Every week John McCarthy Jr. gets calls from other tire dealers who for one reason or another decide it’s time to leave the tire industry. And they want him to buy their businesses.
He takes every call seriously. Some aren’t even close to the McCarthy Tire Service Co. Inc. footprint, which currently stretches from New York to South Carolina. “We rarely act on those because we have a game plan where we want to be, and we know who in that area we would like to talk to.”
For the last 22 years he’s served as president of the tire dealership his grandfather founded in 1926 in Wilkes-Barre, Pa. In that time, he’s developed relationships with other dealers. He’s studied the competing dealers in his market. He knows what brands they sell, and whether they have succession plans or not. He knows if they’re worthwhile to consider. And over the years he’s carefully, respectfully and quietly told dealers in his market that if they’re ever interested in selling, he’d be interested in having a conversation.
“Building those relationships is a process that I’ve worked — that we’ve worked on — so they call us when the time is right.”
It’s clear John McCarthy’s strategy has worked. Under his watch, McCarthy Tire Service has grown into one of the largest commercial tire dealerships in the country. Through both organic and acquired growth, more than 1,200 people have been added to the payroll, and sales have exploded by more than 3,500%. And the company isn’t going to stop there.
He labels himself a thinker and a doer. We call him our 2019 Tire Dealer of the Year.
’A fire in his gut’
This summer McCarthy Tire Service bought 16 GCR Tires & Service properties, including three retread plants, from Bridgestone Corp. The locations span three states, and it’s the biggest deal the tire dealership had ever undertaken. It gives the company 65 service centers, plus 10 retread shops.
“We had a huge gap in southern Virginia,” McCarthy says. “We’ve been trying to buy these GCR stores, which are the old White Tire, for 10 to 15 years. They have a very strong presence in that market. We had a nice location and some nice customers, but they had the majority of the business. That was one area that we really needed to fill in; GCR was the perfect fit.”
With every acquisition, there’s a crown jewel of sorts. It might be filling in a gap in the footprint or expanding emergency roadside service to an area where an existing customer is already doing business. Growing alongside major traffic routes makes sense because fleet customers are traveling on the major thoroughfares. Sometimes, “it’s just a good area that we haven’t gotten into yet.”
And the plan is definitely to continue to grow, he says. “The immediate future is digesting the acquisitions that we just made. Once that’s done, we know where we want to go next. We’ll continue to grow. That’s our goal — to continue to grow in our market area.”
His sister, Katie McCarthy Lambert, says her brother is at his best when there’s a good acquisition prospect in front of him. He manages every inquiry himself and turns them over to the team to examine. “His opportunities are immense and when an acquisition is ripe and he sees it, he has a fire in his gut and he wants that. When the opportunity is there and we’re going for it, he leads this team.” Lambert is the company’s chief financial officer, and she’s worked alongside her brother for 30-plus years. They’re the third generation of tire dealers in the McCarthy family, and are facing a consolidation climate in the industry unlike anything their father or grandfather could have imagined. It doesn’t seem to be waning.
“I think the acquisition opportunities are going to continue,” she says. “It’s hard to invest in equipment, in infrastructure, in buildings, in people, and you’ve got insurance costs, you’ve got health care costs. It’s not easy being a little guy in any industry anymore.”
But there also are risks of growing too quickly, she says.
“You have to watch your appetite and you have to make sure that the home base and existing stores are financially stable and that your people are comfortable. We worry that our people would get fearful (and think), ‘What about us?’”
Lambert says it’s essential that existing employees know they’re just as important as new employees coming on board from an acquisition — “because there’s room for everybody.”
Retail in a commercial-focused world
McCarthy Tire Service has served both retail and commercial tire customers since its start in 1926, but it’s been heavily focused on the commercial business for decades. Prioritizing medium truck, industrial, off-the-road tires and all-things commercial in the early 1990s is something John McCarthy considers one of the best decisions of his life. Still, there’s a place for retail. “We have a nice retail business right now. It’s a good, profitable area for us, and we certainly don’t want to vacate the retail business. If future commercial acquisitions have retail, we’ll keep that retail business,” he says. “However, we will not go out and buy a retail-only business.”
Retail represents less than 5% of the company’s total sales. McCarthy Tire Service has 21 stores that offer retail service and a mix of commercial service. There are six retail-only locations. But the retail tire environment is challenging, as private equity companies have moved into the landscape. Major Wall Street companies have called and offered to buy McCarthy’s retail business.
“We’re not interested,” he says. “Private equity money puts a lot of pressure on a company for profit and growth. Sometimes, employees and customers get caught in the middle.”
