The truck sales market is extremely cyclical. Over its history, JX Enterprises Inc. focused primarily on new truck sales, which resulted in severe swings in sales and profitability. Personal guarantees are the industry standard by banks and major suppliers.
Many truck dealers become insolvent during slow economic times because of poor balance sheet management. A lack of margin controls on truck, parts and service sales, along with mismanagement on receivables, used truck values and obsolete parts are often the root cause of failures. When the economy is strong, these areas are often ignored.
When Eric Jorgensen became president of JX Enterprises in January 2000, the organizational focus started to shift from the income statement to the balance sheet. Areas of the business that provided more consistent cash flow were developed, like parts, service, body shops, financing, rentals and full-service leasing.
Today, the balance sheet is very conservative. Obsolete parts, for example, are targeted to 2.5 percent of total inventory, whereas most dealers run between 15 and 20 percent. The business model has evolved under Jorgensen from new truck sales to one focusing on maximizing balance sheet strength, building on higher margin departments and diversifying businesses that tie to the trucking industry but are not as susceptible to economic cycles. The result is three strong years of financial performance. This year, new truck sales industrywide are expected to drop 30 to 45 percent because of a change in engine emission technology, but JX Enterprises expects another strong year.
HOW TO REACH: JX Enterprises Inc., www.jxe.com or (262) 513-5045