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News from the industry

October 11, 2010
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Retail deal may create car-care giant

Kmart, which emerged from bankruptcy just last year, announced this fall it would buy Sears for $11 billion, including the transition of all retail car-care shareholdings and branches within both companies.

The buyout creates the country’s third-largest retailer. The new company, named Sears Holdings Corp., would have an estimated $55 billion in annual revenue and more than 3,500 retail locations.

Now, Kmart gains control of the Mr. Goodwrench automotive service brand and its hundreds of locations nationwide, which are major competitors to independent fast lubes.

Kmart and Sears will remain separate brands, but company officials say they will be converting some Kmart stores to Sears locations, and many market researchers are wondering what might be changed during store conversions.

It is common during retail consolidations, experts note, for some suppliers to lose their shelf space. Such a consolidation could impact many of the car-care suppliers that sell through both chains, although it is too early to know who will be affected.

The deal puts Sears Holdings just behind Wal-Mart and Home Depot as the biggest retailers in the country, but it is yet undetermined how Sears Holdings will manage its brands.

Wash chain gives $1.5 million corporate gift

Delta Sonic Car Wash Systems offered $1.5 million to the Roswell Park Cancer Institute, making the donation the largest corporate gift accepted by the institution.

Robert Klein, Delta Sonic's senior executive vice president, said that the carwash company wanted to reinvest in the city, while supporting research into cancer — a benefit that goes well beyond western New York.

"Here's an opportunity to give back to a community that's been so good to us," Klein said in the article. "The need is there."

The donation will go toward the Center for Genetics & Pharmacology, a 170,000-square-foot facility that is under construction in the area.

The building, scheduled to be completed by the winter of 2005, is a key component in the Buffalo Niagara Medical Campus, which is expected to help the city's future economy.

Delta Sonic is currently building an expanded carwash nearby the medical complex. The expansion, pursued for years, was finally approved this summer after objections from neighborhood residents that it would create too much noise and traffic.

Big-box lube shop faces unionization attempt

Lube shop employees at Loveland, CO’s Wal-Mart Supercenter are seeking union representation in their dealings with the retail giant, which has historically halted organization efforts by its workers.

Nine of the 17 workers at the store’s Tire and Lube Express signed cards indicating their interest in unionizing, according to the local United Food and Commercial Workers (UFCW).

In the past, Wal-Mart has fought the UFCW over the union’s attempt to organize tire and lube workers at several Wal-Mart stores across the country, and have cancelled unionization elections for many interested lube workers.

A common concern in the fast-lube industry is that the unionization of Wal-Mart lubes may increase the pay rates for lube workers, and affecting all independent lube operators as well.

Labor experts predict that the union’s attempt at organizing smaller departments within domestic Wal-Mart stores is probably part of a larger plan for labor unions to gain a toehold within the retail giant.

Wal-Mart’s lack of unions has been cited by competitors as a reason the retailer can offer lower prices.

The cards were submitted earlier this month to the National Labor Relations Board. If the workers’ petition is certified, the board will schedule a vote for the department.

Major wash distributor undergoes branding change

Self-serve franchise Spot-Not Car Washes’, Springfield, MO, parent organization has changed its corporate name.

Parent company Raco Car Wash System, Inc., a major carwash distributor, changed its corporate name to Spot-Not Car Washes, Inc.

The change was made to better reflect the core business; franchising Spot-Not Car Washes has been the main corporate focus for several years. The name change won’t affect in field operations for the franchisees of the company.

KO Manufacturing will continue to produce Raco brand equipment for the Spot-Not locations throughout the South and Midwest, and provide replacement parts for Raco equipment.

Mace Security revenue up, carwash profit down

Mace Security International Inc.’s (Nasdaq: MACE) revenue during the first nine months and third quarter of 2004 decreased for its car and truck wash segment.

Revenues from Mace’s wash segment decreased by $1.7 million in the first nine months of 2004 compared to the same period in 2003.

The decrease is primarily a result of the divesting of five carwash facilities from 2003 to 2004, and lower volumes in its Northeast, Florida and Texas regions.

The volume-related decrease in carwash revenue was partially offset by a 4.3 percent increase in average wash and detail revenue per car, from $14.45 in the first nine months of 2003 to $15.07 this year.

However, Mace’s Electronic Surveillance Products Division increased in revenue from $836,000 in 2003 to $6.1 million in 2004, a more than 600 percent increase.

Carwash owner indicted on tax evasion

Michael Buonopane of Rumson, NJ was indicted on charges of failing to pay sales and payroll taxes at his chain of Mr. Good Lube oil-change shops and Country Sudser Car Wash outlets.

Authorities said that the tax fraud case, amounting to $4.8 million in state and federal taxes, might be the largest that investigators have ever encountered.

Although Buonopane purchased his first Mr. Good Lube shop in 1988 and eventually expanded to 14 locations and six carwashes, he failed to register properly with state agencies and file appropriate reports with the Division of Taxation, Labor & Workforce Development.

Buonopane will appear before the Supreme Court for arraignment and bail. There are 25 counts against him, 11 are second degree and each carries up to 10 years in prison with a $150,000 fine.

Carwash regulations eyed by California City

Both commercial and non-profit carwashes in Porteville, CA may soon face new regulation concerning unmanaged water runoff.

A city ordinance states that a carwash must be able to contain its runoff and has ruled against several commercial carwashes found not to have legal draining systems in the past year.

City Councilman Cameron Hamilton said that several unregulated, informal carwash events don’t meet the runoff standard and have been taking advantage of the city’s lax enforcement policy.

Vice Mayor Ron Irish said that he would like to start giving warnings first and revoking permits after a second offense.