Allied Resources USA And Carolina CAT Strike A Deal

By Tangela M. Bailey -- Associated Construction Publications, 7/22/2008

One of the largest site development companies in the Carolinas has struck a deal with the organization that bills itself as the world’s leading manufacturer of construction equipment. Allied Resources USA has negotiated a transaction with Carolina CAT, which representatives from both firms calls one of the biggest on the east coast.

For the past year or so, Allied Resources USA has felt the pinch of a tightening Carolina economy. Larry Foxworth, Allied’s owner and president, resolved that it was time to make some changes to his company’s infrastructure.

"Larry decided it was time to clean up the balance sheet," explained Garret Durbin, vice-president/general manager for Allied Resources USA. "He gave several of us the opportunity to brainstorm, and we came up with an idea that could potentially save the company a great deal of money."

The collective think tank determined that it was time to sell or trade their stock of company-owned equipment to a dealer who would then lease replacement machinery to Allied. The goal would be to cut overhead and lower maintenance costs. It would not be an easy task, as Allied’s fleet numbered over 200 strong.

With Durbin heading up the effort, the idea was pitched to seven Carolina-based dealers of construction machinery. In the end, it was Charlotte’s Carolina CAT that responded to Allied’s call.

Tony Pennington, territory manager for Carolina CAT, says he had been trying to earn Allied’s business for three years. When Durbin invited him to evaluate Allied’s proposal, Pennington was eager to create a mutually beneficial relationship. He had been selling heavy equipment for 15 years, and this was his biggest sale opportunity to date.

"I was excited to get Garret’s call for many reasons. Not only was this a large deal in terms of market share for Carolina CAT, but I wanted a relationship with Allied Resources USA. Long term, I knew that whoever got this deal would be Allied’s preferred vendor going forward," said Pennington. "The challenge was that Allied wanted the deal done within a short time frame. We had to jump through hoops to get it done."

Since the total package for Carolina CAT amounted to 23 various pieces of Caterpillar equipment totaling $4.2 million, Pennington involved Milton Long, the Eastern Region manager for Caterpillar Financial Services Corporation.

"My job is to balance the customer’s desires with what is good for CAT. When I reviewed Allied’s history and its management’s experience, I felt confident moving forward with them," said Long.

Although Long does not want the financing terms to be disclosed, he was fundamental to structuring the transaction so that it made sense for everyone involved.

Ultimately, Allied was able to save anywhere from $50,000 to $70,000 monthly on machinery maintenance and other related expenses. All of their equipment is now under a three-year warranty with a four-year lease term.

"The deal that was put together with Carolina CAT took a lot of time, hard work and involved a number of people. I think we accomplished everything we needed to with regards our balance sheet, plus we have now created a relationship with a company that can help get us to the next level in the growth process," said Allied President Larry Foxworth. "We are proud to be a part of this deal!"