All for one and one for all
The authors of the Bible knew how to lead by example. In the New Testament, a disciple of Matthew wrote, “Whoever wants to be great among you must be your servant.”
Apostle Peter echoed that sentiment: “God opposes the proud but gives grace to the humble.”
Bruce Thomas Halle takes God’s call to servant leadership seriously. He has built an empire of tire stores on a business philosophy influenced by his religious beliefs and family values. And Halle has a pretty large family.
“My people are part of my family,” he says. “Their health, security, their futures, that’s my responsibility. We have 17,000 people working for Discount Tire, but you have to take into account they are married and have children. I am really responsible for 60,000 or 70,000 people.”
As he grows the business — 887 stores and counting — he never loses sight of that. People are hired, they get opportunities, they move up into ever-expanding roles of leadership. It is self-perpetuating.
That’s how the business model started, and that’s how it will be run long after he is gone. Halle has seen to that.
He is both a man of means and a man of the people, as comfortable hobnobbing with members of high society as he is spending time with the technicians in any of Discount Tire’s more than 5,300 service bays. It is not unimaginable that while traveling to potential site locations on his Falcon 900 jet he is eating a Costco hotdog ($1.50, soda included).
Halle gives almost all the credit for his Scottsdale, Ariz.-based company’s success to his employees. They disagree, sometimes putting their dynamic yet soft-spoken leader on a pedestal, sometimes just appreciating him for putting them first.
Modern Tire Dealer sides with Discount Tire’s employees. That is why Bruce Halle is our 2014 Tire Dealer of the Year.
The Discount Tire blueprint
To the outside world, the 84-year-old Halle (pronounced “Holly”) is chairman of Discount Tire. He is also a billionaire; according to Forbes, he is the 336th richest man in the world.
To his inner circle, the executives, store managers and thousands of full- and part-time employees who operate Discount Tire on a day-to-day basis, he is their patriarch, the man who oversees the company without micromanaging them.
In Halle’s own eyes, he is “an old tire salesman,” not that much different from when he turned a former plumbing supply building in Ann Arbor, Mich., into the first Discount Tire store 54 years ago.
“In 1960, I would have described myself as a young guy looking for a job!” he says. He and a partner had just shuttered their combination wholesale automotive parts supply business and retail shop, leaving him with little more than his entrepreneurial spirit.
Halle decided he had three choices: He could sell factory-second shoes, day-old bread or tires. Armed with two new tires and four retreads from his previous business, he chose to open up a one-man tire store, right next to a Goodyear store, no less.
Vice Chairman Gary Van Brunt says Halle’s customer-centric business philosophy has guided the company since the beginning.
“It all comes down from Bruce. He sets the standards and it all filters down, and always has.
“When he was by himself, he thought taking care of the customer was the most important thing. Today, with so many employees, it is important to take care of each other first, because happy employees take care of their customers.
“You have to have integrity in everything you do,” says Van Brunt. “If something isn’t right, make it right. Fix it. Don’t cut corners. Make it right because people are relying on us.”
“I don’t think I’ve changed much over the years,” says Halle. “I’m pretty calm and organized. I trust everybody until they prove I shouldn’t. I respect them all. And I want all of our people to be successful financially, socially and morally.”
The prototypical Discount Tire store has six bays and carries 3,000 tires in inventory. Halle says six to eight bays is optimal for employee efficiency, based on the company’s Six Sigma-like Continuous Strategic Improvement procedures.
Scheduled store hours are from 8 a.m. to 6 p.m. Monday through Friday. “Some of the store managers open before 8,” says Halle. “That is their choice. They close at 6, but they have to take care of the customers who are still there. If they all get out at 7, they are doing well.”
The stores are open from 8 a.m. to 5 p.m. on Saturday. They are closed on Sunday.
“Sunday is a day for church and family,” says Halle. “I think six days a week is enough. We also close from 12 to 3 on Good Friday. That’s been the case from the beginning.
“Everybody kept telling me we should be open on Sundays. But you have to stick to what you believe in. We’ve done OK with our business model.”
Definition of Discount
Halle liked the name “Discount Tire” because it instantly told customers they could get a good deal at his store.
