TR Footnotes FN.0110 : Page 1

TOWING&RECOVERY January 2010 Reaching thousands of industry professionals monthly Special Tow Business Edition Special Tow Business Edition By Thomas G. Dolan In these recessionary times, towers might well worry whether a bad econo- my could get even worse for them. So it's good to hear the views of several prominent towing and recovery profes- sionals who feel that while business is certainly off, even way off, things may not be quite as bad for the overall tow- ing industry as it first might appear. The economic downturn is, in vary- ing degrees, hurting most towers na- tionwide, large ones as well as small. Fair profits can be elusive for some even in good times. So a casual observ- er certainly would be justified in as- suming that towers are probably go- ing out of business left and right in alarming numbers. One could make this assumption after hearing examples of this rev- enue decline or that business failure, but it’s more likely derived from the overwhelming impact nationwide of a crashed economy. Less spending, less driving, and less business for customers add up to less business for towers. Good News & Bad Based on the opinions of the mem- bers of the industry quoted in this arti- cle, however, it seems that while busi- Volume 20, Number 9 ❘ $3.95 The times are dark for towers but are some seeing the light? is a business that is easy to get into but hard to sustain under any circum- stances. In other words, going out of busi- ness, now as in the past, may be for reasons beyond just a lousy economy. And that may be the lowdown on why towers go belly up. But back to business. Here’s what these industry experts believe it’s like out there for those who are worried but surviving, and perhaps some who are of America, “but my perception is that the towers who are going out of busi- ness are doing so for reasons unrelated to the economy. Many small operators don't understand the cost of doing business. For instance, they might find a whole lot of motor club opportuni- ties, but they [the clubs] pay well below standard rates. “I think many people get into towing because they want to work on their own and be independent. It's a nice area, are holding their own and are not as affected by the economy as some others. For instance, 50 to 75 percent in the construction business are going under.” Winer added that police tow- ing, relocation, and repossessing seem to be helping towers stay afloat. Gary Coe, who owns Retriever Tow- ing in Portland, OR, was one of those who thought the current economy See GLIMMERS, page 4 MAKE YOUR BUSINESS FRONT-PAGE NEWS Advertise HERE and get the jump on the competition! Be the first to be seen. Call 877-219-7734, ext 1 © 2010 Dominion Enterprises. All Rights Reserved. ness for most towers indeed has declined, o smar ners will not only sur but pr although per pre-r some ty could come sooner than later That bad news really nothing new is this: E in this economy when to pany o their business- es, most pr bly do so for the same basic reason they always have — towing still thriving, though jobs are TOWING&RE TOWING&RE TOWING&RE TOWING&RE TOWING&RE TOWING&RE RECOVERY January 2010 Reaching thousands of industry professionals monthly Special Tow Business Edition Sp G&RECOVERY January 2010 Reaching thousands of industry professionals monthly Special Tow Business Edition Special Tow Business Edition By Thomas G. Dolan In these recessionary times, towers might well worry whether a bad econo- my could get even worse for them. So it's good to hear the views of several prominent towing and recovery profes- sionals who feel that while business is certainly off, even way off, things may not be quite as bad for the overall tow- ing industry as it first might appear. The economic downturn is, in vary- ing degrees, hurting most towers na- tionwide, large ones as well as small. Fair profits can be elusive for some even in good times. So a casual observ- er certainly would be justified in as- suming that towers are probably go- ing out of business left and right in alarming numbers. One could make this assumption after hearing examples of this rev- enue decline or that business failure, but it’s more likely derived from the overwhelming impact nationwide of a crashed economy. Less spending, less driving, and less business for customers add up to less business for towers. Good News & Bad Based on the opinions of the mem- bers of the industry quoted in this arti- cle, however, it seems that while busi- Volume 20, Number 9 ❘ $3.95 The times are dark for towers but are some seeing the light? is a business that is easy to get into but hard to sustain under any circum- stances. In other words, going out of busi- ness, now as in the past, may be for reasons beyond just a lousy economy. And that may be the lowdown on why towers go belly up. But back to business. Here’s what these industry experts believe it’s like out there for those who are worried but surviving, and perhaps some who are of America, “but my perception is that the towers who are going out of busi- ness are doing so for reasons unrelated to the economy. Many small operators don't understand the cost of doing business. For instance, they might find a whole lot of motor club