MacAllister Machinery Reflects on 75 Years of Operation, Looks Ahead to Bright Future

Tue June 09, 2020 - Midwest Edition #12
Giles Lambertson – CEG Correspondent


The MacAllister’s (L-R) Alex, regional rental operations manager; Laurel, facilities project manager; P.E., late chairman of the board; and Chris, president and CEO, attend the open house for the new Indianapolis headquarters in 2018.
The MacAllister’s (L-R) Alex, regional rental operations manager; Laurel, facilities project manager; P.E., late chairman of the board; and Chris, president and CEO, attend the open house for the new Indianapolis headquarters in 2018.
The MacAllister’s (L-R) Alex, regional rental operations manager; Laurel, facilities project manager; P.E., late chairman of the board; and Chris, president and CEO, attend the open house for the new Indianapolis headquarters in 2018.  E.W. (R) and P.E. MacAllister sign the Caterpillar contract June 2, 1945. In 1953, the Fort Wayne branch was remodeled. This technician was hard at work in the shop in 1960. P.E. MacAllister (R) hands out the 2010 employee awards. First three generations — Chris (L) and P.E. pose with photo of E.W. (founder). The Indy headquarters retail area in 2019. Field service trucks at the Plymouth branch in 1951. MacAllister salesmen in 1960. MacAllister opened its new Indianapolis headquarters in 2018. MacAllister Machinery’s first building in Indianapolis on Gale Street 1945. P.E. (L) and son, Chris MacAllister, break ground for the company’s Indianapolis headquarters in 1965. A MacAllister field service truck at visits a customer site 1960’s. One of original Michigan Tractor & Machinery facilities in Lyndon Detroit, 1958. A classic small Caterpillar D4 tractor from the 50’s modified with forks doing some heavy lifting at Michigan Cat. The MacAllister tool shop was humming in 1946. A new parading fleet of equipment at MacAllister in 1951.

"One hundred years, here we come."

That's the exuberant view of Chris MacAllister, president and CEO of MacAllister Machinery, as the Indianapolis-headquartered Caterpillar dealer waltzes through its 75th year of business. Waltz might not be an apt description of a company as vigorously engaged as this one. Rumba, perhaps.

Whichever, it long ago settled into a productive rhythm, with steady growth of its operations and expanding opportunities for customers to access Caterpillar products and other top manufacture brands and services. Nothing in its performance in recent years suggests it is tiring, either, as sometimes happens to companies after three quarters of a century. To the contrary, MacAllister is better positioned for continued success than it was a decade ago.

**

Edwin W. MacAllister — who went by E.W. — came home to Wisconsin from World War I and began working at his local county highway department before joining Drott Tractor Company. Drott became an Allis-Chalmers dealer, which led in 1941 to MacAllister being offered an Allis-Chalmers dealership in Indiana. He embraced that opportunity and, four years later, was approached by Caterpillar executives.

"Drott had been a Cat dealer before switching to Allis-Chalmers," said Kyle Metcalf, leadership development instructor of MacAllister Machinery, "so E.W. was on Cat's radar. They were impressed by how he was running the Allis-Chalmers dealership in Indianapolis and asked him to represent Cat instead."

Seventy-five years later, MacAllister Machinery is celebrating the MacAllister-Caterpillar alliance. Just six years after joining Caterpillar, E.W. turned over leadership of the company to his son Pershing Edwin MacAllister — who also preferred to be addressed by initials, P.E.

"P.E. reflected on his father as a guy who was very business-minded, very conservative in his operation," recalled Metcalfe. "But E.W. also was someone who was very aware of the people he employed. He knew his business was only going to be as strong as the people he surrounded himself with. This was the beginning of the people-first culture MacAllister Machinery has had for 75 years."

In the ensuing 40 years of P.E. MacAllister's leadership, the dealership put down roots as an Indiana commercial institution, branching out across the state from South Bend to Vincennes. Today, 24 locations dot the state, with each branch offering some combination of Caterpillar new or used heavy equipment, rental, generators and outdoor power equipment, including Cat, Kubota, Exmark, Stihl and Echo products; underground shoring and pump; Blue Bird school buses; agriculture products; parts and services; and advanced technologies.

P.E. worked his way up from shipping parts clerk to shop mechanic to company salesman. He was named president in 1951, with E.W. becoming chairman of the board. During P.E.'s stewardship of the company, he became a "larger-than-life figure around Indianapolis" because of his abiding interest and involvement in the community, according to Metcalfe. He died last fall at 101 years of age and tributes poured in.

Said former Indiana Gov. Mitch Daniels: "All of the growth and improvement in Indianapolis had P.E.'s fingerprints on it somewhere."

