Is the Parking Industry Growing Up?
I was talking to the thirty something Chad Reed, new head of 3M Federal APD — and I began to wonder, wonder about our industry and its maturity.
Twenty or 30 years ago such a conversation would have been unheard of. Why would a billion dollar multinational care about the parking business.. Sure, Federal Signal is a large company, but it didn’t seem to really grasp what Federal APD was all about. But now — 3M? Wow?
In it the past few years we have seen big money moving into parking. Xerox is a major player, Morgan Stanley and Emirates money funds are flocking to spend billions. Bill Ford and Co. is dropping the odd 20 or 40 million hither and yon. Venture capital is dying to place major money in parking. Companies, rather than talking about investment are doing it, and in many cases, with big bucks.
It’s almost like we are a mini-silicon valley, almost. When I sold revenue control equipment two decades ago, we were concerned about service and delivery. Now I hear CEO’s talk about ‘burn rates’ and ‘exit strategies.’
A major on street supplier is on the dock. When potential buyers look at it they are looking at return on investment and growth potential. Ten years ago, the technology that came with the company seemed to be the key. Now, not so much.
So what does this mean? What has happened to our little backstreet industry? I suggest when you have “Business Manager-Parking” like Chad Reed at 3M talk about what 3M will mean to the parking industry, and never mention a product, a lot, a technology or a car; I think we have turned a corner.
Huge companies concern themselves with delivery, not just of a product but of a product line, not just to a customer, but to a market. They are about branding, data, studies, markets, and what happens ‘on the ground.’ Chad knows that 3M has large presences in major markets worldwide. These resources will help tremendously when he wants to sell a gate or spitter in Sao Paulo, Shanghai, or Delhi. He won’t be dealing with third party companies; he will be dealing with a colleague he met last month at the retreat for managers in Aspen. If he needs a trade show booth redone in a couple of weeks, it is, as he says, “easy.”
Many of the resources that smaller companies wrench themselves to bring to bear on marketing, design, research, promotion, customer service, training, and the like, companies like 3M, Morgan Stanley, Xerox, and their ilk can find in their in-house contact list. It’s a matter of scale.
A marketing department like one at 3M will bring Harvard Business School smarts to our industry and will quickly determine issues that need solving, and ways to solve them. They may be obvious to some of us, but the solutions may only work with capital investment, and a rethinking of business models. A 3M will have the strength, based on its name alone, to affect pricing levels to ensure that a product is profitable, and can support the customer service required to keep those end users paying more and coming back. I would have never thought of doubling the price of a piece of equipment. They will see it as a solution to a problem.
Asset managers who went for price thinking that revenue control equipment was a commodity will begin to realize that if they want something with the backing of a major player, they will have to pay for it. Service contracts costing more than the original product will become routine. But it will be worth it.
It is said that there are five stages in a company’s evolution. The first is existence – entrepreneurs make things happen, with money from friends and family. The second is survival – you have put it out there and now you need to keep it going. The third is Success – you have made it and can keep alive by coasting. The Fourth is Take Off – can an owner delegate and find the financing to grow. And the Fifth is Maturity – the company has the management and resources to command a market.
The question is where do the companies that make up the parking industry fit in this Harvard Business School report. Certainly many have made it to stage 3, few to stage four. However as companies like Xerox and 3M and financing sources like Morgan Stanley and major Australian banks enter the field, stage four is here. Those that don’t see it will be left behind.
The Chad Reeds of the world bring a different viewpoint. They are numbers guys, they are schooled in change but have a successful structure already in place. What they bring will be scary for some, but I think, in the end, we will all be better for it.