The ballots are cast, the votes are tallied and the five nominees for the 2007 Truck Parts Distributor of the Year are named. The first was announced in the June issue of Truck Parts & Service and we have revealed one finalist in each subsequent edition with question-and-answer style articles. In this issue, we profile all five distributors – the industry’s top choices for aftermarket excellence as selected by readers, advertisers and the Truck Parts & Service editorial team.
The aftermarket grows more complex and competitive each year and it is this challenging business climate that breeds innovation, ingenuity and indomitability. As a whole, readers
of this magazine share similar obstacles and opportunities – regulatory impact on product, employee attraction and retention, globalization, increased competition, evaluation and adoption of emerging technologies and shifting customer profiles and expectations, to name a few. These five distributors are leading the way in cultivating business models and executing strategies that meet these challenges and help secure a healthy future for the independent aftermarket.
Please join us in congratulating this year’s finalists:
- John Bzeta, president, Fleet Brake, Calgary, Alberta, Canada.
- Larry Franklin, owner, and Greg Franklin, president, Franklin Truck Parts, Commerce, Calif.
- Marc Karon, owner, Total Truck Parts, West Palm Beach, Fla.
- Vince Mathews, owner, Capitol Clutch & Brake, Inc., West Sacramento, Calif.
- Tom Stewart, president, Carolina Rim and Wheel, Charlotte, N.C.
The winner of the 2007 Truck Parts Distributor of the Year will be announced during the 2008 Heavy Duty Aftermarket Week in Las Vegas.
In conjunction with the Truck Parts Distributor of the Year program, Randall-Reilly Publishing, the parent company of Truck Parts & Service, has created the Randall-Reilly Educational Project. Twenty percent of all net display advertising revenue in this issue will be contributed to Northwood University as funding for its Heavy Duty Parts and Service Management Program, a two- or four-year ongoing degree-granting program, that helps cultivate the aftermarket leaders of tomorrow.
A Window Into Capitol Clutch & Brake
In a complicated industry, Capitol Clutch & Brake shines as an example of what good a solid, clear business philosophy can do for a company and its customers.
By Erin Sund, Assistant Editor
Capitol Clutch & Brake, Inc., has nothing to hide. The company promotes transparent management of its clutch and brake systems components business, right down to the very bricks and mortar of its headquarters where windows constitute an entire wall. These windows, however, don’t offer a panoramic view of the company’s West Sacramento, Calif., location; they look right back into the facility.
“I have a wall of windows so that I can look out and employees can look in,” says Vince Mathews, owner, Capitol Clutch & Brake. “Customers can stop in too. Many people reach a point in their careers where they build a secluded office in the back, which is understandable, but I like the welcoming atmosphere.”
Keeping customers and staff visible and practicing an open management style is something Capitol Clutch & Brake has in its blood. Part of this emphasis on friendly, personal interaction may reflect the company’s family roots. Mathew’s parents, Grady and Sammie Mathews, purchased Capitol Clutch & Brake in 1966, and shifted focus from light-duty automotive product offerings to heavy-duty friction components and truck, bus and off-road parts and equipment.
Vince joined the growing company while in high school as a delivery driver and General Manager Hollis McNatt started as a machinist the next year. A decade later in 1983, Warren Miller, assistant manager, joined the company and the current leadership team was formed.
Mathews credits both his parents for the core business values and ethics they instilled in him at a formative age. His father focused on sales, while his mother handled accounts and insurance. Mathews paid close attention to both parents’ work, which gave him a panoramic view of the business. “Many people don’t get to see both sides of the business and how one affects the other. It was the best of both worlds,” he says, and cites the comprehensive business exposure his parents gave him as a contribution to his success.
Capitol Clutch & Brake has undergone a series of well-calculated expansions starting with Grady’s decision to move the business out of downtown Sacramento, Calif., to industrial West Sacramento, where he built a 7200 sq.-ft. building to house inventory. Product lines were added and brake and clutch system expertise was cultivated. In 1983, an additional building more than doubled the available space and another purchased building in 1986 created 30,000 sq. ft. of space.
In 1994, Mathews, who had assumed leadership of the company from his father, made the tough decision to construct a new building and completely remodel the existing facility.
