2001 Tire Dealer of the Year
Larry Morgan bleeds Firestone red. He was hired out of college in 1965 by the Firestone Tire & Rubber Co., and almost immediately put in their "fast track" program.
His seven years at Firestone gave him the confidence to succeed -- as a tire dealer. He left the company as a district manager and joined Merchant's Inc., taking over a family-run, nine-store tire dealership and turning it into one of the largest independent tire store chains in the country.
He might never have left, if not for a conflict of interests that came to a head in 1990. "In the simplest of terms, as I look back on it, we had different philosophies," says Morgan. "I thought I owned the company, and they really did." Of course, Merchant's sold Firestone tires during his tenure there.
A year later, he purchased Don Olson Firestone, a 33-outlet chain based in Clearwater, Fla. Ironically, Olson, a former Firestone employee himself, hired Morgan as a Firestone trainee in 1965. In the next 10 years, Morgan Tire & Auto increased its number of stores almost 17 fold!
On August 9, Morgan announced he had sold majority interest in his 558 stores to, who else? Bridgestone/Firestone Inc.
If it seems Morgan has come full circle, he hasn't. He still owns 48% of his soon-to-be renamed Tires Plus chain, and has a contract to run it his way through 2008. By then, BFS will own 100% of the dealership.
His undeniable successes have earned him Modern Tire Dealer's "Tire Dealer of the Year" honors, and a monetary donation in his name to the charity or charities of his choice.
In high school, Larry was captain of the football team as a linebacker and fullback. He was the starting catcher in baseball, and a power forward in basketball. He also was a discus thrower and shot putter for the track team. "I wanted to be a football coach," he says. "That was my original plan. After a short period of time, I realized I wasn't going to make a lot of money doing it."
"My mom thought I was nuts for growing my company so big," says Morgan. "She would ask me, 'Why do you want more responsibility, more pressure, more financial obligations?' But to me, it's not a monetary issue. I enjoy the thrill of the hunt, the accomplishment.
"Mostly, I like to see my people grow, do things I used to do. Some 40 people in the company do what I used to do: They run 30 stores. I try to instill in them the idea that 'Hey, look what might be in store for you some day.'"
Their different perspectives make sense given Larry and his mom were products of radically different eras. Larry's mom and dad, Marguerite and Cecil, were greatly affected by the Depression. They had purchased his grandfather's farm, and then lost all their money when their bank went out of business. Larry's mom, a teacher, rode a horse seven miles to school every day; she carried coal in the saddlebags to heat the school. "She was a real pioneer woman," he says.
Larry was born in a farm house in LaBelle, Mo., or, as he says, "Missoura." His sister, Joe Ellen, came along two years later. "We had an outhouse till I was 12, then we got indoor plumbing!" he says.
A few years after he was born, his father became a state highway patrolman, and his parents rented the farm to a sharecropper. "After they found out I wasn't going to be a farmer, they sold it."
His father would take him hunting and fishing, or to a baseball game from time to time. His mother applied scholastic pressure. Both instilled a strong work ethic in their only son.
"My mom was kind of my mentor. She used to visit stores with me, go to the waiting room, talk to customers. She'd have those people really believing in us in a short period of time."
His mother died in 1998 at age 88; his dad passed away in 1989. "He was a mentor, too, in many ways. But she lived quite a few years longer."
Seven times in seven years
In high school and college, Larry sold fireworks at a truck stop on the Missouri side of the Missouri-Illinois border. "The last year before my senior year of college, I had been open three weeks and a huge storm came up," he recalls. "A tornado was coming, and my tent was flapping. I'm thinking if my inventory gets wet, I'm a dead man. I had no insurance. I was praying in the tent. I could see five years of work going up in one big storm. It was a scary moment." Luck was with Morgan; he lost very little of his inventory, and had the money to finish college.
