The Commoditization of Mohawk Lifts

My friends Lou Coccaro and Mark Tulley at AutoQuip Sales in Mineola just upgraded their company computer system with the purchase of two laptops and two desktops from Dell. The tab: about $2200, which wouldn't have bought even one desktop ten years ago.

The Course of Commiditization  I remember because I used to build and sell desktops in the 90's. Then PCs and parts got cheaper and building gave way to buying wholesale from Rob Wolfson at Doc Audio and his now-retired partner Rick Whitley, who, incidentally, introduced me to Lou. And then came Dell and imports from Taiwan, dropping prices so precipitously that selling gave way to shopping and configuring. So yes, I still occasionally build a special purpose computer, but today it's mostly PC consulting, not retailing.

Makers & Sellers Regroup  The commoditization of PCs reached its zenith (some would say nadir) recently when IBM, the folks who "invented" the personal computer, agreed to sell their PC division to Chinese manufacturer, Lenovo, formerly Legend Computer. But what forced IBM and me out of the business of making and selling computers, wasn't bad in the long run. I migrated into website development, IBM began to focus on its profitable service business, and the consumer was a clear winner.

Consumers Win  Commiditization, with its attendant competition, resulted in cheaper computers, that are more versatile and of higher quality. Today's "entry level" PC is an outstanding value. Quality is uniformly high and has become a non-issue. Power is more than adequate to satisfy all but the specialty user. Like today's entry level cars, today's PCs take you where you want to go without breaking the bank.

Commiditization Hits Mohawk  So Lou and Mark should be happy about commiditization, but they're not. Although they're happy to get inexpensive, quality PCs, they're the "victims" of the commiditization of another product category, automotive service equipment. Their company, AutoQuip Sales, is the metro New York distributor for Mohawk Resources, who make the hydraulic hoists used by mechanics to lift your car or truck in a service bay.

Outlook for Mohawk Okay  Mohawk, and the other domestic makers of automotive service equipment, are under increasing price pressure from manufacturers with factories in China, Mexico and Canada. It's early days yet, so product diversification, new marketing strategies, increased advertising, belt-tightening, and dual-sourcing or outsourcing are all in the cards. In the short run, bankruptcies won't be part of the picture except when poor management or widespread economic distress become factors.

Commiditization Hits AutoQuip  While AutoQuip has to hope the factory does the right thing about the pricing and production issues raised by commiditization, they've got to react directly to another aspect of the challenge. As a distributor, AutoQuip adds value to the Mohawk product by onsite installation, inspection and training, but the the cheaper imports are often sold on the Internet or by mail order, cutting out distributors entirely.

What's a distributor to do? It's hard to say how AutoQuip will handle the challenge, but we've got some suggestions. Two other Mohawk lifts distributors who are also our clients -- JRH Equipment serving Minnesota, North Dakota, South Dakota and Wisconsin and Specialty Automotive Equipment (SAE) serving New Jersey and parts of New York -- have both begun to emphasize OSHA-compliant automotive safety inspections, reports, and training on their websites and they're getting more traffic than the other Mohawk sites we produce. AutoQuip is already practicing another JRH and SAE strategy, namely, targeting government contracts, which are less sensitive to market fluctuations, and offer long-term stability.

Co-opt the Interloper Another Mohawk distributor -- not one whose site we produce -- has taken the tack used by car dealers, namely of co-opting Internet sales by selling on the Internet themselves. While the factory undoubtedly won't permit a distributor to sell lifts on its website, AutoQuip could follow the lead of car dealers and sell used lifts that have been reconditioned and safety-certified "by a Mohawk factory-authorized distributor" -- them.

Good luck!  Some strategies for the "China problem" that we guarantee won't work: belly-aching, retrenchment, and looking to the government for a bail-out. Good luck, Lou and Mark. We're on your side.