HE BOARDROOM OF LEAVITT MACHINERY is generally a quiet place. Company President Tom Leavitt doesn't
hamper his employee's productivity with endless meetings. Today, however, he looks on with a quiet smile as
his brother and CFO, Brian Leavitt, along with three other partners, recount the trials and tribulations since the
company's inception. All of the people in the room left secure and comfortable jobs to join the new venture. Now,
conscious of the huge success they've built, the atmosphere is buoyant. One by one they tell their stories, draw diagrams
on the white board, laugh, and even wipe a little moisture from their eyes. Outside, visible from the boardroom window, is a
yard full of new and used equipment, comprising Leavitt's stock and trade.
"We rent, sell and service new and used materials handling equipment and parts," says Tom Leavitt. "Since 2001, we've
grown from 10 to 18 branches, expanded our operations from B.C. and Alberta into Washington, doubled our employee base
from 160 to 320, paid off our goodwill, expanded our product lines, and doubled our sales revenue. We're now several times
larger than our closest competitor, and we deal with over 10,000 customers.
To understand how so much success is possible in a short time, one had to journey backward in time some 20 years. The
Leavitt Machinery story begins in 1986, when Tom Leavitt joined Finning, the world's largest dealer in Caterpillar products.
Leavitt stayed at Finning for 16 years, 12 of those as general manager of the Materials Handling Equipment division. "Materials Handling,"
says Tom Leavitt, "is code for forklift." In time, Finning made a strategic decision to focus its attention on it core heavy
machinery products.
In 1999, Tom Leavitt approached Finning with a proposal to buy the Materials Handling Equipment division. "If we don't want to grow
it," he said, "why not sell it?" His vision was based on over a decade's experience. "I knew the business," he asserts, "and I
knew it would work."
To help with the complications of acquiring sufficient capital, Leavitt turned to his brother, Brian, a chartered
accountant, who was then employed at BC Hydro in a senior financial capacity. "When Tom asked me to
look at the financials and put a model together," says Brian, "I got excited. BC Hydro was a great company,
with great employees, but this was an opportunity to work in a much more entrepreneurial environment."
In 2001, Finning was ready to sell the 160-employee division, with 14 locations in B.C. and Alberta. "Essentially," recollects
Brian Leavitt, "we borrowed the goodwill from Finning, and the rest from the bank." There were, however, a few more hurdles
to jump. "Finning wanted to announce the deal in July, and close the deal two months later in September," says Tom. "At the
time we had no computers or operating system. We didn't know if our employees at Finning would come onboard with us,
and there were union issues to deal with." Perhaps most importantly, as a division of Finning the company had approximately
6,000 customers. "We needed to make sure they'd come with us."
Less than a month after the initiation of the softwood lumber dispute, the World Trade towers were attacked.
At the time, Leavitt was within two weeks of closing the deal with Finning. In the aftermath of the attack on
9/11, Tom Leavitt took his brother aside, "Do you think," he asked, "we could survive on half our predicted
revenue?" They concluded that they could and the deal was closed. It was then that the real work began.
"We refer to the end of 2001 as The Dark Times," says Tom Leavitt. "We were working 80-hour work weeks, and each of us
lost about 25 pounds. Over Christmas and New Years Brian brought an air mattress to work and slept in his office. We felt
like we were flying an airplane through tall mountains with no visibility."
Fortunately, a core group of people, Tom's team from Finning, agreed to migrate to Leavitt Machinery, and while the Leavitt's
piloted the plane, the company's general managers were busy generating revenue. "Our motivation with our key managers,"
says Brian Leavitt "was to allow them to keep selling while we worried about the financials. We never stopped generating
revenue, but Tom's view was: no meetings, just let them sell."
"We didn't see Tom or Brian much during that time," says Bob McIntosh, General Manager, Used Equipment. "We just kept
selling. As partners, we have a stake in the company, and our decisions make a difference to the company growth. That adds
up to hard work, and a continual feeling of job satisfaction."
Todd Cullum, who oversees the company's Parts and Distribution division, also came over from Finning. "Both Tom and Brian
gave us a lot of latitude," says Cullum, "they trust us, and in turn we hand that trust down to our employees. We run a flat
organization with very little politics."
Tom Leavitt agrees, "We empower people. We want our employees to take risks and speak their minds. They've got a job
to do - we give them the tools they need, and we let them make their own decisions. We have two rules: 1. Two heads are
better than one, three heads are better than two, four is too many; 2. Don't make the same mistake twice."
The move away from Finning, says Cullum, has not only changed the company's corporate culture, it has allowed Leavitt
to operate aggressively. "We can move much faster now. For instance, we didn't need a lot of meetings and discussions to
decide that we wanted to open locations in Washington State. A large company is like a big ship - it takes time to turn. We
feel we are more flexible to meet our customers' needs."
Leavitt's move to Washington exemplifies the business strategies that have propelled the company's growth. Leavitt was
offered the CAT Lift Truck Dealership for Washington State in mid-February, and by mid-March had three new offices up and
running, servicing over 3000 customers.
Central to Leavitt's operations is an organizational commitment to quality and service. "Each of the general managers,"
says Cullum, "has both a functional responsibility to their business unit, and a regional responsibility to the branches in their
regions. Under the old model, the branch manager was the master of his individual branch. The problem with that was ensuring
consistency. Parts might be strong at one branch, but weak in another. The way we're structured now allows us a more
focused approach to running the business."
Another of Leavitt's competitive advantages, adds Bob McIntosh, is its number of locations. "Most of our competitors only
have one or two locations. When a customer with a machine in a remote territory needs to get parts, having 18 branches
makes it that much easier."
As General Manager of New Equipment and Fleet Sales, John Mutis adds his own list of differentiators, the first of which is
the high caliber of his sales team. "We take great pride in our training process; our goal is to set our people up for success.
We work closely with BCIT, and hire the graduates every year. Our new hires spend up to 18 additional months training
internally to ensure that when they are sent out to manage a territory, they are knowledgeable professionals able to advise
our customers on all their mobile equipment needs."
Leavitt Machinery, adds Mutis, is able to provide a high degree of flexibility through in-house financing. "That's very beneficial,"
says Mutis. "Many of our competitors sell equipment to outside leasing companies. If there is a problem with invoicing
or change in the company, an outside leasing company does not have the flexibility to deal with changing customer needs.
Customers appreciated the fact that we truly are partners with them. That's a key reason why we are so competitive in fleet
management."
For further advantage, Mutis points to the way the activities of the company's business units work closely to support each
other. "A large part of the success of the New Equipment division," says Mutis, "is the strength of the Used Equipment, Rentals,
Parts and Service divisions. We're like a table with six legs; the stability of that table is dependent on the success of
each of the other divisions. We try to work together closely to help ensure one another's success." Asked what makes each
of Leavitt's divisions so dynamic, Mutis gestures to his fellow managers, and to Tom and Brian Leavitt. "The common thread
between us is that we outwork our competitors everyday. Each and every one of us is driven to see this business succeed.
Since purchasing the materials handling equipment division of Finning, the world’s largest dealer of Caterpillar products, in 2001, Leavitt Machinery has been dedicated to providing industry leading materials handling equipment solutions. Our goal is to promote sustainable business alternatives and build long term customer relationships.
