LEWISTON, Maine (Oct. 8, 2001)—You can chalk it up as somewhat of a quirk of fate.
Acting on some information he heard “through the grapevine,” about 18 months ago, John Quirk, who owns Quirk Tire & Service Corp., sent a letter to Thomas O. Auger. In essence, he asked the 74-year-old owner and CEO of VIP Discount Auto Center in Lewiston “if there was any reason to get together.”
He wasn't talking about a friendly game of golf with the man he'd never met.
The answer came a short time later with a phone call from Mr. Auger (pronounced “Aw-shay”). Let's talk, he said. Talk they did.
What developed led to the Sept. 28 merger of VIP's 49 retail stores in New England with the one retail store and combination commercial/retail outlet operated by Westborough, Mass.-based Quirk Tire. The deal—for an undisclosed amount—gave Mr. Quirk a majority interest in what he called a fusion of “the successful strengths and heritages of two family-owned companies into a customer-focused team.”
The combined companies will operate a total of 270 service bays within Maine, New Hampshire and Massachusetts and have projected revenues of $95 million.
All that aside for a moment, Mr. Quirk, 43—now president and CEO of the “new” VIP Discount Auto—pointed to what really impressed him initially: “Before we even seriously spoke, they asked me to spend some time in their stores and see where the weaknesses of the company were. So I really have to tip my hat to the Auger family…. They emphasized they wanted future growth for the company and wanted whomever had the best potential to take VIP to the next level.”
Thomas J. Auger, VIP's president and son of the founder, said he received “calls from Monro Muffler & Brake, Auto Zone, Advanced Auto Parts, Discount Auto Parts”—all interested in exploring buyout possibilities. “But we really wanted to keep VIP as VIP....
“We're a big family up here, and the employees are important to us.”
VIP looks to its auto parts and accessories business for some 40 percent of its revenue. About 10 percent of VIP's revenues are from its wholesaling business.
It's not that VIP was struggling. “We're a very profitable, strong company,” Mr. Auger said, with sales last year of $82.7 million and projected 2001 revenue of $87.5 million.
“My father's 74,” he continued. “We knew eventually a transition would have to be made one way or another, and this makes it a lot easier for estate planning and dealing with the IRS.”
Pausing to reflect on the obvious question—Why a merger now?—he at first candidly admitted: “I really don't know the answer to that,” but moments later said, “Maybe it's a lot easier for a stranger to come in.”
His dad will continue to work for the company on a part-time basis as a tire buyer. The younger Auger will become vice president of merchandising and will handle buying and advertising. “Dad's love is tires,” he said. “He still wants to come in, hang his hat and contribute.”
Still, Mr. Auger admitted the company has been going in several different directions over the past few years. While his focus was on the retail and parts businesses, his dad was more concerned about VIP's wholesale, fleet and tire operations, “and both our passions have clashed. This (merger) will bring it all back together…we need to all be on the same page.”
But believe Mr. Auger when he says, “I feel like a load has been lifted from my shoulders.”
His new position will keep his hands full, but will allow him to be more focused. “John Quirk is planning to grow this company and we're excited about it,” he added.
Then he touched upon some of the conditions that can make running a tire business—any business, for that matter—so difficult. “Dealing with customer complaints and employee issues is staggering,” he acknowledged. “In this job market, you try to keep good people. And every customer feels like they're a lawyer. If you don't do exactly as they tell you to do, you're going to be in court.
“It's a full-time job taking care of that, and right now it's not going to be my headache anymore. Let someone else worry about the negatives. I want to be involved in the positives of the business. I like dealing with vendors and factory people and numbers and planning and seeing sales grow.”
Mr. Auger's sister Nancy Hunt will remain with VIP as vice president of management information systems; her husband David will continue as a buyer. A brother-in-law, Michael Sweeney, will be vice president of distribution.
When VIP's employees were told of the acquisition on Oct. 1, Mr. Auger said there were quite a few teary eyes. He and Mr. Quirk then held meetings all that week with store managers to introduce “and pass the baton” to the new owner.