opportuni- ties, but they [the clubs] pay well below standard rates. “I think many people get into towing because they want to work on their own and be independent. It's a nice area, are holding their own and are not as affected by the economy as some others. For instance, 50 to 75 percent in the construction business are going under.” Winer added that police tow- ing, relocation, and repossessing seem to be helping towers stay afloat. Gary Coe, who owns Retriever Tow- ing in Portland, OR, was one of those who thought the current economy See GLIMMERS, page 4 MAKE YOUR BUSINESS FRONT-PAGE NEWS Advertise HERE and get the jump on the competition! Be the first to be seen. Call 877-219-7734, ext 1 © 2010 Dominion Enterprises. All Rights Reserved. ness for most towers indeed has declined, o smar ners will not only sur but pr although per pre-r some ty could come sooner than later That bad news really nothing new is this: E in this economy when to pany o their business- es, most pr bly do so for the same basic reason they always have — towing still thriving, though jobs are idea, idea, but they have to understand the iesel fuel and To tify them, and keep them with good bene- ou don't pay NG&RECOVERY January 2010 Reaching thousands of industry professionals monthly Special Tow Business Edition Special Tow Business Edition By Thomas G. Dolan In these recessionary times, towers might well worry whether a bad econo- my could get even worse for them. So it's good to hear the views of several prominent towing and recovery profes- sionals who feel that while business is certainly off, even way off, things may not be quite as bad for the overall tow- ing industry as it first might appear. The economic downturn is, in vary- ing degrees, hurting most towers na- tionwide, large ones as well as small. Fair profits can be elusive for some even in good times. So a casual observ- er certainly would be justified in as- suming that towers are probably go- ing out of business left and right in alarming numbers. One could make this assumption after hearing examples of this rev- enue decline or that business failure, but it’s more likely derived from the overwhelming impact nationwide of a crashed economy. Less spending, less driving, and less business for customers add up to less business for towers. Good News & Bad Based on the opinions of the mem- bers of the industry quoted in this arti- cle, however, it seems that while busi- Volume 20, Number 9 ❘ $3.95 The times are dark for towers but are some seeing the light? is a business that is easy to get into but hard to sustain under any circum- stances. In other words, going out of busi- ness, now as in the past, may be for reasons beyond just a lousy economy. And that may be the lowdown on why towers go belly up. But back to business. Here’s what these industry experts believe it’s like out there for those who are worried but surviving, and perhaps some who are of America, “but my perception is that the towers who are going out of busi- ness are doing so for reasons unrelated to the economy. Many small operators don't understand the cost of doing business. For instance, they might find a whole lot of motor club opportuni- ties, but they [the clubs] pay well below standard rates. “I think many people get into towing because they want to work on their own and be independent. It's a nice area, are holding their own and are not as affected by the economy as some others. For instance, 50 to 75 percent in the construction business are going under.” Winer added that police tow- ing, relocation, and repossessing seem to be helping towers stay afloat. Gary Coe, who owns Retriever Tow- ing in Portland, OR, was one of those who thought the current economy See GLIMMERS, page 4 MAKE YOUR BUSINESS FRONT-PAGE NEWS Advertise HERE and get the jump on the competition! Be the first to be seen. Call 877-219-7734, ext 1 © 2010 Dominion Enterprises. All Rights Reserved. ness for most towers indeed has declined, o smar ners will not only sur but pr although per pre-r some ty could come sooner than later That bad news really nothing new is this: E in this economy when to pany o their business- es, most pr bly do so for the same basic reason they always have — towing still thriving, though jobs are idea, but they have to understand the iesel fuel and To tify them, and keep them with good bene- ou don't pay rld- rld- , based in , IL, a company that builds ucks and equipment. orldwide’s om ut, he said, "I don't think any of our customers , at least Their business is e no start- , at hicago FOOTNOTES ® www.trfootnotes.com THE MONEY! Show Me pg 15 Towing&Recovery Footnotes® 10 Bokum Rd. Essex, CT 06426 PRST STD MAIL U.S.POSTAGE PAID Hanover,PA PERMIT 117 Joy Hallock

Glimmers Of Hope

Thomas G. Dolan