The third-generation of MacAllister family leadership came in 1991 when P.E.'s son Chris moved into the role as Dealer Principal. Helped by a growing national economy, Chris MacAllister steadily built on his father's legacy. Beginning in 1999, he and his team led the company to heavily invest in equipment rentals, introducing Indiana to standalone CAT Rental Store branches.

"A lot of our businesses grew in the 90s, but when we started rental stores, they really grew quickly compared to some other businesses," said Metcalfe. "The rental stores were in addition to our full-service Caterpillar locations. We have 15 rental stores in the state now and are regarded as one of the strongest Cat rental dealers in the world."

**

Impressive but incremental growth gave way in 2011 to a transforming mega-deal. In January of that year, Chris MacAllister led the company to acquire Michigan Tractor and Machinery, commonly referred to as Michigan Cat. Established in 1944, a year before E.W. MacAllister partnered with Cat, the statewide Caterpillar franchise in the lower peninsula of Michigan operated eight locations.

Like MacAllister Machinery, the Michigan dealership also was family-owned and enjoying broad success. Its executives agreed to be acquired only because another generation of family leadership was not in the wings. When the two Caterpillar territory organizations came together, they retained their original business names but operate under the corporate banner of MacAllister Family of Companies.

Terry Erickson was a 15-year

employee when the company was folded into the MacAllister organization. As such, he has had a front-row seat during the transition.

"It has been very good," said Erickson, Michigan Cat vice president of sales since 2016. "Michigan Cat was a well-run organization with great people and a strong reputation among our customers. The culture of the organization has continued to focus on our customers and our people."

But Michigan Cat enriched its services in the deal.

"After the acquisition, we were able to grow and add other products and services, widely expanding the rental service business, for example. We now have more solutions we can provide to our customers," said Erickson.

Besides traditional heavy equipment sales and Cat Rental Store offerings, Michigan Cat offers Caterpillar engine (Power Systems), underground shoring and pumps, machine control and site positioning products through SITECH, as well as Rig360 truck service centers, as does MacAllister. The network of truck centers offers maintenance services for heavy trucks, whether or not they are Cat-powered.

In both states, heavy equipment sales and service and Cat Rental Store activity produce major streams of revenue for the company. The ag division is a lesser but still important contributor to the bottom line. Metcalfe notes the importance of other manufacturers in the MacAllister lineup of brands.

"Caterpillar, the big yellow machine, is our bread and butter," he said, "but it's not the only thing we represent. We have more than 80 brands. In fact, MacAllister offers more brands of equipment than any other Cat dealer in North America."

Most of them are available through the rental stores. They range from Genie and JLG aerial with booms and scissor lifts to Sullair air compressors; from NoRamp tilt trailers to Honda generators; from Vermeer mini-skid steer loaders to Broderson Cranes and many other name brands.

"Our Cat Rental Store is one of the best rental operations around, certainly as far as breadth of product. It's a challenge to know all the products that are offered," said Executive Vice President of Rental Services Jay Swearingen.

Swearingen is in a position to evaluate rental operations. As a 20-year-old in 1982, he began working in a small family-owned equipment rental store in Lafayette, Ind., renting mid-size construction equipment such as submersible pumps and aerial lifts.

"It seemed pretty interesting," he recalled.

Thirty-eight years later, he still is renting equipment, being tapped by MacAllister Machinery in 1999 to manage its first Cat Rental Store in Indianapolis.

"Prior to that, renting equipment primarily was sort of a sales effort, renting in the hope of selling," Swearingen said.

Sales still are an end-goal of the rental operation, but the scale of both renting and selling is vastly different.

"In the early 1990s, only 5 or 6 percent of all equipment being delivered into the North American market came through the rental channel. By 2015, 58 percent of all construction equipment deliveries from the manufacturing factories were going through the rental channel. The rental business has surpassed my expectations multiple times," he said.

MacAllister now operates 26 rental stores in Michigan and Indiana, with two more Michigan locations in the works and two stores with major remodels under way to expand in the process. In all of the stores, certain pieces of equipment are constantly in demand, including aerial lifts, cranes, telehandlers, compact track loaders and mini-excavators, according to Swearingen.

"That's pretty much true across the industry. Those and similar machines make work so much more productive and safer than in the past," he said.

By design, MacAllister rental equipment serves a range of industries — industrial, construction, municipal, landscaping and so on.

"At MacAllister, we believe if you make a living using rented equipment, we want to do business with you. Serving all the industries also spreads our risk. Like with the COVID-19 situation, car manufacturing plants were not making cars, but there still were businesses involved in food production, pharmaceuticals and many other industrial products. We want to be in many industries," said Swearingen.

Swearingen sees the renting option as a boon for contractors.

"The thing about rental is, you give the customer the opportunity to concentrate on his core business. That is, building things, not changing oil and fixing hoses."

