July 26, 2016 Supply & Demand

Volume 8 | Issue 3

By fashioning itself into a single-point-of-contact business, the American Equipment Company (AMECO) essentially provides contractors and co

The American Equipment Company, or AMECO, headquartered in Greenville, S.C., operates in a very niche market but on a global scale. A combination of strategic initiatives implemented in recent years has placed the organization at the very top of its market. However, perhaps more than these initiatives, it is the distinctive nature of its business that is primarily responsible for AMECO’s success.

“No one else out there does what we do for the same breadth of customers,” says Kevin Minton, AMECO’s vice president of business development. “The breadth of service we offer, and the flexibility we provide to customers, differentiates us and makes us very unique.”

In its half-century of existence, AMECO has evolved into an international full-service equipment, tool and supply company for the construction, mining, government and industrial markets in global operating regions. In recent years, it has organized itself into two business categories: Fleet OutsourcingSM, which provides outsourcing services to targeted industrial markets, and Site ServicesSM, which provides complete equipment and tool programs for capital construction projects. These services offer customers significant cost reductions.

Fleet Outsourcing
Fleet Outsourcing involves a value-creation process designed to analyze a customer’s current fleet/equipment operation to develop a customized outsourcing program.

“Often, we’ll actually offer to purchase a customer’s fleet so that we can right-size it, optimize it and then lease it back for a given period of time,” explains Minton. “We actually manage the fleet for them.”

The process includes an evaluation phase (assessment to identify opportunities for improvement), alignment phase (to establish procedures, reporting requirements and measurable goals), start-up phase (execution of the on-site tool and equipment program), and improvement phase (to ensure continuous improvement to equipment and tool operation).

Benefits include reduced overall operating costs and capital expenditures, improved efficiency of mobile equipment and fleet operations, better preventive maintenance, redirection of financial resources and personnel to the core business, and lowered risk. A customer rarely has to worry about fleet/equipment breakdowns, excessive downtime, and repair charges. Fleet Outsourcing can also provide an immediate cash infusion: AMECO can replace a customer’s old equipment fleet with a more modern one that requires less repair and maintenance.

A prime example of how AMECO helps its customers involves work it performed for a major oil refinery, involving fleet purchase, fleet management, equipment maintenance as well as rentals and tools. The contract included the complete outsourcing of construction equipment. AMECO purchased the entire construction equipment fleet (approximately 420 pieces) and signed a five-year agreement to provide equipment needs through an exclusive fully maintained onsite equipment program.

By reallocating resources to focus on its core business, the customer reduced equipment cost of ownership and increased its productivity as it effectively eliminated equipment downtime while incorporating newer technology. Production also improved because response time to repair calls was reduced to less than an hour.

“We delivered a 33-percent cost reduction to this customer in our first two years of operation,” Minton points out. After five years, AMECO was subsequently awarded a five-year contract renewal at the site.

Site Services
Site Services supports construction and maintenance projects. AMECO supplies customers with everything it takes to build a project, from sandpaper up to large cranes, mobile office complexes, vehicles, and temporary power. “It’s a lot of what is called ‘construction indirects,'” explains Minton. “It involves everything needed to build a project that doesn’t actually go physically into the plant. Also, we provide on-site management and technical expertise.”

It entails a six-step process that takes customers through pre-proposal, proposal, pre-mobilization, mobilization, construction and demobilization.

Site Services creates for a customer a single point of contact for equipment, tools, planning, maintenance, operator training, insurance, supplies, offices, vehicles and scaffolding. Customers can finish capital construction projects on time and under budget through increased craft productivity, reduced costs and duplication, and standardization of equipment and tools. In addition, project risk can be shared through contract options.

58-year evolution
AMECO was founded in 1947 as part of the Daniel Construction Company and incorporated as AMECO in 1971. The company is now a subsidiary of Fluor Corporation, one of the world’s largest publicly owned engineering, procurement, construction and
maintenance services organizations. AMECO was originally established to support construction operations of Daniel Construction, but it grew into a leading provider of Fleet Outsourcing and construction Site Services to many other industrial and construction companies.

“Fluor is one of our primary customers,” says Minton. “However, the majority of our business is derived from other major contractors and fleet owners.”

Because of AMECO’s unique service offering customers often enter into a sole-source negotiation situation. “Many of our customers are major contractors, and they don’t competitively bid. They just sole-source negotiate contracts with us,” says Minton. “When you talk about supporting a $500 million or a billion-dollar project, there are few companies that can provide everything it takes to build a project of this magnitude.”

