For Michael Lalonde, heavy equipment is a family vocation, one taken up over the years by both his father and grandfather.
“I grew up around tractors,” Lalonde said.
But when he wanted to start his own equipment dealership three years ago, he found it was tough to break into the business.
Popular equipment manufacturers such as Caterpillar Inc. in Peoria, Ill., and John Deere in Moline, Ill., already had dealers selling their product in every territory in California – leaving nothing for Lalonde.
So, he partnered with a little-known Chinese manufacturer, LiuGong Machinery Corp., which was looking to break into the California market, and started Westrax Machinery Inc. in Rancho Dominguez. He’s now the Chinese company’s exclusive dealer in Los Angeles, Riverside, Ventura and Orange counties.
The arrangement has paid off: Westrax’s revenue hit $7.2 million last year, up from just $1.4 million in 2011. That growth puts Lalonde’s firm at No. 16 on the Business Journal’s list of Fastest Growing Private Companies. Westrax has 23 employees and a second facility in Corona. It has 175 pieces of new and used heavy equipment.
Of course, Lalonde noted that it’s easier to grow when you’re starting from nothing. And that was the case for both his company and LiuGong, which has almost no presence in the United States.
“LiuGong is a $4 billion company,” Lalonde said. “Worldwide they’re a big player, but in North America their market share is less than 2 percent.”
As it tries to pick up more market share, LiuGong, through Westrax and other dealers, sells equipment for less than Caterpillar and Deere.
Lalonde estimates that LiuGong equipment retails for about one-third the price of comparable equipment from his big-name competitors. Westrax also competes by offering special services to its customers.
For instance, Westrax offers to repair equipment on site rather than requiring clients to haul machinery back to the company’s headquarters for service.
But even with that offer and its discount pricing, LiuGong’s equipment has been a tough sell in the United States. Many in the construction business still prefer to purchase equipment from U.S. manufacturers and from brands with better name recognition.
“Caterpillar is a big marketing company,” Lalonde said. “They’re a billion-dollar brand and even John Deere is doing a very good job. They have John Deere dishes in Walmart now. The branding has nothing to do with tractors.”
And the preference for big brands has been especially strong as the economy has recovered. Over the past few years, when firms weren’t as busy, LiuGong’s bargain prices were a big draw. But this year, Westrax has seen sales drop as customers aren’t as price-conscious.
– Subrina Hudson
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