“The new structure houses a large, modern lobby and display area, as well as a lot more warehouse space,” says Mathews. “It was a major investment for us and it’s never comfortable signing personal guarantees on large loans. However, it’s been a fantastic move. It has allowed us to grow our inventory and display more of it, provide a better working environment for our people and give customers a higher quality experience when they visit.”
As a result of the expansion, the company occupies a 50,000 sq.-ft. complex, has more than 7000 customers and employ more than 40 people. Capitol Clutch & Brake’s 2006 revenue hit $11.6 million.
Growth, both in terms of property and product offerings, can be a double-edged sword if a business owner doesn’t exercise caution and remember what qualities and values made the company successful in the first place. Capitol Clutch & Brake stays competitive by focusing on what they do well and prioritizing people, both its staff and customers.
“We follow our values and the old adage, ‘find your niche and work it to death,'” says Mathews. “We have experienced pressure over the years to open more locations, take on more product lines that are not in our area of expertise and to try to become everything to everybody.” Mathews and his co-workers wisely realize that they cannot make those sweeping changes and remain the kind of company they wish to be.
Mathews has seen many changes in the industry, both positive and negative. “The biggest difference mirrors a change in society from doing business on a handshake and a man’s word,” Mathews reflects. “Now you have to write everything down.”
Another undeniable change is the rapid advancement of technology. According to Mathews, Capitol Clutch & Brake isn’t as far ahead of the curve as it could be, but there are solid reasons to carefully weigh both the pros and cons of new technology before jumping on the bandwagon.
“It’s so easy to get caught up in technology and to forget the basics of personal contact,” says Mathews, “I always try to have people available to answer the phone and to speak to customers. I don’t want to lose the personal touch.”
Customers aren’t the only ones with easy access to a human voice and face; employees also benefit from the “personal touch.” Managers at the company still occasionally work the counters and perform customer service so that they can stay close to the aspects of the business that helped build its success.
“If you don’t stay in touch, you can’t help as effectively when your staff comes to you with problems. You’re not as good of a problem solver,” says Mathews. “Keeping managers and employees in the same loop keeps everyone sharp and sets a good example when staff see us out doing what they’re doing. We lead by example and stay in full view of our customers and suppliers.”
It’s a business philosophy that extends right through to the company’s motto, derived from its initials, CCB: Courteous, Competent, Businesspeople. “We understand our customers’ needs and overstock our facility with the proper products, equipment, personnel, attitude and desire to meet and exceed those needs,” says Mathews.
Capitol Clutch & Brake prioritizes and values people, and so industry-wide issues like the difficulty associated with attracting young workers to the industry and the prohibitive cost of healthcare are what Mathews considers his two greatest challenges.
“We’ve used Internet search engines to find qualified people and we’ve tried talking to people in the auto parts business too. We just keep plugging away at it and we always keep our door open.
“The costs of providing healthcare is another big issue,” Mathews continues. “You get hurt when you start cutting benefits or coverage. The rising cost of healthcare someday could move beyond our ability to cope, but we try to keep our coverage consistent.”
Capitol Clutch & Brake has clarity of vision and looks forward to expanding its market share in Northern California and Nevada. Through transparent management, the prioritization of customers and staff and an unflinching, honest look at industry issues, Mathews’s desire to lead his company strongly into the future stands more than a fighting chance.
Carolina Rim and Wheel: Not Just Rolling Along
Carolina Rim and Wheel President Tom Stewart stays active in the industry to improve the aftermarket for everyone.
By Derek Smith, Editor
It isn’t enough for Tom Stewart, president of Charlotte, N.C.-based Carolina Rim and Wheel, to work toward making his business successful. He wants the aftermarket industry to be successful. To this end, he takes action, getting in on the ground floor of industry initiatives to address the issues, build consensus and execute solutions.
Stewart has been involved with the Commercial Vehicle Solutions Network (CVSN) “since day one,” he says, and was “one of the eight or nine guys who got together to propose joining the two associations, CFS (Council of Fleet Specialists) and NWRA (National Wheel and Rim Association).” He served as president and a trustee of the NWRA, and recently was elected as CVSN’s vice president after previously serving as secretary.
The recent announcement that CVSN will join Heavy Duty Aftermarket Week was welcome news to Stewart, as it was for many in the industry, because it consolidates resources. He currently is serving on the task force committee to define the event’s agenda.