As he was wrapping up his business administration degree from the University of Missouri, a number of companies were on campus prospecting for fresh talent. One of them was Firestone. "Truthfully, I didn't know the hood from the trunk," said Morgan. "I was never a car buff. But there was something about the job that intrigued me." After graduation, he went to work as a trainee in a Firestone store, but was soon put in the company's "college management class." He was the first member of his class to be a store manager, store supervisor, division store supervisor and district manager ("Being first was just the competitive nature coming out of me"). He was Store Manager of the Year in Independence, Mo., in 1967. As a district manager in 1971, he handled both independent and company-owned stores. "They had a series of jobs you went through. It was great experience and great training."
And a lot of traveling. Morgan moved seven times in seven years, from coast to coast. "In those days, if they told you to move, you did it."
While working his way up Firestone's ladder, Morgan had brushes with former political leaders. At his Independence, Mo., store from 1966-67, Harry Truman's valet brought Truman's car in for maintenance. And in Topeka, Kan., Alf Landon, GOP candidate for president in 1936, would come into the store wearing his riding boots.
A man's got to know his limitations
"My business philosophy is to surround myself with great people, treat them the way I want to be treated and encourage them to do the same. What I do today is not quite as hard as it used to be thanks to the company's qualified people. I don't micro-manage nearly as much as I used to five years ago. I'm still very much aware of what is going on in the stores, and I still spend a lot of time in them. I travel a lot."
Morgan settled down when he joined Merchant's in 1972. The nine-store chain expanded to 137 stores in the next 18 years. "I built it and I ran it like it was my own," he says.
"We had a five-year plan that I shared with employees. It defined goals for both new stores and acquisitions, much like I do here. It was a trial run for what I did for myself."
Morgan says parting ways with Merchant's led him to buying his own dealership. "It was the greatest thing that ever happened to me." He closed the deal with Don Olson in early 1991. "I literally looked at dozens of opportunities. I knew I was going to own my own business, and the reasons I chose Olson were first, he was instrumental in hiring me out of college, and he and I had remained friends and shared ideas. Also, I thought Florida was a good place to be.
"I would have had a hard time going from a $200 million organization to running two or three stores. Olson Tire was big enough to keep me challenged. For all the right reasons it worked. I spent the first one-and-a-half years getting what I bought running the way I wanted it, putting the finishing touches on getting it ready for growth."
Prior to 2000, 1998 was Morgan's big year for acquisitions: He picked up Hibdon Tire in Oklahoma, Michel Tire in Ohio and Avellino's Tire & Auto Service Centers in Pennsylvania. Wheel Works in California and American Discount Tire in Georgia followed shortly thereafter.
But the biggest acquisition was yet to come.
Team Tires Plus
"When I went to Germany last year to speak at the European tire conference, I said to my wife, 'Let's just go off somewhere.' So we went off to France and stayed in this 11th century castle and were having a great time -- and it was right in the midst of my negotiations with the Tires Plus deal! So I'm sitting there in this round, beautiful castle in France, and I'm getting up at two in the morning to negotiate with Tires Plus. And that's the way it is."
Morgan is almost always on the job. When he jogs in the morning, he carries a tape recorder with him. "I use my tape recorder constantly. If I've got some issues on my mind, I record them. Sometimes I dictate letters.
"When I go on vacation I take my cell phone, I take my lap top. I'm into it all the time. I couldn't just leave it."
In 2000, Morgan brought Team Tires Plus into the fold. The acquisition of the 82-store chain made Morgan Tire the second largest independent tire dealer in North America. It also gave him a ready-made, 60-store franchise program, and a name with which to unify his stores nationwide.
Team Tires Plus owner and "Head Coach" Tom Gegax (MTD's Tire Dealer of the Year in 1998) was named chairman of Morgan Tire. He has since semi-retired, with the title "chairman emeritus," according to Morgan.
"I think Tom is enjoying the good life. He basically is there as my advisor and consultant if I need him. He participates in our executive staff meetings if he is not traveling or doing something else. He has been a good sounding board. He's a good friend. He has certainly done an admirable job in delivering his company to us the way they proposed that they’d do it."
State of Emergency Fund
"Every year at the annual meeting, I will read a couple of 'thank you' letters without disclosing names and I will look out there and there are people with lumps in their throats and tears running down their faces."
