Saving Snorkel: Don Ahern Interview

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Don Ahern, an icon in the equipment manufacturing and rental equipment industries, recently made headlines after purchasing the struggling aerial lift manufacturer Snorkel from its parent company, Tanfield Group.

The industry has been abuzz since Ahern’s Xtreme Manufacturing and Tanfield announced the creation of a new holding company. In the agreement, Xtreme’s phased buyout starts with Ahern owning 51% of Snorkel without having to make a down payment; Tanfield retains 49%.

The arrangement allows Ahern to buy the rest of Snorkel in phases as the reviving company sees financial success. Ahern has been one of Snorkel’s largest customers for some time and has essentially purchased the aerial lift manufacturer in an arrangement similar to buying a house on a land contract. Ahern’s dynamic hands-on leadership will undoubtedly bring new vigor and many changes to Snorkel.

During a recent interview, Don Ahern discussed how the buyout developed, as well as what will change—and what won’t—as Snorkel is rebuilt and integrated into the Xtreme/Ahern family of companies.

From dire straits to hope If you have been in this industry for the past two decades, you are familiar with Snorkel’s many brushes with extinction. In spite of numerous missteps, bad timing, and lack of commitment, the Snorkel brand has had the strength to survive.

Its recent troubles, however, nearly proved fatal. When Ahern was evaluating purchasing Snorkel, his advisers said the company was in a “death spiral.” Its annual sales had plummeted from $238 million at their peak in September 2008 to as little as $65 million just six months later.

When Snorkel was at its financial best, the company had invested heavily to establish purchasing centers in China and factory stores in Japan and Australia. When the cash crunch hit in 2009, the company’s management decided to use on-hand components to manufacture finished products instead of maintaining an inventory of service parts to support products already working in the field.

That decision hurt Snorkel customers and accelerated a financial nosedive that had been started by the massive global economic slowdown. The company’s huge investments in foreign markets at precisely the wrong time quickly pulled it deep into debt.

Snorkel’s dire financial straits were no secret in the industry, so few were surprised when Snorkel’s parent company, Tanfield, announced in February 2013 that it intended to sell the aerial lift manufacturer. After Tanfield’s announcement, speculation revolved around three possible buyers: Chinese manufacturers, an unnamed North American manufacturer, and Ahern, owner of Ahern Equipment Rentals and Xtreme Manufacturing. In the end, Ahern crafted an interesting deal that gives Snorkel a real shot at revival. Ahern also recognizes there will be challenges as he resurrects Snorkel and implements his vision for giving the brand and its customers a brighter future.

 

Why Ahern bought Snorkel

Ever since Don Ahern bought his first Snorkel lift in 1985, he has been one of the world’s largest supporters and owners of Snorkel boom lifts. At one point, his rental fleet included more than 2,000 of them. Although the industry’s tough economy a few years ago forced him to cut his inventory of Snorkel lifts by nearly half, he still owns enough of them to have a vested interest in seeing the brand survive. So when the chance to take control of Snorkel came up, Ahern took a serious look at it. Many people in the industry questioned his decision to venture deeper into manufacturing.

Although Ahern’s Xtreme products are doing well, taking over a near-dead organization seemed risky. On top of that, Ahern only recently won a long, hard battle with bondholders to retain control of his business.

Some think investing a bucketload of capital to right the ship is a huge gamble. But those who know Ahern realize that the bigger the challenge, the harder he digs in. An improved economy, an intimate knowledge of the product and market, and a relatively low cost of entry could add up to a shrewd move by Ahern.

 

Current state

So what did Ahern get for his Snorkel investment? Besides a product lineup that includes dozens of boom and scissor models, he gets manufacturing plants in North America, Europe, and China, as well as the aforementioned stores in Japan and Australia.

Also, Snorkel has 73 distributors outside of North America that should ultimately benefit from improvements that will be made to products and support. Those distributors could also be a ready-made channel for selling Xtreme Manufacturing products worldwide.

