Executive Interview: Bill Maggs and Michael Mitchell Talk About the Recent Merger of Pronto and RPM - aftermarketNews

Executive Interview: Bill Maggs and Michael Mitchell Talk About the Recent Merger of Pronto and RPM

Following on the heels of RPM Group's merger with Pronto, Mitchell and Maggs sat down for a phone interview with aftermarketNews. The two men gave us the scoop on what changes are on the horizon for the newly merged group as well as their thoughts on the future of programmed distribution.


William D. (Bill) Maggs was appointed president of National Pronto Association in 2000. Pronto is a member owned program distribution group with members coast-to-coast.

Maggs began his aftermarket career in 1975 at Menco Corp., in Springfield, Ill. as part of a management internship during his senior year in high school. After graduating, Maggs accepted an offer for full time employment at Menco. He attended Northwood University during 1976. Maggs’ twenty-one career with Menco included many different positions from store manager, warehouse operations manager, sales manager, to president.

Menco’s owner, William Menghini, was the founder of National Pronto Association. In 1981, Maggs’ responsibilities were expanded to include the title of director of Pronto Programs, and he became the first full time employee of National Pronto Association. In 1990, Maggs relinquished his daily duties with Pronto and became president of Menco Corp. and company store group named Sasco. While running the Menco businesses, Maggs served one term on the Pronto Board of Directors.

After selling the Menco and Sasco business in 1996, Maggs was rehired by Pronto as vice president and product management. He has been involved with Pronto from its inception as an employee or member his entire career.

Maggs is a past recipient of the Northwood Automotive Aftermarket Education Award.

Michael Mitchell was appointed director of Supply Chain Management for the National Pronto Association on April 1. Prior to joining Pronto Mitchell was executive director of the RPM Group, a post he had held since November, 1993. Prior to its merger with Pronto last month, The RPM Group served primarily independent aftermarket chains in the Northeast and Pacific Northwest.

Mitchell has been active in the aftermarket for more than 35 years, starting his career as a part-time technician while attending the Georgia Institute of Technology. He remained in the aftermarket and focused on the distribution side of the business including both the retail and wholesale channels. In addition he worked in the export, OE and undercar channels.

Prior to joining RPM he was a senior buyer for Pep Boys. Before that he was a national buyer/merchandiser for the Chief Auto Parts Division of the Southland Corp. As a result of his new appointment, Mitchell will relocate to the Fort Worth, Texas, area on April 28th.

Following on the heels of RPM Group’s merger with Pronto, Mitchell and Maggs sat down for a phone interview with aftermarketNews. The two men gave us the scoop on what changes are on the horizon for the newly merged group as well as their thoughts on the future of programmed distribution.

Bill: In an interview with aftermarketNews last July, you said your recent membership additions were part of an effort to expand membership across the country. This was after spending about two years looking for potential merger opportunities and not finding the right fit. What was different about the RPM Group? What made this a good fit for Pronto?

BM: We didn’t understand who they were or what they were about. Then, I attended the meeting on electronic cataloging that RPM Group and Mike Mitchell hosted a few years ago in New Orleans. I got to know a few RPM members at that time, but still really didn’t think about it as an opportunity for Pronto.

I spoke with our chairman and talked to a board member of RPM and he got a hold of Mike Mitchell and got the ball rolling.

Really, upfront, I wasn’t sure that it would be a good fit. But it didn’t take much conversation to find out we had very common cultures and similarities in the way we operate. In reality, there has been a blurring of the marketplace. Retailers are selling the wholesale market and some in the wholesale market are selling retail.

Mike: Why was this a good fit for RPM?

MM: We had been looking for about the last two years at the different possibilities to grow our volume base because we strongly believe that volume and compliance are necessary components to providing our members the types of programs that will allow them to compete in the marketplace.

