,ÔÇØ he says. ÔÇ£ItÔÇÖs essentially a common sense approach.ÔÇØ
All of these restructuring efforts have revitalised the internal aspects of the company, but perhaps the most important revolution has been on the customer-facing side. The sales and marketing team has been completely revamped; where previously the sales team would have focused on selling a machine, they are now offering a range of services that require a long-term relationship with the customer and an in-depth analysis and understanding of the customerÔÇÖs needs.
Training obviously plays an enormous part in this, and it is an ongoing process. But the company has also created a set of tools which provide the sales team with everything they need to help the customer.
ÔÇ£What theyÔÇÖre doing now is providing much more of a consultancy service. Our sales team can advise on how to utilise an earth moving fleet. When a customer has peak demands, for example, we can provide them with a rental machine. If they have demand for a longer period, we can sell, lease or vendor-lease a machine. Asset management goes far beyond repair and maintenance; it goes into residual management and total cost of ownership. We are now equipped to help our customers find the most productive way to do the job they need to do.ÔÇØ
The companyÔÇÖs headquarters benefits from a large state-of-the-art maintenance and repair facility, which was built to order and opened in 2007. ÔÇ£ItÔÇÖs a fantastic workshop,ÔÇØ Uphoff says. ÔÇ£We have a double paint shop and our own sandblast facility, and an inside high-pressure wash and cleaning bay, all under one roof. And I can say with pride that not many OEM dealerships have the same.ÔÇØ
Hardenberg is located in the heart of Europe, with access to the major transport infrastructure. Amsterdam and Schiphol International Airport are just an hourÔÇÖs drive, while the major ports of Holland, Germany and Belgium are all within easy reach. Road and rail links are excellent, and although it is not often used, there is even a canal running alongside the plant.
The company has expansion ambitions and plans to acquire further premises across Europe to increase its footprint in the marketplace; however, the recession has forced it to refrain from making such an investment at the moment. ÔÇ£But that plan has simply been put on hold.ÔÇØ
The recession has been a difficult time for Euro Machinery. ÔÇ£And yet there actually is no recession in our industry,ÔÇØ Uphoff says. ÔÇ£It works like this: when our customers win the contract for a project they apply to the bank for funding to purchase the capital-intensive machinery they need, such as our earth moving equipment. But because the banks have been so cautious with their spending, they have refused to lend the money, and this has been stifling business.ÔÇØ
All the changes that have been put in place at the company are beginning to yield results, and the message is beginning to emerge in the marketplace that by renting equipment for the duration of a project rather than buying it, companies can spend their working capital elsewhere. ÔÇ£I canÔÇÖt say the market is picking back up again yet,ÔÇØ Uphoff says, ÔÇ£but I can say we are more effective. And with this culture change in our minds, it looks like our business is picking back up again.ÔÇØ
The long process of migration to the Emeco business model will reach its fitting conclusion in September this year, when Euro Machinery will change its name to Emeco and take on the strong global identity of its parent company.
Looking back over the past six months should give the company considerable satisfaction. Huge changes have been made and embedded into Euro MachineryÔÇöstructural and process changes, as well as a completely new mindset. ÔÇ£You canÔÇÖt change a company overnight,ÔÇØ Uphoff says. ÔÇ£But itÔÇÖs a wonderful thing that people are starting to see Emeco as a brand, a concept, and what we as a company stand for. But this is not something that I personally have achieved; itÔÇÖs something weÔÇÖve all done together as a team.ÔÇØ
