Succession plan is cornerstone of future growth for forklift distributor.
On April 1, Charlotte, North Carolina-based Southeast Industrial Equipment (SIE) underwent a change at the top. Cory Thorne moved up from vice president of operations to assume the role of president, replacing his father, Steve Thorne, who moved to chief executive officer. The move was all part of an intricate succession plan for the company, but as Steve Thorne is quick to point out, “I am not retiring. I am still very involved in the business. I’m simply giving responsibility for the day-to-day operations over to Cory, and I will be concentrating on other areas within the company.”
Thorne worked with an estate planner, a lawyer who is a specialist in business transitions. With his help, it was determined the best way to transfer the company was to do so through trusts. Cory and his sister, B. J. Ferrell, each had a trust set up in their name and then Steve sold Southeast Industrial Equipment to those trusts. “Cory has control of the company, but it is actually owned by the trust,” Steve Thorne explains. “The reason for doing it this way is to eliminate estate taxes for Cory and B.J. I no longer own the company, though I still have 100 percent of the voting stock.”
SIE also worked with its main supplier. Toyota has a policy to pre-approve successor owners and general managers, paying particular attention to the qualifications of the future owners and capitalization of the dealership. In approving SIE’s plan, Toyota pointed to Cory’s dealership background and experience serving on Toyota’s Customer Quality Engineering Board, its Parts Advisory Council and its Information Technology Focus Group.
Cory’s business philosophy is much like his father’s, revolving around customer service and that SIE associates are the company’s top priority. His first President’s Message in the company’s monthly newsletter said, “Let me welcome into the SIE family our new Customers, and offer a renewed welcome to our existing Customers. We pride ourselves on treating all of our Customers as partners; we truly enjoy building personal relationships with our Customers, recognizing that by working together, the possibilities for growth and improvement are unlimited.”
Establishing a Stable Foundation
Southeast Industrial Equipment was originally called VESCO until 1987, when JM Family Enterprises, a Toyota automobile distributor for seven states in the Southeast, bought it and changed the name to Southeast Industrial Equipment. Steve Thorne got involved in 1991, when he came from another company to take over as SIE president. JM Enterprises decided in 1994 to sell off all of its businesses that weren’t car-related. Thorne purchased SIE in June 1994 and the company has been on a non-stop growth curve ever since.
The company has expanded from four branches to eight, adding locations in Wilson, North Carolina; Richmond, Virginia; Savannah, Georgia; and Columbia, South Carolina. Employment has risen from 82 associates to 248. Sales have mushroomed from $12 million to $68 million. All thanks to the leadership style instilled by Thorne. “We really try to create and keep a small-company mentality,” Cory says. “Anything that happens within the company is shared with every associate. If anybody has a question, we’re open to every aspect of the business.”
Treating its employees well is the foundation of the company’s success. “The key is that we try to find good people and then we try to make sure that we keep good people. The second part is sometimes harder than the first part, especially in our industry,” Steve says. He combats the job-hopping tendency of some in the industry by making company associates the top priority. “We built this company with associates being number one in our minds. Without them, SIE could not have the growth or profitability that we do. I really believe that the associates in this organization know that they are #1. It’s not just something that management tells them.”
Ideas in Practice
The company lives up to its word by empowering branches to make their own decisions. “We let the eight locations run on eight different avenues. We don’t mandate corporate policy because each territory has a unique customer base and unique need. What may work in Charlotte may not work in Wilson. The people in those branches have the ability to make and recommend changes for those locations,” Cory says. “We give back to our associates as much as we can,” adds Steve. For eight years now, SIE has offered up to three $3,000-per-year scholarships for associates’ families to attend college. Children of four associates have completed college at a major university, thanks in part to these scholarships. Another perk comes in the form of the annual employee gathering in Myrtle Beach, South Carolina. SIE puts every associate up at a hotel for a Saturday night, typically in December, for a cocktail party, dinner, awards ceremony and dance for all associates and their spouses. “We capitalize on keeping it a family atmosphere even though we’re as big as we are,” says Steve.