Jordan Davis is assistant manager of the company’s flagship retail location in its hometown of Wilkes-Barre. He’s worked for the company for 22 years and “only done retail.” But he says that’s never made him feel insignificant. “I know it’s a small portion of the business, but we never once felt like it was just a tagalong.”
Guy Westerholm, manager of that same retail store, feels the same way.
“I think we play an important part, especially when it comes to fleet owners. They bring their cars to me, so I get to take care of the bosses of our fleet customers. I feel we’re important to the company because we provide that service, and for what we do for our everyday customers.”
One stop for fleets
The majority of McCarthy Tire Service’s business is tied to medium truck. For years it was all truck tires, both new sales and retreading, but the company has branched out to offer truck mechanical repairs in their facilities and through mobile services. First came front end alignments and three-axle alignments. It evolved into front end work and then brakes. Each step of the way, there was demand. “We realized there was a need out there,” McCarthy says. “If you try to get service at a truck dealership, they might tell you it’s a three- or four-week wait to get work done. We’re going to say, ‘Bring it in tomorrow and we’ll get right on it.’” The service started at the home base in Wilkes-Barre, and now diesel mechanic work is offered at 17 locations.
From there, it grew to mobile, and again started with alignments. Fleet customers liked it because their drivers didn’t have to bring the trucks to the tire dealer, and the alignments could be done in the customer’s off-hours, either at night or on the weekends. The company prefers to do multiple alignments in one visit, and often does two to five at a time. McCarthy Tire Service also offers some off-site mechanical work.
“We did buy two companies to help us grow in that segment, one in Wilkes-Barre and another in Manassas, Va. As our customers outsource more, that business has a great potential for growth. It’s kind of like one-stop shopping.”
Next came trailer repair. The McCarthy fleet includes 20 mobile mechanical trucks for things like federal inspections, brake work and lights.
“It’s become a very important part of our business. It’s another value-added service that we give our customers,” he says.
Just like retail tire dealers have added mechanical repairs to boost profits and offset lower margins on tires, commercial tire dealers are expanding services for the same reason. “Profitability on commercial business is low, especially as leasing companies get bigger. Obviously our profits will shrink when doing business with larger customers, so we’ve got to find other avenues.”
At the same time, fleet customers are looking to outsource more of the mechanical work they used to perform in-house. “How could we get into the mechanical business when it’s probably cheaper for customers to hire their own mechanic? It’s because they can’t find the people to staff their facilities.”
From an operations perspective, Chief Operating Officer Joe Doyle sees it as a classic case of vertical integration. “We take the approach that we will fix or manage anything that’s on four wheels, six wheels or however many wheels there are. We want to do anything from the passenger and light truck tire to the industrial forklift. We don’t want to walk by a vehicle that we don’t work on or service.”
Tariffs present an opportunity
On the tire side, the ups and downs of tariffs on medium truck tires from China have created a lot of angst in the industry, and McCarthy says it’s a topic his team talks about often. “For us, we look at it as a positive. We probably don’t sell as many third- and fourth-tier products as other people do because we really push retreads, and we really push a quality casing. We want to sell a quality casing so that when the tire wears out, we can either retread it for the customer we sold it to, or we’ll give them a casing credit and then retread it as a cap and casing.
“Although there is a certain market out there for third- and fourth-tier product, and it’s a profitable line, we’d rather sell a second-tier product with a good casing that can be retreaded.”
And on the drive and trailer positions, he promotes a cap and casing. “Bandag has come out with a new program this year, MaxTread, that pushes a dealer to sell more cap and casings.”
Here’s the introduction to MaxTread on the Bandag website: “With MaxTread, you are guaranteed a virgin casing of a recognizable brand.”
McCarthy says, “In our case it’s been successful. We’ve made three times as many cap and casings this year as in the past, and they are popular with our customers.”
Largest plant ‘in the universe’
Already the eighth largest retreader on Modern Tire Dealer’s list of the Top 100 Retreaders in the U.S., McCarthy Tire Service added to its capabilities with the acquisition of three plants from Bridgestone’s GCR Tires & Service business this summer. It has 10 retread plants in all. But the three new plants are no match in production to the retreading facility in the company’s hometown of Wilkes-Barre. Bridgestone officially touts it as the largest Bandag retread plant in North America. It contains two production lines: one is for medium truck tires, while the other is dedicated to wide-base tires and tires that require more-involved repairs, such as waste load tires. Combined, the plant has the capacity to retread 1,000 truck tires a day. It’s running about 850 truck tires a day, and operating 23 hours a day, five days a week.
Andy Kopko manages the retread plant, and points to a plaque hanging on the wall that Bridgestone presented to McCarthy Tire Service commemorating the day of its grand opening in October 2016. Bridgestone calls it the largest Bandag retread plant “in the universe.”