“Discount is a tricky word,” he says. “It could imply low quality. It could imply low price. As a customer, it’s a matter of which one you want or are willing to accept.
“Back in the ‘60s, there were a lot of discount stores. Everybody thought they sold low-quality merchandise. It was something we had to live through.”
Most of his money came from selling associate or private brand tires and tubes.
“I mainly sold off-brands at the beginning because the manufacturers like Goodyear, Firestone, General and U.S. Royal concentrated on selling their name brands,” says Halle. “At the same time, they were manufacturing off-brands like Defender, Monarch, Carnegie and Fisk and selling them for less money. They also were making private brand tires for oil companies under different names. I was buying and selling many of those tires, which were close in quality to the major brands, so I could be very competitive. I also bought Firestones or Goodyears second-hand from distributors or wholesalers or another retailer.
“On a private or off-brand tire, we had a better markup. The costs were lower and the profits were higher.”
This strategy continued even after Halle began adding stores in Michigan, Arizona and Colorado.
“When you are a younger and smaller company, you don’t have the financial capacity to deal with the big manufacturers and the volumes that they want from you,” he says. “We didn’t have the credit capacity to do that. So we were buying from wherever we could.
“As the company got bigger and more solid financially, we started going more direct with the rubber manufacturers. And buying direct helped keep the costs down. We eliminated the middleman. The wholesaler and middleman make money, too. And they are our competitors, too.”
Discount Tire offers more than 40 brands through its retail stores or Discount Tire Direct mail order business. However, its three private brands, Arizonian, Mohave and Pathfinder (Halle acquired the rights to the brand from Goodyear years ago) are only sold through the retail stores.
“Discount Tire customers get good value for their tires,” says Van Brunt. “We price our competition. With so many people in the tire business, it’s hard to know who’s selling at what price, but we want to be at or below them.”
Van Brunt, 67, who is a cousin of Halle’s late wife, Gerry, was one of Halle’s first employees. Then 15 years old, he was hired by Halle to change tires in the winter of 1962.
In Halle’s biography, “Six Tires, No Plan,” by Michael Rosenbaum (see an excerpt from his book in our digital version), Van Brunt shared that first educational monologue by Halle, the man who he calls his mentor. “He said, ‘The two worst people in the world to hire are friends and relatives. First off, if you hire a friend and he doesn’t work out and you have to fire him, then you’ve not only lost an employee, but you’ve lost a friend. The second is a relative. If you hire a relative and he doesn’t work out and you have to fire him, then the whole family is impacted, but you’re still a relative. That’s not good either. So from 8:30 to 6, you’re an employee.’”
Halle believes in roles-based management, with each store manager giving specific responsibilities to his three or four assistant managers on a rotating basis. The training prepares them to become store managers themselves.
Regional vice presidents and assistant vice presidents oversee all the stores, which are divided into 24 regions; Discount Tire Direct is its own region.
The importance of part-time help to the company’s success cannot be overstated. There are several reasons for this, according to Halle.
“One, we expect and hope that many of them will become full-time. In fact, that’s a great source of some of our permanent employees. It’s a recruiting tool. And, of course, from an economic point of view, using part-time employees helps control our operating expenses. It’s good management to use part-time people as much as we can.
“A lot of these part-timers are older high school kids or college kids who can work 20 or 30 hours a week or whatever their schedules allow. It doesn’t interfere with their school work or their social life because we’re not open at night, unlike a fast food restaurant, or on Sundays. They can work all day Saturday and make good money.
“We have set up a tire tech program for part-time techs going to college, which a lot of them are,” says Halle. “We pay $500 a semester to each one’s school while they are working for the company. And a lot of them stay with us after they graduate.”
All store managers start at the bottom. In addition to Halle and Van Brunt, former tire busters include CEO Tom Englert, 62, Executive Vice President and Chief Operating Officer Ed Kaminski, 56, and Chief Customer Officer Steve Fournier, 63.
Location, location, location
There are 887 Discount Tire and America’s Tire stores in 28 states. Because of a conflict with the Discount Tire name in Oregon and outside San Diego County in California, Halle does business under the America’s Tire name in those areas. In a perfect world, Discount Tire owns the land and the building.
