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Carwashing first surged in the 1950s, prompting a rash of ambitious baby-boomers to invest in the start up of an abundance of both car-care facilities and car-care equipment manufacturing companies.
Increasingly, those carwash entreprenuers are retiring and a new generation of CEOs are taking over. Those new CEOs run the gamut from being second-generation family members to Harvard-MBA investors with diverse business experience.
Regardless, one thing is clear — carwashing’s new CEOs have their sights set on aggressive growth and new development for their companies, and they will have tremendous influence in shaping the future direction of carwashing.
Professional Carwashing & Detailing magazine sat down this month with several of carwash manufacturing’s new CEOs to see what plans they have for their companies, and the carwash industry at large.
Compuwash, Islandia, NY, has long been a leader in motor-control application in the carwash industry, and is credited with increased use of variable frequency drives in tunnel applications.
Company founder Alan Doyle turned day-to-day control over the firm to his son, Kyle, in August 2004.
PC&D: How did Compuwash implement the process of Alan Doyle stepping back and you taking control?
Kyle Doyle: As I became more familiar with our products and the customers, my father thought that he’d like to step back from day-to-day operations.
We call it semi-retirement. Now he’s able to spend more time at carwashes to help with development and tweak equipment in the field, instead of being at the office running the company all day.
There were the usual father and son conflicts, but he saw that we needed to make some changes with the company in order to move into the future.
PC&D: What were some of the company-wide changes that you implemented prior to running the business full-time?
KD: I introduced a new variable frequency drive for dryer control. This is a product that my father created, but I suggested adding to the product line.
We have also moved into a new office building that I found and I hired some new people — we have a dozen employees now, and we’ll be adding to the staff as things develop with our product line.
PC&D: What do you think is unique about leading a family business in the carwash manufacturing sector?
KD: I think the commitment level has to be there for the person carrying on the family business.
The outcome can be great if the second generation really wants to continue in that field.
But a new generation taking charge can also be a bad thing if the interest isn’t there.
With a family business, there is usually a steady cash flow that’s secured; the family doesn’t have to worry about finances when there is a change of ownership because it’s the same money.
With an investor, on the other hand, you know the commitment might be based on financial gain.
But that mentality might also prove beneficial because it motivates the investors — they know they have something to lose.
PC&D: How has the rest of the carwashing community responded to this changing of hands within the Doyle family?
KD: I think when there’s a change like this, everyone takes a moment to reflect. People are telling me stories about my father; it restores a sense of legacy.
Rick Green, the former president and CEO, and Dave Smith, current president and CEO of Arvada, CO-based Mark VII Equipment LLC, are part of the investment team that bought major in-bay supplier Mark VII three years ago.
Green ran the company through the transition period, and this summer Smith assumed day-to-day operations.
PC&D: Explain why Mark VII planned the transition from Rick Green leading the company to you stepping in?
Dave Smith: Rick’s leaving in August was part of a scheduled peel off. We only intended to have one of us working full-time at Mark VII.
After we better understood the opportunity, we agreed to both get actively involved for a period of time, with Rick taking the lead.
Rick and I have worked together for the past 10 or 12 years and we’re pretty interchangeable. We work from the same playbook, so the adjustment has been easy.
Mark VII is not yet as big as we want it to be, but we’re happy with where we are.
We’ve got a clean balance sheet and we’re very close to being debt free, giving us the flexibility to consider various options.
PC&D: What changes have you made or will you make at the company or within the carwash industry?
DS: This year, we came out with a breakthrough product called HubScrub — a unique automated wheel brush system that combines the benefit of friction to clean wheels in an otherwise touch-free in-bay environment.
Organizationally, we have flattened our management structure and eliminated unproductive costs. Our team is really energized about the future, and having a competitive cost position is vital.
The industry is experiencing slow growth — probably in the single digits. We’re also looking at a high number of competitors on the equipment side, with somewhere between 25 and 30 touch-free in-bay automatic equipment manufacturers.
This suggests an opportunity for consolidation. I think we’ll start to see some excess capacity shake out over the next five years.
PC&D: Does your new product, HubScrub, mean that we can expect more friction products from Mark VII in the future?
DS: Friction was a dirty word at Mark VII when we got here in 2002. There was a real religion around touch-free cleaning.
We now recognize a revival in demand for friction and we don’t want to say “no” to our customers that want a friction wash.
We’ve been experiencing a rebirth of energy within Mark VII to focus on the investor. We consider both the investor and retail petroleum sides of our business to be important, and we intend to add a lot more balance between those segments as we go forward.
Fred Grauer, a senior player at Mark VII for over 10 years, has taken on a new role where his complete focus is to educate and train potential investors on opportunities in the business and the most profitable ways to enter the business.
PC&D: Does that mean that you’re looking to possibly franchise the Mark VII AquaJet name?
DS: We definitely think that we’ve got some brand value between the Mark VII and the AquaJet names, but the word franchise has a lot of implications.
Franchise with a big “F” is not something that we’re currently working on.
However, one of our distributors has experimented with licensing the AquaJet name and offering a franchise type — franchise with a small “f” — relationship. This shows some promise.
PC&D: What changes do you expect in the industry?
DS: You’re going to find that family-run, entrepreneurial-based equipment manufacturers are going to get to a generational change and there may or may not be a next generation to carry the business forward.
This will lead to the entry of some new players, and some consolidation, and I think that will be good for the industry.
Former president of petroleum equipment supplier Gilbarco-Veeder Root, Greensboro, NC, Scott Clawson, has been at the helm of Ryko since October 2004.
Clawson is a friend and business associate of Ryko owner Jim Nelson, who started Ryko in 1973.
PC&D: How has the industry responded to a leadership change at Ryko?
Scott Clawson: I’ve been very flattered with the response. I’ve gotten positive feedback and warm welcome from a lot of different people.
It’s been overwhelming and I’ve seen a lot of interest from people who want to be associated with Ryko because they can see what we’re out to accomplish.
PC&D: What are your plans for Ryko’s future?
SC: Up until now, Ryko’s been predominately viewed as a major oil company supplier, but we are trying to move into the self-serve industry and plan to focus more on the private investor — the self-serve industry and the non-gas market.
We want to be the premier and most respected company in the industry. Our goals are to grow and double the size of the business over the next 3 to 5 years.
We will accomplish this, in part, with a new product line developed two years ago.
Although we know the carwash industry has a lot of different suppliers we think we can grow significantly in these markets.
PC&D: Where do you see the carwash industry in 10 years?
SC: The carwash industry is going to evolve into a much more sophisticated and advanced industry in terms of the customer, the channel to supply that customer and the equipment.
There will be much higher demands on the reliability and cost of ownership of the equipment and services in the future.
I believe that there will be, over the next 5 to 10 years, consolidation and advancement with suppliers; it won’t be quite as fragmented as it is today.
PC&D: How will that change the management structure for carwash suppliers?
SC: I think that as the industry grows and progresses and becomes more attractive and complex, the management of the companies therein will change to deal with the increasing intricacy and pressures of running those businesses.
Where family owned or smaller businesses can succeed up to a point, it becomes tougher as the industry advances and as the market develops.
I think that’s what is happening in the carwash industry and will happen slowly over the next five to 10 years.