Chapter 17: Back to School
In business, the competition will bite you if you keep on running, if you stand still, they will swallow you. - Victor Kiam
As my father said, in the ladder of life, you're either climbing up or you’re sliding down. Which way you go is up to you. I learned from him the importance of surrounding yourself with good people who will help you in your climb and of helping others in theirs.
When it comes to business competitors, here’s what I think about that ladder: no matter which rung you’re on, if you’re climbing up, your competitors are going to stomp on your fingers, pull on your legs, and try to shake you to the ground.
Wait a minute, you say. Isn’t this a heartwarming story of inspiration, of rising above challenges, of giving people the ability to live the lives they want to live?
Well, I hope it is. But it is also a story with one undeniable reality: business can be a knock-down, drag-out, bare-knuckled brawl where one side wins and the other side loses. It doesn’t have to be, and in theory, you should be able to peacefully compete against, buy from, sell to, and partner with any company with which you have a common interest. Unfortunately, while that’s a nice theory, at some point, competition means somebody wins and somebody loses. If you’re in business, you know what I mean. If you’re not, consider what Ray Kroc, founder of McDonald’s, had to say on the subject: “If any of my competitors were drowning, I’d stick a hose in their mouth and turn on the water.”
Pretty far from warm and fuzzy.
Don’t get me wrong: competitors serve a useful purpose. They make you think about where you’re strong and where you're weak. They make you focus on your goals and then give you the incentive to keep going until you’ve reached those goals. They make you hire good people and then constantly figure out how to keep those people. They make you think creatively and then manifest that creativity with action and execution. They make you pay attention to your customers’ needs and then work to ensure their satisfaction. With every aspect of your business, competitors make you stronger.
I accept competition as a fact of life, and I even respect what it can do for my business, but I don’t have to like it.
In my youth, my first competitor was muscular dystrophy, followed closely thereafter by the diminished expectations of society. Because I had been diagnosed with muscular dystrophy, people said I’d never amount to anything. Letting my diagnosis defeat me would have been easy, but I couldn’t accept that.
In my battle against muscular dystrophy, I won as best I could.
When I started my business, I competed against the banker who wouldn’t give me a loan, the local businessmen who thought “those boys in the wheelchairs” would never make it, and the suppliers who somehow thought my being in a chair meant they could take advantage of me.
In my battle against society’s small-minded, I won.
As my business grew out of infancy, I competed against those who wanted to lure away my customers—whether they bought my Tri-Wheelers or converted vans and lifts—and who used cheap, poorly built products to cut into my market share.
In my battle against business competitors, I’ve won far more often than I’ve lost.
From Frankenstein and my postal Jeep to the hundreds of thousands of products that have gone out our doors, I’ve always had a special interest in protecting, nurturing, and growing the mobility industry. It’s not merely that I didn’t want anyone to take it away from me; I just didn’t want anyone to do it halfheartedly or for the wrong purpose. Customers who need mobility products can’t afford to put their trust in shoddy products offered by people who want to make a quick buck. As a CEO, and also as someone who lives life in a chair, I guess you could say I’ve always felt protective of the disabled community. Perhaps that’s partly why my battles against business competitors have been so intense.
A case in point is the school bus segment of our business. I will recount a competitive experience I had in this arena, but first, let me offer some perspective as to why this battle was so important.
School busing is a critical and large part of educational ecosystems all over the world, and it is especially so in the United States. Just as our nation’s schools must adhere to strict regulations mandated by the Americans with Disabilities Act (ADA) of 1990 and other rules regarding students with special needs and disabilities, so, too, must school buses.
As a market segment, school busing is big and getting bigger. With the population in the United States growing dramatically, school buses now give children more than 10 billion rides to and from school each year.
Let me provide some historical perspective. About 140 years ago, Massachusetts became the first state to enact legislation permitting public funds to be spent on transporting children to school. In converted wagons used on farms, these canvass-covered “school wagons” carried nineteenth-century children to and from the surrounding countryside to more centrally located schools.
Fifty years later, the rest of the states passed similar laws. When they did, the concept of the modern school bus was born as steel-bodied motorized trucks began to take the place of the outmoded horse-drawn school wagons. What was the reason for this evolution? Education was becoming a national strategic imperative, a notion supported by the states’ efforts to consolidate schools and mandate attendance during this period.
By 1950, when I was 10 years old, approximately 115,000 American school buses carried 7 million students—excluding me and other disabled kids—to school. In 1975, those numbers skyrocketed when Congress passed the Education for All Handicapped Children Act, which required all federally funded public schools to provide transportation to and from school for children with physical and mental disabilities. Today, at a cost of about $500 per year per student, approximately 23 million children, many with special needs, travel nearly 4 billion miles on about 450,000 school buses.
There is a great irony in this. As a young student, I was unable to benefit from this kind of accessible transportation, but as an adult, I get a lot of satisfaction out of knowing that a good majority of those school buses use my company’s lifts. In short, while school taught me nothing about competition, competition taught me plenty about school. I put that education to good use.