We had a couple of false starts. At our meeting in November, the board charged us to take another look at the universe and see if there was something out there that made sense. We had about ten parameters that we thought would define a complimentary group that we could associate with. When we met with Pronto, almost immediately the culture and the chemistry between their leading members and our leading members was evident. Everything intuitively seemed to fit. Then, when we started looking at the numbers and the nuts and bolts, it seemed fairly clear we had some very similar approaches.

Pronto historically served a more traditional channel. We’ve served the retail channel, but as Bill pointed out, all those definitions are blurring. What we really are doing is serving the independent marketplace to help ensure that our members can compete. We want to make sure that our membership has a voice, and by coming together as a single voice, a single entity, a single management team, we feel we can best serve our members. It’s going to be a very good thing.

Mike, you talked about Pronto being thought of as a traditional wholesale type of group with heavy emphasis on store operations, whereas RPM has been known as a retail group. It seems to us that this merger forever changes the role of Pronto in the marketplace, becoming a store group with WD operations. What are your thoughts on this?

MM: It’s not so much that Pronto has changed. I think Pronto has become more.

Let’s talk about store operations for a moment. We’ve never had a desire to brand our members’ stores as RPM. Each member, as a store operator, had his own identity in his own market. If you go to South Boston you know Lappens Auto Supply. If you go to Maine, you know VIP Parts Tires and Service. As our guys were making their move into the professional marketplace, serving the professional trade, it became clear that they needed marketing programs to help them be more effective in that effort. One of our goals in picking a merger partner was finding someone who had an effective marketing program, to save us from having to build one from scratch — someone who is already doing it and doing it well. So, that aspect of what Pronto was doing was just one of the appealing features.

We have members who are already buying into that marketing program and using some of those tools and the merger isn’t even officially complete. (Editor’s Note: The merger became official on March 26.) I think that’s just an indication of the value that we see in our union with Pronto. I think the new enlarged unit is really addressing the independent marketplace as a whole – whether it’s a two-stepper or a traditional WD or a chain-store operation. It’s about merchants and entrepreneurs who are interested in their businesses and want a strong partner to help them in their efforts.

What becomes of the Pronto brand? What role does the Pronto brand play in this new group?

BM: The Pronto brand continues to exist as it has in the past. Every program that we have had available within Pronto and the programs that have been available at RPM are being merged together for the benefit of all the members of the group. VIP Parts Tire and Service has already jumped on a couple of the marketing programs to utilize up in Maine, and several other members are putting orders in for our “Scratch-n-Win” programs that are taking off in mid-April.

Pronto has two marketing programs that we support equally – the Pronto Smart Choice program and the VIP Tech Center program. The only difference really between those two programs is that the Pronto side actually uses identity at a store location, so when you are driving through South Dakota and use see a Sturdevant’s Auto Parts, you are going to see a Sturdevant’s Pronto Auto Parts Store. There is not a VIP Tech Center Auto Parts Store. That’s really the only difference. We support both programs with a national warranty. All of the installer programs are available for both, so it balances out.

I think what Mike said was true. We have members who have a lot of controlled distribution and the marketplace has shifted to what used a bad word — two-step. Now, if you say two-step there are vendors who are tripping over themselves to get to your door. Almost every one of our customers in a rural market is more like a traditional jobber, servicing retail and wholesale trade. We have members who service both. Sturdevant’s has a number of company-owned stores, yet they also service 60 or 70 independent auto parts stores that do retail and wholesale. You have to look at the opportunities that are out there. There is controlled business and there is independent business. We still have several members who service the three-step market. All of the programs we created can be taken through the WD down to the three-step market. The fact is, as it gets much more competitive, there are more and more controlled stores than there are independent jobbers out in the marketplace.

MM Clearly, as we came together, the issue of what to call ourselves arose, but there was not a lot of discussion about that. We are rightfully proud of the recognition we have earned through the RPM name and logo but if we are going to speak with a single voice, we felt that we had to be under a single banner. Given the extensive marketing programs that Pronto had, and frankly, the age of its name over our name, we figured we had to ride one horse or the other and not create a third identity that had no equity at all. So, there was not a lot of discussion. It just seemed appropriate to fly the Pronto banner and we’re proud to do that.