“Traditionally, there has been more value for the distributor, and as long as the distributor is there, the manufacturers will show up,” he says. “That’s fine, but to me the value of that meeting will be providing value to both sides, and that’s what our goal is – to make it a high-level executive forum for everyone.”
Stewart was also in on the ground floor with one of the industry’s first marketing groups, VIPAR Heavy Duty, serving on the committee that formed the organization. Carolina Rim and Wheel has been an active member ever since.
“I’ve always felt that you need to be active if you want to learn things,” says Stewart. “The people I talk to at meetings are where I get a tremendous amount of information, from manufacturers as well as distributors. I’ve always felt it was in the best interests of my company and the industry to be actively involved, and I have been all along.”
All along will be 30 years this December 1. He says he got involved with Carolina Rim and Wheel through his father-in-law, John MacClements, former company president and current chairman. The company was started by his wife’s grandfather, Edward MacClements in 1926, and Stewart became president of the company in 2003.
Carolina Rim and Wheel operates six locations, its headquarters and two others in North Carolina, two in South Carolina and one in Georgia, which opened in 2000.
During his nearly three decades with the company, Stewart has seen numerous changes in nearly every area of the business.
“First, there’s a lot more distribution,” Stewart says. “That has caused everyone to work a little harder and be a lot smarter than they used to be. With the old business, you used to be able to just generate money. But that’s changed with additional competition from mergers and acquisitions, both on the manufacturer and distributor side. It’s refocused attention as to how you sell your product and how you buy your product.”
What hasn’t changed is the value the company places on its employees, a personal point of pride for Stewart.
“There are a number of things I’m proud of with this business, and probably the biggest thing is the employees. I have many long-term employees, a couple with over 40 years, a few with 30 and a lot with 20-plus years,” Stewart says. “For me, that’s a sign that you’ve got a good company and your management is working well when people stay.”
Employee longevity is invaluable as Carolina Rim and Wheel struggles, like most every other business in the industry, to find new employees.
“Our industry is a very mature industry. I think one of the biggest challenges right now is people – finding good people who are willing to spend time learning our business,” Stewart says. “I think we have an aging workforce and it’s becoming harder and harder in the world of high-tech and glamour jobs to find qualified people who are willing to learn the business.
“It’s a good business. It makes good money.”
He adds that Carolina Rim and Wheel’s 70-plus employees all make a living and that “my goal is to ensure that continues on.”
Scarcity of new employees is particularly evident when it comes to more specialized positions, such as outside salespersons and counter personnel, while finding help for the warehouse is less difficult. However, if a warehouse employee shows interest and ambition and wants to explore other areas of the company, Stewart says they will work to train the employee for other roles.
Employee empowerment is a key reason people stay with Carolina Rim and Wheel.
“I’m fairly laid back, I’m not an in-your-face manager,” Stewart says. “I let them do their job. My job is to manage the whole company, I don’t like to be managing individual departments.”
But if there is an area of the business he does enjoy being involved with, it is sales, and he still personally attends to a handful of accounts. The company has a healthy amount of municipal business with local and state governments.
“For instance, the state of North Carolina has been one of my accounts for many years, and it’s a very good account for us,” he says. “We are probably one of their largest suppliers as far as automotive and truck parts are concerned, and I go up to Raleigh (capital of North Carolina) on a regular basis because dealing with governments is always a unique thing. But if you know how to do it and you’re successful with it, it can be rewarding.”
Navigating the bureaucracy can be frustrating, and Stewart refers to an 80-page bid request on his desk.
“There’s a lot of legalese in there. If you don’t read the instructions, your bid gets thrown out; you have to read the fine print. But I’ve been doing it long enough that I pretty much know what’s going on,” he says.
While the governmental business is appreciated revenue for Carolina Rim and Wheel, Stewart says it also comes with responsibility. With inferior counterfeit products making their way into the industry, Stewart takes care to ensure his company takes the high road because, for them, the stakes are particularly high.
“I’m afraid the true problem with counterfeit parts will never come to light until there is a really bad situation,” he says. “I’m particularly worried about what happens on school buses, school fleets. We sell to a lot of them. I know that product is out there, but our company tries to buy domestic-branded products.”
While counterfeit parts, consolidation and other market dynamics pose challenges, it may take a 30-year view to keep things in a healthy perspective. Stewart describes the aftermarket as soft this year, but says that one has to expect fluctuations as a natural dynamic of the business.