True, there are niche players in the market, including rental companies that can supply general rental equipment, or crane companies that can provide cranes, but only AMECO has a total bundled service. Both equipment and management are available to customers in a highly economical fashion.

Global Reach
From North America, AMECO has expanded to include various regions throughout the world. Its main regions of operation include:

North America/Caribbean – This region includes Canada, the United States and the Caribbean. In the U.S., AMECO has four primary operation centers and several on-site tool rooms and equipment yards at customer locations. AMECO Canada supplies fully managed and maintained construction equipment and Fleet Outsourcing. AMECO Caribbean supplies customers with equipment, fleet, and tool solutions. It is one of the 10 largest companies in Jamaica, where it provides outsourcing and equipment management solutions for telecommunications, mining, beverage, industrial and construction companies.

Latin America – This region includes Mexico, Central America, South Latin America, and Puerto Rico. AMECO Mexico includes 12 commercial branches and equipment depots and has become one of the largest providers of construction, industrial and mining equipment in Mexico. It also provides Fleet Outsourcing programs. In Puerto Rico, AMECO offers customers equipment, tool sales and rentals, and construction support services to major capital construction projects. AMECO Chile supports capital construction projects and mining operations with fully maintained fleet and mobile equipment.

South Africa/Middle East – AMECO South Africa services the petrochemical, mining, and power markets. Services include customized mobile equipment and vehicle management programs, construction Site Services, and equipment and tool rentals. AMECO Middle East provides equipment, vehicles, tools, and supplies to contractors working in the Middle East. Currently, AMECO supplies organizations and contractors supporting Operation Iraqi Freedom. “We have a huge presence in Iraq, which is where the majority of our Middle Eastern work is located,” reports Minton.

Minton indicates that AMECO also has projects in other areas of the world that don’t fall within these geographic areas, including the Philippines and Indonesia.

Poised to Grow
The road to the top of the market was rather complex, and the growth resulted from some necessary downsizing. “We’ve downsized the company over the past three years, after a period of high acquisition activity back in the 1990s,” reports Minton. “Those acquisitions substantially enlarged the company, but then the industry started a consolidation effort, and it also experienced a tough period in the early 2000s, when the margin in distributorships and the overall general rental business in North America diminished. A lot of companies went into Chapter 11.”

In response, AMECO divested many of the recent acquisitions, which placed the company in its current niche market. As a result, AMECO did very well, even though the company reduced its size. “We took a very hard look at our businesses and operations,” reports Minton. “As a result, we decided to place them in one of three categories: fix, close or sell. If it wasn’t producing the business to meet certain objectives, or if it wasn’t a strategic business, we either fixed it, closed it, or sold it. We just completed our consolidation effort during the last three or four years. We’re making sure our business is structured to do exactly what we want. Now we are back in the growth mode in the niche markets we serve.”

This growth mode sprang from an initiative implemented this year, which followed the transition in 2004. “We had been supporting a lot of construction activity in North America, but most of that work – such as the oil, gas and chemical work – moved overseas,” recalls Minton. “Most of our assets and expertise were located in North America, so we used the transition year of 2004 to start serving those international markets.”

At the same time, the Fleet Outsourcing was only a minor piece in the organization, but AMECO began to grow that element substantially during the transition to the point at which it is currently a major component of AMECO’s business.

The globalization initiative also played a large part in AMECO’s current success. “We used to be just a domestic company but, back in the mid-1990s, we started to globalize. It was one of our biggest initiatives and it made us what we are today,” says Minton.

After that, AMECO took its business into select international growth regions. Today, it is fully immersed in its growth initiative. “Now that we’re in these geographies, we’re looking at how we can grow with them,” says Minton. “Primarily, that growth is going to come organically.”

Minton is confident AMECO’s business model is positioned for continued expansion. “We should have taken this model out on the market many years ago,” he says. “We’re seeing a lot of success with it. Contractors like working with us, because we share some of the project risk with them. We can become part of their team and help them manage the project.”

As far as the future, Minton sees a return of the oil and gas market to North America. This development will only add to the company’s growth scenario, Minton believes.

“The tar sands (or oil sand) market is exploding right now in Alberta, Canada,” he reports. “There’s about $52 billion worth of work that will need to be done. Several companies are developing huge, multi-billion dollar projects to extract and process that oil for the North American market.”

This means that AMECO is well positioned to meet the global demands because of its unique capabilities and expertise.

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