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Road Machinery & Supplies Marks 80th Year

Thu April 27, 2006 - Midwest Edition
CEG



Reaching the 80th year as a continuously operated, family-owned business is an achievement. It doesn’t just happen. It takes foresight, determination and probably even a certain amount of luck.

Yet for Road Machinery & Supplies Co. (RMS), which is celebrating its 80th anniversary, one of the key factors is its core philosophy that growth is good.

“In this industry, and probably any industry, we believe that if you’re not moving forward, you’re probably moving backward,” said Mike Sill II, president and CEO of RMS. “So at RMS, from the day my grandfather Michael M. Sill founded the company in Duluth, Minnesota, in 1926, our approach has always been to look ahead and move forward.”

Of course, it wasn’t always easy. The first-generation Sill had to weather the Great Depression and World War II.

“In those challenging times, just keeping the doors open was more impressive than double-digit growth during a boom period,” said the younger Sill. “I know my grandfather was a guy who was turned on by scale and always understood the need for growth in a business. The same is true of my father Michael R. Sill and uncle Mitch Sill, who grew the company significantly during their tenure by adding numerous product lines and opening several new locations in Minnesota and the Upper Peninsula of Michigan, including our headquarters in the Twin Cities suburb of Savage.”

The growth philosophy has continued, and even intensified, under the third-generation leadership of Mike Sill II.

He joined RMS in 1987 and served in various capacities — first in product support, then machine sales, followed by used equipment, and finally, as vice president of Operations overseeing parts and service — before becoming president in late 1994.

“I think the world is a little more competitive today, and in our business, it’s more important than ever to offer customers a wide range of products and to know how to service them,” he said. “Growth is a reflection that our customers and suppliers value what we do.”

A Great Mentor

“As the third-generation leader of RMS, I benefitted greatly by the legacy created by my dad,” commented Sill. “He was a leader in our industry, and hardly a day goes by without a customer, supplier or employee asking how he’s doing. My Dad has a way about him that is very easy to warm up to, and he doesn’t forget a face or name. His philosophy has always been that it doesn’t really matter who you are or what you do for a living, as long as you work hard and are dedicated.

“Even though my dad has been retired for more than a decade, we still talk every couple of days. He frequently asks about customers and employees. He is a guy who really cares about people more than just selling equipment. It is a great life lesson, because if you care about the person, you are more likely to be in tune with what he needs.

“He’s also taught me not to be afraid of problems, which he says, ’are the fun part of being in business.’ He’s right, in that solving problems and finding solutions make life interesting. It’s also where customers put you to the test, and is our greatest opportunity to perform and keep them coming back.

“I recognize how lucky I am to have my Dad as a mentor,” acknowledged Sill. “He’s in the background cheering us on and he gives great advice. He reads people and situations so well. It is rare to have someone like him to serve as a sounding board.”

Business Expansions

One of the first big growth moves Sill II pursued occurred in 1997, early in his tenure. That is when RMS acquired one of Iowa’s oldest equipment distributors, the Herman M. Brown Company.

“That was an important step because it allowed RMS to better manage our equipment inventory. We could afford to carry more inventory and turn it faster.”

RMS also expanded its operations in the late ’90s by establishing a used parts (Polar Parts) division and opening RMS Rentals for the rental, light and general equipment customer.

In 2003, RMS purchased a national trench-shield-marketing company in Georgia called Atlanta Equipment. RMS expanded its presence in shoring products by founding U.S. Shoring & Equipment Co., which services the Sunbelt states. Today, U.S. Shoring has four branches in Florida and one each in Texas and Georgia.

In 2004, RMS expanded its aggregate division by hiring an aggregate specialist and increasing the product offerings. This has brought high growth in products for crushing, screening and washed-materials markets.

“Many of these new efforts are designed to allow RMS to take better care of the same types of customers we’ve always supported,” said Sill. “Now, we’re able to do more for them.”

People Make the Company

A family environment leads to many longtime, dedicated employees.

Of course, growth can occur only to the extent that a company has the people to handle it. In fact, employees typically create the growth.

“A leader can have a big-picture plan, but if you don’t have the right people to carry it out, it’s not going to be successful,” observed Sill. “At Road Machinery & Supplies, we have a very talented and dedicated work force that, in my opinion, is one of the best in the equipment industry.”

The longevity among key management personnel at RMS is remarkable. David Johnson, vice president of sales and marketing, has been with the company for 27 years; John Ruud, vice president of northern operations, has been there 30 years; Chuck Petter, vice president of management information systems has been with the firm approximately 40 years; and treasurer/CFO Bill Holte has put in 27 years with RMS.

“My dad certainly did a good job of hiring people and creating a family environment in the workplace,” said Sill. “We don’t have a strict hierarchy here. We do have job titles and job functions, but mostly we work together, manage by consensus, and try to have fun along the way. But the only reason we’re able to take this approach is because, throughout our organization, we have people who are really good at what they do, and understand the value of long-term relationships with customers. If you hire talented people, they’ll make good decisions, and you need to give them the freedom to do their jobs without micromanaging.”

