Graham Manufacturing Company: Distributor of Highway Construction Equipment – Sale of a Truck-Mounted Power Shovel

In January 2017, Shattuck Construction Company was awarded a $60 mil­lion contract for building a section of interstate highway crossing New York State. The contract called for clearing, paving, bridge building, blast-ing, and landscaping 50 miles of roadway, two lanes in each direction, in the vicinity of Syracuse.

Over a period of six months prior to the award of the contract, Fred Rennert, salesman for the Graham Manufacturing Company, had been calling upon the Shattuck Company for the purpose of selling a truck- mounted power shovel. Although the prospect concern had used all types of bulldozers, carryalls, trucks, and large shovels, it had never had experi­ence with this particular type of power shovel. In January, Rennert finally persuaded John Shattuck, president of the Shattuck Company, to witness a demonstration of the product. Because Shattuck’s time was limited, the demonstration’s sole purpose was to acquaint him with the general oper­ating procedures of the shovel.

Previous to the time of the sales interview recorded here, Rennert had talked with state engineers and other officials engaged in planning the new road. He had studied the technical aspects of the project and the major problems that would have to be faced in completing the prospect’s con­tract. In addition, he had familiarized himself thoroughly with the various pieces of equipment used by the prospect on similar contracts in the past.

The following interview occurred on the day after the product demon­stration. Rennert had learned on the same morning that the contract in question had been awarded to the Shattuck Company.

Rennert: Good morning, Mr. Shattuck.

Shattuck: Good morning, Mr. Rennert.

Rennert: I understand you have received the contract for the 50 miles of road construction east of here.

Shattuck: That’s right, Mr. Rennert, and we have quite a job ahead of us. Rennert: This’ll be the biggest job you’ve had since the war, won’t it, Mr. Shattuck?

Shattuck: Yes. However, we did have one big job five years age, a big stretch of parkway near New York City. That was a dandy, at least from an engineering-Standpoint. We had our troubles on that job, and we missed our bid estimate by almost $400,000 because of the landscaping that was a part of the project.

Rennert: Doesn’t the state pay for any errors or mistakes they make in their survey estimate of the proposed project?

Shattuck: Yes, they do pay for their mistakes. However, that mistake was ours and we didn’t get paid for it! You know, Mr. Rennert, what they say in this business—one mistake and you’re backed up against the wall.

Rennert: That’s exactly why I’m here this morning, Mr. Shattuck, and that is why I gave you the demonstration yesterday. I am here to show you how to make more money by saving on construction costs right down the line. We realize that you have been in business a good many years and have the know-how, or you wouldn’t be operating today. But I have studied your problems and I believe we have a machine that will reduce your operating costs by at least 10 percent.

Shattuck: Well, at the present I have two regular power shovels and a fleet of trucks, and I can’t see how your machine will benefit me at all. I liked your demonstration yesterday but, of course, that is only one operation and I already have the equipment to do that.

Rennert: That’s true, Mr. Shattuck, but remember that your 1- and 2-yard shovels are not truck-mounted and therefore don’t have the versatil­ity that our shovel has. Isn’t it true that most of the time on a rock cut or hill excavation those shovels are in the same spot for months at a time?

Shattuck: Yes, they are.

Rennert: Well, our shovel is a mobile shovel. “Quick-Way” Model E has a 4/10 cubic-yard capacity bucket. It can be moved from place to place with the least amount of lost time or delay. It is ready for use as soon as it reaches its destination. There is no loading or unloading to consume time and run up costs. In many cases, you have small jobs, such as laying pipe, putting in culverts and ditch digging, all of which have to be done at almost the same time. With a “Quick-Way” shovel you’ll be able to go from one job to another with a minimum of delay. You’ll be able to use this shovel from the beginning of the operation right down to the end.

Shattuck: I don’t see how I could use your shovel throughout the whole operation.

Rennert: In the early stages you can use the clam shell or trench hoe for digging ditches and sluice ways. These can also be used for building up shoul­ders. The crane, which is 25 feet long, can be used for laying forms, putting out reinforcements of steel,and many other jobs of loading and unloading that must be done. When the concrete is ready to be poured, you can use the shovel boom and bucket for feeding the batch bins and loading the trucks with gravel.

Shattuck: That does sound practical, but I didn’t know you could use a trench hoe or a crane with your shovel.

Rennert: Oh, I’m sorry! I should have made that clear. The clam shell and trench hoe can be mounted on the shovel the same as a shovel boom and bucket can. There is also a 25-foot crane boom that can be mounted the same way, as you can see by these photos.

Shattuck: How long does it take to make a changeover to any one of these attachments?

Rennert: It takes approximately two hours. However, the job is usually done at night when the machine is not in use.

55 Shattuck: That sounds good, Mr. Rennert. Now, I have a lot of bridge build­ing in my work. Will your machine be of any use on these projects? Rennert: Absolutely! You can use the clam shell or the trench hoe for the digging, and the crane boom for laying the steel girders. Does that answer your question, Mr. Shattuck?

60 Shattuck: Yes, it does. I have heard that your type of shovel has a lot of competition from other road-building equipment. Is that true?

Rennert: Yes, there are a lot of specific machines that we compete with.

However, ours can compete with almost all of them. It is all four machines in one—the clam shell, trench hoe, crane boom, and shovel 65     boom and bucket. You can see that this is a great saving in capital investment. You have one machine that does four different jobs.

Shattuck: Well, that certainly sounds economical.

