October 1994 Issue of UPS’s West Carolina BIG IDEA Magazine
In 1994, as the second largest United Parcel Service small package shipper in the Greensboro region, I was invited by UPS to come to their Charlotte offices and speak to a KORE Involvement Meeting of over 150 UPS staffers about our partnership with UPS and the outstanding service we were receiving from UPS and its impact on our customers.
I took only a copy of Our Commitment to Total Customer Satisfaction as a prompt for my talk and spoke for over 45 minutes, and, if you can believe it, received a standing ovation at the end. A copy of the magazine article follows:
SALE OF DIXIE SALES’ AUTOMOTIVE SERVICE BUSINESS IN 1992
During the early 1990’s Dixie Sales Company’s outdoor power equipment parts and accessory business was booming. The corporate offices were in the Brown’s Summit distribution center. And that’s where Ernest, Jim and Richard Starmer spent most of their time. Ernest and Jim would only go to the 327-29 Battleground Avenue Automotive Parts and Service Department when there was the rare customer issue that Clarence Martin the service manager and Jimmy Lynch, the assistant service manager could not resolve themselves. Or on periodic daily visits, to just “check on things” and make sure all was well. But the business results that had evolved over time, made the OPE division in Brown’s Summit become the “tail wagging the dog.” The OPE division required nurturing and attention because of extraordinary growth, and the automotive parts and service division was becoming more and more a distraction to the OPE side of the business.
Independent automotive service businesses like Dixie Sales Company were still strong in the early 1990’s, but we knew that domestic vehicle manufacturers were extending and strengthening their warranties in their initial response to import auto manufacturers’ huge success in improving their vehicle quality; Toyota and their Lexus division in particular. Stronger and longer domestic automotive warranties made consumers return to automotive dealerships more often and over a longer period of time, decreasing their initial visits to independent garages both in frequency and delaying their first visit by a year or two. We suspected that while business was still good, the pendulum was swinging the other way in favor of more visits to car dealers for longer warranty periods and correspondingly fewer visits to independent garages. We saw the “handwriting on the wall” and knew that we needed to give all our attention on the part of Dixie Sales’ business that we believed had potential to continue its fast growth.
We made discreet inquiries to various people and businesses that we thought might be interested in purchasing the assets of the automotive parts and service business. The person that showed the most interest was Russell Doss, at that time the assistant service manager in the DSC automotive service department. He was able to obtain a bank loan and in 1992 purchased almost all of the assets found in the building at 327-29 Battleground Ave. He also changed the name of the business at that location to Dixie Sales Company Auto Repair. The physical real estate continued to be held by Ernest and his brother Charles and heirs of Ellis Snyder and was leased to Dixie Sales Company Auto Repair.
ADDITION TO 5920 SUMMIT AVENUE DISTRIBUTION CENTER
In 1994 planning began for a warehouse and off expansion at the Brown’s Summit distribution center. Additional land next to the DSC distribution center was purchased to provide fill dirt for an addition to the rear of the existing 5920 Summit Ave building. The existing land sloped to the rear and we were going to need many dozens of truckloads of fill dirt to extend the warehouse to the rear and to build a two-story office area at the very back of the warehouse addition. Buying and trucking in the fill dirt was much more expensive than buying adjoining acreage and moving and using that dirt for infill. And we would still own the land to use for future expansion once the dirt was moved. This additional land purchase made a total of just over 12 acre’s available in current and for future use.
The warehouse addition to the south rear (long wall) of the existing warehouse was 29,200 square feet and was to be used for bulk rack parts storage and receiving. We had essentially run out of receiving area in the original 40,000 square distribution center because of growing multiple truckload receipts of parts and accessories. Built on the back of the warehouse addition was a two floor office addition totaling 18,675 square feet. One half of the upstairs was finished for purchasing, accounting, HR and management offices. The other half of the upstairs was unfinished with only metal wall studs on the exterior walls ready for wall board and insulation. The downstairs was unfinished on one side and the other side became a meeting/training room. The unfinished side upstairs is now used by accounting, and the lower unfinished side is now a retail/consumer focused call center.