Halle hopes to have stores in at least 40 states, not including Alaska and Hawaii.
“We will hit 900 this year or early next year. We are working toward having 1,000 stores in 2 1/2 years. And then we will start working toward 1,500.”
Discount Tire is always on the lookout for new locations, led by their regional vice presidents. “We have real estate agents in every market,” says Van Brunt. “They know what’s happening, whether a new location has opened up or a building will become available in six months or a year. We give them the parameters that we’re looking for, and if they do their jobs, we will work with them.” The arrangements with the agents are not exclusive, however.
“If someone else brings us a piece of property and says, ‘I notice you guys are opening stores in wherever market, and I’ve got a piece of property or I know someone who has a piece of property,’ we will talk with them,” says Van Brunt. “That’s fine.”
Halle personally visits every possible site, usually with Van Brunt, President Mike Zuieback, 48, and Executive Vice President and General Counsel Jim Silhasek, 71. They travel four to six days a month in one of the company’s three jets, and visit five to 10 sites per trip, often more than they planned.
“We study all the demographics: population within three miles, five miles, 10 miles; income levels; number of cars per household, all of that,” says Halle. “Then, of course, you have to go see the site. And it has to be in an area where people will go to buy merchandise, not just drive by.
“I like to be close to a Wal-Mart or Target. Home Depot and Kohl’s are OK, but the Wal-Marts and Targets sell groceries, and people go there every week. Being associated with big supermarket chains like H-E-B in Texas or Kroger is also good.”
Sometimes stores are built in underdeveloped areas ripe for growth.
“We have done that,” says Halle. “During the boom years, we would see a shopping center and all the new homes being built around it and buy property and put up a store there in advance of the growth. Some of the stores have been very successful and some have not.
“We have probably closed or relocated 120 stores over the last 50 years because they haven’t done as well as we anticipated. Maybe 20 to 25 of them were pure closings. The rest of them were relocations because of demographic changes. Some neighborhoods in the city that used to be dynamic are not anymore. Shopping centers and power centers are not really that big thing anymore.
“We have been doing this for so many years that we know what to look for. Are the buildings around the site run down? Is the area a good place for a hospital? In addition to all the demographics and analysis, you have to have a feel, a sense for what will work. Today, if we go to see four sites, they are probably all pretty good.
“It’s just a matter of making a decision based upon your sense, your gut feeling and price.”
Silhasek monitors not only real estate acquisitions, but also construction of the stores for Discount Tire. He says he first looks at applicable zoning codes and land use restrictions.
“You also have to be concerned with the developer when looking at a piece of property. If it’s within a development, there are conditions, covenants and restrictions that affect building size, construction of the building, the type of building, things like that.
“You also may have a private sector to deal with. For example, when a Target takes over a shopping center, Target rules. You have to get their approval for everything if you want to build in the center.
“Usually a developer sells his soul to the devil when he sells to a Target or a Wal-Mart, although it does make his other nearby parcels more valuable.”
Silhasek says locating outside the developer’s property lines, such as across the street, brings city rules and regulations into play.
“Cities not only have zoning laws, but also special use permits. Or they might have an overlay that limits the amount of automotive repair businesses in a particular area. They also may only want buildings of a certain height, or located a certain distance from the road.
“Then the fire marshal gets involved. Water volume and pressure are real big issues. When we wash our buildings in California, we have to have a siphon truck there to siphon the used water.
“After you look at zoning, you look at accessibility. How many access points can you have? How wide can they be? How far from the corner can you have an access point? Let’s say you are right on the corner. Sometimes you have to have an access easement across the adjacent property to get to the street.
“You have to make sure utilities are available,” he says. “For example, on U.S. highways now, you have to tunnel under the road rather than cut through it to install utilities. That’s called jack-and-bore installation, and it is very expensive.”
With all the rules and regulations — “you have to make sure the building is safe for employees and customers” — plus legal setbacks, it takes almost six months to get all of the feasibility studies and permitting done, then another 120 days to build the store, according to Silhasek.
“In California, it takes approximately two years to get all your permits, and then you start building! And that’s just building a tire shop.”
