Article of American Towman magazine

The Battle Between Big And Small Towing
By Steven Calitri
(This article appeared in July 1996, prior to any consolidation efforts.)

You have either asked or been asked this question at some point over the last ten years: "Are companies getting larger, and are the smaller companies falling by the wayside?" The answer to this question effects everyone in this industry: the towers, the motor clubs, the suppliers, and the associations. The answer is not an obvious one, in spite of a drop of 5,000 towing operations over the past ten years. In fact, the answer is quite deceptive. Moreover, within each answer lies a wish factor; that is, whomever answers the question has a preference, even if that preference seems to go against the grain of what that special interest is actually doing.

Warren Goercke of the Allstate Motor Club made the assessment that towing companies will be getting larger, and there will be fewer of them to service his Club's calls. Warren is known for researcing key issues, and there must be something to what he is saying.

On the other hand, I would guess that most motor club managers wished they had fewer service vendors to deal with, fewer and of course, more professional. The fewer servicers, the fewer the service problems. That's the wish factor.

Employees of small towing operation, Generic.

While the motor club may wish for bigger and better service vendors, ironically, it is the motor club that has helped the smaller towing firm to proliferate. It is the motor club controlling the majority of tow calls who continualy search for towers to take their calls at "wholesale rates". Thus, they are willing to try out start-up operations, or small outfits, because they are a big hungrier, or more eager for volume accounts. In fact, it is the towing-only business that has proliferated, because of the motor clubs search for towers who will be dedicated to their calls.

It is the small tower who often takes the 3 a.m. call in the middle of nowhere or in the heart of a storm. And it is the small tower, grateful at first, to have a big brother in the business, feeding him ten to twenty to thirty to one hundred or more calls a week.

George Bergeron of Export Towing out of Medford, Massachusetts (just outside of Boston), is an example of a towing company trying to grow while facing the headaches of a typical towing operation. Export towing has grown little by little over the past ten years. You would call him a small to mid-sized towing firm handling light work to heavy duty recovery.

Bergeron's growth strategy is bold. From Boston, he recently opened up shop in Atlanta, Georgia, Would Abe Lincoln have had a general willing to strike as boldly into the South, the Civil War would have been over in two months.

Bergeron believes the future is with the big tower and he wants to grow where towing service is in demand. The motor clubs are willing to give him business in Atlanta, based on his service record in Massachusetts.

"I see gas stations selling their one or two wreckers. I hear the motor clubs wanting towing firms who will service a wider area, 24 hours a day. They want towers who won't pad mileage and will answer the phones consistently."

But while the forces of the motor clubs may favor the larger towing firm, the average firm faces the dilemma of growth.

"From my experience, it is easier to manage a smaller towing operation," says Bergeron. "Maybe I won't see it that way a year or two down the road. I certainly hope not."

Roger Coffey, of the long-established Coffey's Towing & Recovery Service in Louisville, Kentucky, believes the motor clubs are doing little to bolster the larger tow companies.

"I see the motor clubs splintering off to smaller towers," he stated. "They can leverage the smaller towers more easily, whether you're talking rates or payment schedules. The clubs will feed and feed the smaller tower on low rate tows to the point that the tower neglects his commercial customer base. The small tower becomes dependent like a heroin addict.

"And, I don't see the larger tower cutting better deals. I see the larger tower working for less per tow in many cases, because he feels the volume may still allow him to profit."

Coffey, who, besides running one of Kentucky's largest towing firms, is also president of TRAA. He continued to elaborate.

"As to rates, the clubs are a hair's breth away from violating the Sherman Anti-Trust law," Coffey said. "But in regards to the trend toward bigger tow companies, I think it's simply a matter of the bigger towers buying up the smaller guys who are tired of fighting it all."

The suppliers would have the most to lose, if the trend toward bigger companies became a reality, not just a forecast. The effect of bigger and fewer companies, like consolidation, would eventually bring a greater operating efficiency. Less trucks, less drivers, less everything would be used overall in a consolidated industry, compared to the status quo of thousands more smaller companies. Not only would less product be bought and sold, the profit margin would be driven down by higher volume purchasing. That's higher volume purchasing per company, but less volume purchased industry-wide.