“This company is full of good, honest, hardworking people who are enjoyable to work with and have the same ’can-do’ attitude our customers have,” added Sales and Marketing Vice President Dave Johnson. “It’s a great work environment, and at the end of the day, you’ve got a winning company. Everybody wants to be part of a winning team that works hard to meet customers’ needs.”

“Beyond our managers, the importance of sales representatives, product support reps, service technicians and parts personnel cannot be overstated,” said Sill. “They are the people who have the most frequent day-to-day contact with customers and they represent who we are. Fortunately, we have a lot of longevity in those roles as well.”

Wide Range

of Products

Few dealers offer the wide range of products Road Machinery & Supplies does. Because of the diverse economy in this part of the country, RMS products serve most industries that use equipment.

The company deals with earthmoving and construction contractors, taconite mines, forestry customers, the aggregate industry, scrap handlers, paving contractors, bridge contractors and municipalities, among others.

“You name the industry and chances are, we sell to it,” claimed Sill. “We’re very proud to offer a wide range of products, but what pleases us most is that we are able to represent a broad range of products and still achieve high market shares for each of them. Because we’ve built a good reputation for sales and support, we’ve been able to attract some of the premier products.

“In fact, one of our guiding principles is that we want to represent the number-one or number-two preferred product in its category or not at all. We’re not interested in having a particular type of product just to have it. We must be convinced that our customers won’t be disappointed.”

The list of RMS suppliers is led by Komatsu.

“There are only two manufacturers in the world that make a full line of construction, mining and compact equipment, and Komatsu is one of them,” noted Sill. “Komatsu not only has the broadest product offering but also is a great product manufacturer. From a sales standpoint, you want to be able to face your customers and tell them that your product is more reliable and more productive than the competition. For the vast majority of Komatsu models, we can say that with confidence.”

Other primary manufacturers represented by RMS include Ingersoll Rand and Blaw-Knox; KPI, JCI and Astec Mobile Screens for aggregate production; Sandvik and Tamrock for crushing and drilling; Gomaco for concrete paving, trimming and curbing machines; Bucyrus International for electric rope shovels and drills; Lull forklifts; LeeBoy/Rosco for smaller paving needs; Timbco and Valmet machines for logging and forestry work; Link-Belt and Grove Cranes; Potain tower cranes; Cerda Industries trench-shoring products; Dressta earthmoving equipment; and Wacker.

In addition, RMS offers LaBounty for a wide range of heavy hydraulic attachments, including scrap and demolition products; JRB quick couplers and attachments; NPK hydraulic hammers; Gradall specialty excavators; Load King trailers; Broce Broom and more.

Commitment

to Mining

RMS’ roots are in northern Minnesota, and the company has focused on the Mesabi Iron Range since the 1920s. With three branch offices in Grand Rapids, Virginia and Duluth, RMS is poised to serve the existing mining properties as well as proposed new taconite/steel mill and copper/precious-minerals mines. RMS offers products ranging from portable light towers to enormous mining shovels and drills.

Vice President John Ruud leads RMS’ northern operations.

“John is a straight shooter who is dedicated to his customers and employees. He has surrounded himself with a great team of people in a strong family environment,” noted Sill.

RMS’ commitment to the mines has never been stronger. With steel prices at record highs, the mines are focused on maximizing production. This year RMS will deliver five Komatsu mining shovels and a Bucyrus drill, among other products.

“We know the stakes are high right now,” said Ruud. “So we have increased our staffing and training to make sure we fully support our customers.”

Used Equipment

Beyond new machines, Road Machinery & Supplies in recent years has grown to become one of the larger used equipment dealers in the country as well.

“Brian Durfee has headed up used equipment for the past six years and he’s an exceptionally talented and hardworking guy,” said Sill. “He’s connected into the used equipment business around the country. He buys well, which allows us to sell at a reasonable price. He and his co-workers Paul Marxen and Steve Anderson are also dedicated to helping our salesmen offer customers fair trade-in value on their used machines.

“One of the first things Brian did was establish some structure to used equipment sales,” he added. “Because of that, you can go online at www.rmsequipment.com and find the service records for a piece of used equipment we have for sale. It’s not only make, model and year. We grade the undercarriage and the components. When you buy a piece of used equipment from Road Machinery, you know its history and you have an excellent indication of how it’s going to perform.

“We have a significant used equipment inventory and with Brian’s connections, he can usually find what a customer needs, even if we don’t have it on the yard.”

RMS Rentals

New and used equipment sales are not the only growth areas for Road Machinery & Supplies in recent years. The company also has experienced significant growth at RMS Rentals.

“Our Rentals division has grown so much that we’re running out of space,” admitted Sill. “Our plan is to move the entire operation into a nearby building in Savage. Not only will it give us more room for equipment inventory, we’ll have a first-rate, 60,000-square-foot repair shop as well as substantially more parts storage.”