The plant provides tires for 18 McCarthy stores, including some of the company’s biggest fleet customers. “Penske and Ryder are two bread and butter customers of ours,” Kopko says.
They, along with UPS, are McCarthy Tire Service’s three largest customers.
Kopko says the plant has a failure rate of 0.5%, well below the benchmark of 0.7% the company has promised to Bridgestone. He attributes that success to the team’s thorough inspection process, which begins at the front door and continues after repaired and retreaded tires emerge from the chamber. In the middle, each tire is tested using shearography for a laser look at what’s not apparent by sight or touch. The plant is located inside a 75,000 square-foot warehouse that was retrofitted for production. Kopko oversees production and the 85 employees who work on the lines, plus five more who focus on maintenance at the plant. He started at the plant four years ago — as the janitor. He moved into quality control and was promoted to plant manager about a year-and-a-half ago.
“I would much rather promote from within,” says McCarthy. “He’s a success story. He knew nothing about retreading. He’s not an engineer. Now, he is a manager. If you walk through different parts of our business you will find great success stories like that.”
Coaching the team
In 1985, the year before McCarthy graduated from college and officially joined the family business, McCarthy Tire Service was made up of five stores, which rung up $11 million in sales, with 104 employees on the $1.4 million payroll. The company now has 65 service locations and more than $400 million in sales. With the latest acquisition of 16 GCR locations, McCarthy Tire Service employs more than 1,300 people. In 2018 payroll was just shy of $60 million.
Even with that massive portfolio, McCarthy says the people are the company’s greatest asset.
“I can’t stress enough the importance of the team that we’ve built here, right down to the service techs and the people in the warehouse,” he says. “The way that I look at it, the people we work with make us different from anywhere else. They care. The hours they put in, the quality of work they put in, they’re just great people. They make my job a lot easier.”
His language there is intentional. In hours of interviews, he never once talked about people working for him, or people working for his family business. He works with them. They work together. They are a team. “That changed many years ago,” he says. “I’d love to not say employees anymore. I just think it’s not the right characterization.”
An avid college sports fan, he relates his job to that of a coach.
“I read something that said the average millennial has 12 jobs before the age of 35. It’s rare for people my age to jump. Our generation believed that the least number of jobs you had, the better. We need to find ways to motivate people. Offer them job clarity. Do they have a job description that they feel is important? They ask, ‘How do I fit in?’ They demand ongoing feedback.
“Before you were the principal and you had to crack the whip. Now, you’re the coach and you give them enthusiasm and positive reinforcement for them to keep going. They get bored quickly. If you’re not keeping them engaged, you’re going to have issues.”
But it turns out the demands of millennials are good strategies for the entire workforce. The company is focusing on work-life balance so its employees can manage work alongside having a social life and having time to exercise. McCarthy Tire Service has increased its hourly pay rates and increased commission programs for its technicians.
The benefits package includes Blue Cross and Blue Shield health insurance, plus a 401(k), sick days, short-term disability insurance and paid vacation. There are bonus programs and recognition for an employee’s years of service, plus an incentive to help bring more people into the business. A worker can earn $500 if they refer a new employee to the company who stays on the job for six months.
McCarthy says it all goes back to how his father did business.
“When we were a smaller company, he would hand out every paycheck. When we had five stores and it was bonus time at Christmas, he would go to every store and hand each teammate their bonus check. You get that one-on-one touch with your coworkers.
“People want positive reinforcement. If you’re around talking to your techs, talking to your mechanics, talking to your warehouse people and you let them know they’re appreciated and you’re happy that they’re here, it goes far.”
With 1,300 employees, he can’t personally deliver checks anymore. But he tries to do as his father did.
“I travel a lot. We do quarterly reviews. Joe Doyle and I go around and we get in front of every store manager once a quarter. And we move those quarterly meetings around so we’re not just seeing the managers. We’re trying to see everybody in the store. I think you’ve got to have that personal touch.”
Managing family and business
John McCarthy learned the tire business from his father, John “Jack” McCarthy Sr., who had inherited it from his father, Joseph McCarthy. And now John and his sister are leading the way for the family’s fourth generation. His interests led him to sales, and she loves numbers and joined the finance department. But neither of them started at the top.
The McCarthy men have all worked in every facet of the business — in the warehouse, in the retread shop, and in both the commercial and retail operations. Lambert says the women have been spared shifts in the retread plants, but she’s done time at the retail counter, in back office operations and in the car wash. In the 1970s and early 1980s she used to ride her bike to and from the car wash, and remembers she wasn’t allowed to keep any tips for herself. Tips went in the tip jar and were shared with the whole team. “He taught us about people, and about how to respect people,” Lambert says of her father, who died in January 2015 at the age of 79. “The passion for the business came from him. He told us exactly what to do and how to treat people, whether they’re the customer or an employee.”
