Mack Trucks Inc. is realigning its dealership and service networks in 12 states to boost its weakest sales region: the West Coast.
The company's traditional stronghold is the Northeast, where it has more than 20 percent of the Class 8 truck market, said Paul Vikner, Mack executive vice president of sales and marketing. Out west, Mack has only 4 percent of the market, and it trails West Coast-based manufacturers, he said.
To improve that figure, Mack has been searching for established dealers to take over its factory stores and other underperforming dealerships in major Western markets such as Los Angeles, San Francisco, Seattle and Phoenix.
'We're marrying the 'gorillas' that exist out there,' Vikner said, referring to Mack's new partnerships with major dealers.
In some Northeastern markets, Mack's market share is 30 to 40 percent, Vikner said. In the Southeast, it's in the teens.
But in the 12-state West Coast region, Mack wants to catch up with such companies as Kenworth Truck Co. of Kirkland, Wash., Freightliner Corp. of Portland, Ore., and Peterbilt Motors Co. of Denton, Texas.
WEST IS WEAK
The 12-state region consists of Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming.
Mack's overall goal is to increase its 12.5 percent share of the U.S. heavy-duty truck market. 'But to do that, we have to be much stronger in the West,' Vikner said.
This year, Mack has sold its factory stores in the Oakland-San Francisco area and in Seattle. The new owners, such as Jack Kane, who purchased the Oakland-San Francisco store, can develop those dealerships and add Mack trucks at their other outlets, said Mack spokeswoman Robin Crawford. Kane's other truck dealership is the Oakland Truck Center in Oakland.
Mack has encouraged changes elsewhere, such as the Bonar Group's purchase of a Mack dealership in Las Vegas, the relocation of a Mack dealership in Phoenix to a new 'state-of-the-art' facility and the opening of a new store in the Fresno-Bakersfield area of California.
Adding new stores in West Coast cities would have been too tough a task for Mack to handle on its own. 'It takes a lot of capital, and it takes a lot of resources to establish a Class 8 dealership,' Vikner said. Instead, the company is partnering with the region's entrenched dealers, he said.
'We are talking with several people about the L.A. market. We are looking for a strong partner to handle that market for us,' Vikner said. Mack has one company-owned truck dealership in Anaheim near Los Angeles.
'That is the key market. ... The concentration of trucks (in Los Angeles) is one of the highest in the country, if not the highest,' Vikner said.
Mack faces at least one problem with its new strategy. On the big dealership lots the Mack products could get lost among the other brands. 'There is risk to it, there's no doubt,' Vikner said.
However, neither Vikner nor trucking industry consultant Stuart MacKay believes that will happen. 'Mack has some distinctive market characteristics that
I think are marketable,' said MacKay, president of MacKay & Co. in Lombard, Ill.
APART FROM THE CROWD
Mack separates itself from the rest by having its own engine and some other drivetrain components, MacKay said. It also has a very strong position in vocational applications, he said.
But engines and gorilla dealers cannot do it all for Mack. Dealers in big markets who are performing well need support from dealers and service centers in the small markets, Vikner said. But some of them are not getting the job done, he added.
As a result, Mack continues to realign its service and parts network. In December, it opened its new Reno (Nev.) Parts Distribution Center to service 28 Western region distributors.
Mack dealers will need even more support if they begin supplying Mack's major fleet customers. For example, Mack trucks dominate the Eastern fleets of waste service companies like Browning-Ferris Industries Inc. of Houston and Waste Management Inc. of Oak Brook, Ill.
Both have been expanding in the West. 'They've indicated to us that that would mean much more business for Mack in the West,' Vikner said.
Mack also must make more Class 8 vehicles that meet the specifications of Western customers, according to Vikner. As a result, Mack has introduced the Western Contractor, a new vocational model that meets the West Coast's weight specifications.
Said Vikner, 'It's hard to build a network if you don't have the right products.'