In these recessionary times, towers might well worry whether a bad economy could get even worse for them. So it's good to hear the views of several prominent towing and recovery professionals who feel that while business is certainly off, even way off, things may not be quite as bad for the overall towing industry as it first might appear.<br /> <br /> The economic downturn is, in varying degrees, hurting most towers nationwide, large ones as well as small.<br /> <br /> Fair profits can be elusive for some even in good times. So a casual observer certainly would be justified in assuming that towers are probably going out of business left and right in alarming numbers.<br /> <br /> One could make this assumption after hearing examples of this revenue decline or that business failure, but it’s more likely derived from the overwhelming impact nationwide of a crashed economy. Less spending, less driving, and less business for customers add up to less business For towers. <br /> <br /> Good News & Bad<br /> <br /> Based on the opinions of the members of the industry quoted in this article, however, it seems that while business For most towers indeed has declined, owners who are smart managers and planners will not only survive but prosper once again, although perhaps not at pre-recessionary levels for some. And relative prosperity could come sooner than later.<br /> <br /> That’s the good news. The bad news, which is really nothing new, is this: Even now, in this economy, when towing company owners lose their businesses, most probably do so for the same basic reason they a l w a y s have — towing is a business that is easy to get into but hard to sustain under any circumstances.<br /> <br /> In other words, going out of business, now as in the past, may be for reasons beyond just a lousy economy.<br /> <br /> And that may be the lowdown on why towers go belly up.<br /> <br /> But back to business. Here’s what these industry experts believe it’s like out there for those who are worried but surviving, and perhaps some who are still thriving, though jobs are down:<br /> <br /> Down,Not Out<br /> <br /> “I don't have a way of knowing for sure,” said Harriet Cooley, executive director of the Towing & Recovery Association of America, “but my perception is that the towers who are going out of business are doing so for reasons unrelated to the economy. Many small operators don't understand the cost of doing business. For instance, they might find a whole lot of motor club opportunities, but they [the clubs] pay well below standard rates.<br /> <br /> “I think many people get into towing because they want to work on their own and be independent. It's a nice idea, but they have to understand the costs of doing business. Diesel fuel and insurance rates are astronomical. To get good employees, train and certify them, and keep them with good benefits is very expensive. If you don't pay on one end, you will on another!"<br /> <br /> Pat Winer is the president of Worldwide Equipment Sales, LLC, based in Rockdale, IL, a company that builds and sells tow trucks and equipment.<br /> <br /> He acknowledged that Worldwide’s business is down 15 to 20 percent from what it was two years ago. But, he said, "I don't think any of our customers have gone out of business, at least that I know of. Their business is not great, and there are no startups, but the towers we see, at least in the Chicago Area, are holding their own and are not as affected by the economy as some others. For instance, 50 to 75 percent in the construction business are going under.” Winer added that police towing, relocation, and repossessing seem to be helping towers stay afloat.<br /> <br /> Gary Coe, who owns Retriever Towing in Portland, OR, was one of those who thought the current economy Would drive more towers out of business.<br /> <br /> “I thought we would lose 20 percent of our local towers,” Coe said, "but only three in our market have gone under. Everybody is struggling, but the result was not as drastic as I expected.”<br /> <br /> Costs & Cutbacks<br /> <br /> Coe added, however, that it's difficult for him to understand why this is.<br /> <br /> “We're the big guy in this market, but we're down 23 percent in volume, which is huge. We've had to undergo a major cutback in costs to stay in. But the smaller companies are working on a slim, slim margin anyway, so there's not as many places to cut. It's surprising to me.” Coe noted that several new-car dealerships have gone out of business, including two Lincoln dealers, several with Chrysler, and maybe half a dozen with GM. These represented a big segment of his business — he has two towing companies, one of which specializes in downtown “court tows,” where police check the cars of drivers who go to court and have them towed if they have overdue parking tickets.<br /> <br /> But that business has dropped in half because the police are ordering only half as many court tows.<br /> <br /> “It completely baffles me,” he said, how some towers do only police tows and yet remain in business. “Some of these guys don't have financial statements.<br /> <br /> Maybe they are working out of their left and right pockets. I don't know how they can last."<br /> <br /> Coe doesn't see much good on the horizon, particularly with the banks being in paralysis. “It's difficult to get trucks financed,” he said. “The West Coast is devastated in terms of truck sales. Then there's the new health bill which will tax employers who don't offer medical coverage. Many towers don't.” According to Coe, “that tax will be eight percent. How will businesses who don't make eight-percent profit pay it?”