He cites the difficulties spawned by the mandated diesel emissions standards and the tiered introduction of new power plants.

"Engines changed dramatically during that. Now you have to have the expertise to handle all the changes. At the dealership, we have that expertise."

Also added is the management and infrastructure internally to manage an owned fleet of machinery as required. Renting what you need from MacAllister Rentals solves all of that with a phone call.

**

Caterpillar products have been around almost from the beginning of modern heavy equipment and, as such, are iconic. That is, they are symbols of the industry as well as roaring, rumbling pieces of working machinery. Living up to legendary standards can be a challenge.

"Sure, expectations are very high when it comes to Cat," said Erickson, who has been associated with the manufacturer for almost a quarter century. "Customers trust us to provide superior products and service. We take that trust very seriously. As a team, we take a lot of pride in delivering on that trust. Some other companies make promises, which is easy to do, but we have an advantage here: We have 75 years of delivering on our promises."

Pressed for specific reasons to look to Cat dealers for machinery, Erickson cited Cat products' total cost of ownership and the manufacturer's dealer support.

"Machines can't make money if they aren't working. We're able to provide customers uptime that keeps them working."

He concedes that rentals have replaced some machine sales.

"But we encourage rentals. We want to provide equipment solutions, whether that be customers supplementing their existing fleet when workload demands it or supplying a specialty machine needed for a particular job. We're still providing an equipment solution to help our customers build their job."

MacAllister sells used equipment — some 1,800 pieces of used or refurbished machines typically are listed on company websites — and Erickson said those units provide another solution to our customers by providing a lower price point for a reliable, well-maintained machine.

"Caterpillar machinery always has high resale value due to a quality product and the ability to get parts for the machine throughout the world. During the last downturn, though, we saw something new. We learned about the liquidity involved in selling used Cat equipment. As contractors shed fleet during the downturn, we all saw that Cat equipment sold while competing brands struggled to sell. That's a testament to the brand."

**

Seventy-five years sort of feels like a laurels-resting moment, a time to kick back, look back and enjoy. There's little evidence that MacAllister Machinery has been lulled into taking it easy.

Metcalfe's leadership development instruction is a good example. Working under Terresa Ritzenthaler, MacAllister's human relations manager of leadership and development, Metcalfe is working up strategies to enhance the skillset of the company's cadre of leaders — some 325 people in the organization who have been identified as individual and team leaders.

"There was never a perception that we were deficient in leadership," he said of the effort. "But our growth was so quick over a period of more than a decade that there was an understanding we needed to develop our leadership faster than we had been to accommodate future growth."

Metcalfe said the first screening for leaders comes at hiring.

"We actively look for those folks who have high potential for developing into leaders. We want to capture that potential and develop it so succession in the various positions can come from within whenever possible. This will give us an enormous advantage over competition. The only thing that really sets a company apart is the quality of people it has."

In this, Metcalfe echoes company President Chris MacAllister.

"It is our people, more than anything else, who are the key to MacAllister's strength, success and longevity," said the president. "If he were here today, E.W. MacAllister would be astounded at the size, nature and success of MacAllister Machinery. He provided an excellent foundation for the company, by linking up with Caterpillar and establishing a culture of treating people well and square-dealing."

Swearingen believes it is the company's focus on people first, rather than profits, that sets it apart.

"MacAllister Machinery is not your average company. The philosophy of ownership and management is all about having a long-term vision and taking care of employees and customers."

Erickson concurred that the operation is keyed to its people, including tenured ones.

"We have a lot of people with considerable tenure," said the Michigan Cat vice president of sales. "The tenure I like to talk about, though, is not the 30- or 40-year veterans, rather a group of folks we brought in straight out of college 15 years ago, the first class in a management training program. They had no ties to the construction industry before, but six of the seven are still here in positions of significant influence. That they have stayed — when surveys show their peers out in the workplace generally work with three or more different companies over 15 years — that is a testament to the quality of the organization."

He noted the ongoing challenge of construction and heavy equipment companies to attract younger generations.

"People entering the workplace can apply their skillsets in any kind of company. To do so with a company like ours that is helping to build and rebuild the world we live in gives young people a chance to be part of something big."

Metcalfe is confident MacAllister Machinery will endure "well beyond 100 years in business. This is a generational company and Chris MacAllister's son Alex is coming along to eventually take over as the Dealer Principal. Alex has worked in the company for several years in our rental division. He's widely known and will be well-positioned to continue leading the company."

"With the fourth generation of MacAllisters now on board and an excellent team in place, the company has tremendous opportunity to continue growing and improving," said Chris MacAllister. "We're thankful for all that our teammates have done and for the confidence our customers have placed in us." CEG