She has a portrait of her father in her office, but it doesn’t hang on the wall. The frame sits on the floor, propped up against a wall so she can see it from her desk. She looks at it every day, and admits she often talks to it too, seeking his advice.
The oldest of Jack and CeCe McCarthy’s children, Mary Ellen Horn, never joined the family business, though she remains an owner with her siblings. (But her husband, Neil, wears a company shirt to work; he’s vice president of operations.)
Lambert, the middle child, says, “I always knew I was going to come back here.” After earning her degree, she worked in public accounting for a couple years and planned to stay at that firm longer, but one of McCarthy Tire Service’s bookkeepers got sick and needed time off. Lambert’s dad told her to “wrap it up and get back here.” So she did.
“When you’re in a family business it’s talked about at dinner, its talked about on family vacation, it’s talked about when sitting around the pool on a summer afternoon. It’s just talked about,” she says. “We used to laugh when the attorney would say, ‘when did you hold that corporate meeting?’ Probably when dad was shaving in the bathroom. That’s just what family businesses are about. You always have the opportunity to interact.”
Within a year of her joining the company, her brother followed — three weeks after earning his degree in 1986. He started in commercial sales. She was the controller. They were both in their 20s. In 1997 McCarthy was named president and Lambert was promoted to chief financial officer. Their dad remained on the job and became CEO.
“He didn’t put the two of us in the same thing together,” she says, happily calling herself her brother’s sidekick. “The two had to meld, and my father knew that John couldn’t do it all himself. He needed support.”
Are they competitive? It depends on the situation. Cornhole tournament? Yes. March Madness bracket contest? Definitely. But at work, there’s no competition.
“There’s no need. We’re too different,” Lambert says. “He has what he’s in charge of, I have this. He expects me to do my part of it, and I expect him to do his. I have the confidence that if we’re going out to bid for something he went in with our best pricing. I know he’s not going to foul that up, and I know we’re going to make money on it. We’re always equals. We’ve literally always been by each other’s side.
“We’ve been blessed. Being in a family business, being in control of your own destiny, knowing where your next day is going because you’re controlling it, that’s a blessing.
Granted, it has headaches and you put your head down on the pillow at night and go ‘whoa, I’ve got a lot on my plate.’ But it’s also a blessing that you’ve got this opportunity to do this. And that’s what we tell our people. We will always look out for our people. Decisions that are made will always be made with their best interest in mind.
“It would be easy to say, ‘let’s sell.’ But then what are we going to do? I’m not going to sit at home. He’s not going to sit at home. So we’re going to work and now our next generation is here, and it’s even more exciting. Now we have even more passion. The things we do now we’re doing so we can hand it off to the next generation.”
Doyle has a unique vantage point to the brother-sister dynamics. He joined the company 10 years ago but has been on the sidelines for decades. He and McCarthy have been best friends since they were in the ninth grade. Lambert remembers her mother telling her to drive John and his friend Joe to the mall, or to the local pizza shop. She’d drive a couple blocks away from the house and then kick them both out of the car and make them walk.
Funny thing is, Doyle’s background is also in finance, so he and Lambert view things through similar lenses.
“If there’s any competition, it’s unified competition of what they want to do as a company,” Doyle says.
That doesn’t mean the siblings don’t sometimes disagree. “We’re both educated. We both have an opinion, and there are times we’re on different sides of the fence,” Lambert says. “I think we learned from our father that you have to respect one another’s opinion. Nobody ever says this is the way it is. You sit and talk it out and figure out the right way to go. Sometimes you sleep on it and talk about it again. Jointly you end up making a decision and you have other people involved in the executive team.
“(John) always says ‘I have one vote. He doesn’t have the ultimate vote.”
He does lead the company’s five-person executive team, which includes Lambert and her husband, Gary Lambert Sr., vice president. Another brother-in-law, Horn, and Doyle round out the five. The team is yet another reminder of the family leadership in McCarthy Tire Service. They meet monthly and create and manage the company’s one-year, five-year and 10-year plans. Each has a role during acquisitions, on top of their day-to-day duties. Together these five people embody the company culture, which embraces family and a close-knit, team environment.
The culture is evident everywhere, even in the midst of interviews. Lambert’s cell phone rattles on her desk. It’s a text message from the head of payroll, who is out of the office because she’s just become a grandma for the first time. Lambert immediately responds to the message. She can’t imagine an employee not sharing that kind of news with the team. “You share the highs and lows.”
Passing on the family business
McCarthy, himself a third-generation tire dealer, often refers to a statistic he once read: Only 3% of family businesses survive long enough to be passed on to the fourth generation. That figure can be credited to Joseph Astrachan, a researcher, author and speaker with decades of experience studying family businesses. Astrachan says 12% of family-owned businesses are viable into the third generation.