Wild and crazy guys
Word gets around when you provide exceptional value and service. In the mid-1960s, however, Halle and his then partner, Ted Von Voigtlander, wanted to get the word out faster, with more flair. (The legal name of the company is Reinalt-Thomas Corp., which is made up of the middle names of Von Voigtlander and Halle.)
“We just sat around with different people and created newspaper ads based on what was popular at that time. Batman was popular, so we dressed as Batman and Robin. We dressed as the Cartwrights because Bonanza was popular, and as astronauts when the astronauts went into space. Then we would put these crazy pictures in the paper to promote Discount Tire. It was fun.”
Van Brunt also got into the act in 1966. Mimicking an earlier ad of Halle’s, he gave the shirt off his back to make deals, such as four tubeless blackwall tires for $59.40. Discount Tire backed the price with a 36-month guarantee.
“We also used to give away flowers like geraniums at the store,” says Halle. “And watermelons.”
That was good enough to gross $1.7 million in 1969 with six stores in Michigan. But in a bold move, Halle and Von Voightlander decided to take advantage of rising populations — and the 300 days of sunshine a year in Phoenix —by expanding in Arizona. The Phoenix suburb of Scottsdale eventually became the company’s headquarters.
It was there that the longest running ad in television history was created.
In 1975, a friend of Halle’s, Bob Natkin, shot a 10-second ad centered on a little old lady rolling a tire.
“If ever you’re not satisfied with one of our tires, please feel free to bring it back,” says a voiceover. Then the lady throws the tire through the window of the store. The narration concludes with “Thank you. Discount Tire Co.”
The little old lady has since died. But the 39-year-old ad lives on, and is featured in the Guinness Book of World Records.
Only once has a customer actually thrown a tire through a store window, according to Halle.
“It happened in Grand Rapids, Mich.,” he says. “Back in the late ’80s, a customer came to the store on a Saturday and was upset about something. He left, then came back with a tire and wheel, all mounted, and he says, ‘I’m going to throw this through your blank, blank window.’ So the manager says, ‘Well, let me get people out of the showroom, because there is going to be glass all over the place.’ He gets everybody out, but in the meantime, somebody had called the police. The police report went out on the wire services, so reporters arrived.
“The police called me and told me what he was doing and said they were going to arrest him. And I said, ‘You’ll do nothing of the sort. You’ve got to make him the happiest man in the world.’
“The guy is about 10 or 15 feet from the window and thinks he’s Superman. He thinks he can throw the tire and wheel that far, but he can’t. He throws it and it bounces, and he’s really upset. He gets closer, and he does throw it through the window. But it’s all on film. In those days, there were no computers, and the news hit the wire services all over the country.
“We gave him a new set of tires. We couldn’t begin to pay for that kind of publicity. It was worth a fortune to us. In fact, it made the front page of the Pittsburgh daily newspaper, and that really disappointed me because we didn’t have any stores there!”
Robert Natkin Advertising also created two other well-known Discount Tire TV ads.
One ad featured little baby chicks with the tagline, “Cheap, cheap, cheap, cheap, cheap! That’s what Discount Tires are, cheap, cheap, cheap, cheap, cheap!”
The other parodied the Goodyear blimp. An old, patched up blimp falls from the sky, with the following voiceover: “With the money we save on blimps, we can sell good tires cheap.” (“Goodyear never said anything to us about it,” says Halle.)
The company often uses the word “cheap” on its billboard advertising as well. “People are afraid to use the word cheap,” says Halle. “I think it’s a brave word to use because cheap implies low quality or low price. But again, people accept it.
“Cheap is a good word. We don’t say inexpensive prices, we say cheap prices, even now. I think it’s great.”
Discount Tire uses all forms of advertising to increase brand awareness. The basics include direct mail, radio, newspapers, billboards and the Internet (e.g. social media and mobile advertising). The company also sponsors Team Penske drivers Brad Keselowski, Joey Logano and Ryan Blaney in the NASCAR Nationwide Series and Sprint Cup Series.
Keselowski won the Sprint Cup championship in 2012.
