This {BONUS} episode of the podcast is highlighting yellow equipment! Dennis Howard joins host Tony Kramer to discuss all things construction - from equipment, technology in place on job sites, to challenges the industry is facing.
This episode is dropping during National Construction Appreciation Week, the week dedicated to showcasing the essential business of construction and celebrating the people who develop, build, maintain, and support infrastructure.
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Additional Resources for our listeners:
Learn more by watching The Track, RDO's YouTube series dedicated to the construction industry.
Tune in to past podcast episodes on our website.
Find answers to your precision ag questions on our YouTube channel, Precision Ag Answers:
View the entire episode transcript here:
Tony Kramer: This week is a special week so we are going to be tipping our hats to our brothers and sisters over on the construction side of the business.
I'm very excited to bring on Dennis Howard who is the vice president of equipment for RDO Equipment over on our construction line of the business. Thanks for joining us on the show today, Dennis. To get started, let's hear a little bit more about you and your background and how you got involved in the industry.
Dennis Howard: Thanks, Tony. Yes, I've been in the industry a long time. I actually started an ag dealership many years ago and then I worked for a Komatsu dealership and then I started working for RDO. In about 14 years now, I've worked for RDO. I started out as the general manager of our Dallas-Fort Worth operations, then I was director of rental. My current title, as you said, was vice president of equipment. I oversee all the equipment for the entire company. My background primarily is construction, although I started in ag. I'm having a really good time now learning more about the ag equipment within RDO, as well as the construction equipment.
Tony: That's really cool to hear that you've got some ties or some history with the ag side of the business, and like you said, you're mostly familiar with the construction side but have some of those ties and now learning a little bit more about the ag side of the business. That is really neat. Especially this being the Agriculture Technology Podcast, majority of what we do or everything that we do focuses a lot on the technology within the ag industry and the equipment being used.
With that, and in a little bit here we're going to talk about some of that technology or solutions that are provided on the construction side. As I stated at the beginning of the show, this week is construction appreciation week. Dennis, why don't you just tell us a little bit about what construction appreciation week is, and what it means to the construction side of our business.
Dennis: Construction appreciation week, is the week where we, like it says, we give appreciations to everything that's in construction. When you look at ag you realize ag feeds the world and when you look at construction, construction builds the world. We have two great industries that we deal with at RDO, and construction is really-- Everything that you see, the house you live in. Somebody that we do business with or could have done business with helped build the streets to get to your house, helped build the lot, the bridge you drove over this morning.
Anything you're looking at is involved with construction, it was built. There's a lot to think about in construction. It's like everything, we get busy and you don't really appreciate it and so one day, one week a year we try to stop and appreciate what we've done in construction.
Tony: You talk about the appreciation for construction, and going back to your history, Dennis, doing some stuff in agriculture and then now being mostly focused in construction. I know you have a very, very special place in your heart for the construction industry and you have a strong passion for that. When you come from ag and then you get into the construction side, where does that passion come from? What really drives you to get up to work every day and work within the construction industry?
Dennis: It really is what I just referenced, construction builds the world, the streets, the bridges, everything is built. The fiber optics in the ground is done by-- Our Vermeer operations sells drills that drills under highways, allows us to have fiber optics. Our construction group sells tractors that allow us to build the roads. One thing you'll find out, I call everything a tractor, so sometimes on the ag side they're like, "Why is he calling everything a tractor?" I call everything a tractor, just the old habits are hard to break.
You realize how much of our economy is driven off construction, and then how much of what we do is involved in construction. The satisfaction that we get helping our customers-- There's customers that can look at this bridge that I referenced earlier, and realize that they built that bridge 30 years ago. Their father helped build that bridge, now they're helping repair that bridge their father built. It's really just a neat thing, to be able to see your accomplishments on a regular basis, and then see them last for years.
Tony: It's funny how you make that comment, Dennis, about how you refer to everything as a tractor. We on the ag side, we would look at that and be like, "Well, what does he mean? That's not a tractor that's a wheel loader, or whatever it may be, a backhoe." It just goes to show, and talking about your passion and going back to construction appreciation week. It goes to show how similar both of these industries are, whether it be agriculture, or construction. You said it best, agriculture feeds the world and construction builds the world.
I think a lot of it gets overlooked a lot of times, like you said, we don't take the time to slow down and appreciate the world we live in, because everything from the roads, the houses, it all has to be built and that all comes from the construction side and the equipment being utilized and the people working in that industry. The other thing that ties very closely to the agriculture industry is there is a lot of technology being introduced into the construction industry, and you guys have been utilizing that technology for a number of years as well.
