Nice to talk with them, good to hear they're still alive and kicking - but the money never seems to make it. After the third call - and no results - it really pisses me off!
It's not just my alleged business school buddies that fry my you-know-what; it's also many of the people I spend time with in this industry, too. The issue here isn't money - at least not my asking for money. But it is money that could be in their pocket, and it's going into somebody else's.
What's the issue? Service. Commercial truck and trailer service. How many times is it necessary to point out the obvious (at least to me) opportunities in the service arena that offer genuinely huge sales and profit opportunities for guys who are currently only in the parts business?
Twenty-five years ago, I wrote an article entitled "A $12 Billion Opportunity Nobody Wants!" The truck and trailer service market at that time - valued at the average door rates of dealers, independent garages and other service suppliers - was about $12 billion.
Twelve billion of anything is nothing to sneeze at - but a lot of people to whom I addressed the $12 billion message chose to pass on it. "Plenty of opportunity in the parts business." "I don't want the labor problems." "Too much of an investment." Yadda, yadda, yadda.
Guess what? The $12 billion dollar opportunity of 1985 has evolved into an opportunity about three times that size today! Depending on what hourly pricing you apply to the nearly 500 million service labor hours today's vehicles generate, the service market carries a value from $29 billion ($60/hour) to $39 billion ($80/hour). Yeah, I know, AIG or Lehman Brothers would suck that amount up like Hoover's vac, never to be seen again. But suppose we spread some of that around the aftermarket.
Approximately 60 percent of this pot of potential gold represents service work performed by the truck owner/maintainer. That leaves about 40 percent, say $15 billion, being covered by the truck dealer, the independent garage and parts distributors with service facilities. Dealers, by the way, have the largest piece of this $15 billion - but independent garages are also chewing into this.
When pressed, most of these owners/maintainers, representing the 60 percent piece, would rather have someone else do much of this work - if they could find the right guy. When you see smart operators outsourcing even some of the basic stuff like PMs and tire work, you know there has to be a pony somewhere under that pile of dung!
Twenty-five years ago, there wasn't much interest from the non-dealer distribution business to expand seriously into service. The parts business was growing sharply, occasionally in double digits.
But some guys listened - and they have really prospered.
There won't be much growth of consequence in the heavy-duty parts business over the next few years. Riding the growth curve isn't going to work: no rising tide, no floating boats.
Giving lip service to the service business isn't going to get it done today. If you're not in - you may find yourself on the way out!
Stuart MacKay is president of MacKay & Co., a specialized market research and consulting firm established by him in 1968.
From the April/May 2010 issue of Heavy Duty Aftermarket Journal.