<br /> <br /> Hard But Here<br /> <br /> Mike Scott, president of Scotty's Carriage Works, Inc. in Cameron, MO, is also worried about health care costs, but at a more personal level. "I have a lot of friends — school teachers, who are, yes, getting retirement, but what they thought was a lot of money is turning out to be not so much. They are paying twice as much for health care from what it used to be.<br /> <br /> That scares me when I look ahead to my own retirement."<br /> <br /> But Scott also said that he's asked around, and found that, though times are tough, towers are surviving.<br /> <br /> “There are fewer cars to tow, and everybody I talk to said business is slow," Scott said. “There's cutbacks in this and that; dealership business is down, so are mechanical repairs. Times are hard, but everybody seems to be tightening his belt and making it.” On the other hand, there are other things that are changing, Scott said, which may help the longer-term outlook.<br /> <br /> “We're seeing more and more operator training,” he said. “Towers are becoming more computer-wise… and towing equipment has become more sophisticated, now able to be operated fully on remote control in hazardous highway situations. We're keeping our fingers crossed and hope everything gets better. We just have to weather the storm.”<br /> <br /> Leveling Effect<br /> <br /> Bob Berry, president of Berry Brothers Towing & Transport, Inc. in Oakland, CA, thinks the prolonged downturn has affected the way people live and that will have leveling effect on the industry. “When people live off the equity of their homes, which allows them to live beyond their means, and there's this excess in society, people tend to do stupid things,” said Berry. “That's how we encounter these people. Maybe they're still drinking as much booze now, but they're not driving as much, not knowing what the cost might be in insurance and jobs.<br /> <br /> “I think, quite frankly, we're going to get used to living this way and Being very careful of what we buy. In the foreseeable future there will be higher taxes, and inflation next year; it's going to cost us all. I don't think we've seen the worst. We've got to get used to living closer to the ground. We can't fly as high — there's not that big pillow of equity in our homes."<br /> <br /> Berry recently gave a talk to a group of towers in Wenatchee, WA. “Their sales are dropping 20 to 25 percent, maybe as high as 30 percent. But they're doing all right, I don't see them going out of business,” Berry said. “It's tougher for the younger guys. The lending institutions aren't going to help them get started.” Berry said his own business is down about 15 percent. “We're definitely feeling it,” he said. “Retail is our biggest work and that's fallen off, as has police work. The biggest loss is the value of vehicles on a lien. There's a big loss of what we were getting last year for this work, and what we are getting now.”<br /> <br /> Looking Ahead<br /> <br /> Glenn Landau, operations manager of Fryer's Towing Service in Daytona Beach, FL, said the “cash for clunkers” program got a lot of old vehicles off the road but, in his opinion, was not a Good idea. “The government took close to 800,000 cars off the road. This hurts young families and parents who would have bought cars for their teenagers. It hurts the used-car market, repair-shop towing, and our commercial account work."<br /> <br /> Landau said he's heard of some towing companies in his area going out business, “but I'm surprised more haven't closed down — some are down 50 percent. But actually I'm seeing more start-up companies in our area.<br /> <br /> Our volume is down about 20 percent, we've lost a lot of our accounts, but have picked up others, so for the year, it's still pretty good.” Richard Kauff, manager of Kauff's Towing, Inc. in West Palm Beach, FL, said, “There are not that many going out of business, but I can tell you the towers in our area are having an exceptionally hard time in our economy. All of the heavy duty-related work on the job site has virtually come to a stop.<br /> <br /> This is going on with the downsizing of companies in general. Rooftop companies have slowed. Cement mixers are running at 30 percent capacity. All of this has an effect on towing.” Despite this, “going forward, it's not altogether negative,” he said. “I think the bright side is when the economy does start picking up, most small businesses have to start looking forward — from this moment on.” Now's the time to plan for growth, he said, with an “overall business plan, plus an execution plan — almost like starting over. But if you've made it this far, on the top of your thinking you should be ready to start growing nicely over the next few years.” Kauff said he is not simply offering general advice here to others, but rather he is expressing the overall view of his company. “We've looked at the last three years as a virtual regrouping, reestablishing ourselves, getting our stuff together. We have had some slow times but we have gotten through them. And the turnaround is not that far away either. I believe we have hit bottom and will start going forward.<br /> <br /> And I can tell you, once the economy starts picking up, we're going to be pleased to run like rabbits!”

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