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Building Relationships, Building Business 
by meeting customers' needs - always

By Mike Martin

John Connolly Sr. launched ATS Equipment in 1985. As the company grew, his three sons came on board to help keep the rental business growing.

After an early evening round of golf, followed by dinner with friends, Stephen Connolly of ATS Equipment was ready to head home when his cell phone rang. A contractor working on the Longfellow Bridge project had a generator break down and needed a replacement. Though it was after 10 p.m., Connolly swung by ATS’ Dorchester, Mass., yard, loaded a generator onto his pick-up, and quickly navigated the Boston streets to deliver the generator and get his customer back up and running. While his customers gave him grief for wearing work boots, hi-viz vest and hard hat over golf attire, he was happy to take it. After all, in less than an hour a customer’s problem was solved, letting them continue their night-time work on one of the most visible infrastructure projects in New England.

With four locations – two in Massachusetts, one each in New Hampshire and Rhode Island - ATS provides a wide range of equipment to meet the needs of a diverse range of contractors. At the heart of it, and repeated consistently from the company staff, is customer service. As Steve’s father, John, likes to say, “It’s customer service the way it used to be.” In fact, that’s the company’s motto.

A nice philosophy, but isn’t executing that as a strategy a bit of a challenge? The post-golfing anecdote answers that question.

ATS Equipment was co-founded by John Connolly, Sr. in 1985. Stephen, his brothers Brian and J.C. (John Jr.) and their father own and operate the business, which now includes more than 50 employees, including several in Dorchester – where Stephen made the late day run for a generator. How was it, then, that he got the short straw for this call?

He didn’t.

“There’s a reason we don’t put titles on our business cards,” he explains. “Every one of us needs to know that the customer comes first. We don’t want anyone getting hung up on titles. We all have the same job – take care of the customer.”

Business-building DNA
ATS Equipment, in its former life, was known as Air Tool Service - ATS. The business was owned and operated by someone John Connolly got to know when he was an executive with Hertz Equipment. As the name implies, ATS sold and serviced a
variety of air tools, focusing on Boston-area contractors.

While he credits Hertz for “giving me a PhD in the rental business,” John was looking to do something else. His quick business analysis suggested ATS presented opportunity. “He had relationships with contractors and I had relationships with contractors. He knew how to take care of customers and fix their air tools and I had an idea that there was a need and an opportunity to grow a rental business,” John Connolly explains, “And I knew the rental business.”

Connolly provided rental business acumen, including the ability to access investment capital, and launched ATS Equipment. The business moved to its current Dorchester site in 1995, added a Candia, New Hampshire location in 2001, a location in Auburn, Mass., in 2009, and a fourth facility in East Providence in 2012. Each location includes a service center for equipment, plus mobile crews are ready to respond to customers’ needs, providing on-site repairs when needed.

As far as business territory, “we go anywhere for a good customer,” Stephen says. They currently have equipment on projects in Connecticut, New Hampshire, Vermont, Maine, Rhode Island, Massachusetts “and a little bit in New York.”
From what Stephen estimates was a $500,000 inventory in 1985, the company now has more than $18 million in inventory, running from massive Komatsu excavators to Oztec concrete vibrators. They focus intensely on meeting the needs of a variety of contractors. As a result, 95 percent of their revenue comes from contractors, with a 60/40 split of rental-to-sales revenue.

John Sr.’s expertise, ATS’ foothold in the Boston market and strong local demand were, clearly, a good foundation for a rental business. John Sr., at 80 years young, remains involved every day. Asked about their excavator fleet he can rattle off numbers, sizes, capacities, prices, rental rates and talk about how and why their fleet has grown and changed with
customer needs.

“He doesn’t miss a thing – ever,” J.C. points out. “Dad picks up on things in our financials, in our rental agreements, that we missed. He knows the business so well.”

Brian, John Jr (J.C.), John Sr. and Stephen Connolly surrounded by some of the products they provide to contractor customers in the greater Boston area. The four location rental business sees different needs in each location, shifting equipment and products around as customers needs dictate. (Photos by Mike Ritter, Ritterbin Photography, www.ritterbin.com)

All three sons worked elsewhere before joining ATS. As the business grew and their father saw the need for help, he brought them in one by one. J.C. and Brian serve more in operations, working with managers at the other facilities, make outside sales calls and also spend time on customers’ job sites. “We joke that we want someone somewhere else every day,” J.C. says. “In fact, if someone isn’t somewhere else, Dad says we’re not thinking.”