The combined companies will employ more than 1,000, and there will be no job losses, Mr. Quirk told Tire Business. For the most part, the entire senior management of the firm and he are “on the same page, with the same vision. I think the comfort level with me is very high. Other people could have come in and chopped the company up in a lot of different ways, closed some things, but that's not going to happen.”
For at least four years Mr. Quirk has been looking for a “sizable” retail acquisition, he said. “I've talked to a lot of competitors, but didn't find a fit that financially made sense. We're looking at the industry five to 10 years out…as to where we're going to be.
“The retail end of the business is the only true growth segment in the industry that's left. It's becoming the more profitable segment of our business and the one we felt was a better long-term strategy to follow.”
Mr. Quirk said his objective is “to get these 49 stores to execute a better service product than they do today. We're going to have our hands full doing that.”
His primary focus will be to “train our people and get them to understand what they need to do to be much more customer focused than they are today.”
He acknowledged that VIP is a relative newcomer to tire installation and automotive service, easing into it only about eight years ago. It primarily had been a wholesale auto parts distributor. The goal is to “turn VIP into a first-class auto service provider, and we've got a long way to go before we can say we're there.”
The parts business has been flat for about two years now, Mr. Quirk added, so by boosting the service segment “we think that can help drive our parts business.”
Auto service has accounted for about 55 percent of Quirk Tire's overall revenue compared to only about 20 percent for VIP. But Quirk relies heavily on its commercial business—it is one of New England's largest distributors of giant tires, supplying about 150 rock quarries—and also has a wholesale operation that supplies new- and used-car dealerships and body shops.
Quirk Tire operates 18 service trucks covering an area 150 miles out from Greater Boston, taking the company into surrounding states including Maine, Vermont and Rhode Island.
Putting VIP's auto service operation under a microscope is perhaps the tip of the iceberg, Mr. Quirk said. “We need to get VIP to execute in all areas of the company—everything we do—to concentrate on ourselves because we are the product.”
To accomplish that, the company will make a concerted effort at training its troops. “We had no training at all,” Mr. Auger said. “If you're going to survive in today's environment, you need good training.
“We want to go from being the least-trained to the best-trained people in the business.”
VIP has begun work on a new 3,000-sq.-ft. training center that will occupy—and build onto—existing warehouse space at a VIP store in Lewiston. Mr. Auger said the new center will include alignment equipment, a parts counter and audio/visual aids. Having no formal training program, Mr. Quirk said, was one of the glaring shortcomings he found when eyeing up the VIP acquisition.
Overall, a company-wide facelift of all VIP stores is planned, and Mr. Auger said consideration is being given to installing alignment racks with 20,000-pound capacities to replace the current 9,000-pound versions in use in order to be able to handle more light commercial work.
Quirk Tire's retail store in Watertown, Mass., where the company had been based for 75 years, is undergoing a five-month renovation and will become a VIP store—the largest in the chain. Four years ago, Quirk built its commercial/retail outlet in Westborough, and relocated its headquarters there, but Mr. Quirk will now call VIP's Lewiston corporate headquarters home.
There are no immediate plans, however, to add new outlets. He believes VIP's “growth kind of got ahead of them. The worst thing we could do right now is to open new stores. We need to get everyone thinking the same way about what VIP really stands for.”
Mr. Quirk would like to see the company become more proactive in undercar work, and more aggressive in tire merchandising by expanding its currently minimal original equipment product line and offering better selections. The dealership currently handles Centennial, Continental, Cooper, Firestone, General, Goodyear, Kelly, Michelin, Pirelli, Multi-Mile and Uniroyal. He said his “strategy is to simplify our lines, add about 30 percent more SKUs and have more of an everyday lineup than exists today.”
He also believes by not making an effort to inspect vehicles on a daily basis VIP is “letting a lot of revenue slip through our fingers.”
Nonetheless, he noted that since first exploring the acquisition he has developed a “pretty special relationship” with the elder Mr. Auger.
In a press release announcing the merger, Mr. Quirk described this as an “exciting time” for both firms. “My family business is celebrating our 75th anniversary this year and the Auger family has had a 43-year-long reputation of excellence. Together we will focus our combined commitments to customer satisfaction.”