DJC.COM -- Construction and Equipment Forecast 2004 -- Surveys

Papé Group

Specialty: Capital equipment sales, rental and service
Management: Randy Papé, CEO
Year founded: 1938
Headquarters: Eugene, Ore.
2003 revenues: N/A
2004 projected revenues: N/A

Things are picking up at Papé, and it’s not just the forklifts.

Sales have seen a “healthy rebound” as businesses purchase more equipment, said Tim Clevenger, director of corporate development.

The past couple of years had been marked by jumps in rentals — a signal that companies were too uncertain about their growth prospects to commit to new equipment.

The privately held Papé Group includes Papé Machinery, Hyster Sales Co., Flightcraft, Bobcat West and Ditchwitch Northwest.

The Eugene, Ore.-based company serves customers in the construction, forestry, agriculture and warehousing industries through dealer networks in Oregon, California and Washington.

The largest of the companies are Papé Machinery, which specializes in construction and forestry equipment, and Hyster Sales, which sells and services forklifts other material-handling equipment.

As the economy picked up speed in the latter half of 2003, “we started to see more capital purchases coming from people we’ve been talking to,” Clevenger said. “In the earlier part of the year, people weren’t sure what was going to happen.”

While booming home construction — particularly in California — has driven sales, new road construction has also played a role.

“In Oregon, and to some extent Washington, the release of road construction funds gave contractors some assurance to make purchases,” Clevenger said.

During the slow periods, a fatter percentage of Papé’s business is dedicated to rentals and service. “When capital expenditures are not forthcoming, companies still have funds for service and parts,” Clevenger said. “Customers may not be purchasing a lot of new equipment, but they’re still using their existing equipment to be more productive.”

Clevenger characterizes Papé’s presence in the Puget Sound as “fairly substantial.” That size helped the company weather the economic downturn.

Larger companies like Papé have an advantage over smaller organizations because of the range of products they can carry, Clevenger said.

“People don’t want to wait a week to have the dealer contact the manufacturer to get something shipped here,” he explained. Papé usually has a replacement product on hand at one of its locations, available for overnight delivery and use the next day.

“It’s hard to stock that level of inventory when you have one or two locations,” he said. Given the competitive nature of the capital equipment market, Papé also strives to distinguish itself with its product selection and service.

Since every company sells a forklift, Clevenger said, “we try to align ourselves with product lines that are in the top tier of the product that is available.”

He has a line he likes to use to emphasize the importance of strong service: “When my car breaks down it’s an inconvenience to me, but when a bulldozer breaks down, it’s costing someone money.”