Between McCarthy and his two sisters, they’re the parents of seven. Six members of the fourth generation are at work at McCarthy Tire Service.
How is his family’s business part of that elite group? McCarthy gives the credit to his parents. “My father taught us at a young age that if you want to come into this business, you’re going to work.”
He rattles off the rest as if his father is still whispering the words into his ear:
“You’re not going to arrive at 9 a.m. You’re not going to leave at 2. You’re not going to take the perks out of the business and not put everything back into it. If you want to work in the business, I’ll give you a great opportunity.”
Lambert learned from her father, too. “He would be the first one here and the last one to leave, which is what he ingrained in all of us, and it’s what we’re ingraining into our future generation.”
As the members of the fourth generation were heading to college, McCarthy and Lambert sat down with each of them to figure out what they wanted to do, and what their interests were. And then they talked about where the company had needs. He says, “We didn’t tell them where we wanted them to go; they were able to pick their own path. It really could have gone a different path, but it didn’t. It all fit into place. I’m just going to say it’s luck, but it’s worked out very well.”
Two earned degrees in accounting, and one of those accountants went on to law school. Another studied human resources. Three more studied business and marketing. And as they’ve come on board at the company, each has found his or her own path.
Meet ‘the fourth gen’
As they describe it, it was probably destiny that the fourth generation will continue the family business. John McCarthy’s son, John McCarthy III, says when they were children, he and his cousins used to gather at the family’s lake house on Harveys Lake, “and our cousin Meghan would literally set up McCarthy Tire in the basement.” (The irony here is that Meghan is the lone cousin not working in the family business. She studied education, became a teacher, and now is a stay-at-home mom.)
Gary Lambert Jr. says, “Instead of playing house we were going to play McCarthy Tire.” They laugh as they think about it now. Mary Kate Henry says, “It was really weird we would do that. We would set up a coffee table and pull phones from all around the house, and we’d get the phone book and pen and paper. We actually picked people that worked here and said, ‘we’re going to be on the front counter.’”
As each cousin turned 13, they got their first official jobs in the company. Lambert and Daniel Horn usually worked together. They unloaded trailers in the warehouse and loaded payables boxes onto the trucks before they were old enough to drive.
Horn says, “We were pumping gas and then we got a promotion and we got to change tires, and then we got another promotion and were able to work in the warehouse. We were able to go through and learn every type of business. That was something our grandfather taught our parents. You can’t expect someone to do a job if you don’t know how to do it yourself. We worked that way through high school.”
Lambert says they later worked in truck service and the retail bays. They did fleet surveys and went out on a service truck to learn how a service call is done. “The OTR surveys were always the fun ones. You wear your hard hat and safety vest, but it gave us a little taste.”
Horn knew he wanted to go into sales. He spent time with sales reps and sales managers to learn, and then worked a couple years as a route sales representative in Hazelton, Pa. Then he moved on to sales manager. About a year ago he was named director of sales. John McCarthy III also works in sales. He’s a regional sales manager in the Philadelphia market.
Lambert prefers to work behind the scenes. He entered regional operations via store management when he joined the company nine years ago. He oversees multiple departments and is director of purchasing, inventory and information technology.
After spending about 18 months working in human resources at another company, Henry moved into the same department at McCarthy Tire Service. After six years, she’s the HR manager.
Colleen Doyle went to law school and then spent six years working as a commercial litigator. She joined the family business three years ago and is general counsel.
Tim Lambert is the newest fourth generation family member to enter the business. Similar to his mother’s path, he worked in public accounting for two-and-a-half years in Philadelphia before returning to Wilkes-Barre two years ago to enter the business. He’s a senior accountant.
Planning for the future
Just like the generation before them, the “fourth gen” as they’re called sees how their pieces of the business fit the puzzle. Henry says, “If we didn’t work together, we wouldn’t be where we are now and we wouldn’t be able to grow. So we know we need to work together to grow this company the way our grandfather taught us.”
For this family of sports fans, it’s only natural to use this analogy. John McCarthy III says, “It’s not golf; it’s basketball. It’s a team.”
They all talk about turning to one another to pick each other’s brains to come up with solutions to problems. They all grew up within five miles of each other and say they consider themselves more like brothers and sisters than cousins. Their banter across a board room table is completely natural, and they say it’s always like this. It feels like a family dinner, except there’s no food.
Make no mistake, they are hungry. And they’re already influencing the future of McCarthy Tire Service. Horn points to technology as an example. “There is a gap between what you’ve done forever and what works and what doesn’t. I think we’ve brought a different approach whether it’s tracking representatives or expense payments.” Gary Lambert Jr. says they’ve established key performance indicators (KPIs) across the board and researched industry best practices. “We want to be the dealer that other people say ‘we want to be like that.’”
