20 GEARSJuly2008

PLAYING TO WIN

by Thom Tschetter

Memoirs of a Madman…Part 3

L ast summer, Rodger Bland, the managing editor of GEARS Magazine, and I were reminisc-

ing about our lengthy careers in the transmission industry. About halfway through the conversation, Rodger said, “Now I understand why so many of your ideas seem somewhat peculiar and outside of the box. I always thought you were just marching to the beat of a different drum.” That was typically polite; Rodger Bland’s way of saying, “I always thought you were a mad-man.”

He went on to suggest that I write a series of articles that deals my journey into and progress through 30+ years in the transmission industry. With that suggestion, what else could I call the series? Memoirs of a Madman was born.

Frankly, if you did miss the first two articles, you should probably look back to get up to speed and to keep things in context. We left off last month with how, in 1981, I ended up owning a transmission business as the result of a coin toss.

As an industry, in 1981, we were being challenged on several fronts. Here is an abbreviated list of the chal-lenges we were facing:• We were just learning (thanks to

Terry Greenhut) how to sell more effectively and to charge higher prices if we were going to be prof-itable and stay in business.

• But we were in the midst of a recession, and we were beginning to lose a significant percentage of business to lower priced shops or other cheaper alternatives.

• Because everyone was slow, most transmission shops were having a hard time keeping their rebuilders busy enough to justify keeping them on staff. (Many didn’t have enough work for one rebuilder, and some those that had two or more rebuilders didn’t have enough work to keep them all busy.)

• We were being killed by the advanc-ing technology of the lockups and overdrives, which, by comparison today, seems ridiculous.

• To make matters worse, because they were hurting too, the general repair shops were taking some of the transmission business away by installing wrecking yard units instead of referring the work out. (By the way, is this all sounding a little familiar?)

It was clear that, as a new business, we needed to do something different if we were going to make it. We couldn’t just be another me-too transmission shop and compete with the already established shops. The solution wasn’t apparent until we clearly defined the problem. To do that, we had to step back far enough to see the forest rather than just the trees. We decided that we would be the solution to the shops’ problems rather than trying to compete with them.

It seemed apparent that if we could provide an affordable solution to the shops’ rebuilding problem, we would have a winning idea. The idea was to be the supplier to shops that didn’t have enough work for one rebuilder or be the solution for those that occasionally

needed more units than their staff could produce. In short, we would be their “on-demand” rebuilder.

So we started selling, rebuilding and delivering units to the other shops. I hit the road as our outside salesperson, and I literally covered the entire state of Washington. Sales to dealerships, municipalities and fleets that could handle removal and installation soon followed. Many of the general repair shops even started buying our units instead of going to the wrecking yards. Business was booming!

But as history proves, the solution to every problem brings with it a whole new set of problems. As I mentioned in last month’s article, the automobile was considered to be the great solution to the air pollution problem for major cities in the early 1900s. The air pollution of that day was caused by the piles of horse manure accumulating and fermenting in the cities. How ironic is that?

Enter our new problems: In 1981, we weren’t the first independent trans-mission company to offer remanufac-tured wholesale units over the counter, but the idea wasn’t very widespread and we were one of the pioneers. We were told that it’ll never work because there were too many transmission types and variations within the types. We’d have to stock perhaps as many as 100 units to cover the spectrum of alternatives. Imagine that… 100 different units! In retrospect, I can see why the expres-sion, “the good old days” is so com-monly used; can’t you? Wouldn’t it be great to have to concern yourself with only 100 types, let alone variations?

As time progressed and the econo-

GEARS July 2008 21

my improved, things began to return to “normal” in our industry. The transmis-sion shops that had been our best and most consistent customers when they saw us as the solution to their problem began to view us as a threat rather than an ally. In a very short time, our sales began to dip.

We’d learned very early that when selling wholesale, consistent high vol-ume was the key to profitability. We had efficient systems that ensured that we had the capacity to produce more units per rebuilder per day than a rebuilder in a traditional shop environment could.

But more importantly, we’d been able to sell what we produced. We were now faced, for the first time, with a sales challenge rather than a produc-tion challenge. A rebuilt transmission is only worth scrap value until it’s sold. Production without sales is scrap!

So with our market suddenly shrinking, we had to come up with our next strategy. We knew that transmis-sion shops represented our most consis-tent sales flow. How could we get them to buy units from us again?

Winston Churchill once said that the strongest alliances result when faced with common threats. The threats that transmission shops in Washington had in common at that time were the franchised transmission shops, with their big advertising budgets, shrinking labor pool because Boeing was hiring, having to pay higher wages to get good help from the smaller pool, and keeping up with the changing technology.

In the Pacific Northwest, there’s a tire company called Les Schwab Tires. They have hundreds of outlets, great marketing, and a reputation for excel-lent customer service, fair prices, and honesty. Nearly all of their stores are independently owned, yet when you go into one of them, you get a sense the whole chain is family-owned.

Here’s what makes Les Schwab unique: You can only get their brand of tires at a Les Schwab tire store. Even if you’re a tire store, you can’t buy them directly from the Les Schwab Headquarters… you’d have to buy them from a Les Schwab store.

I looked at what Les Schwab had accomplished and decided that we could do the same thing in the trans-mission business. We already had the rebuilding center, we were already dis-tributing our transmissions throughout the state, and we had more capacity. All we needed to do was get a few trans-mission shop owners to see the value of being part of a network without giving up their independence; operate under a common name, share in advertising, buy all or most of their transmissions from us, and follow a set of procedures that would make sure that every cus-tomer gets excellent customer service, a fair price, and honesty. To better fight threats they had in common, we were able to attract an initial group of shop owners, and we were off and running.

Before we could blink, we had 14 Transmission Factory Service & Installation Centers scattered across the state. But as I stated earlier, with every problem solved there comes a whole new set of problems.