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PETROLEUM DIRECTORY: Totem Equipment turns up the heat on Alaska’s competitive equipment sales, rental industry Industrial equipment company proves that it can not only change with Alaska industry, it can make changes to it Mara Severin PNA Contributing Writer
Mike Huston, vice president of Totem Equipment Sales & Rentals, knows the formula for success in Alaska. It’s a simple formula and it works. First, you must be adaptable. Few states have more volatile markets than Alaska, and a successful business must learn to read the needs of changing industry, and must be able to quickly meet these needs. Second, you must provide excellent service. In a small market such as Alaska’s, repeat customers are essential. And the market’s very smallness mean that mistakes and a lack of service won’t go unnoticed or unheard of for long.
If you can’t find it, make it “Our general philosophy is you grow or you die,” says Huston. “We’re always looking for new products and new markets, so we now have a full basket of products and services to sell.”
For Totem, “looking” for new products might actually mean creating them. In the 1980s, during the development of the trans-Alaska pipeline, Totem proved its adaptable and creative nature when it became instrumental in pioneering indirect fire heaters. Totem had been distributing heaters from other manufacturers but pipeline-builder Alyeska was looking for something a notch above what was currently on the market. “They wanted something a little bigger than your standard Herman Nelson,” he explains. “It had to give off hot, clean, breathable air that was mobile and could stand up to the harsh Alaskan climate.”
The professionals at Totem collaborated with Dave Gammons, an Alyeska employee, and together they redesigned a Totem-produced prototype. They came up with the Totem10 heater, now a standard piece of machinery in the Totem arsenal. “We put a couple of them together early in the pipeline,” says Huston. They’ve been refined and perfected since then. “Now, you can find them all over,” he says with unmistakable pride. “They’re all over Alaska, they’re in the Lower 48, and you can even find them in Russia.”
Rather than rest on their laurels, Totem continues to improve and innovate heater designs. Currently, Huston is awaiting the arrival of the first of a new product for the North Slope. It is a smaller 500,000 BTU continuous duty heater. “It has a 24-hour run time,” he says, “and it is a little lighter and easier to transport than some of the bigger stuff.” It will be available before the end of the year.
Not just heaters Now, says Huston, “people think of us as the heater guys.” And that’s both good and bad news for Totem. “We’re glad for the reputation,” he says, “but we still want people to know about the other things that we do real well. Material handling, for example, is one area of Totem’s expertise that Huston takes pride in. They also offer sandblasting, and pressure washing equipment to support the maintenance and service industry. “Sandblasting is fairly specialized,” says Huston. In addition, Totem provides diamond blades and concrete equipment. “We’re probably the largest concrete pump dealer up here. And new this year, we have picked up the Terex line of equipment for the state of Alaska.”
Racing against Alaska’s seasonal clock Adding products to their “full basket,” is one way that Totem stays on top of the changing Alaska economy. Offering a variety of products and services allows the company to quickly change its focus based on what Alaska industry demands. “We can quickly change our focus from oil to contractors to government entities depending upon the needs of the state,” he says.
The ability to do things quickly is essential to the industry, says Huston. “We’re small and light on our feet,” he says, “and that allows us to be very service-oriented. We can be at a location within hours of a call.” And in Alaska, where the climate offers short seasons and small windows of opportunity to all varieties of industrial and construction work, speed is most definitely of the essence.
“Oil companies, for instance, use ice roads, so they have a couple of months in the middle of winter to get work done,” explains Huston. “Alternatively, most contractors work in the summer months. They don’t want to have to deal with temporary heat and don’t want to use concrete blankets to put foundations in.” Huston prides himself on providing immediate and efficient service. “Deliveries have to be on time. Equipment has to be up and running and functional the moment it’s delivered,” he says. “You don’t get a lot of second chances up here.”
In Alaska, he says, “now means now.”
Industrial strength equipment for industrial strength weather In addition to providing service designed to suit Alaska industry, Huston also prides himself on providing the best equipment for Alaska’s environment. “Our parts inventory and our rental equipment is all geared towards the Alaskan climate,” he says. Everything, obviously, has to be winterized, he says, and if the factory won’t do it, the people at Totem do it themselves. “We’ll put block heaters on the equipment that doesn’t come so equipped from the factory,” he says. “We’ll wrap battery blankets and we’ll install oil spill containment pans.”
They search out the best products as well. “We bring equipment in that’s geared toward northern climates,” he says. “We do quite a lot of business with Canadian manufacturers for that reason. They seem to understand the way things need to be built.”
Standing out in the rental business In 1993, Totem added another range of services to its roster when it opened a rental yard. The company was able to offer their clients an expanded product line and more importantly, was able to fill an industry need while distinguishing itself dramatically from other rental companies. “For instance,” he says, “when we rent a piece of equipment to the customer, we automatically apply 85 percent of the rental to the purchase price. So if someone plans to rent a heater for a month, and ends up needing it for six months, it can easily be converted into an investment in equipment,” he explains. “With a normal rental company, that money is just gone.”
What also distinguished the rental division at Totem is the fact that all of the rental equipment is for sale. “Our goal is to move equipment,” says Huston. “Other rental companies won’t get rid of their equipment until it’s completely worn out,” he says. “We sell our equipment way before its useful life is over.” This way, he says, “all of our equipment is new or like new. We are able to supply our customer with the newest technology, and we also cut down on maintenance costs.” Also unique to the rental industry is Huston’s policy on rental income. “I’ll split my rental income with the customer,” he says. So, he explains, if a brand new piece of equipment is rented for a month and brings in $1,000 worth of income, “I’ll take $500 off for the customer.”
Spreading the word — it’s a small world after all Says Huston, in a market as small as Alaska’s, word gets around if you’re not providing exceptional service. So poor service means you will not only lose your current customers, but you won’t see new ones either. “We want return customers,” says Huston, “and we do everything within our power to bring our customers back.” Sometimes that means making a short-term investment. “Like everyone else,” he says, “we want our business to be profitable.” But, says Huston, it doesn’t always work out that way. “Sometimes, you’ve got to bite the bullet and take a loss in order to make the customer happy,” he says. “We’re willing to do that.”
This kind of thinking, says Huston, is fundamental to the company’s success. “We want people to say they got a good deal at Totem Equipment,” he says. “Word of mouth is our best advertising.”
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