WesTrac meets its goals in first 100 days

By David Palmer

Coincidentally, when I met WesTrac NSW/ACT CEO Ray Romano in mid July, it was just three days short of the company's first 100 days of starting as the Caterpillar distributor for NSW and the ACT.

It was a milestone for him too, as he had just clocked up his 30 th year in the industry, mostly working for Cat dealers in the north eastern United States.

We met at NSW/ACT headquarters in the western Sydney suburb of Wetherill Park, established speedily on an old Stramit site, when Gough and Gilmour declined WesTrac's offers for its infrastructure.

“We had fairly short notice to establish our headquarters. When we realised Gough and Gilmour were not going to accept our offer, we had just a few months to get established,” he said.

The company leased the site after looking at a dozen or so unsuitable ones across the city. “It was one of the very few facilities set up for heavy equipment with appropriate cranes, hard stand, workshops and yard space.”

Aggressive ordering

But before Romano worried about finding facilities, he ordered 500 pieces of equipment from Caterpillar factories for the NSW start up. And that wasn't counting Caterpillar Australia's equipment commitment. “We certainly didn't want to get caught in a short supply situation during our first year,” he said.

He conceded though that he wouldn't always run with 500 units, because turnover was not generally high enough to justify that. “We might initially have six months supply instead of two and a half months, which is maybe more normal. So we know we have enough stock for the next six to 12 months. We're in very good shape with a normal core of heavy and light construction products from small skid steers to D11 bulldozers.”

It was a fortunate decision because in the last few months machine availability and shipping capacity has become tight and much more expensive.

Full ships

“So now that delivery dates are slipping out because of full ships, I have the inventory and by ordering ahead I know I'm not going to run out. But it is more difficult on the mining equipment side because of a shortage of steel and tyres. We never really thought that would happen,” he said.

If someone wanted a fleet of a dozen 793 rigid frame trucks for example, there would likely be a six month lead time. However the company often orders large mining trucks in advance so it has up to 12 in the pipeline at any time.

It also has a good stock of used and rental equipment so if someone needs six new trucks but says he can wait six months for four of them, Westrac normally has rental and used machines it can draw from to keep the customer happy.

Romano said the company was focussing on the obvious market segments of heavy construction, building construction, mining and agriculture. Other segments like quarrying, hire, truck engines, marine and industrial engines and lift trucks, are high growth opportunities too. “They allow us to have a much more diverse market than we have in WA for example. There we have it loaded much more towards mining where it accounts for 60 to 70% of the business, depending on the year.”

2000 employees

By the end of this calendar year, WesTrac expects to be employing about 700 people in NSW and the ACT. Together with WA, the total will be close to 2000 Australia wide.

Romano said it was painful initially to address the staffing problem, “knowing we needed 700 in the first year. We weren't allowed to solicit Gough and Gilmour people and we didn't. So we advertised generically in Sydney and rural areas. Gough and Gilmour employees made their own decisions about whether they would apply and all we did was give them an opportunity,” he said.

Overall the company processed more than 3000 applicants before it started. A large contingent are former Gough and Gilmour employees. But there are not as many as people seem to think, Romano said. “They think that 90% are former Gough and Gilmour employees. But it's more like 60%.

“We actually are ahead of our employment curve. We were trying to have 550 people on board when we started on April 9 and we were a little bit under that. But we are now over 650 and I think we'll be past 700 by the end of the calendar year.”

In the words of WesTrac owner Kerry Stokes, “the company does a really good job of training apprentices in WA. It has a 50:50 joint venture with Caterpillar called the Cat Institute. Under a four year apprenticeship scheme it trains about 600 at a time.”

Cat Institute

So the company plans to have a permanent facility in New South Wales too. “We will recreate the institute with a view to training a minimum of 200 to 300 apprentices a year in NSW,” Stokes said, “because we can't sit back and expect the government to train people.”

There are about 60 Westrac NSW/ACT apprentices in the system now, most of whom were with Gough and Gilmour before, and there'll be a new intake in January.

Romano made the point that WesTrac does not look at itself as just an equipment dealer. “We look at ourselves as an equipment management company and a solutions provider. Our job is not just to provide the best equipment and parts, but to provide the lowest cost per tonne solution for operators. It is way beyond selling machines. It's about supporting them and maintaining uptime and productivity.

“Part of that will involve fine tuning the 17 branches as we see where our customer bases are growing. That will determine our longer-term footprint. And we had to realise it is a different market to WA. You can't import everything from there and expect it to work. Just because it worked in WA doesn't mean it's going to work here,” he said.

China dealership grew out of NSW delay

In the time it has taken WesTrac to become the NSW/ACT distributor for Caterpillar, Ray Romano has been able to play a significant role in getting WesTrac China started.

“Because of the time delay, and the NSW/ACT dealer transition due to the court case, I actually spent most of the last three years in Beijing.”

That dealership covers about one quarter of China and a population of about 275 million, which is about the population of the US. “So it is kind of staggering from that standpoint. We think it has lots of potential too,” he said.

It is a diverse area encompassing Beijing, Tianjin and the surrounding provinces in the north east of China, from inner Mongolia up to Heilongjiang. Cat equipment from WesTrac is heavily involved in building infrastructure for the 2008 Olympic Games in Beijing, and is helping realise most of the mining opportunities in the country.

Before he started with WesTrac in November 2000, he worked for two different dealers in New England for 20 years. They were Southworth Milton which covered Boston, Massachusetts, upstate New York and the New England states of Maine, New Hampshire and Vermont.

“Then I worked five years for the Caterpillar dealer in New York, HO Penn Machinery. I was born and raised in New York so that was like coming home.”

HO Penn played a very large role in providing equipment used in cleaning up after terrorists collapsed the World Trade Centre twin towers three years ago. Not the least of which was to supply a number of Cat powered gen-sets to keep office buildings and businesses running. Significant other heavy equipment was used for the removal and delivery of debris around the clock to the landfill site on Staten Island.

After that he worked for Caterpillar and started a worldwide used equipment company called Caterpillar Redistribution Services before joining WesTrac.