In short, the proliferation of smaller and fewer companies, are in the suppliers's best interest.

Often, it is the bigger company boss saying he sees a trend towards bigger companies. That too is part of the "wish factor". He darn well wishes all those "pain-in-the-neck" little tow firms would disappear. He's tired of their cut-throat pricing. Fact is, he'd do anything to drive them out, even if it meant controlling all the motor club work at less than profitable rates, or low bidding on a municipal contract.

Then, there's the irony of the towing associations. There's no question that the bulk of association membership is made up of small towing companies, say three to seven trucks. In some of the state associations, the small towing firms control the boards and the decision-making process. The Garden State Towman's Association and the Statewide Towing Association fo Massachusetts are good examples of strong associations that have been led by smaller towing firms. There are other associations, like Towing & Recovery Association of America (TRAA), where the larger towing companies have run the show from day one.

The associations cannot grow without reaching out to the majority of towers in its jurisdiction. Associations need new blood, new energy, new resources to continue its battles. TRAA's has the lowest percentage membership (3%) among all the associations. The average state associations have 10% to 15% of towers in their states as members. TRAA may do well to reflect the average-sized tower among its leadership if it wished to be perceived as representing the industry at large-and to grow in numbers.

The motor clubs would do well to look at what the industry needs most. Is it big towers? Or is it simply better-managed towers? Big and small. As we all should know by now, being bigger doesn't necessarily mean being better managed or more manageable. Indeed, it can mean just the opposite.

So, nobody seems to know who they're rooting for, the big towers or the small guys.

My vote. The future toward a more economical towing industry lies with the small towing firm. This is a unique service business. You can't cookie cutter accident towing or recovery work, or the many forms of road service. You can't cookie cutter the dedication it takes to wake up at 3 a.m. for the privilege of leaving into a storm or risking your life on the highway.

Then, there's that wish factor. We at American Towman would like to sell magazine subscriptions to many more, not fewer, towing firms.

Employees of a big operation, Lisi's Towing.

Lisis's fleet

Previous Best Of A.T.