“In general, I think there are plenty of good prospects for the aftermarket,” Stewart says. “The economy has been growing steadily and I think we’re just going through a slight downturn. I think the stronger distributors in the aftermarket will do well. We’ve ridden four or five strong years, so a slow year this year is just one of the expected turns.”
Fleet Brake Grows Out From Its Core Business
Expanding on its strength as a brake and suspension parts supplier has allowed Fleet Brake to offer one-stop shopping.
By Denise L. Rondini, Contributing Editor
When John Bzeta purchased Fleet Brake in Calgary, Canada from his father in 1997, the first thing he did was begin to design a new facility.
“I felt we were too small and we needed something to grow into,” he says. Bzeta thinks this was a stepping stone for where the business is today.
“Owning that facility gave us leverage to finance other expansions,” he explains. Of course, his timing didn’t hurt either. Bzeta’s taking over as president of Fleet Brake coincided with an economic recovery in the area and the ascendancy of the roll ups.
“It was a perfect storm; we were able to grow fast and effectively. Economic conditions were correct and the competition was in disarray and some of them were disappearing because of roll ups.”
Today, in addition to the Calgary headquarters, Fleet Brake has a distributorship in Edmonton, as well as operations in Winnipeg and Lethbridge.
The Edmonton location was a start up and is purely a distribution center. Bzeta explains that it is located in an oilfield-related area, which makes it difficult to find quality technicians because many are working in the oilfield.
Lethbridge, which offers parts and service, was purchased from an independent distributor. Winnipeg was purchased from Wabash National “which was shutting down its parts and service offerings in that province. We stepped in and took over,” Bezeta explains.
About six months ago, Fleet Brake purchased a service business called Oak Part Alignment, also located in Winnipeg. “They probably are the largest repair shop in the city with 30 technicians. It also has a small distribution component to it, which we are hoping to expand on,” he says.
The core of Fleet Brake’s business comes from other small repair shops and small to regional fleets. “There are regional differences between our locations. Some of our customers are agricultural, others more oilfield related, but in general our chase still is the same and encompasses general freight companies, the small repair shops serving those companies and municipalities.”
Although Fleet Brake began in 1978 as a brake and suspension parts supplier, today it is much more then that. “Brakes and suspensions are our core business, but we now are a one-stop shop for customers,” Bzeta says.
He believes that was the best way to provide the level of service that was needed, so he slowly brought on what he calls traditional fleet goods.
“By that I don’t mean just what the fleet requires to operate its business, but also what it needs to repair the units as well as items that repair shops need to operate. We get into a lot of what I call semi-automotive industrial distribution,” he says.
As a result, Fleet Brake supplies items like cleaning supplies, paper products and “whatever the customer needs to help his business since we are delivering to his area anyway.”
In Fleet Brake locations where service is available, Bzeta takes the same broad approach. “We will do everything on a tractor-trailer unit except for engines, tires and body work on the tractor,” he explains.
However, if a customer’s vehicle is in a Fleet Brake shop and it needs engine, tires or body work, Bzeta will get an outside vendor to complete the work on the unit so the customer does not have to go to three or four different places.
Fleet Brake will do all work on trailers including modifying them. “This is one of the areas we have expanded on and it is a big part of our growth,” he says.
In fact, Fleet Brake recently entered into a partnership with Wabash to become a whole-goods supplier, making them a branch dealer for Wabash trailers in Western Canada.
Providing such wide-ranging services is one of the things that Bzeta thinks sets Fleet Brake apart. “Without a doubt, we try to be an all-encompassing solution to our customers’ needs and what that means is that a lot of our competitors, or competitors/customers like the repair shops, try to focus on certain specialties. If a customer brings his unit to us, we will complete the entire unit.”
And as we already have seen, this all-encompassing attitude also is evident on the distribution side. “We supply everything that that customer needs, whether it is something for his warehouse, something for his bathrooms, something for his job or something for his drivers. It doesn’t matter. We are one of the few companies that will go and find something to meet our customer’s needs,” Bzeta reinforces.
It also is reflected in the company’s attitude toward inventory and locating products. “A lot of our competitors attempt to COSTCO their business. They will put all these products in their warehouse, but if it is not in that warehouse, that’s it. What we do is bring a product group into our warehouses, but if a customer needs something we don’t have on hand, we have all the avenues of distribution set up so we can pick up that product for that customer. That is really a distinguishing thing for us,” he says.