One of the programs of which Morgan is most proud is his "Emergency Fund," something he was unable to implement at Merchant's.
It works like this: If company associates have financial needs, they can contact the program's "communicator" or administrator. They must outline what their needs are, the circumstances surrounding them, and how much they need. Only the program administrator knows who makes the requests.
The requests are then sent to a committee for review, according to Morgan. "No one knows who the committee members are, and they do not know the name of the person who is applying -- they only the know the circumstances... they are empowered either to give money, loan money, or say no."
Morgan says he has never been a committee member. "I do keep pretty conservative people on that committee, people with sound judgment who aren't totally going to give away everything, but at the same time are compassionate."
Decisions are often swift. "Typically, most of these requests are real, true emergencies. People need it now -- maybe their mother just passed away in Seattle and they do not have enough money to get there, or they have been evicted from their home and tomorrow the sheriff is coming. It is serious stuff."
The company raises money for the fund from an annual charity golf tournament and associate donations. Suppliers are asked to help out at the tournament as well.
"People can make payroll deductions," he says. "We have people taking 50 cents a week out, a dollar, whatever they think they can afford.”
Last year, the fund doled out some $300,000, including Christmas gift certificates for needy families in the organization.
"There is never a week goes by that I don't get an e-mail or voice mail from someone we have helped. Sometimes I get voice mails and people are just sobbing on the phone not from sorrow but from joy.
"Sometimes we will get hooked. We will do something to help a person like loan them $2,500 and the day after they get the money they will quit and never pay us back. We see the dark side of people, too. But for the most part, it is just a fabulous deal."
"We had some price wars with Tire Kingdom that when I write my book I am going to have to talk about."
Morgan says Tire Kingdom is his biggest competitor, at least in the Florida market. Sam's Club, Wal-Mart, Pep Boys and Midas shops also provide varying degrees of competition in Florida. NTW does not, having left the market within the last couple of years.
Occasionally, Morgan has to compete based on price. He remembers one battle in particular. "We sold Firestone Supremes back in the early '90s, when that tire was Firestone's premium tire. Tire Kingdom went out and bought a bunch of them from a Firestone dealer. Our cost was around $35 a tire, and we were (forced to) sell them for around $17 to compete. A Firestone Supreme, say 195/14... at 50% of cost! We would normally sell them for $55.
"I just felt that I was the Firestone retailer in the state and it was important to me to meet the price. I don't know, it could have been an ego thing. But I didn't want them to take our business. I knew for
every tire they sold they were losing money, too. And it would be a matter of who was the best."
Morgan describes Pep Boys as a "low-end leader" without major brand support. "They get probably a higher than normal percentage of low-cost buyers. There is no question that the Sam's Clubs and Wal-Marts are competition.
"Probably on the service side it's the car dealerships and Firestone," says Morgan. "Company-owned stores always have been and, to most of my people, always will be competition. We always have reciprocated and helped each other when we needed tires for one another. That's one thing we do now, so that won't change. What probably won't happen in this new arrangement is we won't be stealing each other's people anymore. I think that would be considered unpopular."
Auto dealerships have not been competitive on the retail tire-side, according to Morgan. "I don't think we have felt them as tire competition. We are obviously aware they are trying to monopolize and probably doing a pretty good job on the recall business. Do I think they will become the next big marketer of replacement tires? No.
"We have three stores in our company that do nothing but sell to car dealers. That is their primary focus. But that business has been affected somewhat as the result of the car dealers having a direct purchase relationship with the manufacturers.
"It has always amazed me how so many people think selling tires is so profitable. To me, there has to be something Sam's can sell on a square footage basis that brings a higher return.
“I just can't fathom that they sell everything else at the ridiculously low margins that they obviously make on tires."
As might be expected, economies of scale play an important part in Morgan Tire's pricing philosophies. Store managers do have a say in determining prices, however.
"Occasionally, someone will start a little price war, and we'll sell tires at a loss. I have a marketing group that makes pricing decisions. The marketing people place the ads and adjust the computers. Our store managers have flexibility to meet market conditions, but they don't actually set the prices either in ads or in any other fashion.