Stephen handles safety, employees, facilities and various legal and financial aspects of the business; he worked for local moving and trade show companies, going to law school at night, then added an MBA. Although, when mentioned in the office, that’s recognized with brotherly love: “Oh, he only looks good on paper,” Brian laughs.

Sitting in the space the three brothers share when all are in Dorchester, you find that joking with each other is constant. So is the customer contact. Each will have a little deeper knowledge of some customers - “Brian and J.C. are out there all the time,” Stephen says - but they all seem to know something about every customer, their projects and the equipment being used. They take calls constantly, interrupting conversations with each other, with other staff, to make sure no customer is waiting to have a call picked up. Their father, too, takes and handles calls. The calls are constant. Customer drop-ins are steady. While 6 a.m. to 8 a.m. is rush time, and 3:30 p.m. to 5:00 p.m. is time for taking calls and getting customers’ equipment needs ready for the next morning, drop-ins, pick-ups and deliveries occur throughout the day.

“Everyone wants to get everything they need first thing in the morning. At the end of the day, they’re telling us what they want the next morning. We do our best to get everything set for pick-ups, to get our deliveries set, so no customer has to wait to get working in the morning,” Brian says.

As every business knows, though, “all it takes is one call and the whole day, no matter how well we plan, can get spun on its head. It’s the nature of the business and we have to be able to handle it,” Stephen comments, whether it’s a change in an order, an unexpected drop-in for 10 air hammers, or the need for fast replacement or service.

Positive growth environment
Part of the constant business ‘buzz’ in the office reflects the area’s construction climate. Driving around the resurgent Boston Harbor, Stephen points to the tower cranes as a sign that business is growing right now, “although 10 to 15 years ago some of these areas were abandoned and depressed,” he points out. “But right now, we’re blessed to be in a good business environment.”

There is consistent infrastructure work on city streets and with utilities. Area homes have basements that, with the bay and Charles River, experience water issues resulting in repairs, remodeling and waterproofing. Even parking garages, with daily spaces at a premium, work quickly to repair concrete – thus the sudden order for 10 air hammers.

“We have a lot of universities in the area, many with projects underway. Fenway has a project every year. Logan (airport) typically has some type of project,” Brian adds “But there was a lot of variation over the last couple of years in how businesses recovered. It varied based on location and on the type of work that needed to be done.”

Because of this, ATS works diligently on two related business facets: Its customer base and the projects they handle; and having the tools and equipment in its fleet and at its locations, to meet customers’ needs. “For a while, we really were too heavy in earthmoving. It showed in our fleet and the number and size of excavators we had,” John Sr. says. 

“We constantly look for new customers and different types of projects” where meeting rental or sales needs plays a key role, Brian comments. “When you have too much tied up in just one customer, it’s like you have your arm in the mouth of a tiger. It’s very risky.”

The family made a strategic and conscientious effort to establish and build relationships with other types of contractors, now focusing on five key categories: earthmoving, site work (clearing, prepping for various types and sizes of projects), environmental (debris removal, soil removal, more typical with remodeling/revamping of buildings on universities), utility and waterproofing contractors.

Within each category, they want at least five “strong” customers. In their parlance, “strong” refers to contractors that appear to run a solid business, that are recognized by others in the market as good contractors, “and, for us, it means that they stay current, they pay their bills,” J.C. says.

Going at least five customers deep in each dqtegory earns ATS direct input from 25 construction businesses across the company’s current market territories. And it’s “the business practices of these customers that helps guide our business,” Stephen explains.

The various locations also provide diversification advantages. To some extent, Brian says, the locations let the company improve utilization of its current fleet. For example, adding the Auburn facility in 2009 was a smart investment despite the recession. “It’s fair to say we were a bit ‘overfleeted’ at that time. Our equipment was either too underutilized for our business, or our business was too underutilized for the amount of equipment we owned, however you want to look at it.”
Stephen says they run a tight ship financially, accelerating depreciation, making sure all bills are paid on time. With the recession dragging on, adding a location make sense because it let them use equipment already in the fleet, extend customer relationships, find and develop new customers and develop a new market area. “Because of the highway access (at that location), we saw an increase in use of our heavy equipment, so that was important for us.”

The 2012 East Providence addition was more serendipitous. An equipment dealership struggled during the recession and was going out of business. “As soon as we heard that, we thought that would be a good expansion option, a good area for us,” J.C. says.