In the mid-1970s, we created our first lift for vehicles with high floors. When the Education for All Handicapped Children Act passed, we knew school buses had the potential to give us a good amount of growth, and we thought our new lift would position us nicely for that market.
At the time, we were selling quite a lot of our new lifts through Mobile Tech, a division of Collins Industries that had already been making small school buses for a couple of years and had some knowledge of the industry. All was going well, and both of our companies were making progress—until one day when the president of Collins Industries, Don Collins, came to Winamac to take Burnie Blackmon and me out to dinner. At dinner, I got a real taste of what competition was all about.
As our dinner was winding down and Don pushed away his plate, he lit a big, fat cigar and sat back in his chair.
He patted and rubbed his belly. “Ralph, we’ve been doing pretty good together, haven’t we?” he asked.
“Yes, we’ve been doing all right,” I answered.
“Well, I think we can do better,” he said. “I think there’s a lot of room for growth. You agree?”
“Sure,” I said. “I think the market has a lot of potential.”
“I’ve been thinking,” he continued, “and I think there’s only one way we’re going to grab this thing and really make it work.”
“What do you have in mind?” I asked.
He puffed on his cigar a couple of times and blew a thick plume of blue smoke toward the ceiling. Then, he leaned toward me and grinned with what seemed like hundreds of sharp teeth.
“Ralph, I have a proposition for you,” he said. “I want to buy your little company here, fold it into Mobile Tech, and move it to Kansas, with the rest of my businesses. What do you think about that?”
I was stunned. He acted like he’d just given me a birthday present, like I should be shouting with joy, relieved of a burden and grateful for his generosity. Just a minute earlier, we were business partners, doing well together.
I looked at Burnie and turned back to Don. “We’re not for sale.”
With that, his entire demeanor changed.
He scowled and pointed the tip of his cigar at me. “Listen, you’re charging me way too much for those lifts, and neither of us is making what we should,” he said, now with a different tone in his voice. “Now, you know I don’t need you, because I can make these things myself. But I thought I’d do you a favor. I thought I’d take this thing off your hands and get it out of this damn cornfield and over to Hutchinson where it belongs.”
“You don’t need me, but you just offered to buy my company,” I said. “There’s something wrong with that picture, don’t you think?”
“I didn’t offer to buy your company,” he sneered. “I told you I’d buy your company.”
“And I told you we’re not for sale,” I said.
Don was accustomed to getting his way, and with my flat-out “no,” his face changed from white to red to purple in seconds.
I continued, “I’ll tell you what I’ll do. You say you’re paying too much for my lifts. Well, what do you think a fair price is?”
Now he was seething. “You don’t get it. I can build a better lift myself and beat the pants off you!”
“Then go ahead and build it,” I said, turning to Burnie. “We’re done here.” I began to back up my chair.
“Now hold on a minute,” he said. “What do you mean ‘We’re done’?”
“That’s it,” I said, with finality. “C’mon, Burnie.”
He snorted a sarcastic laugh and sat back in his chair. Grinning again, he said, “Well, boys, if that’s how it’s gonna be, I’m afraid I’m gonna have to put you out of business.”
As Burnie and I went toward the door, Don, aware that his final attempt at bullying had failed, yelled at our backs, “Ralph? Ralph! HEY!”
We kept right on going. Outside, I had that old familiar feeling: I’ll show him.
A few months after that episode, we took one of our new lifts to see a purchasing agent at the Wayne Corporation, a large bus manufacturer in Richmond, Indiana. Collins Industries hadn’t been our only customer for our school bus lifts, but without that company on board, we needed to expand our reach. Wayne had been in the school bus business since the 1800s, back when school buses were the horse-drawn wagons I described earlier, so it had deep knowledge of the industry and seemed like a good fit. What’s more, Don Collins had started selling his own lifts directly to Wayne, and we had heard his lifts had issues with quality and reliability. Plain and simple, they were cheaply made, and school districts were complaining about them.
Because we did not have a school bus on which we could demonstrate the lift, we installed it on the back of a pickup truck. The purchasing agent, a short, roly-poly man with red hair, watched as our lift worked perfectly. His nickname was Red, because not only was his hair red but I believe he also chewed Red Man tobacco.
Red liked what he saw. When we finished our sales pitch, he asked how much we wanted for it. When I told him, the atmosphere changed, much like it had with Don Collins. Red paused, walked to where I was sitting, leaned over me in my chair, and said, his voice dripping with condescension, “You don’t actually think I’m going to pay that much for that thing, now do you?” As he spoke, some spit flew out of his mouth and landed on my face. It was unintentional, but the combination of his condescending attitude, his tobacco-laced spittle, and the fact we were sitting in a parking lot on a sweltering hot day didn’t sit well with me. I was there to make a sale, so I forged ahead. I told him, with all the politeness I could muster, that I thought we had priced it fairly because it was much higher quality than the Collins product they were using, and I knew how much material and labor costs went into manufacturing. Undeterred, he bid us goodbye, and we went back to Winamac.