"We have a system in which our regional people can adjust prices based on competitive conditions. They have that authority. The ad's look and all that is done by somebody else, but they can actually change pricing based on what the competition is doing... they can actually e-mail the prices right into the ads."
The makings of a sale
I'm very much a detail person for financial issues. Even to this day, although not as much as I used to, I analyze P&L's even at the store level, (especially) problem stores and good stores, to stay on top of what's happening in the real world. By doing this, I was able to impress the bankers to the point they would loan me money to grow the company. The last few years my bankers have actually wanted me to grow the company, and faster, because they felt comfortable with us and trust me, and that's rewarding."
According to the agreement between Bridgestone/Firestone and Morgan, BFS owns 52% of Morgan Tire. Over the next several years BFS will end up buying out Morgan completely.
"The deal was actually struck back in 1998," says Morgan. "I was the majority stockholder until recently... I was a private company and I just kept it to myself." (His three retread shops were a different story. Until he sold them to BFS on Sept. 1, Morgan owned 100% of them.)
Before BFS became a majority owner, however, the fate of the still expanding company was not preordained. Morgan says venture capitalists, among others, were offering him "a bunch of money" to grow the company even more. "All this sounds intriguing and exciting, but then you realize you've just sold your company to somebody (to whom) dollars and cents are most important. And a lot of the things I worked hard to accomplish, and some of my goals and objectives, wouldn't be in my hands anymore.
"Quite frankly, I had another tire company knocking on my door. BFS found out about it. I was their largest customer and they didn't want to lose the market share. So they started talking to me about what ifs and that's really how it took place.
"My kids are independent and have their own goals and objectives, which is great and I respect that. I want them to live their own lives. I've seen family businesses that have tried to force their kids into doing things that really wasn't their motivation.
"BFS is a strategic partner. They're in the same business we are, and I've got a lot of people in my company who really mean a lot to me. They think like I do, and they want to continue to grow and make this company prosper. It's an opportunity for me to plan my transition out of the company... and still be able to work for a whole bunch of years and do what I love to do. And all my folks stay in place.
"Of course, we'll continue with the roll-out of the Tires Plus name nationwide. We'll have no affiliation with (Firestone Tire and Service Centers). Down the road, we will hopefully share some best practices and learn from one another. If we can combine purchasing synergies and things like that, great.
"And we'll continue to be multi-brand. That's always been very important to me. The same ones we sell today. Those suppliers are aware of it. And there's not a problem with that."
In addition to Firestone, Tires Plus outlets will offer Bridgestone, Michelin, Goodyear, Continental, Uniroyal, Dunlop, BFGoodrich, Dayton, Pirelli, Road King, Falken and Yokohama. BFS tire brands make up 75% of Morgan's tire mix.
"If you're doing your job at any company, you don't have anything to worry about." Curt Rhyne, district manager, following Bridgestone/Firestone's purchase of majority interest in Morgan Tire & Auto.
"I just conduct the orchestra, I'm not a one-man band."
When Morgan talks about his 6,302 associates, his passion borders on obsession: "Having a people problem is the only thing that keeps me awake at night, and I have tried to instill that passion for people in my key people."
His ultimate business goal is to create the perfect business model, able to sustain itself endlessly. In its simplest form, it goes something like this:
1. Associates take care of the customer.
2. Customer comes back and spends money.
3. Employees are compensated/rewarded and they stay.
4. Customers build relationships and come back over and over.
He tries to teach his associates to take care of each other. If store managers can properly train, motivate and direct the people under them, and provide them with the necessary tools to succeed, they can all concentrate on trying to turn "guests" into longtime customers. Larry considers this a simple, workable concept.
"I never had an employee tell me I mislead them or lied to them. That's a reputation that I want to take to the great tire store in the sky, so to speak."
"One year at Merchant's, we gave away 5,000 tickets to inner-city kids for (a Baltimore) Orioles baseball game. As a result of that, I went on the field and they had me on the big screen. I took Lauren and Brett and they got to spend 30 minutes in the dugout before the game. The kids still remember how nice Cal Ripken and some of the other players were.