“It’s a good marketing tool for us,” says Halle. “It’s a popular national sport that our employees enjoy. NASCAR fans all around the country see the photos in our stores. The older race cars are moved to the front of our stores and lots of people and families take photos with the car.”
Discount Tire videos, including the “Adventures of the Racing Cowboys” (Keselowski, Logano and Blaney), can be seen on YouTube.
Charity begins at home
If Bruce was the patriarch of Discount Tire, his first wife, Gerry, was the matriarch. She was there from the beginning, and, like her husband, welcomed store employees and their spouses into their circle of friends and family.
When she died of ovarian cancer in 1989, that support group helped Bruce carry on. Nearly six years later following a whirlwind courtship, Halle married for the second time. Diane Cummings, a widow with a passion for philanthropy and art, quickly became invested in the Discount Tire family.
“After hearing me expound on the good foundations do, Bruce decided we should start our own foundation,” she says. The result was the Diane & Bruce Halle Foundation. She is chairman and president.
“The mission of the foundation has been to improve the quality of individual lives by focusing on women and children issues such as homelessness, hunger, education, arts and culture, and health and medical research,” she says. “The foundation also oversees a scholarship program for the children of Discount Tire employees so that they may attend college.”
Diane Halle has involved the wives of the regional executives in similar issues with the formation of Driven to Care, a regional philanthropy program. Since 2005, the wives have granted $4.3 million for more than 260 deserving organizations throughout the United States.
Their work inspired corporate female executives and the wives of the executives at the company’s headquarters in Scottsdale to form the Bridges to Hope program. The group identifies opportunities to strengthen and enrich the community, then awards grants to worthy local organizations in order to address those issues. This year, Bridges to Hope is supporting education for autistic adults.
“Giving is contagious,” she says. Other charitable groups within Discount Tire, including the executive assistants’ program, The Administrative Angels,’ have followed her lead. The Bruce T. Halle Assistance Fund helps employees who have financial hardships.
“If we can help a person in any way in our company, we strive to do it as quickly and as efficiently as possible to let them know we are behind them,” she says. “And it all starts with Bruce.”
Over the last 54 years, Halle has successfully coped with extraordinary “What if?” moments that could have favorably or adversely affected the company’s fortunes. For example, what if his experiment with automotive service had been profitable? Discount Tire grossed $4.2 billion last year just selling and mounting tires and wheels.
What if his competition, like the nearby Goodyear store, had chosen to match or undercut his low prices when he first opened in Ann Arbor? What if real estate values had declined in the late 1970s, when Halle and Von Voigtlander, borrowing on appreciating property values, were expanding at the rate of 25 stores per year?
What if Halle had died following a horrific mountain bike accident in 1993?
Halle would be the first one to tell you he is blessed, and that luck and timing have had a lot to do with his success. However, he has made sure the company will live on as a private company without him.
One hundred percent of the company’s stock, originally owned by Halle, has been put into a family trust fund set up to make ever selling the company financially imprudent. His goal was to keep the company in his family for generations to come, and to secure the jobs of all his employees.
“I’ve spent the last 10 years planning for this scenario,” he says. “I knew if I didn’t, upon my demise, the company would have to be sold in order to pay the taxes. That would be a disaster for my family and my people.”
As CEO Tom Englert says, it comes down to one man who has his priorities straight. “Bruce told me, ‘Tom, no one’s life should change because I’m no longer here.’ I think that proves his devotion to the people who have helped him and his family become so successful. That is the mark of a remarkable man.” ■
‘A rose, by any other name...’:
Discount Tire does business as America’s Tire in (most of) California
Discount Tire is known as America’s Tire everywhere in California except San Diego County. “We needed another name because Discount Tire Centers was already there in the early 1980s,” says owner Bruce Halle.
“America’s Tire works just as well as Discount Tire. By any other name, a rose is a rose. It looks like one and smells like one. We do business the same way for both.”
The vast majority of his 135 stores in California are run under the America’s Tire banner.
Modern Tire Dealer contributing writer Wayne Williams has competed against America’s Tire since the beginning. Some 30 years later, he is president of ExSell Marketing Inc., a “counter intelligence” firm based in La Habra, Calif. Here are his thoughts on what he calls “an unstoppable force.”
