The Pape Group

Specialty: Capital equipment sales, rental and service

Management: Dan Hollingshead, CEO; Susie Pape, chairwoman of the board

Year founded: 1938

Headquarters: Eugene, Ore.

2008 revenues: N/A

Projected 2009 revenues: N/A

Tim Clevenger, vice president of marketing and brand management at The Pape Group, said the biggest challenge the construction equipment industry faces is the same plaguing contractors and developers: The lack of financing.

Clevenger said construction equipment sales are hurt when contractors can't get money for projects or new equipment.

"It impacts equipment dealers when they're not purchasing equipment because their customers don't have new projects in the pipeline," Clevenger said.

But Clevenger said while Pape has seen equipment sales fall, the company's rental business and aftermarket parts and service business are holding at the same levels of previous years.

"It's been relatively solid, and our extrapolation of that is, if at a macro level a customer is not purchasing or not sure, they're going to rent something for a shorter period of time rather than (buy it)," he said.

He said Pape is staying focused on keeping existing customer equipment running.

"It benefits us when you've got somebody who wants to make sure their equipment is operating at full capacity when those jobs do come in," he said.

Energy efficiency

The biggest trend in construction equipment is the increasing interest in more energy efficient products. Clevenger said John Deere is working with manufacturers on stricter engine guidelines and other brands will soon go down that road. He said there is also growing interest in Kenmore's hybrid trucks.

"All of our manufactures are recognizing and we recognize that the move is toward a cleaner engine, cleaner emissions and we support that," he said. "We're moving in that direction, and we're working with customers on retrofits and ways they can modify existing equipment."

Diversification

Pape's strategy over the past few years has been diversifying geographically and in some of its divisions. Acquiring new locations and specializations has allowed the company to offer more services to clients, Clevenger said.

"We see opportunities to solve equipment problems across a customer's needs," Clevenger said. "If they're hauling an excavator, they need a truck."

Pape acquired Roberts Motor Co. last spring, expanding its Pape Kenworth division, which previously had five locations in California, into Eugene, Medford, Portland and Redmond, Ore. In late 2008, Pape purchased three Bobcat West locations, expanding its Bobcat West supplier holdings into Portland, Reno and Hubbard, Ore. Pape also acquired the Seattle-area racking and warehousing company Engineered Products a few years ago.

Clevenger said the company is always looking for more opportunities to expand, but doesn't have any plans on the immediate horizon. He said the policy is to always be open to expansion, rather than looking to buy up businesses now because of the downturn.

Cutting expenses

Pape has had to make a few layoffs at some of its locations, but Clevenger said the company was able to reduce layoff numbers through some attrition. The company has also taken a closer look at all expenses, reducing money spent on travel and office supplies.

"Across the board have just looked at a variety of different expenses, and where we can be more efficient, we've done so," Clevenger said. "(We're) just putting a new focus on little things."

The Pape Group, with around 1,800 employees, is a dominant supplier of capital equipment in the Northwest and beyond. Its five companies sell, rent and service equipment used in construction, logging, trucking, warehousing and private aviation in seven states and 60 locations.