Truck maker heeds firemen’s call
Published: May 12 2008 19:42 | Last updated: May 12 2008 19:42
Anyone who thinks “fire-engine red” is a standard colour would be surprised by the paint laboratory at the back of the Pierce factory in Appleton, Wisconsin. On the wall are 125 metal plates, each painted a slightly different reddish hue.
“If you’re going to spend half a million dollars on a fire truck, you’ve got to be able to choose the exact colour you want,” jokes Jim Michal, vice-president of manufacturing for Oshkosh Corporation, the heavy truck maker that acquired Pierce in 1996.
Many western manufacturers have tried to stay competitive in the face of low-cost overseas competition by closely tailoring products to their customers’ needs. Oshkosh takes this approach to the extreme, customising its trucks according to individual buyers’ needs and collaborating with customers on redesigning its vehicles.
Its experience shows how such a strategy can pay off: in the past decade, Pierce has grown at an average rate of more than 11 per cent a year. With revenues last year of $600m – up from $180m when it was bought by Oshkosh – it is now the leading maker of fire trucks in the US with a market share of about one third in North America.
Tim Solobay, chief of the Canonsburg Volunteer Fire Department in Pennsylvania, agrees that Pierce’s customisation strategy helps attract buyers. “We went with Oshkosh because it’s just easy working with the company – you know it won’t become an engineering nightmare.” Pierce trucks are popular with volunteer teams, of which there are about 34,000 in the US and which account for 80 per cent of the company’s sales.
Mr Solobay is beaming at his new fire truck, parked on the factory floor – a slice of classic Americana with rows of gleaming vehicles bearing the emblems of fire departments from Jacinto City, Texas to Downers Grove, Illinois.
Mr Solobay says this is his third point of contact with the company: first, he and his crew met a local salesman to talk about design features, then, last December, they visited the factory to talk in more detail about customising the vehicle. On this return visit – a four-day trip – they check the results and take delivery.
Mr Michal says Pierce’s strategy of working with customers is two-pronged. First, the company tailors each vehicle, from the artwork on its grille to the water-pumping technology. “The customer has an option list for specifications,” he says. “The result is that no two vehicles are exactly the same.”
While that makes Pierce vehicles (such as the one pictured below) 
among
the most expensive on the market, it also wins fierce brand loyalty
among purchasers. Mr Solobay says his fire department is paying about
$30,000 more than it would for a vehicle from a rival, but adds that
for a fire truck that is only replaced about every 20-25 years there
are other considerations, such as dependability and the unique features
the company offers. “These are top-quality vehicles,” he says. “We know
that because our other fire trucks are from Pierce.”
Oshkosh is so confident that its customers will stick with the Pierce brand that in April – while the US industrial sector appeared to be mired in recession – it increased the price of its vehicles, citing rising steel costs.
Charlie Szews, Oshkosh’s president and chief operating officer, says the tailoring strategy has been honed over decades. “We operate in relationship markets. These products last up to 50 years – there are still Pierce fire trucks from the 1950s that operate in the field. We have to think long-term.”
The second part of Pierce’s strategy involves using contacts with customers to aid redesign and spur innovation. Before undertaking a fundamental redesign of its basic fire truck model two years ago, Pierce surveyed its customers to get ideas for improvements. Then the company invited more than 100 firefighters to visit the factory to give them more detailed feedback. It put them in groups and asked them to design their ideal fire truck from scratch.
The company fed ideas from this exercise into the redesign: it removed a pillar from the windscreen and changed the location of wing mirrors to improve visibility; made door handles bigger so they were easier to use for firefighters wearing gloves; and installed side airbags for extra protection.
Oshkosh also used the opportunity to measure firemen – and found out they were, on average, taller and broader than federal guidelines on cab heights and seat widths had led them to expect. As a result, the company widened the standard seats in their trucks.
During a standard sales process, too, the company has a lot of time to get to know its customers. As with the Canonsburg fire department, customers who buy a fire truck infrequently – such as volunteer departments serving rural areas – typically have three meetings with the company over the course of the six months leading up to a sale. Up to 10,000 visitors a year come through the factory to inspect and collect their vehicles, and Pierce uses the opportunity to collect feedback.
“We line them up with a series of lunches and dinners while they’re here so we can hear their ideas,” says Mr Michal. “At every meal we have a staff member from a different department go out with them to chat informally. Then the employees document what’s been said and send it on to the engineering department or the marketing department.”
Bob Bohn, Oshkosh’s chairman and chief executive, says the ability to listen to customers in such an informal setting is an invaluable part of the production process. “It gives them a chance to really tell us what they like and what they don’t like,” he says.
It is only through taking advice on its products from their users that Pierce has been able to claim a progressively larger slice of the fire truck sector, the company says. “These markets only grow at about 1-3 per cent a year,” says Mr Szews. “We need to think differently in order to increase our market share.”
Vehicles built on front-line experience and first-hand feedback
While Pierce’s relations with its customers go deeper than most, Oshkosh adopts a similar approach across other units. Employees in its military arm, for example, spend months living in the field when US forces are testing prototypes and 20 per cent of the division is devoted to parts and servicing. The company has two facilities in Iraq and one in Kuwait dedicated to repairing and refurbishing military vehicles.
Mike Conger, Oshkosh
vice-president and general manager of operations, says his experience of living for three years near government “proving grounds” where vehicles are tested and delivering vehicles to the field is typical of how the company works with the US military. “I could walk around and talk to the staff sergeant or the chief warrant officer and get direct first-hand feedback about how our vehicles were performing,” he says.As is standard for US military contractors, members of the Defense Contract Management Agency, a unit of the Pentagon, also work on site with Oshkosh. The company brings the dozen-strong DCMA team in to its operations as much as possible, with federal staff sitting in on twice-daily production meetings as well as inspecting quality and processes. Mr Conger says: “We hear the customer’s expectations right on the shop floor, and our employees hear it first-hand.”
Copyright The Financial Times Limited 2008
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