The Battle Between Big And Small Towing By Steven Calitri (This article appeared in July 1996, prior to any consolidation efforts.) You have either asked or been asked this question at some point over the last ten years: "Are companies getting larger, and are the smaller companies falling by the wayside?" The answer to this question effects everyone in this industry: the towers, the motor clubs, the suppliers, and the associations. The answer is not an obvious one, in spite of a drop of 5,000 towing operations over the past ten years. In fact, the answer is quite deceptive. Moreover, within each answer lies a wish factor; that is, whomever answers the question has a preference, even if that preference seems to go against the grain of what that special interest is actually doing. Warren Goercke of the Allstate Motor Club made the assessment that towing companies will be getting larger, and there will be fewer of them to service his Club's calls. Warren is known for researcing key issues, and there must be something to what he is saying. On the other hand, I would guess that most motor club managers wished they had fewer service vendors to deal with, fewer and of course, more professional. The fewer servicers, the fewer the service problems. That's the wish factor. Employees of small towing operation, Generic. While the motor club may wish for bigger and better service vendors, ironically, it is the motor club that has helped the smaller towing firm to proliferate. It is the motor club controlling the majority of tow calls who continualy search for towers to take their calls at "wholesale rates". Thus, they are willing to try out start-up operations, or small outfits, because they are a big hungrier, or more eager for volume accounts. In fact, it is the towing-only business that has proliferated, because of the motor clubs search for towers who will be dedicated to their calls. It is the small tower who often takes the 3 a.m. call in the middle of nowhere or in the heart of a storm. And it is the small tower, grateful at first, to have a big brother in the business, feeding him ten to twenty to thirty to one hundred or more calls a week. George Bergeron of Export Towing out of Medford, Massachusetts (just outside of Boston), is an example of a towing company trying to grow while facing the headaches of a typical towing operation. Export towing has grown little by little over the past ten years. You would call him a small to mid-sized towing firm handling light work to heavy duty recovery. Bergeron's growth strategy is bold. From Boston, he recently opened up shop in Atlanta, Georgia, Would Abe Lincoln have had a general willing to strike as boldly into the South, the Civil War would have been over in two months. Bergeron believes the future is with the big tower and he wants to grow where towing service is in demand. The motor clubs are willing to give him business in Atlanta, based on his service record in Massachusetts. "I see gas stations selling their one or two wreckers. I hear the motor clubs wanting towing firms who will service a wider area, 24 hours a day. They want towers who won't pad mileage and will answer the phones consistently." But while the forces of the motor clubs may favor the larger towing firm, the average firm faces the dilemma of growth. "From my experience, it is easier to manage a smaller towing operation," says Bergeron. "Maybe I won't see it that way a year or two down the road. I certainly hope not." Roger Coffey, of the long-established Coffey's Towing & Recovery Service in Louisville, Kentucky, believes the motor clubs are doing little to bolster the larger tow companies. "I see the motor clubs splintering off to smaller towers," he stated. "They can leverage the smaller towers more easily, whether you're talking rates or payment schedules. The clubs will feed and feed the smaller tower on low rate tows to the point that the tower neglects his commercial customer base. The small tower becomes dependent like a heroin addict. "And, I don't see the larger tower cutting better deals. I see the larger tower working for less per tow in many cases, because he feels the volume may still allow him to profit." Coffey, who, besides running one of Kentucky's largest towing firms, is also president of TRAA. He continued to elaborate. "As to rates, the clubs are a hair's breth away from violating the Sherman Anti-Trust law," Coffey said. "But in regards to the trend toward bigger tow companies, I think it's simply a matter of the bigger towers buying up the smaller guys who are tired of fighting it all." The suppliers would have the most to lose, if the trend toward bigger companies became a reality, not just a forecast. The effect of bigger and fewer companies, like consolidation, would eventually bring a greater operating efficiency. Less trucks, less drivers, less everything would be used overall in a consolidated industry, compared to the status quo of thousands more smaller companies. Not only would less product be bought and sold, the profit margin would be driven down by higher volume purchasing. That's higher volume purchasing per company, but less volume purchased industry-wide. In short, the proliferation of smaller and fewer companies, are in the suppliers's best interest. Often, it is the bigger company boss saying he sees a trend towards bigger companies. That too is part of the "wish factor". He darn well wishes all those "pain-in-the-neck" little tow firms would disappear. He's tired of their cut-throat pricing. Fact is, he'd do anything to drive them out, even if it meant controlling all the motor club work at less than profitable rates, or low bidding on a municipal contract. Then, there's the irony of the towing associations. There's no question that the bulk of association membership is made up of small towing companies, say three to seven trucks. In some of the state associations, the small towing firms control the boards and the decision-making process. The Garden State Towman's Association and the Statewide Towing Association fo Massachusetts are good examples of strong associations that have been led by smaller towing firms. There are other associations, like Towing & Recovery Association of America (TRAA), where the larger towing companies have run the show from day one. The associations cannot grow without reaching out to the majority of towers in its jurisdiction. Associations need new blood, new energy, new resources to continue its battles. TRAA's has the lowest percentage membership (3%) among all the associations. The average state associations have 10% to 15% of towers in their states as members. TRAA may do well to reflect the average-sized tower among its leadership if it wished to be perceived as representing the industry at large-and to grow in numbers. The motor clubs would do well to look at what the industry needs most. Is it big towers? Or is it simply better-managed towers? Big and small. As we all should know by now, being bigger doesn't necessarily mean being better managed or more manageable. Indeed, it can mean just the opposite. So, nobody seems to know who they're rooting for, the big towers or the small guys. My vote. The future toward a more economical towing industry lies with the small towing firm. This is a unique service business. You can't cookie cutter accident towing or recovery work, or the many forms of road service. You can't cookie cutter the dedication it takes to wake up at 3 a.m. for the privilege of leaving into a storm or risking your life on the highway. Then, there's that wish factor. We at American Towman would like to sell magazine subscriptions to many more, not fewer, towing firms.
	Employees of a big operation, Lisi's Towing.
		Lisis's fleet