They recognize that the size of the company they’ve joined is vastly different than the one the previous generation inherited. Compared to the mid-1980s when their parents joined the business, McCarthy Tire Service’s footprint has exploded and includes 13 times as many locations.
“I think they were almost too hands on, and it got to the point where you would start to lose a little bit and you couldn’t keep track of everything,” Horn says of his aunt and uncle. Since then, the company has “put a lot of really good people in the right positions who we trust to operate this as if it’s their own business, which allows us to do things a little more strategically and work on special projects because we don’t get tied up as much in the issues that come up day-to-day. It’s a good way to steer the company in a new direction.”
Each of them has had a hand in the company’s latest acquisition from Bridgestone. Doyle has prepared, reviewed and filed the legal papers. Henry, Horn and Gary Lambert Sr. have all traveled to the new locations to work with the acquired teammates. Because the deal was finalized in three waves, Tim Lambert and John McCarthy III have spent multiple weekends on site doing inventory and integrating McCarthy’s computer systems at the time of transition.
For Colleen Doyle, this was her third acquisition in the three years since she joined the company, and it was “by far the biggest and by far the smoothest because everyone was able to stay in their lane and play their role while still sort of monitoring what everyone else was doing.”
In lots of ways, they see their most important job is to be visible and accessible to employees. Gary Lambert Jr. says, “Our biggest thing is we want to be in front of everybody. I want to talk to you. I want to see how life is going. I want to know how your family is. I want to hear your issues, and not just over the phone or over conference call or video chat.” A couple weeks earlier he and Horn visited more than a half dozen stores over a two-and-a-half-day stretch.
Henry estimates she’s visited 85% of the company’s locations, which span from the Carolinas to New York. “We still feel like a family company even though we’re growing. In every store they would say they’ve at least met some of us.”
And it’s been apparent in some acquired locations that personnel in the new stores aren’t accustomed to a hands-on family presence. So they tell those new employees that they do their best to visit locations as much as possible and that employees should call them when they need them.
It’s clear those are genuine sentiments. The “fourth gen” admits its hard for them not to talk about work when they’re together. Tim Lambert says, “I think we made it 15 minutes last year at Christmas before someone mentioned something about business.”
And, for the record, they’re already grooming the fifth generation of McCarthys to join the tire industry. There are nine members of that generation, with the 10th due in October. They range in age from 8 to newborn, and yes, the newborn has been in the office.
The people problem
Even having two generations of McCarthys at work in the business, the family depends on its workforce to serve customers every day of the week. And like other tire dealerships and automotive businesses all across the country, finding, hiring and keeping good people is a huge problem. The “fourth gen” agreed it was the biggest challenge for the future. Three years ago McCarthy Tire Service hired its first full-time recruiter, and Julie Fumanti took on the task 10 months ago. She tracks every vacancy, but also is working to build the company’s internship and co-op programs.
At the high school level, automotive students in the vocational program can spend half their day at school in the classroom and the other half at McCarthy Tire Service. There are options for juniors and seniors interested in diesel or automotive service, and when they graduate, they can earn full-time employment. Fumanti wanted a structured program, so school administrators have created a curriculum and syllabus, and she matches their work with what they need to graduate. Stores in Baltimore, Md., and Lancaster, Pa., are working to offer the same program in their markets.
The company also is adding internships for college students at Johnson College of Technology in Scranton, Pa. There will be programs for both diesel and automotive service, with the option for permanent placement after graduation. That program is just getting off the ground, but there are spots for at least three students, including one at the McCarthy Tire Service headquarters in Wilkes-Barre, where Fumanti envisions a student rotating through both diesel and automotive bays, plus additional time learning how to work with customers at the counter.
“If we can nurture them when they’re young, and they form an understanding of McCarthy Tire Service, they’ll see it’s a great family and a great company. I push that you’re able to grow with the company. We have all these locations. If you want to transfer down south, we give you that opportunity to move around within the company. We show them the door is always open.”
Another way to open the door is by showing young people what the company has to offer. Fumanti takes high school vocational students on tours of the local retread plant “because not everyone wants to go to college.”
For those who are college bound, the company has expanded its corporate internship program, too. During the last school year and summer nine students learned about marketing, human resources, legal, accounting and information technology while supporting the company’s daily operations. And these are not coffee-fetching, lunch-delivering internships. They’ve worked on the employee handbook. They’ve helped onboard new employees. They’ve set up computer systems for new stores.
They’ve also brought unmistakable energy to the home office, says Carter, who without the help of interns is a one-woman marketing department.