RMS Rentals focuses on general and light equipment for mechanical, electrical, concrete, masonry and framing contractors. It is one of the largest Lull dealers in the country and also represents Komatsu utility products, such as backhoe loaders, skid steers and compact excavators.

“Carson Erickson heads up RMS Rentals along with Sales Manager Mark Rossi, who came to us following a long, successful career in the high-reach and light equipment business,” said Sill. “They’ve done a great job of growing the division.”

Product Support Efforts

RMS is committed to keeping customers’ machines up and running

The list of manufacturers represented by Road Machinery & Supplies would mean little without the support crucial to keeping that equipment up and running.

“I think we have the best sales team in the business, but we all know that salesmen are only as good as their support team,” said Sill. “That’s an area that we’ve always emphasized and have made an even higher priority in recent years.”

He said such a commitment is necessary because of the complexity of modern-day equipment.

“It’s very difficult anymore for contractors to have their own mechanics who are up-to-date on the latest in electronics and hydraulics. So, it’s our responsibility as a distributor to have the people who can use the proper diagnostic tools to troubleshoot and repair quickly.

“Beyond those emergency calls, we offer routine maintenance contracts where we take care of a machine’s service intervals as well,” said Sill. “That’s an extra set of eyes on a machine, which in the long run, improves longevity and lessens downtime.”

RMS has approximately 85 service technicians throughout its territory, most of them field service techs who drive fully equipped service trucks to make repairs at the job site. In addition to branch service facilities, RMS also has a number of “resident technicians” who live in cities like St. Cloud, Worthington, Fort Dodge and Mason City. This gives RMS the ability to respond quickly to customer needs in those areas not near a full-service branch.

The company’s service offerings also include full rebuilds of many machines, including large electric mining drills, trucks and wheel loaders.

An Emphasis

on Training

It’s one thing to have an adequate number of technicians, it’s another thing to have good ones — skilled people who know exactly what they’re doing.

RMS has taken extraordinary steps to ensure that its technicians have extensive training to develop the skill set needed to take care of customers.

RMS is one of the few U.S. distributors that has two service training instructors — Director of Training Richard Cooper and Savage Shop Supervisor/Training Instructor John Tangeman.

“We also recently built a training trailer that has both a Tier 2 and a Tier 3 Komatsu engine,” added Sill. “It also has a hydraulic pump and laptop plug-ins to teach computer diagnostics. We’re able to take it on the road to do training sessions in Iowa and up in the Iron Range in Minnesota, so we can take it directly to the technicians. We’re also very proud that we’re an authorized Komatsu training center and quite a few other Komatsu dealers send their technicians here for training.”

RMS training also consists of basic hydraulic and electrical courses, as well as product-specific training.

To give an idea of the importance RMS places on having qualified technicians, the company plans to provide a dedicated training center in what is now the RMS Rentals building. The company spent an estimated $650,000 on service training last year.

Parts — New

and Used

While service is one side of the support coin, replacement parts are the equally important other side. RMS stocks millions of dollars worth of new parts and tracks its inventory in a way that helps ensure availability for even slow-moving parts.

“No dealer can have every single part for every machine on the shelf at every branch,” commented Sill. “But combined, our nine branch locations have the vast majority of needed parts.

“Something else that will help us get parts quickly to our customers is Komatsu’s decision to locate a regional parts distribution center in the Twin Cities in 2006. It will supply dealers in a five-state area and will serve as a source for slower-moving parts that we may not have on our shelves.”

In addition to new and remanufactured replacement parts, Road Machinery & Supplies also is one of the largest used-parts suppliers in the nation. Ten years ago, it established its Polar Parts division, which purchases used equipment for salvage. Those used parts are graded in terms of quality and often cost less than half as much as new. Ray Warmka has 35 years of experience with RMS and manages the Polar Parts operation.

Long-Term

Relationships

In nearly every department and every division, RMS had a record year in 2005 and is optimistic about 2006 as well.

“Record sales is one indicator that our customers value what we do,” stated Sill, “and it is especially pleasing when that contribution comes from each of our divisions.

“It goes without saying, that you can’t survive for 80 years without taking care of your customers,” Sill emphasized. “We’d like to think our growth is a result of meeting our customers’ needs in a friendly, efficient, and cost-effective way. We know that we aren’t the only choice in the market, so we just keep trying to outwork the competition, day-in and day-out. We work hard to earn the respect and ongoing business of our customers.”

Long-term relationships are central to RMS’ success.

“Our attitude is that there’s no individual deal worth losing a relationship over,” said Sill. “Our employees know that for us to grow we need our customers coming back again and again. That will only occur if we stand behind the products we sell and do everything in our power to keep our customers happy.

“This philosophy has served RMS well and we can’t forget what got us to this point. We got here by taking care of each customer, every day. That will be our blueprint as we continue to move forward through 2006 and beyond,” Sill concluded. CEG