Treating the employees this way has fostered a feeling of togetherness among SIE employees. Most of the management team has been at SIE for 10 years, and many preceded Steve Thorne in service. “The first thing we look for when hiring is somebody who cares and who truly believes they can retire with SIE,” Cory says. “We want people who have the best interests of the company at heart on every decision they make. Most of the time these are people who want to have the ability to change, grow and retire with the company.”
A good strategy is as important as committed employees, and SIE has one of those, too. Cory sees most future growth fueled internally. “We’re really trying to concentrate on existing territories and growing market share, rather than just expanding by purchases and acquisitions. Mostly, we are addressing target accounts that will allow us to grow in those territories and finding unique ways to solve customer problems.”
The company’s existing territories include all of South Carolina and parts of Virginia, North Carolina and Georgia. “The Southeast is a unique geographic area because there is a lot of rapid growth, typically about two percent to three percent higher every year compared to the rest of the country,” Cory says. “We have a lot of industry moving into the four states where we do business, as well as increases in imports through our ports. Business in this part of the country really includes every industrial segment.” For that reason, Southeast Industrial Equipment is “interested in any customer that moves a product from Point A to Point B,” Steve says.
To accommodate that broad customer range, SIE offers a broad product line. Toyota is the primary line, but the company also sells Genie scissor lifts, Manitou construction equipment and piggyback forklifts, Cushman and Columbia ParCar personnel carriers, along with racking systems from a number of different manufacturers. Cory adds, “We can’t tailor ourselves to certain industries because we would limit our potential if we did. The diversity that we have in the Southeast allows us to obtain a significant amount of business.”
Standard of Excellence
With eight branches to keep on track, communication is critical. E-mail is a common tool, but Cory Thorne also encourages regular face-to-face contact. “Our management team comes together in person once per quarter at a minimum. We travel on a regular basis in order to stay in front of our associates. Being seen by them and being a part of their daily work routine is very important to us.”
SIE believes that three things must happen to have a good customer relationship: treating them fairly, properly and profitably. “We want to be involved with our customers to the point that we’re profitable and we’re providing them benefits. If we can’t look at a customer and talk openly about their profitability, then they’re not the type of customer that we strive to go after. We want customers and associates who are going to be willing to change to better ourselves and them.” Or, as Steve adds, “If we’re not profitable with a customer, we’re not going to have them as a customer very long.”
The company relies on its tradition of excellence, but that doesn’t mean it is set in its ways. “We don’t change just to change,” Cory says. “We change to be able to bring more to existing customers to help us both be profitable.”
A catalyst of those changes, he believes, is technology, the Internet in particular. “Historically, and even currently, the computer systems used by our industry do not allow much functionality for customers. We are trying to push our computer suppliers for the ability to add value for the customer.” For example, Southeast Industrial Equipment is in the process of implementing an online work order system, and within three to five years the capability will exist to remotely read a customer’s current hour meter without having to send an associate to look at it. “That’s really going to be the biggest impact on our industry with the Internet. A lot of devices out there use the Internet as a backbone and give us the benefit and power to reach the customers.”
Capitalizing on opportunities such as those provided by technology will help propel Southeast Industrial Equipment to a bright future. Cory Thorne expects a 15 percent rise in the aftermarket segment of the business, leading to overall company growth of 10 percent. “As we become a stronger, consistent service base for our customers, we rely on reputation and word of mouth to help us obtain those goals. A lot of internal changes will allow us to make sure that we’re striving to give our customers more, faster, to relay information to their fleets.”
It all fits with the company’s over-arching goal to position itself as the number one supplier in the area and continue its growth within the market. As the old saying goes, “A succession plan is a plan for success.” Thanks to the foresight of its executive team, Southeast Industrial Equipment now has both.