Another thing that sets Fleet Brake apart, according to Bzeta, is its people. He credits the management team of his partner Fred Lack; manager in Edmonton, Ken Peterson; manager in Winnipeg, Mark Sumka; and manager in Lethbridge, Randy Hoesksema, as the reason for Fleet Brake’s success. “It is not just me; it is the people surrounding me who are the reason we are successful. We stay more successful than our competitors by ensuring that our people are the best.”
Having said that, Bzeta also sees people as a challenge he faces. “Our ability to bring in people is the biggest challenge we face,” he says. “But it is not an insurmountable challenge.”
Fleet Brake has had success bringing young people into the business. “We bring them in at ground level and develop them into key managers. They learn about the business and they get excited by it.”
Bzeta admits that the aftermarket does not have a lot of sex appeal but attributes his success in attracting young talent to the fact that he sells them on their ability to have a good professional career in this industry.
Bzeta also sees the people issue as providing a great opportunity for future growth. “Without a doubt the greatest opportunity for our company is the aging population. The retirement of distributors, the retirement of customers, people exiting the business. I call it the brain drain. The brain drain in the next 10 years is going to be absolutely tremendous.”
And Bzeta believes this presents a tremendous opportunity for a smart, driven distributor who can assist fleets that have lost the person who knew everything. “It gives us the opportunity to train and assist them. That is going to be instrumental for our business. I tell my sales staff that when a fleet guy with 30 years experience retires, they need to explain to that fleet how we can help, how we can train their parts distribution people and how we can help them keep their fleet rolling.”
Franklin Truck Parts: A Family Affair
A focus on quality products – and a lot of them – has enabled family-owned Franklin Truck Parts to thrive in a challenging market.
By Derek Smith, Editor
Serving the vast and diverse southern California market through eight locations keeps Franklin Truck Parts busy. Real busy. So busy, in fact, they forgot to celebrate their 50th anniversary last year.
“To be honest, we were so busy with day-to-day operations that we overlooked it,” says Greg Franklin, president of Franklin Truck Parts, headquartered in Commerce, Calif.
It is that nose-to-the-grindstone business style that has fueled the company’s steady growth.
“We started in 1956 in the auto wrecking business with a lot of hope and six cases of brake linings,” says owner Larry Franklin, Greg’s father. “And we found out we had a lot of loyal friends that supported us, and it just worked from there. We did what the customer wanted and they advised us what to carry. It took a long time, but as we grew we carried more lines to fill in and we’re still doing it. The customers always have given us the foresight on what to carry and we’ve always focused on quality.”
If growth is any indication, the strategy works. In 1980 the company opened its second store in Walnut, its Oxnard facility in 1986 and a new main warehouse – twice the size of the previous location – in 1987. Three more stores – in Indio, Fontana and Pacoima – were opened in the 1990s, and they added one in Carson in 2000 and one in Victorville this year.
“It’s been slow and steady growth, but when we see a need to put another store in place, we do it,” says Larry. “We invest everything back into the business.”
Adds Greg, “Every time we expand our business, I’d like to think it’s best for our customers, it’s best for Franklin Truck Parts and it’s best for our future. We don’t rent anything, we own all of our own property. It’s just a good, solid foundation for what we’re doing.”
Franklin Truck Parts goes to great lengths to make sure they have what the customer wants, when they want it. The breadth and depth of their inventory is substantial and is, according to Greg and Larry, one of the key factors that set them apart from the competition.
“We carry a huge amount of inventory at all of our locations. We stock a lot of breadth and depth of inventory, multiple numbers,” says Greg. “If a repair shop sends over a couple of jobs and they’re working on an International, a Freightliner, a Kenworth, a Peterbilt all in the same day, and they send parts over from every single vehicle, we usually can cover them out of one location.”
And while Franklin Truck Parts doesn’t formally track their fill rate – they prefer to look at customer loyalty and satisfaction as their measuring stick – Greg says it’s probably in the upper 90 percent. Their inventory strategy is not unique to one location either, it is in place at all eight warehouses.
“We’ve been around, we carry a lot of obsolete stuff. We generally can make something work if it’s obsolete or we don’t have it on the shelf,” Greg says. “And because we maintain those inventory levels at all of our locations, if we don’t have it at a particular store, the way we run our delivery trucks between locations, we can have it either the same day or first thing in the morning.”
