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INTRODUCING FCC EQUIPMENT FINANCING  'A great
marriage'CAT Financial, FCC partnership expected to benefit both companies by Chip Alford Representatives from Cat Financial and FCC Equipment Financing, Inc., are already hard at work establishing accountabilities and creating relationships that will allow both companies to grow and dominate both the Caterpillar dealer and direct financing markets. "There will be no turf protection; this is an enterprise strategy," Executive Vice President Jim English told Cat Financial Territory Managers and FCC Sales Managers gathered for a Sales Conference in February at Caterpillar Financial Center in Nashville. "Let me make this very clear: Cat Financial and FCC will work as a team to maximize the marketplace opportunity." That team atmosphere is already taking shape. FCC National Sales Manager John Marino said the chemistry between the FCC reps and Cat Financial TMs at the initial sales conference was "just fantastic." "There are going to be things we are going to have to work through as we define our responsibilities going forward," he added. "But I'm very confident that we will develop a great working relationship." Details of the acquisition FCC, a Jacksonville, Fla.-based commercial finance company specializing in direct financing and leasing of  heavy equipment in the
construction industry, had been seriously looking for a buyer for about two
years when it was purchased by Cat Financial in February. "Our shareholders -
Caterpillar dealers Ring Power and Thompson Machinery - long ago determined
that the growth opportunities for FCC would outstrip their ability to provide
the needed capital for that growth," FCC President Chris Regas
explained. Jim English first learned about FCC's availability in May 2000, but at that time, Cat Financial was still committed to its charter as a captive finance company. By early 2001, however, the company's strategic direction had changed course to allow for future growth. "Our North American business has reached maturity with its 84 PODD (Percent of Dealer Deliveries)," Jim explained. "Continued growth in North America is paramount if Cat Financial is going to continue contributing significant returns to our parent company, so the Business Excellence Council recognized it was time to 'spread the wings' of the organization." Many areas of growth were endorsed by the BEC, including continued geographic expansion into Japan, major growth and expansion of the company's direct lending capabilities, and an acquisition strategy. When Jim learned FCC was still up for sale this past November, Cat Financial quickly put together a team to do due diligence and put together a purchase proposal. The definitive offer was signed on Jan. 31, 2002, with closing held Feb. 6 in Nashville. Why acquire FCC? Explaining the reasoning behind the FCC purchase, Jim said the company provides "instant access" for Cat Financial to deliver on its growth strategy. "FCC is already in place and direct lending is their business and core competency. They are successful and they have a culture and value system that fits hand in hand with Cat Financial. It is a wonderful match, not necessarily made in heaven, but certainly within a market that craves world class integration of purpose, processes, and delivery of outstanding services." Chris Regas couldn't agree more. "I thought it would be a great marriage from the beginning, partly because of the fine standing that Cat Financial has in the industry and its unparalleled financial strength," he said. "But more importantly, because of its cultural orientation - the way it manages its people and its customer relationships. When we began learning about the Shared Values system at Cat Financial, we became tremendously excited because we have aspired to the same types of values at FCC." The acquisition is expected to generate positive results for both companies. Cat Financial will benefit from FCC's established presence in the direct lending market, and FCC will benefit from an infusion of capital from Cat Financial that will allow it to strengthen and expand that presence. Cat Financial TMs will also be able to give all their attention to Caterpillar dealers. "FCC will be the direct lending division for Cat Financial in the U.S.," Jim emphasized. "Cat Financial Territory Managers will continue to take responsibility for the Caterpillar dealer relationships for finance and leasing sales of new and used equipment from Cat dealers. Personnel from both companies will work hand in hand, referring leads and opportunities with our existing customer base of 50,000 Cat Financial and FCC customers."  A viable option for growthThe underserved market in the direct lending arena represents a viable option for growth, Chris said. "We have sized that by looking into our competition and seeing the outstandings that exist there, knowing that we have the opportunity to bring great value to them. We have kicked around some numbers and the industry would indicate that there is $20 billion in opportunity available." Responding to that opportunity, FCC is already adding to its workforce, which currently stands at 41 employees. "Since the sale, we have been able to add representation in Kansas City, Phoenix, Charlotte, Northern Virginia, and California," Chris said, adding his company is already strong in the Sun Belt portion of the U.S. "We also expect to look at the Northeast, Chicago, Denver and into Texas for expansion. Our current plan, which is under review, would call for us to grow to 56 employees by the end of the year, of which 22 would be out in the field." Challenges ahead That growth and continued team building between the two companies won't come without challenges and hard work. "We'll be challenged to communicate, to bring clarity to our field force and the marketplace about what our roles will be," Chris said. "If we err, we hope to err on the side of over communicating to be sure that we minimize any downside to the transition. Once we are able to sift through whatever gray areas there are and what overlap exists in our two organizations, we believe that we will be able to provide terrific value to the customer in the marketplace." Everyone seems ready to take on the challenge. And as the inscription on a memento given to Sales Managers and TMs at the February conference stated: "Together, we'll make it happen!"
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