"When we came to Florida, we sponsored the Clearwater Phillies, a Single-A team, and we had a big sign in the outfield. As the result of that, the general manager of the Clearwater Phillies and I would use Brett as the batboy for some spring training games. We would pick anytime the Orioles would play. The players recognized him every year because it was the same kid."
Larry and his wife, Patty, have been married 26 years. They have 21-year-old twins, son Brett and daughter Lauren.
Lauren, a former homecoming queen, was commencement speaker at her College of William and Mary graduation. She is a first-year student at the University of Richmond law school.
Brett will graduate from the University of Richmond in December. "Someday I would like to do something entrepreneurial with my son," says Larry. "My daughter's going to be a lawyer, so that's a little out of my range right now. We don't know what we want to do, yet. He has one more semester of college. He's getting a marketing degree."
Brett also is an award-winning Web page designer, says his father. "He might spend a few years getting some good, old, practical work experience somewhere. He loves doing work in our company. He started out working in the warehouse when the tires weighed more than he did. He worked his way through all the positions to be in sales and he really liked it. He may still decide to do that."
Larry plans to donate at least some of MTD's monetary award to fighting multiple sclerosis. His wife was diagnosed with the disease seven years ago.
Until recently, she suffered only occasional numbness and fatigue. But a few months ago, she suffered a major attack.
"It was really scary for me, but it had to be scarier for her, to go from relatively healthy to a wheelchair in three weeks."
Although there is no cure for MS, she has gained some strength back and "can walk a little bit... after being in a wheelchair for three months, it's a major cause for excitement," says Larry. Visits to the Mayo Clinic in Rochester, Minn., and Vanderbilt University Medical Center in Nashville, Tenn., have helped. The Mayo Clinic also has a branch in Jacksonville, Fla.
"There's a lot about MS they don't know," he says. "Her attack shouldn't have been as severe as it was.... Our goals are to do the things that can reduce the chance of her having another attack: drugs, exercise, reduce stress, trying to keep her from having other illnesses."
Larry says his greatest joy is to be with his wife and kids. When reminded he had earlier said "a good scotch and good friends in a relaxed atmosphere" was his perfect evening, and asked to choose between these two seemingly contradictory answers, he didn't flinch: "I try and do it all. I can't afford to give up either."
"I live in Philadelphia but I travel about 35 miles each way to your Avellino's Malvern (Pa.) facility because of how well they take care of my '95 Crown Victoria LX and my Dad's '78 Datsun 510 Wagon," said a customer in a 1999 letter sent directly to Clearwater, Fla. Morgan passed the letter along to the store's employees with the following note: "Great job. We are proud of you guys. LCM."
After his contract runs out in 2008, Morgan says he will either run the company another five years or be a consultant, per his agreement with BFS. Until then, life, and the welfare of his business, goes on.
"We make out a five-year plan every year, and we still have things to accomplish, like a certain number of stores, sales volume and things of that nature," he says.
"We've opened so many stores and grown so fast that admittedly, our game plan is to concentrate the next couple of years on just spending more time running what we have and improving our performance. We're just kind of taking a big, deep breath and building our people-quality back up. When you grow so fast, that always becomes an issue."
Morgan says he did not grow too fast. "No, I had planned this all along. I knew what I was doing. The bankers were very much involved in all of this, and were obviously sitting there supporting me, providing me with the money."
Now the ball appears to be in Bridgestone/Firestone's court, with Morgan holding the ball. Whether he decides to downplay the Firestone brand because of the recall controversy ("I think it's unjust what happened, but life's not always just") or build more stores ("We've still got about 50 to 60 stores under development that will be built from scratch"), Morgan says he is calling the shots.
"I can still plan the future growth of the company and I can still provide career opportunities to people, all the things I've worked to achieve," he says. "I feel like I have had a very successful career in the industry, and I certainly want to go out a winner. So I want to continue to work hard, be successful and do good things. Those are really my goals.
"I love what I do. Don't get me wrong, there are days that things don't always go my way, of course, but I never get up in the morning and say, "Oh God, I hate to get up this morning and go to work.' I've never felt that way."