During their 51 years in business, Franklin Truck Parts has witnessed a lot of change, both in who it serves and in its supplier base. The southern California region is ethnically diverse and customers speak English, Central American dialects, Farsi and Spanish, among other languages. Greg says most dialogue is effectively done in English and Spanish, but the communication barrier does present some challenges.
Even, he adds, if the employee and customer are speaking the same language.
Because Franklin Truck Parts makes every effort to stock only premium, American-made products whenever possible, it often has to explain the cost-value equation to its customers.
“It’s an educational process,” Greg says. “We try and educate all of our customers, but sometimes it can be a challenge. We have several languages spoken here in southern California, but once customers understand the concepts behind the quality products, they generally buy the better merchandise. They will usually take the superior product at a higher price. They don’t want to break down, they don’t want to have downtime. They’d rather spend a little more money now.”
The dedication to supplying quality products and established brands is another trait that sets Franklin Truck Parts apart in their market. Greg says over the past few years there has been an influx of smaller parts stores cropping up offering inferior products.
“These small shops will appear and they start to import products, knock-offs of the brand names,” Greg says. “Franklin Truck Parts won’t buy that merchandise. We buy genuine components, but because these smaller shops’ product is so cheap – and I mean cheap in all ways – they’re going after the guy who doesn’t know any better and is just buying on price and they don’t know it’s such a poor quality product. That’s where a lot of competition is coming from.”
Other competition is coming from area dealers who are pursuing aftermarket sales more aggressively while truck sales are down.
“The dealers, due to lack of sales, are trying to get further into the aftermarket and they’re really cutting price,” Larry says. “So it makes it a lot harder to operate.”
A good deal of Franklin Truck Parts’ business is from walk-in traffic and the company has taken steps to secure and grow this opportunity. Greg says they’ve developed retail showrooms at all of their locations, ranging from 2000 to 5000 square feet.
Whether it’s knowing what to stock or how to sell it, knowledgeable, talented employees are fundamental to Franklin Truck Parts’ success. While some might expect a business run by a tight-knit family to be overly protective and control-conscious, Greg and Larry say they let their employees do their job, but they’re always available when needed.
“We give a lot of responsibility to our employees and we rely on them to fulfill their day-to-day jobs by running the business as if it were their own,” says Greg. “Our management philosophy is much like a mom-and-pop operation. Our managers run their respective locations as they choose, and if any issue or situation comes up, they can reach us. We’re always accessible. We really just try and give them guidance and let them be successful with their locations and cater to their customers’ needs.”
But, from the approximately 90 Franklin Truck Parts’ employees, Larry does single one out.
“We do have to give credit to my wife [Mollie, secretary/treasurer],” he says. “She oversees everything.”
Total Truck Parts Thrives On Being Different
Total Truck Parts has been through a lot in the past several years, but its focus on being different has helped it weather the storms.
By Denise L. Rondini, Contributing Editor
How do you survive four hurricanes in two years followed by skyrocketing real estate prices, followed by a downturn in one of your major markets?
If you are Marc Karon, president of Total Truck Parts, headquartered in West Palm Beach, FL, you address the issues head on.
When Truck Parts & Service last visited with Karon in July of 2005 when he was also a nominee for the Truck Parts Distributor of the Year, he talked about buying his business back from TransCom and future growth plans which included adding branches as well as expanding the number of service bays and adding to the retail parts display areas at existing facilities.
Unfortunately those plans got a little sidetracked by the above forces. However, Karon and the staff of Total Truck Parts pressed on and worked through the problems.
One of the things the hurricanes forced the team to do was to change they way it did business. “There was a tremendous influx of people who came in to our area to do repairs following the hurricanes, and they all needed their trucks repaired right away,” Karon explains. “We had to rationalize priorities between our existing customers and our new customers. We had to change our operation into more of a crisis management approach.”
But changing its mode of operation was not the biggest change for the company. According to Karon, between 2005 and 2006 real estate prices in south Florida doubled which meant the cost of occupancy for the buildings Total Truck Parts rented would go up dramatically. “We had to shift gears and made a conscious decision to buy all of our real estate. We could not afford to be at the mercy of landlords,” he says. “That obviously took a lot of money, money that we had planned to use for branch expansion.”