Central to all of this is the Snorkel factory in Elwood, Kan., which will continue to manufacture select Snorkel models. It will also rebuild equipment from Ahern’s rental fleet and offer equipment rebuilding services to outside customers, too.

Ahern has had an engineering center in Kansas for years to support his Xtreme Manufacturing entity. Many of the engineers who work there came from Snorkel. So Ahern already has a skilled and experienced staff in place to develop new models and revamp existing ones.

Snorkel’s product line includes a range of lifts from small mast lifts, to boom lifts, and high-capacity scissor models like the S4390RT.

So far, the biggest challenge Ahern and his team have faced is putting in place supply channels that are needed to produce virtually the entire product line. “Some vendors had not been paid for over two years,” said Ahern.

The first order of business was re-establishing vital relationships with component suppliers that feed Snorkel production and put service parts on the shelves. To do that, Ahern and his team spent two months traveling around the world to settle old accounts with the cash that was committed as part of Ahern’s agreement to take control of Snorkel.

Focus on rental company needs Ahern’s further foray into equipment manufacturing puts him in a unique and difficult position in the industry.

How does he feel about being viewed by his equipment suppliers as an even bigger competitor? “Last year, [Ahern Rentals] purchased over 900 booms from Genie, JLG, and Skyjack. I also purchased hundreds of telehandlers, despite the fact that we have produced telehandlers for over a decade,” Ahern said. “We will always have a need for products from our long-term partners”

He added: “I hope the other independent and family-owned rental operators will look at us as partners. We know what is important to them better than anyone that has been in control of Snorkel for decades. What is important to me as a [rental equipment] buyer is equally good for them, and my commitment to continue to put Snorkels into the Ahern rental fleet demonstrates my continued confidence in this product.”

Ahern did himself and Snorkel owners around the world a huge service in taking over the ailing company. A Snorkel failure would have eroded the residual value of hundreds of millions of dollars’ worth of equipment currently in service globally.

Now that the company has an owner who not only understands the industry but also has a doubly-vested interest in the company’s success, owning a Snorkel has become a much stronger investment.

 

Product Changes, New Models Coming Soon

Ahern plans to return Snorkel to its roots. Snorkel’s past success was built on strong, dependable products backed by responsive parts and service support. As the owner of North America’s largest independently owned rental company, Ahern believes he knows what rental operators need. One of first items on the list is to produce a large quantity of what Ahern calls “legacy” machines in some of Snorkel’s most successful sizes, including the TB37, TB42, TB60, and TB66.

Unlike Snorkel’s recently introduced Polaris models, the new legacy models will use open-loop hydraulic drive, much like Snorkel’s earlier products. That will eliminate the more expensive and complex hydrostatic drives that have become the industry norm.
 
In addition, existing Polaris boom lifts like the A62JRT and T66JRT will see many changes, including replacement of the keel boom with a more traditional square or “top hat” design, and a redesigned jib that will give the 85-ft. model an extra foot of reach.
 
Most surprisingly, Ahern is already leveraging Xtreme Manufacturing’s telehandler expertise to develop a new line of Snorkel telehandlers he hopes to roll out by the end of the second quarter of 2014.
 
The new Snorkel telehandlers will not simply be rebranded Xtreme units. They will be more mainstream products that will compete with products currently produced by Genie, JLG, Manitou, and Gehl.
 
Ahern explained, “These all-new Snorkel handlers will initially include a 6,000-lb. capacity unit with 40 ft. of reach, an 8,000-lb. unit with up to about 42 ft., and a 10,000-lb. model with a height from 42 to 54 ft.” The engineering specifications are still being worked out, so the exact capacities and reaches of the new models are not yet final.
 
Plans also include continued distribution of the Pop-Up low-level access products. Previously available only as push-around models, Pop-Up platforms will soon offer an external power unit option that enables them to be driven from the platform. Last, but not least, Ahern plans to change Snorkel’s current generation of scissor lifts to be more robust, and Snorkel engineers are now redesigning the entire line. When the changes are complete, the new, stronger models will be rolled out as the Phoenix II generation of scissor lifts.