Rennert: It is economical, Mr. Shattuck. The “Quick-Way” shovel is oper­ated generally by one man who can also drive the truck from job to job. The shovel has positive hydraulic controls and a wide-vision cab that gives the operator clear vision at all times. It has a 55-horsepower International engine that operates at low speeds. Therefore, your maintenance costs drop. It is full-revolving, mak­ing 7% turns per minute. The shovel boom and bucket can dig to 3% feet below ground level and can lift to a height of 11 feet above the ground for dumping. The trench hoe can dig to a maximum depth of 15 feet below ground level. The total height of the machine is 10 to 12 feet, depending, of course, upon the type of truck on which it is mounted. This passes all the requirements for highway bridges and trestles. It is also classed as a power shovel and, therefore, does not require license plates in New York State. One of the outstanding 80     features of our shovel is that it has no dead weight to counterbal­ ance the loads. By this, I mean that it is balanced right. Its weight is distributed proportionately throughout. This, of course, as you know, saves on repair costs and increases the utility of the machine.

Shattuck: We’ve had a lot of trouble with our large shovels because of this factor of counter-balancing. I have looked over your specification  sheet and have noticed that there is a bronze bushing on the main spur gear. I would say that a roller bearing would be better because of the high speed at which your shovel operates.

Rennert: Yes, you’re right. The roller bearing would be faster, but this is the very reason for using a bronze bearing. When a bail bearing or roller bearing breaks down, there is likely to be damage to the shaft and the racer. On the other hand, when a bronze bearing wears, there’s no damage to the shaft, and the machine doesn’t have to be stopped immediately. This, I think, is a definite advantage in that the shovel can be kept in operation until time is available to get a new bearing and to get it installed. I would also like to point to you that all our hydraulic clutches are interchangeable. If any one of them breaks down, it may quickly be substituted for by the clutch on the main boom lift, which has a mechanical stop and can temporarily be used in this way. You can see that this also saves on the number of parts that must be kept on hand to service the shovel.

Shattuck: Do you have any figures on the actual operating costs of your shovels over a period of years?

Rennert: We have. We figured average cost per machine-year on twenty- five machines, a total of 130 machine-years. It was $2,325 repair and maintenance costs. Mr. Oldine, of the Oldine Contracting Company, bought a “Quick-Way” shovel two years ago and has had excellent results on this score. His total service costs have been $1,400 a year.

Shattuck: From what I have seen and from what you have explained, I’m interested in your shovel. Do you have the cost figures with you?

Rennert: I have them right here. The basic machine plus the shovel boom and bucket comes to $28,241. The clam shell is $21,393. The trench hoe, $21,350. And the crane boom, $6,569. The prices are F.O.B. your place of business.

Shattuck: Your cost figures seem rather high since they don’t include the price of the truck needed to mount the shovel.

Rennert: No, Mr. Shattuck, experience has shown that it is possible to amor­tize the cost of our shovel over a two-year period. This also brings up another point. Our shovel can be mounted on any type of 5-ton truck. This is a distinct advantage over other truck-mounted shovels—they all require a specific type of truck on which to mount the shovel equipment. I have noticed that you have a Mack truck out in the lot which would be suited for our shovel. I have already looked at it and measured it. It’s just the one for mounting our shovel on. That is, of course, if you can spare it.

Shattuck: Why, yes, I do have a few extra trucks, and that one you are speaking about is one of them.

Rennert: I believe you’ll agree that this is an added saving for you, and the price I have quoted, including attachments with outriggers, is reasonable.

Shattuck: Yes, it does make it sound better, but let me look over those spec­ifications again…. Yes, I see. Just what is the capacity of this shovel?

You know I have a lot of heavy work.

Rennert: Well, with outriggers, the capacity over end or over side is 13,000 pounds at 10 feet and drops to 8,000 pounds at 15 feet. There is a 15 percent safety factor built in which increases its capacity correspond­ingly. I believe these capacity ratings will handle any work that you will encounter.

Shattuck: That would seem plenty. What attachments do you suggest I use?

Rennert: I made a complete study of the attachments you will be using for this job. I would suggest the shovel boom and bucket, the crane, and the trench hoe or clam shell. The trench hoe would probably be more practical, but the final decision is up to you.

Shattuck: I think I agree with you. The trench hoe will handle my work. If I need it, you can always get me a clam shell, can’t you?

Rennert: Yes, I can have one for you within a few days’ time. Now Mr. Shattuck, here’s the contract. The basic machine, shovel boom and bucket, crane, and trench hoe. total up to $56,160. This includes installation and mounting on your truck.

Shattuck: This seems to be in order. Where do I sign?

Rennert: Thank you, Mr. Shattuck. I’ll send a man over for your truck tomorrow. We’ll be able to go right ahead with the work and have the shovel and truck back to you within two weeks. That will be in plenty of time for your work, won’t it?

Shattuck: That will be fine. We plan to start operations in about two weeks, and I’ll be able to use the shovel by that time.

Rennert: Thanks again. I know you’ll be satisfied with our “Quick-Way” shovel. I’ll be here when you take delivery. I want to see that every­thing is as it should be. Goodbye, Mr. Shattuck.

Shattuck: Goodbye, Mr. Rennert.

Judging from the approach used, what facts had Rennert learned about the pros­pect?

2. How important was timing in this interview?
3. In opening the interview, did Rennert have a good plan of attack?
4. At what points in the interview did the prospect voice objections? Which objec­tions, if any, were real, and which were excuses?
5. What methods were used by Rennert in answering the objections voiced by fhe prospect?
6. At what point in fhe interview was it apparent that Rennert was going to make the sale?
7. Analyze the closing technique used in this case.
8. Was Rennert wise to leave Shattuck almost immediately after getting the order? Why or why not?

Source: Richard R. Still, Edward W. Cundliff, Normal A. P Govoni, Sandeep Puri (2017), Sales and Distribution Management: Decisions, Strategies, and Cases, Pearson; Sixth edition.