No Rest for Fast-Moving Rescuer of Bekins Co.
Thomas E. Epley, chairman of Bekins Co., recently moved into a new ground-floor office at Bekins’ modest, red-brick headquarters building in Glendale. But in front of his desk is a wall still undergoing renovation, its wallpaper torn away and awaiting a new finish.
The wall is an apt metaphor for Bekins since Epley took the helm of the venerable moving company in 1985. At that time, Bekins was listing badly, hurt by a disastrous diversification effort and the deregulation of the moving industry, which intensified competition and kept downward pressure on prices.
Epley responded by stripping away all of Bekins’ ill-fated acquisitions, which ranged from pest control to financial services. “There wasn’t a single one of them that was viable,” he said recently.
And once Epley was left with just Bekins’ core moving business, he formed a group that bought the company from Minneapolis financier Irwin Jacobs for $66 million in a leveraged buyout in May, 1987. The moving business was barely profitable, but Epley was convinced that he could bolster its performance.
Praise From Agents
He has, by many accounts. Several of Bekins’ independent agents--locally owned moving companies that represent Bekins--praised the company for vastly improving its computer system, which tracks delivery schedules and billing and thus is the lifeblood of the business.
“They are definitely leading the pack” in computer automation, asserted Dennis Eversole, general manager of Acme Moving & Storage, a Bekins agent in Belmont, Calif. “I would not have said that three years ago.”
But like his office wall, Bekins still presents Epley, 48, with work to be done.
The moving business in general is a slow-growth business with profit margins of less than 5 cents per dollar of revenue. Bekins’ revenue last year edged up only 3%, to $325 million from $317 million in 1987. Bekins is profitable, although Epley would not disclose any details.
Bekins also faces lots of competition; the company is the nation’s fifth-largest mover, with about 8% to 10% of the U.S. market. And at the moment, industrywide growth is flattening because of slowing housing sales, particularly in California, where Bekins is best known.
“Right now, we’ve got a real softness in the California market,” Epley said. “That’s caused us a problem.”
On the national level, it’s also debatable whether Epley has yet lifted Bekins a notch in the nationwide moving market, according to Bekins’ rivals.
Hasn’t Seen Change
“I have not really seen any change of direction in Bekins,” shrugged James L. Wilson, executive vice president of United Van Lines, a Fenton, Mo.-based concern that is the nation’s second-biggest mover. “They don’t have a major impact on us.”
Epley, a Jeannette, Pa., native who earned engineering and business degrees from the University of Cincinnati and Northwestern University, respectively, has been busy enough trying to improve Bekins’ existing businesses.
Its two primary divisions are Bekins Van Lines and Bekins Moving & Storage. The van lines business, which accounts for two-thirds of Bekins’ revenue, acts as the main conduit between Bekins’ agents at each end of a move. The agents, either independent or company-owned firms, are the ones that actually pack and move the goods. But Bekins’ van lines division schedules the packers and drivers, bills the customer, arranges for storage, collects the customer’s money and then doles out the cash to the various parties involved.
The moving and storage division, meanwhile, is composed of Bekins’ company-owned agents, which are mainly in California, Texas and Florida. Each of those agents mostly serves its local area.
But beyond hauling household goods, Epley also is pushing Bekins in other moving-related businesses to fatten the company’s profits.
For instance, Bekins is trying to increase its handling of specialty freight, such as computers or other products transported to trade shows. The company also moves and installs furnishings for new hotels and retail outlets.
More Stores
And Bekins is expanding the number of its Bekins Boxstores, which are retail outlets that pack and ship specialty items--an antique clock, for example--and which sell boxes, tape and other packing materials for the do-it-yourself mover. Bekins already has 17 company-owned stores in California. Last week it began making plans to franchise the stores.
“Boxes, as mundane as that may be, are very hard to come by that have any strength or capabilities for storage or moving,” Epley said.
But Bekins has no plans for the same type of pell-mell expansion outside of the moving business that it pursued a decade ago and that Epley had to dismantle.
“We are not looking elsewhere for growth,” Epley said. “We’re working from within; we’re trying to make sure we’ve got that last fine-tuning in place.”
Bekins traces its roots to 1891, when Martin and John Bekins, sons of a Dutch immigrant, founded the company in Sioux City, Iowa., with three horse-drawn vans, a warehouse and 12 workers. Four years later, they moved the operation to Los Angeles and opened their headquarters in an old van with the wheels removed.
The Bekins family retained control of the company for the next several decades, but by the early 1980s, a now publicly held Bekins--its poor acquisitions and deregulation taking their toll--became the target of a takeover fight between two corporate raiders, the Belzberg family of Canada and Irwin Jacobs. Jacobs won with a $92-million purchase completed in 1983. No Bekins family members are still involved in management.
Before joining Jacobs to run Bekins, Epley had spent 15 years at FMC Corp., a major producer of machinery, chemicals and defense systems. He became known as a trouble-shooter, at various times heading up struggling FMC units involved with specialty chemicals, phosphorous chemicals and defense products.
Biggest Problems
“I tended to gravitate toward the businesses that had the biggest problems and biggest negative trends,” he said. “I get very bored managing something that is in a steady state where you make a little improvement here and there over time.”
Epley got just what he wanted at Bekins. After Jacobs hired him, Epley overhauled Bekins’ management in addition to its computer system. He also pared Bekins’ entire work force by 7%--to about 2,000 from 2,150--and otherwise claims to have cut Bekins’ overhead costs by more than $3 million a year.
Besides saving money, Epley’s moves have made Bekins more efficient, to hear some of Bekins’ agents tell it. Dan Kaske, owner of Apace Moving Systems, an agent in Orange, said that before Epley took over, Bekins “was notoriously very, very slow in paying their agents,” often taking up to 90 days. Bekins’ new computer system “enables us to pretty well get paid in a 45-day period,” Kaske said.
Epley’s plan is to maintain steady, albeit thin, profits at the core moving business and to pad those earnings with its new ventures in hauling specialized freight and operating packing/shipping stores. But if housing sales continue dropping or the overall economy weakens to otherwise depress demand for moving services, Epley could have his hands full.
Epley’s group acquired Bekins in a leveraged buyout, meaning the group borrowed most of the money using Bekins’ assets as collateral. Bekins will have to make payments on that debt for the next several years--whether business is improving or not.
And Epley might have a hard time finding places to save cash if profits are squeezed further. After all, he said of the company, “we’ve basically gotten it as lean as it can be.”
THE MOVING INDUSTRY’S MAJOR PLAYERS The table below ranks the nation’s biggest moving companies by their 1988 revenue from moving operations only. Many of the movers are part of larger parent companies, which have other sources of income not included here.
In millions
Company 1988 Revenue N. American Van Lines $540.4 United Van Lines $425.6 Allied Van Lines $383.6 Mayflower Transit $309.8 Bekins Van Lines $203.8 Atlas Van Lines $195.9
Source: Household Goods Carriers’ Bureau
