Chapter 10: Unexpected Events
September 5, 1970
My head was still swimming from all the events that had happened since Shelly had her accident and we got engaged. I was still having trouble coming to grips with it. The previous four months saw us open a new shop not far from the service station. Duke was running it, and almost right away I could tell he was going to be a success. Shannon was right there beside him, helping him in every way she could; answering the phone, ordering parts, mailing out invoices, taking the checks to the bank, and a dozen other things that would otherwise keep him from working on the cars and trucks.
I said trucks because we earned a contract to service and repair all the district telephone service trucks. The opportunity had come up suddenly. The company decided to have the work done outside its own shop when they looked at their costs. We bid on the contract and were awarded it against two other firms. Immediately, it meant we needed two more mechanics. Luckily, some of the guys from the about-to-be-closed shop came by to see if there were any jobs. Duke and I interviewed them and hired two guys who we thought would do a good job and stick with us long-term.
I'd no sooner got Duke settled than I had a visit from Martin Williston and Tom Humphreys. Tom was the real estate agent that had negotiated the rental of Duke's shop for us. Martin was a member of the city council. They had come to see me about another piece of property and wanted to know if I might be interested in it.
The property was about six blocks from our service station and until a couple of years ago it had been a Studebaker/Packard dealership. It closed due to lack of business. No surprise there. What made me pay attention were the service bays, four of them, all with hoists, plus a body shop, and a paint booth. The owner had held onto the property with the hope that someone would want it, but in two years there had been no offers and it was time to force the action.
If the offer had come along earlier, I might have jumped at it. As it was, we were up to our necks in work for the facilities we had, and once again working our people very hard. On the other hand, I was curious about what it would cost and I decided to at least listen to them. Looking back on it now, I'm glad I did. You never know what can happen when you least expect it.
Jurgen, Duke, and I had gone over to the abandoned dealership on a Sunday just to have a look. What we saw made our mouths water. It was everything you'd want in a shop. On top of that, it wouldn't take much to put it in the kind of shape I expect any of our properties to be in. When we left the building, Jurgen suggested we sit down for a moment.
Jurgen had been purchasing a copy of a German language newspaper once a week, just to keep in touch with the happenings in his former country. He said he had just read in the newspaper that NSU and Audi were about to merge. I didn't get why that would be interesting until he told me. Audi was a successor to the old Auto Union company. At any rate, the newspaper reported that Audi would replace NSU and begin an aggressive marketing campaign in North America. They would be looking for dealerships to represent them.
Jurgen had once more planted a seed and then stepped back to see what would happen. I could hear the gears turning in his crafty mind. Auto Union was his old employer many years ago and now there was a chance to see them reborn here in America. I have to admit, I was interested. I wanted to explore the idea, but I didn't know how to go about it.
First things first. I sat down with Martin and Tom and discussed what it would take to buy the property. Martin suggested that the owner was not in desperate need of cash, but did want to liquidate the asset. Tom suggested we make a lowball offer and see what the guy came back with. We didn't have to commit to buying it, but we needed to know some hard-dollar costs.
Next, Jurgen made an overseas phone call to Audi in Ingolstadt to get some more information, finding out if they would be willing to talk to us about a dealership. Apparently they were and had already set up a U.S. operations base in New York. Volkswagen had bought the rights to Audi and it was they we would have to talk to.
It turned out the local VW dealer would have first right of refusal on the Audi brand, but he turned it down. He was anxious to get his feet wet with Porsche as the natural complement to the air-cooled Beetle. So part two of the strategy was available; a franchise.
Part three was the business plan. Before we put out dime one we needed to know that the business would produce enough revenue to sustain itself. There was no point in ending up like the Studebaker guy did. This was the sticking point as far as I was concerned. The more I thought about it, the more I figured we needed an additional brand to sell.
The next-to-final step was financing. How were we going to finance this project? My gut told me that we could probably find the manpower, but where would we find the cash? It was time to call Stumpy once more. He was over in a flash.
"So, let me get this straight. You want to get into the car business, right? And you are thinking about buying Ray Pollard's old dealership and bringing in foreign cars to sell, right?"
I was nodding my agreement as he spoke.
"Well, I don't know nothin' about selling cars, but I know someone who does."
"Who's that?"
"Ray Pollard," he grinned.
I laughed. The simple answer was usually the best. I shrugged and clapped Stumpy on the shoulder. "I should have thought of that. He wants to sell the property, so naturally, he'd want to help us. Can we trust him?"
"Yep. Old Ray is as straight as they come. He'll tell you what you need to know. But, one thing ... don't be surprised if Ray doesn't want to come in on the deal with you if he thinks you've got a winner. He told me he hoped someone would pick the property up and make it go."
"Well, Stumpy, I hadn't even thought of a partnership, but with Ray already owning the property, that might solve some of our financial worries."
"Exactly what I was thinkin'," the round little man nodded. I was getting to like Stumpy more and more as time went on. He was smart, knew everybody, and was a good idea man, especially when it came to finance.
I called a business meeting on Tuesday evening and invited Duke and his number one man, Tommy Nakano. Duke had been praising Tommy to high heaven, and I wanted to see how he handled himself in this situation. We were letting him in on the inside of our family business. If he was as good as Duke said, then he could be an important man in our future.
Mom, Jurgen, Shelly, Duke, Shannon and Tommy all sat down with me in the living room just after seven that evening. Mom had baked a nice big chocolate cake and made sure everyone got a piece before we started the meeting.
I had already told Mom and Shelly what I was thinking, and of course Jurgen knew as well. It was a big step and maybe a dangerous one. I needed everyone to buy-in to make it work. I began by laying out how this had all come about, blaming it all on Jurgen of course. That got a laugh all the way around.
Then we got down to serious business -- how to make it work. I'm an optimist by nature and I tend to look for ways to win rather than how not to lose. Luckily, we didn't have anyone in the room that was really negative. I could see the worried look on Mom's face, but that was natural. I think she was worried I was biting off more than I could chew.
My one real concern was whether we could develop enough volume with Audi to make the business a success. While foreign cars were continuing to rapidly gain popularity on the West Coast, it was still an unknown brand and new business wouldn't be automatic. I was really hoping we could team it with a non-competing brand and give ourselves more volume opportunities. I thought about Jeep, but I was leery of them for quality reasons and their ownership stability. There was a rumour going around the trade that they were for sale again.
Tommy Nakano had sat quietly, listening intently. He was acting very interested, but so far hadn't participated. I decided to draw him out.
"What do you think, Tommy?"
He sat quietly, composing what he wanted to say I suppose. He was nodding his head, in agreement with something? I couldn't tell.
"I agree that we would need another brand. One that would not compete directly with Audi. One that we could have confidence in for quality and factory support."
He spoke in flawless, unaccented English. Duke had said he was very thoughtful and deliberate. Duke also told me he had a wicked sense of humor. What interested me was his use of "we" when talking about the business. I liked that.
"Would you be willing to entertain a Japanese brand?" he asked me directly.
"Yes. But Honda and Toyota are well established. Datsun is the only major brand not well represented locally."
