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Cleveland Brothers Sets Course

Mon November 14, 2005 - Northeast Edition
CEG



The welcome sign in the lobby of Cleveland Brothers’ headquarters in Harrisburg, PA, reads “Keeping Customers First Since 1948.” Now, with the acquisition of Beckwith Machinery and One Call Rentals, the Caterpillar dealer is poised to take that philosophy to a sizable portion of Pennsylvania and West Virginia as well as into parts of Maryland.

When the ink dried on the recent deal, Cleveland Brothers President and CEO Jay Cleveland Jr. and Executive Vice President and COO Tom Kirchhoff had significantly increased their company’s territory to 28 branches covering 59 counties in Pennsylvania, 17 counties in West Virginia and two counties in Maryland, and added three One Call Rentals facilities.

One Call Rentals is a network of Caterpillar rental stores that was affiliated with, but not owned by, Beckwith Machinery. All three companies, under the umbrella of Cleveland Brothers Holdings Inc., now employ approximately 1,300 people. Each company will retain its corporate name.

“This acquisition is a great opportunity for the people in all three organizations to grow, as well as for our family,” said Jay Cleveland Jr.

Beckwith Machinery, based in Murrysville, PA, was a third-generation company founded in 1907 by James S. Beckwith. G. Nicholas Beckwith III, now the former owner of the company, will, however, retain ownership of Beckwith’s material handling division, Penn West Industrial Trucks, which employs approximately 80 people. Nicholas Beckwith also will be chairman and CEO of Arch Street Management LLC, a new holding company created for the material handling business and for family investments.

According to Kirchhoff, the timing of this acquisition simply was right, though, he offered, in some ways, it has been in the making for several years.

“Caterpillar dealerships don’t change hands very often,” said Kirchhoff. “So, when Nick Beckwith was ready to get out of the business we were fortunate to be in a position to talk to him about this opportunity.”

“This was a process that, quite honestly, took about several years to complete,” added Cleveland Jr., “It started with us being posed the question by Caterpillar, ’Are you interested in more territory if it becomes available?’”

Caterpillar, said Kirchhoff, is focused on continuity of ownership within its dealer community. “Over time, they want to ensure that there’s somebody from the next generation in position to take over.”

“We met with Caterpillar officials in Peoria [Caterpillar’s headquarters in Illinois] because, prior to the acquisition process, they wanted to know — from among the interested dealerships — who could provide the best coverage in any given marketplace and to continue to provide customers a high level of service,” said Kirchhoff.

“ You have to prove to Cat that you’re going to live up to their expectations,” he added.

Kirchhoff emphasized that Beckwith Machinery has been a respected and successful business for approximately 100 years and that ever since Caterpillar was founded, they’d been a dealer for them.

“They’ve been a good Caterpillar dealer, so it was really an honor for us to be considered by Cat to acquire Beckwith’s territory.”

Once the acquisition was complete, Cleveland Brothers set about preparing goals.

“Our first goal of this acquisition was to prepare for a successful day-one,” said Cleveland Jr. “People in all three organizations needed to know they were going to work the next day as normal. By avoiding any hiccups, we would still be able to provide the quality parts and service and sales that Cleveland Brothers, One Call Rentals and Beckwith Machinery have been providing for many years.

“At a very bare minimum, there will be no drop off in the level of service that the three companies have provided in the past.” Cleveland Jr. added, “Our plan is to grow the business and further raise the level of service.

“We have kept all customer-oriented employees,” said Kirchhoff. “Whether they are a salesperson or a rental representative or a service technician or a parts and service sales representative. For all intents and purposes, we are leaving everyone intact. We didn’t want to disrupt the business. The wind appears to be at both Beckwith’s and One Call Rentals’ back, as it has been at Cleveland Brothers. It’s about letting these organization to continue to be well run.”

“Beckwith and One Call, we have found, have good, quality people and we have found them to be refreshing to deal with,” added Cleveland Jr. “We truly see a great combination of these three companies, which is going to make them a force to be reckoned with in the marketplace.”

During the acquisition process, both Cleveland Jr. and Kirchhoff personally visited every Beckwith Machinery branch.

“Jay and I tried to allay people’s concerns by going out to visit every Beckwith branch within the first two weeks and met with virtually every employee and gave them roughly a half-hour presentation, saying ’here’s who we are and here’s what this means to you, here’s the combined territory, here’s what will not change, such as sales representatives still calling on the same customers in the same territory, the same service technicians will still service the same machines at the same facility.’ So we’ve tried very hard to calm their fears. We also met with Cleveland Brothers employees to provide the same information,” said Kirchhoff.

Cleveland Jr. and Kirchhoff also answered questions from Beckwith employees during these visits.

“Every employee received a packet of information filled with frequently asked questions prior to our visits,” said Kirchhoff. “I think we hit 90 percent of their questions on the head before we ever got out to see them. We had maps of the combined territories and biographies of Jay and me so they could get to know us. With that information combined with our visits, we took care of most of their concerns.”

One of the most repeatedly asked questions of Cleveland Jr. and Kirchhoff was perhaps the most important of all of them, especially when considering that eastern Pennsylvania meets western Pennsylvania: Pittsburgh Steelers or Philadelphia Eagles fans?

“We told them that we like good football,” Cleveland Jr. and Kirchhoff both answered in unison, laughing. “Of course, after everyone realized that was a cop-out, we answered honestly: We said we were Eagles fans. Beckwith and One Call Rentals employees told us they were going to have to convert us,” said Cleveland Jr.

“I did go to the recent Steelers and Ravens game on Monday night [Oct 31] in Pittsburgh, so I’m trying,” added Kirchhoff, who was a star quarterback for Lafayette College in Easton, PA, from 1990 to 1993 and who briefly played for the Philadelphia Eagles in training camp in 1993.

“When the Eagles made the cut from 80 down to 53 players, I was one of those people who was cut. I was scheduled to play an exhibition game against the New Orleans Saints in Japan. I had my visa and everything. About a week before we were going to leave, Randall Cunningham got hurt. Although I was a quarterback, they brought in Bubby Brister to back him up. At that point they had too many people, so I went. That was one of Rich Kotite’s [then Eagles coach] last, final mistakes,” Kirchhoff joked.

All joking aside, however, Kirchhoff and Cleveland Jr. left their Beckwith branch visits very impressed with the company’s employees.

“You never know what to expect when you’re going out to meet with new employees,” said Kirchhoff. “You don’t know if you’re going to be welcomed with very open arms or if they’re not going to want to talk with you. But I have to say that we were pleased with the welcome, and the reception that we received. I think they hope that, here’s two guys that are young who are going to invest in their futures. Cleveland Brothers has been around almost 60 years as a Caterpillar dealership and we want to continue doing this for generations to come. We wanted to show them that they have a future here.”

“The same goes for Beckwith and One Call Rentals customers,” added Cleveland Jr. “We’ve had a chance to meet with some customers and they’ve had very good things to say about the organizations, and they don’t want to see their business impacted negatively.

“You don’t stay in business as long as Beckwith has without satisfying customers,” he added. “Beckwith and One Call rentals have a very good and quality reputation. Our challenge is to maintain and build on their success.” CEG