I want to dive a little deeper into that, being this is the Agriculture Technology Podcast. I want to draw some lines, Dennis, on some of the solutions or some of the technologies that are in the industry, what they can do for a customer and where it started and where it's at today. To start out, let's just talk about the introduction of technology into the construction world. What were some of those first pieces? Like within the ag industry, some of our first items were a yield monitor and a combine and then all of a sudden we got auto steer. What were some of those industry-changing technologies within construction?
Dennis: In construction, it really started more in the paving part of construction, than in the [unintelligible 00:08:10] work of construction. What we call the string line, which is the string alongside the highway when they were putting down asphalt or concrete and they had the sensor that read the string line. The string line told the paver where to go and how deep to put the product, and this will [unintelligible 00:08:30] along. That was the first part of the technology, and that really was driven off of how expensive concrete and asphalt is. If you put too much out there, you're wasting money.
That was really what got construction years ago, doing technology, that very basic-- Then probably, the next step was lasers, and primarily pop lasers became very popular. Where if you got water, it's got to flow downhill, you take a pop laser to shoot to make sure you've got the grade down that you need to make the water flow appropriately. It continues to evolve and probably the next big step was grade control, which was basically a motor grader or dozer having the sensors tell it how deep to cut the dirt, when to fill and when to cut to get the grades made. Now we've evolved into GPS, which is the next step in integration within the machines.
Tony: Yes, it's been fun watching the technology evolve within the construction industry. You go back, no different than grandpa and his dad and how they farm, they took a lot of pride in the work they did. You look at some of those older generation whether it's a motor grader operator, dozer operator, excavator operators. Those guys are always fun to watch. They took a lot of pride in the work that they did, whether it was cutting at final grade or laying a slope of some sort. There's more and more technology being introduced into that industry. Like you said, the smart grade systems, I think they're called, and other systems like that, where you take a lot of the guesswork out of it, the operator can relax a little bit and take a deep breath. It's not all on them.
There's technology there to help them make those final cuts and whatever it may be. There's so much technology being introduced in the construction industry, but I know that you guys probably still deal with some challenges, no different than the ag industry. We deal with challenges day-to-day of technology adoption or technology utilization. Some of that is due to simply cost of the product. Some of it is due to generational differences on the farm. What are some of the challenges that the construction industry faces when it comes to the use of this technology?
Dennis: A lot of the challenges mirror what you just talked about on the ag side. You've got a generational issue, and you're right, back-- 20 years ago, the motor grader operator was the most skilled person on the job, and now with technology, your skill set can be much lower than what it used to have to be. The generations are starting to adopt technology, but a lot of the construction companies are still controlled by people that understand that the motor grader operator is the most valuable person on the job.
When we see adoption, we see generational- probably the biggest thing we see. When you do a construction job, you basically start with a piece of land. Maybe it's got some houses on it. Maybe it has something that has to be demo'd, maybe it has some stuff needs to be cleared off, but you're basically reshaping that land is the first step. You've got to build a model, what they call is a model to go out, and say, "I want this raised up four foot, and I want this lowered three foot and a road cut through here.
I want the road to be down 18 inches. I want drains here." You've got to build of this model out. A lot of people over the years have just done those models with surveyors and very good blade operators and some good foreman. They go out and knock those models out. They go out and knock the production out without the model. Now to understand that with the model, which is a step they're not used to, adding that into their workflow is one of the first adoptions that we're seeing has to be done.
If we find somebody that has a good plan and a good team, and they understand, they want to take the time to get these models built. They want to understand the performance they can gain with technology. They'll get into it and they'll adopt it and they'll run with it fairly quickly, but that initial step of, I've got to add a step in my construction process that I've never seen any value in it, and I've always been able to not need that step.
We've got to get past that initial step. We do a lot of demoing, models that are very reasonable price on the first model to get somebody to understand the value in it. We see a lot of adoption in technology by being able to get the model built and then us rent the technology to the customer so they can see it and see the return they'll get off of it.
Tony: You just answered two questions that I wanted to ask there, Dennis, one of the big opportunities is getting it in their hands is what I'm understanding. You guys go out and you demo this technology, no matter if it's a computer program or if it's on the machines, that sounds like a large opportunity. Again, that mirrors the ag industry. A lot of our opportunity on the ag side is again, getting it in the hands of the customers, demoing it to them, showing it to them.