“Execution is the chariot of genius,” said British poet William Blake. That describes Bruce Halle and America’s Tire.
Business and business success have fascinated me since my days as a district manager for Parnelli Jones Inc. My mentor there came to me one day and said, “You better get your act together. Discount Tire Arizona is coming to town, and these guys know how to sell tires.”
I used to wonder what it would be like to have my own tire store. I dreamed of a store with lots of tires in stock, thousands, as a matter of fact. I dreamed of a store that was well-merchandised, clean and easy to navigate.
In my dream, I would have a simple selling formula that was customer friendly, and I’d present my products to customers in a clear and concise manner so they would know they were getting a great deal, because they were. I would sell name-brand tires at great prices, and I would offer fast-and-friendly service. I thought to myself, why not have super clean service bays with the latest equipment and really good installation technicians? And wouldn’t it be nice to have windows, big windows in the showroom that allowed visibility into the shop area so customers could see their tires being installed on their vehicles?
Well, I was so disappointed when I visited an America’s Tire store for the first time. Somebody had stolen my dream, and even added to my ideas. The lighting in the store was bright and cheery. The waiting-room chairs were comfortable and color-matched the theme of the store. Restrooms were spotless and parking was easy. I loved selling aftermarket wheels and, apparently, so did America’s Tire.
Over the years, I phone-shopped and visited their stores. I noted the nuances as they evolved into a greater powerhouse. I watched as they opened stores in the best locations in California.
You can’t become the best accidentally. You can’t put together a run like these guys have without vision, determination, and the ability to lead and create. Bruce Halle and his people are the best.
Definition of a CEO: Guess who came out on top?
In 2006, the Vanderbilt University Owen Graduate School of Management held a class designed to “identify the traits, behaviors and tendencies that exemplify great business leaders.”
Classmates chose and studied 50 CEOs, including Warren Buffet, John Lampe (Bridgestone Americas Inc.), Fred Smith (FedEx Corp.) and Meg Whitman (eBay Inc.). Discount Tire’s Bruce Halle came out on top, edging out Whitman.
According to the study, there are at least four essential traits every CEO should have:
- motivational skills (more than “carrot and stick” motivation).
- a unique voice (influenced by talent, passion, need and conscience).
- rapid cognition (combined with a sense of frugality).
- the ability to manage strengths (a common myth is that improvement comes from focusing on weaknesses rather than strengths).
“Mr. Halle has figured out how to be overwhelmingly successful and profitable in a cutthroat industry with huge competitors and low barriers to entry,” concluded the study.
Store managers: The key to Discount Tire’s success
Talk to any of the executives at Discount Tire and they will tell you their 887 store managers rule.
“We serve them,” says President Mike Zuieback, “and our whole focus is helping them be the best they possibly can be.
“They know what is required day to day. They’re out there in the field. They are living it, so we need to listen to them and learn from them and support them with what they need to be successful.”
The base salary of a store manager is based on the cost of living index in a region. Quarterly bonuses kick in from the very first dollar in profit; as the profit increases, the percentage of the bonus increases.
As Chairman Bruce Halle says, “they are really running their own businesses.”
‘Integrity comes first’: 6 qualities to a better life
Karl Eller has had a big influence on Bruce Halle. He is both a fellow entrepreneur (Clear Channel Outdoor Inc., Circle K Corp.) and author (“Integrity is All You’ve Got”), and considers Halle a close friend.
One of the cornerstones of Halle’s business philosophy is integrity, which he believes Eller sums up nicely. A copy of Eller’s definition prominently hangs in all 887 Discount Tire and America’s Tire stores.
“When you are looking at the characteristics on how to build your personal life, first comes integrity; second, motivation; third, capacity; fourth, understanding; fifth, knowledge; and last and least, experience. Without integrity, motivation is dangerous; without motivation, capacity is impotent; without capacity, understanding is limited; without understanding, knowledge is meaningless; without knowledge, experience is blind. Experience is easy to provide and quickly put to good use by people with all other qualities. Make absolute integrity the compass that guides you in everything you do. And surround yourself only with people of flawless integrity.”