Is the goal to get the Pronto brand or the VIP brand out to the installer level or is that inconsequential to you? Do you want loyal Pronto branded installers as your customers or do you not care so much about branding your installer base?

BM: That’s a great question. We want to be first-call for all the parts our installers need. We do not require identity for a customer to participate in our programs. Service centers may have a lot of their own identities. They may be a franchisee that has rules that doesn’t allow him to put other signs up. The fact of the matter is, we’re proud of our name, but we’re more proud of the parts and service we provide to the customer. That’s our business – delivering the right part quickly at the right price for that customer. We have a number of members who use the identity at their locations and that is really based upon the customer base that the member has. While it makes me feel good that they want to put the Pronto sign up, in reality it’s not the sign that is important. What is important is that we’re earning their business.

Mike, in the past RPM members sold direct through the programs you put together and it worked. Yet, there were also a lot of situations where, for example, a Lappens Auto Supply or a Frank’s Auto Supermarket or even VIP Parts Tires and Service would source product from local WDs. Do you have a goal to, or are you even thinking about trying to direct outside purchases, where appropriate, that will funnel through already established Pronto warehouses?

MM: The answer to that is yes. Our guys have bought outside the group. In the absence of any other factors, they made their decisions based on who could best supply them. In some cases, those might well have been Pronto warehouses. Now, there is an added incentive, especially for service providers like a VIP Parts, Tires and Service or a Strauss Discount Auto, there will be opportunities. Wherever those opportunities exist, we want to encourage and nurture them. Again, there’s no requirement that anybody buy from anybody. But, my goodness, if we’re all together and we’re all benefiting from the volume we deliver to the vendor community then it just is in our own best interest to support one another to the extent that it makes good economic sense.

BM: I agree. I think almost every member we have today would buy some product lines outside. I don’t think you can expect that everybody is going to buy every product line direct, because that may not be their specialty but they do need it for a few customers. In some situations there may be opportunities similar to a national account types of programs. We see that actually growing. I think there will be more opportunities in our future for this type of thing. We have signed a national account agreement with the Independent Tire Dealers group. We will do more national account business in the future. That is part of growing our footprint so that we are capable of giving good service to national accounts.

The addition of a company like Strauss Discount Auto into the program group is very intriguing. Then you take a company like VIP Parts Tires and Service. When you combine VIP Parts Tires and Service with Strauss Discount Auto and you look at the total number of bays, surely, then Pronto as a program group, probably has members who operate more bays than any other program group out there. It makes us wonder about the role service might play in your group moving forward. Is there an opportunity in the auto service arena for Pronto/RPM?

BM: I think, from our standpoint, our existing membership doesn’t wake up and say, “Gee, I no longer know where my demographic is.” There are some different things that have happened. We’ve had members in the past that have owned service centers but people really didn’t know that. It wasn’t as visual as a Strauss or a VIP. It may in fact change our demographic a bit.

You just said it – we may have more bays under a program group than anybody else and I’ve never even thought of it that way. The service aspect is still somewhat separate from the program distribution parts aspect, although that could change in the future. We could provide the service guys some additional benefits. Just like any buying group, you’re trying to aggregate your buying, your training, so there could be some real benefits there. But at the end of the day, these were businesses that were buying direct from the manufacturers whom we already buy. So, they are out there and they are already buying as WDs, they do fit our demographic.

We haven’t signed any businesses that are basically a service business that will go out and try to buy direct from a manufacturer. We don’t and never have signed anybody that was not a direct type of account. There are criteria when we go out looking for accounts in volume. We have a compliance program that members need to move toward, buying all from the same vendors. If you are going to be a combined buying/marketing group you need to buy together. But these guys don’t have to change their businesses overnight. As we evolve, as the industry evolves, I think it’s a great thing. I think it’s good for our existing members and good for the new members that we get in the future.