Maybe they've already got the capabilities on their machine, but they just have never utilized it. It's really cool again, to draw those lines and see those ties there. With all of this technology that's being introduced into the industry or the technology that's already there, in your eyes, Dennis, how is this technology changing the way our construction customers do business?
Dennis: People that have adopted, they've got a lower cost basis. They can do the jobs more efficiently. It is lowering some of the prices or at least not increasing the price with some of the construction projects, because the return on the technology is so good. One of the bigger things though is, there's a huge labor shortage everywhere today, but the labor shortage in the construction industry has been around as long as I've been in it. When I talked about the motor grader operator earlier, that guy had 20 years experience, and he could do it by the feel of his seat.
Those guys can't find them. With this technology, I'm not going to say that somebody off the street can run a motor grader. In a much shorter training cycle, you can be able to produce at a level that the construction company can make money off of versus waiting 10 years before you're ready to be that motor grader operator. It's really allowed for a broader labor market, which is really important right now in the market we've been in forever, and what we're in today with the labor shortages.
Tony: Yes, I completely agree with you there, as far as the labor shortages go. Obviously you guys see it a lot more on the construction side, because there's so many more bodies that you need to complete these projects. We also, we see that same thing on the ag side. As we were talking here, it is really neat to draw these lines between construction and ag. There's so many similarities in the industries.
It's just the difference in end product, whether you're feeding and fueling the world, or whether you're building the world, there's a lot of ties between all of it. Now, the last thing I want to ask you, Dennis, is just construction industry as a whole. How is the construction industry doing? What does the rest of 2021 look like? What are your predictions for 2022 going forward? Tell us a little bit about just the industry outlook.
Dennis: The industry outlook is very positive all the way through '22. We don't see any significant slowdowns for the next 12 to 18 months. Housing starts for construction. We always watch housing starts. Housing starts are really strong, the need for equipment is strong. We've got- a lot of the manufacturers slow down production and we had supply chain issues, and those are still going on today. New equipment availability is still difficult to get, so demand is far outpacing availability of machines.
Rental utilizations, which is something else we watch, our construction is very high, demand is very strong. We think we're 12 months away from getting to these supply chain issue, best-case scenario, and we don't see demand slowing down through that 12 months and then that gives you at least 6 more months on the back side of that. We feel very confident for the next 12 to 18 months that construction is going to stay strong. Yes, it's really a machine and people issue right now, and it's really more people than anything else.
Tony: That is awesome to hear, that positive outlook. The industry is doing well. Things are thriving on the construction side of the business. It's really cool to hear that 12 to 18 month outlook. If somebody wants to learn more about whether it's construction equipment or some of the technology that's being utilized, where can they go and who can they talk to?
Dennis: You can go to rdoequipment.com. There's a lot of resources there. You can walk into your local RDO Equipment store and ask. We will be glad that- somebody at the store can get you started and we'll bring in specialists. We have specialists around the country that can help you. You can reach out to me. I have a YouTube channel called The Track. Please go and watch The Track. We do a lot of fun stuff on The Track. You can watch that and learn more, or you can reach out to me @RDODennisH on Twitter.
I'll be glad to connect with you on Twitter. A lot of different ways to connect, and somebody at RDO will be glad to help you learn more about technology. We are really trying to educate as much as-- Obviously we pay the bills by selling the technology, but we really see ourselves as leading and educating people of the opportunities right now, more than we are trying to sell it. Even if you're just like, "I don't know if this would ever work for me, but I'd sure like to spend an afternoon talking to somebody about the options," we would be glad to talk to you about that.
Tony: Yes, I can't echo that enough, Dennis. You're right on with everything that we do within the RDO Equipment organization, what you guys are doing over there on The Track-- I come from a farming family and I thought I was fairly knowledgeable about construction equipment, but watching those Track episodes and what you guys talk about on there, I've even learned stuff myself, so very great resources that are out there. Like Dennis, said follow him @RDODennisH. Follow myself for ag industry news and updates and information @RDOTonyK.
With that, Dennis, I just want to thank you very much. Us over here on the ag side, this is a thank you, a tip of the hat to all of you on the construction side for are everything you guys do in building the world, and keeping the infrastructure moving forward. Thank you for that part of the business. Thank you for taking the time to sit down and do this podcast with me as we appreciate everyone in the construction industry during this week. Thank you, Dennis.
Dennis: Thank you, Tony, I had a good time.
Tony: Thanks again for tuning in to another episode. If you have questions about the technology and products discussed, or have ideas about future episodes, please leave them in the comments below. You can also subscribe to RDO's YouTube channel and be in the know about each episode, or tune in on any streaming service. Thanks again.
