The truck sales market is extremely cyclical. Over its history, JX
Enterprises Inc. focused primarily on new truck sales, which resulted in severe
swings in sales and profitability. Personal
guarantees are the industry standard by
banks and major suppliers.
Many truck dealers
become insolvent
during slow economic times because of
poor balance sheet
management. A lack
of margin controls on
truck, parts and service sales, along with
mismanagement on receivables, used
truck values and obsolete parts are often
the root cause of failures. When the
economy is strong, these areas are often
ignored.
When Eric Jorgensen became president
of JX Enterprises in January 2000, the
organizational focus started to shift from
the income statement to the balance
sheet. Areas of the business that provided more consistent cash flow were
developed, like parts, service, body
shops, financing, rentals and full-service
leasing.
Today, the balance sheet is very conservative. Obsolete parts, for example, are
targeted to 2.5 percent of total inventory,
whereas most dealers run between 15
and 20 percent. The business model has
evolved under Jorgensen from new
truck sales to one focusing on maximizing balance sheet strength, building on
higher margin departments and diversifying businesses that tie to the trucking
industry but are not as susceptible to
economic cycles. The result is three
strong years of financial performance.
This year, new truck sales industrywide
are expected to drop 30 to 45 percent
because of a change in engine emission
technology, but JX Enterprises expects
another strong year.
HOW TO REACH: JX Enterprises Inc., www.jxe.com or (262) 513-5045