Oregon tire king Les Schwab rolls to success

The inside of tire baron Les Schwab’s http://www.lesschwab.com massive warehouse is a miniature city. Dozens of forklifts, dwarfed by skyscrapers of black rubber, hum busily along narrow concrete alleys as they ferry piles of tires through the quarter-mile-long building.

By Gillian Flaccus
The Associated Press The Seattle Times

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Les Schwab, 1917-2007: Tire tycoon built regional empire from ground up http://matr.net/article-23998.html

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Schwab, 85, steers his gold Chevy TrailBlazer through the labyrinth and out into the crisp Central Oregon air. Thousands more tires — some taller than the SUV itself — sit stacked in piles around the sprawling industrial lot.

"We had tires sitting outside when we first started, and we still have tires sitting outside today," Schwab said.

In 50 years, Schwab has watched his company grow from one run-down tire-retreading shop to an empire with 350 stores and more than $1 billion in annual sales.

"I never thought I’d do $1 million in sales, so I’ve been 1,000 times more successful than I ever thought I’d be," said Schwab, who doesn’t have a college degree and was orphaned at age 15.

The privately held company employs 7,000 people nationwide and sells 6 million truck and car tires annually. It adds about 20 new stores a year — and pays for them all in cash — while maintaining virtually no debt, said Schwab.

Schwab’s success stretches beyond the numbers.

Until about five years ago, he appeared in nearly every Les Schwab Tire Centers http://www.lesschwab.com
commercial, making him one of the best-known faces in the West. The celebrity fixed himself in the region’s collective consciousness as the company’s icon — a no-nonsense rancher with catchy slogans and a characteristic Resistol hat.

In the Northwest, the company’s flashy red-and-yellow signs are only slightly less famous than its employees, who wear their hair above the collar and sprint to customers’ cars when they pull in.

"They are known for their service and dealers from around the United States will travel to Les’ stores to see how he does business," said Bob Ulrich, editor of Modern Tire Dealer, which ranked Les Schwab the No. 2 independent tire dealer nationwide in 2002.

Analysts attribute his trademark customer service in part to a unique profit-sharing program that put 55 percent of profits — or more than $60 million — in employees’ pockets in 2002.

DON RYAN / AP
Les Schwab, founder of the No. 2-ranked independent tire retailer in the United States, sits in front of photos of his many stores in his Prineville, Ore., headquarters.
"Why wouldn’t you work for him? You’ve got to work hard, but what if you were guaranteed to retire wealthy?" Ulrich said.

Schwab is fiercely committed to keeping the company’s headquarters in Prineville, a rural town of just over 8,000 located in Central Oregon’s high desert. All tires are trucked to the remote warehouse and then redistributed to stores across the West.

He owns an 80,000-acre ranch near Prineville and often repeats that he employs 900 people in that town alone. It’s a "miracle" to build a company of that size in the town, he said.

Over the years, Schwab has carefully cultivated the laid-back, cowboy image of rural Oregon and used it to his advantage.

In 1963, he started the "Free Beef in February" promotion as a way of boosting sales during the slow winter months.

Last year, the company gave away $1 million in free beef and spent more than $1 million on advertising it. Every Les Schwab store rents a freezer for a month, he said.

Schwab’s success wasn’t guaranteed.

Born on a hardscrabble homestead in Fife, Ore., he grew up in a two-room shack. His mother died of pneumonia when he was 15 and his father, an inveterate alcoholic, was found dead in front of a bar just before Schwab’s 16th birthday.

Schwab rented a room at a boarding house for $15 a month in downtown Bend, Ore., and delivered newspapers while struggling to finish high school.

By 17, he was making $200 a month — about $65 more than his high school principal — and owned the only new car at school, a Chevrolet two-door sedan.

Schwab stayed with newspaper work after graduation but by his early 30s was eager to try a more lucrative business. He borrowed $11,000 from his brother-in-law in 1952, sold his house and borrowed on his life-insurance policy to buy O.K. Rubber Welders, a dilapidated tire franchise. He didn’t know anything about tires and had no formal business training.

"A man wanted a couple of 6-ply tires mounted," Schwab writes in his book "Les Schwab: Pride in Performance," of his first day at the tire shop. Schwab didn’t have any idea how to mount the tires, but "one of the two other men finally came in and saved me."

By the end of the first year, Schwab’s store had done $150,000 in business and by 1955 he had opened four more, two under the name "Les Schwab Tire Centers."

Schwab has now handed most day-to-day duties over to President Phil Wick, who started working for Les Schwab at age 21. Still, most days still find Schwab in his office reviewing financial records, lunching with his top management or tapping out a monthly column for the employee newsletter on his 1943 Royal typewriter.

"Most tire dealers admire Les Schwab for what he’s accomplished, with special kudos for doing it his way," said Bob Davis, reporter for Tirebusiness.com. "He has carved out his own identity."

Copyright © 2003 The Seattle Times Company

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