“These are young people with a good work ethic. They show up early to clock in, do whatever you ask them to do. They always have a good attitude, a bright disposition. I know there are slackers out there, but there were slackers in my generation as well.”
Five years ago the company created a management training program for new college graduates. John McCarthy says originally the goal was to train the person for three to six months and then send them to wherever the company had a need. He admits that backfired, because moving someone from northeastern Pennsylvania to Buffalo, N.Y., for example, forces the employee into a new geography without any support structure of family or friends. Despite that, they’ve had three people go through the program who are doing “fantastic.” Each one has been with the company for three or four years.
Service is here to stay As a commercial-focused tire dealership, McCarthy Tire Service rarely operates on an 8-to-5 schedule. Its customers work all day and need service when they’re on the road or job site. But they also need equipment repairs, alignments, inspections and tires in their off hours, which means the McCarthy team really has no downtime.
And that, of course, adds another complication to the already sticky problem of finding good employees. Daniel Horn says, “When hiring we are very up-front and open with them, we tell them the expectations. It’s not an 8-to-5-type job. There are going to be long nights. There are nights you’re going to be home on time or home early. There will be weekends you’ll be away and weekends you’ll be home. But there is no cookie cutter recipe to say, ‘Here’s your job, here are your hours, here’s what you’re going to do.’ If you’re not up-front they’re just going to leave and say, ‘This isn’t what I expected.’”
The demands of the job are intense, but meeting and exceeding the expectations of customers is how McCarthy Tire Service believes it stands out from the competition. The team follows the example of its leader.
Working with customers is where her brother really shines, Lambert says. Their offices have been next door to each other for decades, and as a result she can hear him on the phone talking to customers.
“His customers are like the love of his life. There isn’t anything he wouldn’t do for a customer. If he needs to be in the Carolinas, or in New York to meet somebody, no matter what his schedule is, personal or not, he changes it. Whatever the customer needs is where he goes. He’s the same way with his people.”
She’s also seen him reroute trips and leave family vacations early to meet with someone. His cell phone is rarely out of reach, and even on vacation he checks it hourly. He can’t stand to have unread emails in his inbox.
“It’s a customer-oriented business, it’s service oriented. You’ve got to be there,” she says. “He still has the passion for the customer, the passion for the service.”
And while the retail tire world is obsessed with online sales, that fever hasn’t spread into commercial tires. Lambert doesn’t think it ever will.
“When you look at the commercial tire industry, somebody has to go out and deliver these tires and somebody has to go out and fix that truck that’s broken down on the side of the road. It has to be physically done. You can’t see an OTR tire flying through the air. And even if it did, who’s putting it on? You have to have a tech who’s equipped to do that. I can’t see that business going away.
“It’s just like when your sink clogs, you need a plumber. I read about all the innovations, but the last piece of it is that guy touching the tire, and I don’t see that going away; I can only see it growing because all those trucks delivering what we bought online need tires.”
McCarthy Tire Service’s truck and OTR tire customers have so much technology at their fingertips. They can monitor tire pressure from the cab of a loader. They have databases that show them the status of their tire casings and retreads. They calculate the cost per mile, or per hour, down to the penny. Is there a tipping point when a fleet says it only needs to order tires from the dealer because it has all the information it needs to manage its tires? “I don’t see that,” John McCarthy says. “I think it’s just the opposite. I think there’s much more opportunity out there for us to help keep their fleet up and running.”
A recent report from the sales team made his point. When McCarthy Tire Service got the contract to work with the Port of Savannah, the company was told it was a one year-bid with a two-year option — and it shouldn’t count on getting the option.
“We went in and showed what we could do with our fleet inspections. Three years later the customer will tell us that tires used to be one of the top things he dealt with every day, but ‘I don’t do any of it. I rely on you because I can get all the information.’ People want us to do the work.
“Technology is helping us. They can see their tire expenses. If they drove a million miles this year and a million miles last year, and the cost was three cents last year and it’s a penny-and-a-half this year, then they’re happy.”
Offering more than tire expertise
McCarthy Tire Service does $80 million in OTR tire business a year. It’s a specialty business, and it’s an expensive operation. Boom trucks cost $300,000 each; the McCarthy fleet includes 130 of them. The company has more than 200 earthmover tire technicians, managers and sales representatives certified as Mine Safety and Health Administration (MSHA) Part 48, for underground mining and surface mining of coal and some metals. Others also have MSHA Part 46 certification, which covers the aggregate industry.
