1-Day Paint Regains Its Polish : Automotive: The company’s founder returned to operations in 1990 only to find major problems. He conducted a massive reorganization and is now back on top.
At first glance, it seems the recession hasn’t even grazed 1-Day Paint & Body Centers Inc. Last year, the family owned business posted an 18% jump in profits to $1.5 million. Since January, the employee list has grown 12%, and the $27.5-million sales company is preparing to expand into foreign markets.
The company’s founder likes to foster the impression that things are fine. “What recession?” said Javier (Rick) Uribe Sr., who lives in Calabasas.
But 1-Day has been battered by the recession. Even worse, over the past seven years the company and the Uribe family have struggled with widespread dissension among three of Uribe’s children and three in-laws who looked over the business in his absence. Profits, meanwhile, plummeted 78% from the company’s record in 1984. There was so much dissension that at one point the Uribes even discussed dissolving the company.
“A family business is a very high-stakes, traumatic entity,” says John A. Davis, president of the Owner Managed Business Institute in Santa Barbara. The Uribes hired Davis’ consulting company to help smooth communication among family members.
In the last two years, 1-Day has worked out many of the issues that were blocking its growth. “We didn’t quit trying,” said Uribe. “Now we’re enjoying the best time of our company’s life.”
The root of the problem was that like many family businesses, 1-Day had not groomed a leader to step into the president’s slot--a situation that created chaos.
The squabbling began in 1985 when Uribe fell ill and removed himself from daily operations. At the time Uribe’s son and two sons-in-law were working at 1-Day and without a strong leader, management grew lax, expenses rose, training was ignored, and family conflicts intensified.
Fortunately, Davis’ consulting firm specialized in family businesses. The Uribe family held sessions twice a month. “If people are heard and recognized, any wounds inflicted during transitions of power can be more easily healed,” Davis said.
Uribe Sr. came back to work in 1990, and his family reaffirmed its commitment to make the company work. “That decision turned all the negatives into big positives,” Uribe said. Aligned with a single goal, the family began making long-range plans for the first time in years.
The Torrance-based corporation, which has its highest grossing store in Van Nuys, specializes in painting and repairing automobiles. The company owns 33 auto shops throughout California and in Nevada, Arizona and New Mexico. Its largest competitor is Earl Scheib Inc., with more than twice the revenue, eight times the number of centers (272) and the same level of profits ($1.5 million) as 1-Day.
In Southern California, Earl Scheib has more stores than 1-Day. But Uribe says locally 1-Day paints more cars and rings up more sales than does Earl Scheib.
Uribe once worked for Earl Scheib, where he learned the auto paint business. In 1967 he tried to borrow money to start his own auto paint business, but was refused. So Uribe’s father borrowed $2,000 and gave it to his son.
Uribe tackled the wholesale market, rather than the retail market that Scheib then dominated with his $29.95 paint jobs. “I’d drive to used-car dealers and say ‘I want to paint your cars,’ ” he said. For $32.50, he would pick up, paint and deliver used cars.
In three years, Uribe had three stores and half-a-million dollars in sales. In the early 1970s, Uribe shifted to doing retail paint jobs. 1-Day’s growth was fueled by the boom in Southern California, where the company now has 23 centers, often buying the property and buildings for the new centers.
Today, 80% of 1-Day’s centers are owned by the family or the company. “Real estate is one of the biggest strengths of our company,” said Tom Aguirre, vice president of finance and Uribe’s son-in-law.
The company has marketed itself as a quality auto-painter whose lowest price is $219--although Scheib’s prices are even lower. “I’ve been in business with them for 10 years and they’ve always given me excellent service,” said Yehuda Riess, used-car manager of West Valley Toyota in Canoga Park. “Sometimes it’s cheaper to go elsewhere, but it’s not the same quality.”
In 1983, 1-Day’s sales hit a then-record $26 million, while pretax profits jumped to nearly $5 million--another record.
By then, Uribe’s children--Teresa, Maria and Javier Jr.--had all married and graduated from college. In 1985, his son Rick Jr. joined the company, as did Teresa’s husband, Brian McGilvray, and Maria’s spouse, Aguirre. Uribe’s wife, Maria Fe, remained a director. That year, Uribe Sr. suffered a nervous breakdown. He learned he was a manic depressive with a chemical imbalance that affected his moods. Although he still kept tabs on the business, he was no longer a hands-on manager.
Meanwhile, the siblings and in-laws found it difficult to work together. By 1988 Rick Jr. was marketing vice president, McGilvray, vice president of human resources, and Tom Aguirre, vice president of finance.
“There were personality differences between me and” Rick Jr., McGilvray said. It didn’t help that the two men had overlapping responsibilities and no clear direction from above. By 1989, the family tensions had risen to the point where a consulting psychologist was asked to help clear the air.
When Uribe returned to daily operations in 1990 he found that 1-Day was suffering from accounting problems. “I had two highly compensated staff members who . . . had been arbitrarily sticking expenses from operations into corporate overhead,” recalled Uribe. The accounting trick made operations look good, he said, but it masked the company’s weak financial condition.
It became evident just how weak operations were when 1-Day’s 1989 pretax profits were $1.1 million--only half the prior year’s figure.
Fortunately, the company had income from real estate holdings to offset 1-Day’s slide. This gave management time to slash expenses: advertising was cut 8%; professional fees and outside services were slashed 30%; manager’s commissions and fees fell 10%.
The company asked newer employees to contribute more to a company-sponsored health plan, which shaved 15% from health expenses. The company shrank its payroll from 600 to 450 people, mostly through attrition.
Then 1-Day turned its attention to its organizational structure. The executive team roamed throughout the 33-center system, operating individual shops when managers were absent, and evaluating things. “We found that, instead of being doers, the regional managers had become overseers of their own personal fiefdoms,” said Uribe Sr.
In a sweeping reorganization, Uribe weeded out or reassigned those employees who were not performing. If one supervisor performs well, he is asked to work with another supervisor who is struggling until that supervisor’s profits improve too. During this time, all of the top managers took a 15% cut in pay, including Uribe Sr.
Today, the dramatic changes seem to be paying off. The company is leaner and much more efficient. Although revenues at year-end 1991 fell 12% to $27.5 million, pretax profits jumped nearly 18% to $1.4 million.
By spring, the company plans to open a facility in Monterrey, Mexico--its first foreign operation--with plans for a Canadian subsidiary. And the company intends to appoint outsiders to its board of directors. “You need outsiders on a family board to depoliticize touchy issues,” Davis said.
One of the board’s first duties will be to search for a new company president.
“But I’ll still be chief executive officer,” Uribe said. “I want to stick around to enjoy the family’s success.”
