A Family Firm Adapts its Business Model and Looks to Expand
Meco Miami Inc does a booming business selling and renting heavy equipment for construction firms and contractors. As the company’s name implies, the firm is based in Miami and primarily serves the South Florida market.
Founded in 1972 by Alvaro and Lourdes Vazquez, the focus of Meco Miami was initially quite different than it is today. “We were primarily in the export business when we started. That’s where the name comes from – ‘Machinery Export Company’ or ‘Meco,’” states Meco Miami Vice President Michael Vazquez.
Michael Vazquez is one son of the founders who retain ownership of the company. Another son, Gerardo, a lawyer, is also involved with the firm. The plan is to keep Meco family-run.
For the first few decades of its existence, Meco primarily reconstructed and refurbished used heavy equipment and sold it to customers working in construction, agriculture or mining, among other sectors. Much of this equipment was shipped to clients in the Caribbean and South and Central America.
About five years ago, Meco changed its business model. Foreign customers were buying less gear due to several factors, including slumping commodity prices which affected local economies. Foreign clients were also turning to cheaper equipment from manufacturers in China.
“The business changed, so we decided to change with it. We became an equipment dealer,” says Vazquez.
The company currently represents construction equipment manufacturers Atlas Copco and Dynapac from Sweden, Sany from China and Mahindra of India. Mahindra, with which Meco has been working for about half a year, is one of the world’s largest producers of small tractors that are perfect for small-scale agriculture. Meco also recently signed on to represent Japanese equipment maker Yanmar. Meco stocks its inventory at a 2.5 acre compound, complete with equipment yard and facilities for mechanics, service workers and administrative staff.
Meco works with foreign manufacturers because domestic construction equipment OEMs such as John Deere and Caterpillar are already well represented by dealers in the Miami-area. It chooses the manufacturers it represents by conducting market research, soliciting opinion from friends and customers and determining if the company is a good match.
“We want to see what the future for us in the next five to ten years will be with that company, if they fit our needs in the sense of where we want to be,” says Vazquez.
When it came to Yanmar for example, Meco was impressed by the firm’s history, reputation and market segment. Yanmar is over one hundred years old, generates billions in revenue and is widely respected for its small diesel engines and mini-excavators.
At present, the split between sales and rentals is “probably about fifty-fifty,” says Vazquez.
“The thing about rentals, the revenue side is lower than sales, because obviously if you sell one tractor, a tractor can be worth $200,000. But the rental business is really the growth market in our industry right now, and here in South Florida the economy is tremendous,” he adds.
While Meco offers brand-new equipment, most of the gear it sells is second-hand. According to Vazquez, this is a popular option: “There’s an enormous demand for used equipment due to the price.”
To this end, its rentals come with a purchase option. If a client takes a liking to a piece of rental equipment, the customer can arrange to buy it from Meco. The company will deduct some of the rental fees the customer has already paid from the purchase price. It is an arrangement that works well and not just because clients are getting a bargain.
“People in the industry want to try something before they buy it. It’s a very competitive industry, so with a lot of products, people really have to see if they like it first. Another trend that’s very big in our industry right now: a lot of people are leasing equipment just like they do automobiles. They get a three year lease, five year lease – with full warranty,” says Vazquez.
The company has a team of mechanics, technicians, welders and painters who keep its inventory in premium condition. If so requested, the company can provide maintenance on equipment it has sold, checking filters, changing oil and other tasks. Meco can service equipment in the field or customers can bring it around to the company yard.
Excavators and road building machinery are some of its most popular items. The company also does a brisk business in asphalt and dirt compactors, telescopic forklifts, backhoes and mini-excavators.
Whether rented or sold, Meco can deliver equipment right to a work site, although many clients opt to pick their own gear up. Some customers bring vehicles with trailers for this purpose or hire transportation companies to move their equipment from Meco’s yard.
If Meco recalibrated the business model of the company a few years ago, it also refocused its corporate structure. The firm currently has about twenty-three employees, down from seventy-five workers at its peak roughly two decades ago, says Vazquez. At that time, it had two other offices in Florida and a trucking company. The trucking company was eventually sold and Meco closed the other offices. Consolidation was driven by the desire to centralize operations in Miami.
“Our customer service is superior to everybody else,” says Vazquez of what makes the company unique. “The customers are everything … When a machine has a problem, we really make an effort to service it within three hours. That’s a very large thing in our business, because it usually takes three days. Our pricing, I think is lower than our competition, and our equipment is newer than our competition. Our salesmen are generally really nice guys, and people like dealing with them. We’ve never had any legal dispute with anyone because we always resolve issues with our customers.”
Meco Miami’s equipment has been involved in a number of recent important projects in its home state, involving everything from water treatment and sewer plants to road construction, highway extensions and new bridges. Many of these projects are either state- or federally-funded.
The company is looking to increase its equipment inventory and market reach. Through its relationship with Mahindra, it wants to boost sales and rentals to the agricultural sector. South Florida, of course, is a large source of fruits and flowers, which is a tantalizing prospect for a machinery supplier. As business grows, Meco Miami might also be looking to expand again.
In terms of new hires, “the most important thing for us is the character of the person. When we do our interviewing process, we really try to get some background as to where they are. If someone was in another company, we look for longevity in employment. We look to the quality of the person and the character of the individual as much as possible,” says Vazquez.
“I think our corporate culture is very unique in a lot of ways. We have a diversity of ages and cultures here in our office. We have employees from Venezuela and Peru, Cuba, Colombia and Honduras, some from Nicaragua. We also have Americans of course. I think [our corporate culture] is very upbeat. Our employees are not restricted to any one particular job. A parts person is also a sales person. They really have a broad spectrum of opportunities when it comes to progressing in the company,” he says.
The company has a website and is looking to hire a consulting firm to do social media marketing. It is also doing some old-style promotion in the form of roadside billboards. For all that, much of the company’s promotional work centers on word-of-mouth referrals and recommendations. Meco does excellent repeat business, a testament to the company’s equipment and customer service.
The firm tries to retain a human factor in all it does. For example, sale and rental transactions are still done over the phone or in person, not online. “We have a person who answers the phone. We want customers to know they are being treated like human beings,” says Vazquez.
As for the future, Vazquez says, “I think in five years, we’ll expand our domestic sales, our rental business and our local presence here, while never forgetting the fact of the export side, which is the Caribbean, Central America, South America.”
Given Meco’s strong ties to this region, the company is keeping an eye on developments in Cuba. It is watching closely to see if the current U.S. government lifts the long-standing trade embargo on that island.
“As of right now, Cuba is an enormous market potential for us. We have been in discussion with Sany and Atlas Copco about representing them there, but until U.S. laws change, we cannot do anything in Cuba. I do believe the potential will be tremendous due to the proximity of both countries and necessity [of rebuilding] Cuban infrastructure,” says Vazquez.
He returns again to Meco’s major business reboot from roughly five years ago, when it changed from a primarily export-based construction equipment company to a more domestically-focused equipment sales and rental firm. “The [industry] has changed dramatically, and we have been able to adapt very successfully with it … I think for the next five to ten years, we’ll have an enormous amount of success,” says Vazquez.