The remaining open land that was purchased for fill-dirt, can hold about a 65,000 square foot warehouse/office addition with room remaining for necessary parking places that current OI zoning calls for.
Zoning and Deed Info: Zoned Office/Industrial (OI). Platt Book 88 Page 6 Deed Book 3627, Page 991 Restrictive Covenants in Effect.
1995-1996 ARLINGTON, TN AND ORLANDO, FL BRANCHES OPENED.
Arlington, TN was about 20 miles east of Memphis, TN and was close enough to make both UPS and Fed EX’s first sort in their Memphis facilities. Fed Ex primary U.S. air hub was also in Memphis. We had been looking for some time in the Memphis area for a location for a branch distribution center to help reduce small package shipping times into KY, TN, MS, AL, and even parts of WV, NC, SC, and GA. It would be a store, pick, pack and ship location only. Going west from Memphis you immediately came to the Mississippi River, and the state of Arkansas. We were looking for a shipping point that would focus on shipping to the east, north and south where our areas of responsibility were located. We found a warehouse in Arlington, TN that seemed to fit all our requirements. And we opened there in January of 1996.
Earlier in 1995, the owner of the Kawasaki parts and engine distributorship Engine Power located in Orlando, FL, had come to us with his plan to sell that part of his business and focus on his manufacturer’s rep agency and his well-drilling business. His Kawasaki area of responsibility included FL, GA, AL, MS and the Caribbean. He was also selling quite a few engines to small OEM’s in those four states. We agreed to the purchase of his Kawasaki inventory that was saleable and we would operate out of his current location by sub-leasing space in his building. Kawasaki’s engine division, based near Minneapolis, MN at the time, approved the purchase and transfer of distributor responsibilities to Dixie Sales Company. And in the fall of 1995 we purchased their Kawasaki inventory for cash, plus a good-will payment to be made over time.
Before the sale was consummated, we had approached both MTD and Frigidaire (later to be Husqvarna) about picking up their product lines for the same territories. Both manufacturers were using Radco Distributors based in Jacksonville, FL, at the time, and both said no. But shortly before the sale papers were signed, Frigidaire came to me and said they had decided to remove their product line from Radco and let Dixie Sales have it for the same territory. Now we had two major parts lines and needed additional space for both. We looked throughout the Orlando area and found that distribution centers were either high-end and expensive, or were so low-end that those buildings could not be considered. We ended up leasing a building at 9700 Satellite Blvd, near the Orlando Jet Port (airport.) Other smaller product lines followed. Volume was substantial with Kawasaki and Frigidaire Home Products (FHP).
Radco was under stress, and a few years later MTD cancelled Radco as an MTD Central Parts Distributor. Radco would shortly be bankrupt. Next MTD gave Radco’s service distributors in FL, AL, GA, and MI direct access to purchasing parts directly from MTD. They could also buy from Dixie Sales as the new Central Parts Distributor, but few did because they could brag that they were buying direct from MTD. Initially consumer calls from those states were given to Dixie Sales to handle, but shortly Florida consumer calls were taken back by MTD. MTD soon found out that most Radco service distributors were simply big dealers and were prone to parts ordering errors, placing many drop-ship orders and having perpetual credit problems. Within a few years MTD sent those service distributors back to buying from Dixie Sales, but gave the Mississippi territory to Marr Bros. even though Dixie could service it and was serving it quicker from our Memphis distribution center. And MTD kept the Florida consumer calls. It felt to us as though Dixie Sales was being punished for its success in servicing its areas of responsibility both in the South and the middle-Atlantic states.
1996
The financial impact from opening two branches within a few months of each other put great stress on Dixie Sales Company. Even though we had hired a person I considered to be our first professional manager and CFO, Laura Garrett, in 1995, we couldn't begin the financial strengthening as quickly as we needed. We found a new banking relationship in early 1996, and took all the necessary steps to help the company become financially stronger including restructuring our workforce. It took almost two years to get the company back to full strength and regain its industry leading customer service and focus. Sustained profitable growth returned in 1997.
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