“We have two OTR trainers that do nothing but train our techs for off-the-road work,” says John McCarthy. “We’re the only commercial tire dealer to have two full-time Advanced TIA and Michelin-certified Level 400 trainers on staff.” One of those trainers is Mark Shimko. When he earned his 400-Level Earthmover instructor certification from the Tire Industry Association in 2017, he was one of only eight in the world to do so. Others have since joined the elite club; TIA says there are 26 who have the certification.
Russ Devens, the director of safety and risk management for McCarthy Tire Service, says Shimko’s expertise is second to none. “When somebody wants to know about OTR safety, he’s the guy to call.”
Before adding the latest GCR business to the portfolio, McCarthy Tire Service handled 450 quarries in its market area. “It’s not just selling the tire or doing the service, it’s the tire tracking,” says McCarthy. “We use Bridgestone’s TreadStat system. We feel it’s the best system out there. We have a number of full-time people doing surveys and inputting data. It’s just so important to the customer to be able to go online and see the condition of their fleet.”
When a unit goes down, the McCarthy team can see which unit, and which tire needs replaced. They instantly know what kind and size of tire needs to be brought to the site.
“We can budget and forecast when tires are going to wear out. Customers will come to us and ask, ‘What am I going to need for the next year?’ We put budgets together for them. Because the OTR tire supply has been so short, we can go to Bridgestone or Michelin at that point and tell them we’re going to need this specific tire this month. We’re going to need this many tires this month. Not a lot of companies can do that. We have really invested in this service, and it’s invaluable to our customers.”
Up until 2015 McCarthy Tire Service produced OTR retreads at a plant in Somerset, Pa. But the company closed that plant after buying Ragan Tire Group LLC. That purchase beefed up the dealer’s OTR presence in the Carolinas and Georgia, adding four locations in South Carolina and one in Georgia. But the deal also allowed the Ragan family to focus solely on retreading through its separate company, RDH Tire and Retread Co. Since then, McCarthy Tire Service has sourced its OTR retreads from RDH.
On OTR work sites, the McCarthy team provides more than tires.
“We do site surveys for our customers where we talk about the grades and conditions of their haul roads. We’ll have toolbox talks and we’ll meet with the drivers before their shifts start to give them tire tips — what to do, what not to do, what to look for. ‘If you see a boulder in the middle of the road, the idea is not to run over it and try to crush it. Call the grader man,’ John McCarthy says.
“We’ll analyze load sites — how a loader moves when it’s digging into a pile, backing up and loading a haul truck. We’ll take videos and then show the superintendents the current operation versus how it should be done. A lot of our customers look to us not just for tire expertise, but for ways we can help their site get better, which eventually will lead to better tire wear and less down time for them. It’s soup to nuts.”
Following in his father’s footsteps
For a company that does so much work with fleets, McCarthy Tire Service certainly has a diverse one of its own. Mike Flynn is the man in charge of managing the 870 vehicles. There are boom trucks, service trucks, mobile repair trucks — and one ice cream truck. Jack McCarthy bought it at a classic car auction 25 years ago. Flynn says, “They have done more events with that truck, I couldn’t even fathom a number — and we haven’t quite taken in any money for ice cream yet.”
The truck makes appearances at charity events, mostly in the summertime and until the weather turns to fall. That’s when Flynn’s other season begins. He’s the “team wrangler” for the Christmas float. Since 1998 a train hand-built by volunteers in the McCarthy truck repair division has brought Santa Claus to town in the annual Wilkes-Barre Christmas parade. The train is 80-feet long when it’s assembled. The crew is working on a new train, but Flynn isn’t sure if it will be ready for this year’s parade.
Being a part of those community events remains important to the entire McCarthy family. They serve on boards, and the company’s philanthropic work extends to more than 100 charities. As the business’ footprint has grown, their giving has extended, too. The company supports the causes its team members invest their time in, as well as programs big and small that improve the communities where its people live — that includes customers as well as employees.
Doing good work is yet another lesson Lambert and her brother learned from their parents. The effect of those good deeds was drilled home when their father died. It was January in Wilkes-Barre. John McCarthy remembers it being one of the coldest days of the year. The wake was held in the church because they anticipated a large crowd. There was a two-hour wait to get through the line. “It was such a tribute to the kind of person he was,” he says. “One of the things that stuck with me the most was the number of people that I knew, who had a story I had never heard before of how my father had helped them, and the number of people that I didn’t know who had a story of how my father had helped them.”
He decided then to try to emulate his father once more. When there’s an opportunity to help, he wants to do so.
McCarthy has greatly expanded the reach and capabilities of McCarthy Tire Service since he became president in 1997. Yet, he still follows the path his father set for him. That’s why this $400 million company still calls Wilkes-Barre home.
“We want to stay in Wilkes-Barre. It’s something that was special to my father, and we’ll stay with that. The kids feel the same way. We have opportunities to move other places, and we want to be here.”