Distributor found a niche supplying rubber tracks for construction equipment
- May 1, 2008
by Donna C. Gregory
Ashland-based Dominion Equipment Parts LLC hit pay dirt when the now-waning construction boom led to a rising demand for mini-excavators. National sales of the small, rubber-tracked machines, which are used to move earth on construction sites, rose from about 2,000 in the mid-1990s to about 35,000 today. That initially was good news for Dominion, a distributor of mini-excavators for Japan’s Yanmar Construction Equipment. But soaring demand led to a flood of competitors, which threatened to squeeze Dominion out of the market.
“In the mini-excavator world, there was a great deal of competition, and the successful manufacturers found they were dealing directly with the dealer networks instead of middlemen like us,” says Kenneth Byrd, Dominion’s president.
To avoid being shut out of the market, Dominion looked for a niche. The company redefined its relationship with Yanmar in 2001. It created a distribution network for replacement parts for imported construction equipment and began focusing on distributing rubber tracks for mini-excavators.
“There was a great deal of imported construction equipment that dealers and users were having a problem finding parts for. We started going after those parts that were hard to find,” says Byrd. “In that process of being the parts provider for so many manufacturers, we had more and more requests for rubber tracks, so it made logical sense to develop rubber tracks, and that business began mushrooming.”
Mini-excavators have become commonplace on construction sites because their size and rubber tracks allow them to negotiate in spaces off-limits to larger equipment. When manufacturers saw how rubber tracks increased efficiency, they began outfitting other machinery such as track and farm tractors the same way. That led to the creation of the
Dominion Rubber Tracks brand in 2002.
“It was a matter of being in the right place at the right time. We were there when this whole rubber-track market started,” says Byrd.
Now that Dominion has a strong hold on its niche, it hopes to improve market share by concentrating on faster delivery and service to end users and dealers. Until last year, the company had only one distribution center, in the Richmond area. It opened warehouses in Dallas and Cincinnati last year and in Jacksonville, Fla., and Southern California earlier this year. “Right now, we can do same-day shipping with one-day delivery to about 60 percent of the people in the country,” says Byrd.
The company also is building its national account list to become a preferred aftermarket provider for rubber tracks. Like the automobile industry, construction equipment dealers sell original and aftermarket parts, with aftermarket parts generally costing less than original parts.
Dominion recently signed an agreement with Takeuchi America, a leading manufacturer of mini-excavators and tractors, to become its preferred aftermarket rubber-track provider. Dominion also is in talks with two other companies to get their nod of approval. By growing national accounts, the number of dealers Dominion can sell to will grow. “With national accounts, it [creates] built-in customers,” says Mike Wilkerson, Dominion’s chief financial officer.
That’s not to say Dominion won’t face challenges. Slumping demand for construction could hurt the company’s bottom line. Byrd, however, is optimistic. “I don’t think we’re insulated from bad events, but in slower times, people hold on to their older equipment rather than buying new.”