Three years later, we finally made the sale. In the interim, we learned that Collins had shut us out of the market by cutting deals with all of the bus manufacturers to make sure their lifts were the ones being installed in their buses. They were willing to go with the cheaply built, poor-quality product because they could make such a high margin selling them. We were stuck and needed to find another way into the market.
We decided to change our go-to-market strategy and directly approach the dealers who served the school districts. It worked, for one main reason: the complaints about our competitor’s quality were getting louder and more frequent, and their business was hurting. Because the school bus dealers were the ones who dealt with the school districts on a day-to-day basis, they got the brunt of the criticism, despite the fact they weren’t the manufacturers of the buses or the lifts that were in them.
One of those dealers was Bob Matthews, who was buying his buses from Thomas Built, a large manufacturer out of High Point, North Carolina, that was using Collins’s lifts. Bob came to see us in Winamac because the quality issue was getting out of hand. The school districts depended on him to deliver quality products that lasted, and he wanted to make things right. Rather than make me travel to New York, he flew to Winamac in his private plane, where I picked him up and brought him to the plant.
Within an hour of watching our lifts in action and hearing us talk about the care and effort we put into making them, Bob was sold. He wasted no time in placing an order for 55 lifts. Next, instead of waiting for the lifts to be shipped, he said he would bring 55 buses all the way to Winamac so we could install the lifts ourselves. Now this was a man of action—my kind of guy.
Bob was getting his buses from Thomas Built, who had been buying and installing Collins’s lifts, putting in doors, and then shipping the completed buses to his dealership in New York. Because Thomas Built had made a deal with Collins and wouldn’t buy our lifts, Bob bypassed them by going to us directly. As a result, 55 buses came to Winamac with Thomas Built’s doors, but they went back to Bob with 55 Braun lifts.
After the first 55 buses, we started shipping our lifts as kits to Bob, who then began installing them at his own facility. It took a while for Thomas Built to figure out that although the same amount of buses was being shipped, a number of them didn’t have any lifts in them. As word got around that Bob was taking the direct route to get our lifts, other school bus dealers began to follow suit. Soon, more bus manufacturers were watching their buses go out the door, minus any lifts, along with revenue they would have previously gotten. The Wayne Corporation was one of them. That’s when I got a call from Red, the purchasing agent from Wayne, who this time had a decidedly different tone. He was missing a lot of revenue and wanted to make a deal.
The bus manufacturers had taken five years to decide they’d better jump on the bandwagon and start using our lifts. Ultimately, our lifts began going to all of the bus manufacturers, and they still do today. We had to go through the back door to get there, but it was worth it.
Fast-forward all the way to 1997. Don Collins had tried in vain to beat me with Mobile Tech in the school bus lift business. He had also tried and failed to get into my consumer business of converting vans. Finally, he retired and left the business to his son, also named Don. In an effort to hang on and get back at me, Junior had seen a Swedish design from UVL, makers of under-vehicle lifts—lifts stored under vehicles instead of inside them—and decided to copy the design and manufacture the lifts through Mobile Tech.
UVL had a nice design and very good lifts, but when Junior tried to reengineer the lifts so he could avoid paying royalties on the patent, he ended up making an inferior product and still infringed on the patent. I had heard about this and knew UVL’s design was strong, so I bought the UVL patent for our company. When I did, I informed Junior and Mobile Tech they were infringing on our newly acquired patent and would have to pay us royalties. He was not at all happy. However, he knew he could not afford to make the royalty payments and also realized Mobile Tech did not fit within Collins Industries’ long-term strategy. He was in a jam with no way out.
I called Junior and offered him a deal: instead of going into a long and costly legal battle over the patent infringement, I would buy Mobile Tech and enable Collins Industries to focus on its core business. Defeated, Junior gritted his teeth and made the deal.
After I hung up the phone, I smiled with satisfaction. Alone in my office, I realized how far I’d come from the restaurant that night when Don Collins Sr. told me either I was going to sell him my company or he was going to put me out of business. Having fought the battle and won, I felt victorious.
I turned to leave my office and move on to the next challenge, but before I did, I took one last look at the phone and said to the empty room: “Twenty-five years ago you poked your cigar at me and said you were going to put me out of business. You failed, and I’m still here. Welcome to the big leagues. Welcome to the cornfield.”
Continue Reading Rise Above:
Rise Above: Prologue
Chapter 1: Dirt Farmer's Son
Chapter 2: As Heroes Go
Chapter 3: Barriers and Bridges
Chapter 4: The World as a Classroom
Chapter 5: Moon Shots
Chapter 6: Adventures in Machine Making
Chapter 7: Changing Times
Chapter 8: Of Mentors and Men
Chapter 9: Neither Rain Nor Snow
Chapter 10: Sparks Fly
Chapter 11: Crazy Good Times
Chapter 12: Moment of Truth
Chapter 13: Ready, Willing, and Able
Chapter 14: Pioneer Spirit
Chapter 15: The Fire
Chapter 16: Out of the Ashes
Chapter 17: Back to School
Chapter 18: It's a Small World
Chapter 19: Let's Make a Dealer
Chapter 20: Inventing the Future
Rise Above: Epilogue