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📅 Fri January 18, 2013 - Midwest Edition
Tom Lamberg has been adapting to changing market conditions and turbulent cycles, as well as embracing innovation for more than a quarter of a century — and at the end of December he transitioned into a new chapter: retirement. As division manager of American State Equipment’s Crushing and Screening Division, Lamberg has helped make the company one of KPI-JCI and Astec Mobile Screens’ best distributors.
At the end of the dealership’s fiscal year, Nov. 30, Lamberg will turn over his management duties to Randy Manteufel, who has been the aggregate specialist for American State. Lamberg will remain on until the year’s end to work closely with his successor and ensure a smooth transition.
As the official retirement date of Dec. 31 occurred, Lamberg took a little time to reflect on his career, the industry, and the future.
The Beginnings of a Business
Born and raised in the Green Bay, Wis., area, Lamberg started his career in the parts department at Baur Truck and Equipment, an international truck dealership. As the truck market began to turn south, Lamberg felt he was “on a sinking ship” and began looking for other opportunities.
At 44 years old, he switched careers and became parts manager of American State Equipment in 1986, which was looking to diversify its products and enter the crushing and screening market.
In 1989, the crushing and screening division was launched, although initially there were only three people selling the Pioneer product line.
In 1997, Lamberg became a division manager at American State for the business unit selling aggregate equipment in Wisconsin and the upper peninsula of Michigan. By 2003, the company had added the Johnson Crushers International (KPI-JCI) product line, and by 2008 American State was selling the entire KPI-JCI and Astec Mobile Screens product line.
A Changing Market
Throughout his tenure at American State, Lamberg has seen the landscape of the aggregates industry change greatly, particularly in the size of companies for producers.
“When I started, there were large producers, medium producers, and the small mom-and-pop producers,” he said. “Due to regulations by the state and federal government, the small producers went by the wayside, and now it’s getting to the point where there are only large producers.”
This came as a blow to distributors and the used equipment market, Lamberg said.
“Before regulations forced smaller producers out of business, the large producers would buy the new equipment, and we would sell their used equipment to medium and smaller producers,” he said. “Now, you either have to go to auction or you refuse to take a trade that is too old to sell, when you used to be able to take it because you knew you could go to the small mom-and-pop producers. It has affected our business tremendously.”
The effects of the regulations also spurred changes in American State’s business practices, like stocking inventory.
“You just didn’t stock a lot of equipment on speculation because everyone bought,” Lamberg said. “But as the smaller producers went by the wayside and you had fewer customers, the market got more competitive. Our profit margins dropped from 12-15 percent to 10 percent.”
This change, coupled with dramatic economic hits in 2001 and 2009, caused American State to adapt their business model to the changing market conditions. When the crushing and screening division was launched in 1989, 10 percent of profits came from the rental market. Today, it’s up to almost 50 percent.
“In 2001, more people began renting equipment instead of buying it. That’s when our inventory really started to increase,” Lamberg said. “You were required to inventory more so you could have equipment to rent to sell. In the 2009 recession, an even bigger portion of our sales were rentals, and not necessarily rent to purchase because the banks were loaning out less money.”
The increase in available rental units, particularly mobile track units, ended up being helpful to smaller contractors, who could no longer afford to purchase equipment, as well as lucrative to distributors like American State, so long as the dealership invested in maintaining the equipment, Lamberg said.
“The key to have a successful rental business is to maintain the equipment properly, because you’re not going to get paid if the uptime isn’t there,” he said.
Just as the composition of consumers has changed, so have their expectations. Lamberg, who started his career in the pre-Internet era, said the wealth of knowledge available at the consumer’s fingertips has made for a more intensive sales process.
“The Internet has made the customer smarter because he goes out and finds out all the data from every competitor, so he knows a lot more about what he’s buying, not just what the few people who are talking to him have said,” Lamberg said.
Another challenge that’s developed during Lamberg’s tenure is finding ways to retain employees at the company after they had been trained.
“The toughest part of managing this business is finding quality service people who want to do hard work, because believe me, working on crushers is hard work,” Lamberg said. “We rely on local technical colleges and hire graduates and do our own training, which is more costly,” he said, “and you always have the fear that you will get them trained and they will go elsewhere. Fortunately our company has a history of not losing people.”
Indeed, American State’s employee track record is impressive. With the exception of one new mechanic, his 11-person aggregates staff has stayed with the company for at least 12 years, and some as long as 22 years.
“These people have been like family to me,” he said. “I’ve had the pleasure of managing some of the best, most loyal employees. It’s been a wonderful journey.”
Lamberg attributes their retention success partially to a good benefits program, but there’s more to it than that.
“I think we have retained our employees because the owner has allowed me to do what I need to do to keep our people. He allows me to run this division like I own it. That’s been hugely beneficial to me.”
Forecasting the Future
After 26 years in the industry and serving on the KPI-JCI and Astec Mobile Screens Dealer Advisory Council from 2003-2009, Lamberg has developed a keen sense of where the future of the industry lies. He predicts equipment sales will be more competitive with more specialty product development in the next few years.
“There are going to be fewer and fewer customers because of mergers and buyouts, which is going to make the market even more competitive,” he said. “We’re also going to see more specialty products developed to accommodate specialized markets like the fractionated sand industry, just like we saw with RAP (reclaimed asphalt pavement) a few years ago.”
Lamberg said from his perspective in the Wisconisn aggregates machinery business, the election results were “a major disappointment,” and expressed his concerns about near-term business decline and possible further bank restrictions that will curtail customers’ ability to borrow for equipment purchasing. And then there’s the uncertainty about federal highway funding.
“I really hope that a multiyear federal highway bill gets passed, one that is longer than the current MAP-21,” he continued. “It’s critical. The extensions put customers in a situation where they can’t predict their future, and they’re less likely to buy products that are going to last them 10 to 15 years. If we see a four or five-year highway bill passed, we are going to see the customers who have been making a good profit buy more equipment, because they know the money is going to be there. Sooner or later, our politicians are going to have to realize that if they don’t do something with the infrastructure in this country, the future of the country isn’t going to go anywhere.”