“We can open a branch with minimal investment because it gives us the opportunity to leverage our fleet,” Brian says. But the brothers also point out that each location also has a different personality. Dorchester sees more residential remodeling and repair, and the need for compact equipment to work on narrow city streets. New Hampshire homes are slab on grade, J.C. explains, so more concrete and compaction equipment moves through that store. Auburn tends to be heavier equipment while Providence generates a higher percentage of the company’s sales and generator rentals.

A fifth location is likely. “We’re constantly looking for options. We’d like each facility to be within 75 minutes of another facility so that we can easily move equipment where it’s needed and improve utilization,” Stephen says. In each location, though, “we have to work to build business gradually. It’s not like we’re turning on a light switch,” Brian emphasizes.

Part of their new location ROI equation includes growth from current customers working near a possible new location. But
getting new customers is vital.The key, Stephen says, is to have good people who have existing contractor relationships in that area. “We like to say ‘Every church has a different service.’ Every location is different. If we have good people there, if we can increase sales and rentals with current customers while earning new customers, then we improve utilization and set ourselves up to grow.”

Shifting fleet
Diversifying by adding locations has been an important part of ATS’ business expansion, as has the staff’s ongoing efforts to add customers. By being out in the market, paying attention to customers and finding new ones, they began to shift from “dirt” into aerial work platforms. “Boom lifts, hybrid lifts, electric lifts – they’re part of a nice growth opportunity we’ve seen,” Brian says, helping them add maintenance, painting, mechanical and electrical contractors and steel erectors as steady customers.

“I think we’ve probably grown to about 300 scissor lifts and probably 80 boom lifts,” J.C. adds, “while gradually reducing our excavator fleet.”

Obviously, adding equipment or product lines is never done on a whim. “We’re loyal to our vendors, maybe brand loyal to a fault,” Brian says. When their father was starting to build the rental business, several manufacturers stepped up and supported the effort with terms that a start-up business could support. They haven’t forgotten that. So, while they continue looking for products that can deepen or expand their customer base, their line card has seen relatively few brand changes.
Still, their company culture reflects how they expand their product offering. “When a customer has a problem we want to have their solution. We have a few customers who only make a request once and we add a product to our line. And we have a level of customer where, if we get a request from a few of them for a product, we add it,” Stephen says.
Sometimes, though, the investment is a bit more instinctive. “We were discussing whether or not to add this IHI (electric mini excavator) to the fleet and finally just decided to do it,” J.C. says, nodding toward the trailered equipment sitting on the lot. “And now it’s hardly ever here. We’re not quite ready to add another, but we’re starting to talk about it.”
The IHI is in demand, they say, for projects where quiet, no-emissions power matters to the contractor and the contractor’s customer. “We see quite a bit of use on the universities, kind of the ‘green’ aspect,” he adds. “It’s also where we’re seeing increased use of our Niftylifts (electric boom lifts).”

Missed rentals play a role in line additions. Everyone who is on the phone with a customer or prospective customer enters missed rental information into the company’s software (Wynne) database. John and all three of his sons review the list, discuss the options and opportunities, and decide what to add. They also consistently review utilization rates – it’s not unusual to see several reports spread out on John Sr.’s desk – deciding what to add, what to sell, what to upgrade.
The final decision will typically involve input from vendors. “We treat them as partners. We know that they see opportunities for us and they know what’s going on in other areas. Whenever a vendor comes in to make a call, we always try to make time to talk with them. Having a good working relationship helps down the road when people change positions or they change the lines they’re selling,” Brian says.

“We visit job sites with them, as well. They can be an outstanding part of our sales force,” J.C. says, offering product knowledge and expertise that can help ATS’ customers.

Hectic morning
After spending time reviewing some reports, spending time being interviewed, a brief conversation with Aime Cedrone (see related article), several phone calls, conversations with some of the counter, shop and office staff, John Connolly headed outside for the photo shoot. He was frowning a bit – as his sons predicted he would – with what appeared to be a bit of disarray: Some new equipment in crates by the building, other equipment coming back in, some being prepped for an early afternoon pickup, other equipment being loaded on an ATS truck for delivery.

“I’d like to keep this place a little more organized,” he says, “but we’re running out of room.”

Except, someone mentioned, the yard had seen a lot of products going out the door that morning. In fact, it appeared to be hectically busy.

He pauses, then says, “Yes, we’ve had some activity, we’ve had some activity,” nodding for emphasis,
quickly breaking into a grin. “And activity is good!”

Originally published in the July/August 2014 issue of Pro Contractor Rentals. Copyright 2014 Direct Business Media.

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