Early in 2006, Total Truck Parts purchased property for its Fort Myers branch and now is in final negotiations for property in Fort Pierce which will involve relocating the existing branch.
These investments meant that plans for shop and retail parts displays were delayed. “Shops and retail displays are absolutely vital to our organization,” Karon says.
“And that is part of the rationale behind the new facilities.”
Owning its own real estate allows Total Truck Parts to incorporate more service bays into its operations. “There are so many benefits that come from the shop, it is almost hard to list them all. Most importantly it probably is the ultimate customer service tool if you do it right. When you fix a truck correctly the customer is really happy with you, he rewards you with loyalty and price no longer becomes an issue. It is that loyalty you seek because that keeps the repeat business coming,” Karon says.
The other thing it has done is allow Total Truck Parts to take advantage of fleets that are outsourcing. “Especially in down economic conditions outsourcing becomes a bigger issue because fleets can’t afford to have mechanics so they do not have enough mechanics to do the repairs. They come to us and have us do the repairs and again this builds a link between us and that customer, a partnership.”
Karon believes that Total Truck Parts’ ability to service vehicles has helped it maintain higher margins than its competitors. “With a parts-only operation, you do not have anything to offer other than the price. We have something else beside price and that allows us to sell the same part our competitors may sell but we can do it at a higher margin,” he says.
As for parts showrooms, Karon loves them. “I think they make a lot of money for us, but they also just make the place look better. When people walk into our facilities, they look at things and pick things off the shelf. It creates a better atmosphere to buy parts in and that all translates into more customer loyalty. The customer is going to think of you first if he needs to get a part, and come to your location and that is what this is all about.”
Additional bays and retail parts showrooms are not the only things Total Truck Parts has done to improve profitability. When the South Florida construction market went into a slump, Karon and his partners (Tom Fitzpatrick, Tom Gibson and Jack Wilcosky) looked at adding product lines and expanding its customer base. “We were basically a heavy-duty truck parts company,” Karon explains. “Now we are moving into hydraulically braked trucks and that opens up a whole new market for us.” Karon ran a list of registrations and came up with 4,000 prospective customers in its market area that it does not currently sell to. “That is like moving into another lake and going fishing. It is a whole new feeding ground for us,” he says.
The move has worked well for Total Truck Parts and while its competitors are down 30 percent to 40 percent, September was the first month Karon saw a sales decline for Total Truck Parts, although he does expect to be down five percent to seven percent for the year.
In an effort to further broaden its business, Total Truck Parts partnered with Integrated Supply Network, a company that produces a catalog of products from major tool manufacturers. Karon had catalogs printed for Total Truck Parts that allow its customers to order items like latex gloves, flashlights, towels, etc. directly through the distributorship’s sales force, eliminating the need for customers to contact three or four different vendors.
Karon prides himself on the fact that Total Truck Parts not only differentiates itself from the competition, but in fact is different. “When we look at our marketplace we try to figure out what everybody else is doing and we try to go a little outside the box.”
One way he does that is through brands. “We are a brand seller. Most of our competition has gone to private labels. The nice thing about brands is that they have a slightly higher cost than the private labels.”
Karon also does not place a great deal of importance on inventory turns. “We believe in stocking depth and coverage when we take on a product line. We recently took on air conditioning for the first successful time. We had tried it in the past and it did not work. But this time when we took it on we contacted our vendor and we asked for a suggested inventory level. We wanted two lists, one for the master branch and another for the other branches. However, we put the master list at every branch. We want to make sure that when a customer comes to our door he finds the part, and that means we are going to have slightly worse inventory turnover than everyone else does, but that is a differentiator because everyone else is going in the other direction.”
Innovative thinking has helped Karon and Total Truck Parts weather some tough times, but he knows the future can hold more surprises and he has some ideas of what needs to be done so Total Truck Parts maintains its position as a market leader.
“We are going to add some more branches but they will either have to have a strategic importance such as a new industry or key market area, or they will be in response to a customer’s need,” he says.
Total Truck Parts also will continue to add shop capabilities and additional product lines which allow it to bring more vehicles into the shop and to capitalize on the medium-duty truck market.
But perhaps most significantly, Karon along with his partners are in the process of developing a succession plan that will allow Total Truck Parts employees to take over the business.
“We think this is important because our suppliers and customers need to know that Total Truck Parts is going to be around for a long time.”