Pioneer Profile

www.iecvalue.com

Industry Pioneer Profile:
Carl C. Chrappa
President, CEO

Independent Equipment Company

The year was 1970 and Carl Chrappa had just graduated from the University of Massachusetts with a B.S. degree in Applied Science. He thought a career in electronics might suit him, which is why he was considering employment with Factory Mutual Engineering Association. Imagine his surprise to learn the company had nothing to do with electronics; in fact, it was a mutual insurance company service provider. There’s no question, though, that the day he accepted the job with Factory Mutual Engineering as an Appraiser marked a great loss for the electronics industry, instead launching the career of one of the country’s most highly regarded and prominent leasing industry executives.

Over a career that has spanned more than 30 years, Chrappa has frequently lectured and written hundreds of technical articles. He is the co-author of what many consider to be the authority for equipment management, A Leasing Company’s Guide to Equipment Management, and today is president and CEO of the nation’s oldest and most highly respected equipment management firm, Independent Equipment Company. As summarized by Tom Flickinger, VP of Westinghouse Credit Corp., his former colleague and founder of the Equipment Management Panel (now a Committee), "Carl provides the standard by which the rest of us measure ourselves."

Carl’s story really starts with the Factory Mutual Engineering Association. Beginning as an Appraiser performing equipment inspections and appraisals, he was initially attracted by the travel and opportunity to meet a variety of people – ranging from a company’s president to maintenance personnel. Carl claims the experience was captivating, and that he learned many priceless lessons while working there. "I learned so much about many areas that were new to me," he says. "I thought the job was fascinating, and I never got bored of it. In fact, even to this day I find the work challenging and exciting."

After spending ten years with Factory Mutual, moving from Appraiser, to Manager of Appraiser Training, and finally to Manager of Resident Appraisal Operations, Chrappa was lured away to the Kemper Group as a Property Valuation and Appraisal Manager. While at Kemper, he started, managed, and grew its appraisal unit. He also established and published the "Kemper Replacement Value Cost Trends." However, he yearned to participate in the finance side of the industry.

That’s when Chrappa was presented an opportunity to become VP of Equipment Valuations and Remarketing at International Capital Equipment (ICE). ICE was a publicly traded, residual value guarantee firm that offered insured "puts" to the leasing industry. It was there that he met someone who would leave a lasting impression not only on Chrappa, but the entire industry as well: Robert G. (Bob) Clark. Bob was a former Wall Street stock analyst, President of Pepsico Leasing, and the Chairman of ICE. While working with Clark, Chrappa received his initial training in the proper technique and methodologies of residual value analysis, something new to him and many of his colleagues, but already practiced for more than a decade by Clark. In fact, Clark’s methodology was so successful that the loss ratio at ICE was less than one percent – an incredible track record that speaks to the effectiveness of Clark’s methodology.

Chrappa picked up the teachings quickly, primarily because of his already extensive experience with equipment in general. Says Chrappa, "Because of my broad background in equipment, it was easy for me to understand the key issues related to residual value analysis."

Building on the lessons he learned from Clark, Chrappa began to reach out to others in the industry to share his newly discovered knowledge, beginning with the American Association of Equipment Lessors, now the Equipment Leasing Association. Forming what was then known as the Equipment Management Panel -- today known as the highly regarded Equipment Management Committee -- Chrappa began teaching about residual value methodology, a concept completely new to most in the industry. Response was so overwhelming, however, that he soon followed with a presentation, "Residual 101," expanding upon and formalizing a presentation format to teach the methodology he learned from Clark.

About the same time, Chrappa began getting more involved in other aspects of the job and equipment remarketing as well: first as Vice President of Equipment Valuation and Remarketing for ICE, and then as Vice President of Asset Management for TRAC Systems, experiences about which Chrappa characterizes as a "pre cursor" to his work with Independent Equipment. While at TRAC (a subsidiary of Signal Capital Corporation), one of Chrappa’s first jobs was to manage the portfolio workout of Equilease Corporation and its equipment funds. Chrappa said he sold hundreds of millions of dollars worth of assets. "You name it I sold it. Aircraft, machine tools, offshore and marine vessels, electronic equipment, computers, construction and mining equipment, trucks and trailers, railcars and locomotives, telecom gear, dredges, etc. Almost anything you can think of."

Chrappa attributes Independent’s success to the company’s commitment to excellence. "Our employees and their collective experience are our most valuable assets." Equilease had a $5 billion portfolio, but experienced huge losses in the early ‘80s and became insolvent. Within one year the company went from 500 employees and multiple offices down to just 60 employees at one New York City location. Eventually Signal Capital was sold and TRAC Systems officially closed.

Not surprisingly, Chrappa already had other plans in place. Two months before the official sale of Signal Capital, Independent Equipment Company had recruited him to turn around the company’s remarketing program. At the time Independent did not have an external sales force and the company was losing hundreds of thousands of dollars. Predictably, Chrappa was overwhelmingly successful: in just one year he not only turned around all the losses, but the company was now showing a profit.

Chrappa continued to do remarketing and leasing, particularly after the company acquired a portfolio of rail maintenance-of-way equipment from it’s San Francisco-based investment banking parent, D’Accord, Inc. (now DKW), that it remarketed and re-leased, something Independent continues to this day. Gradually, under Chrappa’s guidance, the company began providing other third-party services such as inspections and appraisals and the business really took off.

In 1993 Chrappa bought the company and moved it to Clearwater, Florida where it is headquartered today. Independent specializes in equipment inspections, appraisals, remarketing, and portfolio management -- all services which are useful to the equipment leasing and finance industry. In addition, Independent is a licensed auction company and has also developed an extensive web site (www.iecvalue.com). It is currently working to develop online auction capabilities to augment the Company’s remarketing services. Says Chrappa, "It’s been a very good run with lots more to come."

Chrappa thinks the greatest challenge facing leasing industry executives today is making profitable decisions based on quality information. That is why quality and experience count.

When asked what he views as his greatest accomplishments professionally, Chrappa points to his pride in helping to shape and influence the equipment management profession for nearly two decades, as well as leading Independent Equipment Company. Says Chrappa, "I’ve enjoyed all aspects of my work, but I’d have to say that running Independent Equipment successfully for so many years has been my crowning achievement."

Site Updated
November 05, 2005