MM: My gut feeling is, we’ve already got other things we do well that we can capitalize on. In terms of appealing to those operations that have service as well as a retail store, or maybe some other models, if you are in the business of distributing automotive products, then I think you become fair game. I think we want to be open to all shapes, because our market is morphing.

I can remember vividly when there were some pretty rigidly defined channels of distribution. We have some manufacturers who still live in those days. I suspect they may wake up one day and see that the world around them has changed. Part of being the organization that we are is the ability to always look at the market and make intelligent change where it’s appropriate. I’m pretty confident that the folks I’m associating myself and our group with are those kinds of people.

10. Mike: Now that you will be heading up supply chain initiatives for the entire group, what are your plans and goals for this side of the business? Why is this such an important component of business for the group?

MM: One of the critical components of our business is the ability to deliver the right part to the right customer in a quick time frame. To manage the growing number of part numbers it takes to serve the 200 million plus vehicles on the road, we have to draw more on our data processing systems to do that because it’s just too complex to do by cards.

At RPM we were looking at one aspect – our e-Commerce initiatives through Corecentric. Pronto itself had several initiatives – including their data warehousing initiative – and they were doing some similar work to what we were doing. It’s still too early to comment, but we think that using the data processing systems and the information management systems available to manage this massive universe of part numbers is essential to serving our customers. We think if we can have the information available to better manage slow-moving and declining part numbers we can deliver an additional service to the manufacturing community because as you’ve heard often enough, one of the killers is the amount of product that gets returned the manufacturer.

Strategically, we want to use information management systems to help us manage this flow of inventory by part number so the people who need it can get it and we can give our members some controls to help them in the management of their inventory. We’re not going to take over the management of our members’ inventory, but we want to have some pretty powerful tools in place to help them do what they need to do. That was the perspective we had at RPM and based on what I’ve seen so far, I think that parallels what Pronto had in mind, but I will let Bill speak to that.

BM: The data warehouse will do exactly that. We haven’t actually moved current merchandise between members yet, but we’ve been able to identify parts that have not moved within the previous year that other members are moving on a consistent basis. So we will have the ability to hopefully use up inventory that’s on the shelf instead of sending it back to the vendor. Those returned products end up going to scrap and if you think that you are getting a five percent return allowance and half of that is going to scrap that’s 2.5 percent. That’s huge. If we could take a half a percent of that away that would make a big impact.

Sometimes you are trying to search a part and a vendor does not have it. We’ll have the ability to search parts from fellow members, the ability to do some benchmarking reports. For example, we can look at how well is the Southeast doing on one product category versus the rest of the country. How well are you doing in your region versus other members in your region? We’ve already used this a number of times, for example, when a member is getting ready to update a category within their market. I can take a look and see what my fellow members are selling.

Our data warehouse is handled by CTS. Mike Mohler and myself have been trying to manage that but we really were at a point where we needed someone to come in and manage it. Mike Mitchell is the guy to do that.

The other thing we will be able to do, which is huge, is purifying the database. Everybody wants to cleanse the data. If a member has a bad part number in their parts file, we’ll be able to find that in our data warehouse and notify the member of that erroneous part number. If they try to use a bad part number to try and send an order to a vendor EDI, then that means the EDI system is going to need human intervention. Ultimately, to save time and money, these orders need to come in and be processed automatically and shipped out and the ASNs returned and electronic invoices returned with really no human intervention into that at all. By cleansing the data in our data warehouse, we’ll help cleanse the data of all of those members and that is a huge process.

You just mentioned that Pronto has the CTS system is in place. Can RPM members communicate with that? Typically, as we understand it, RPM members have run the Profit Pro system.

MM: I think it will run smoothly. We have done a lot of work in integrating the legacy systems out there with Corecentric and so our members, as a whole, can communicate through Corecentric and Corecentric has the ability to communicate with other systems with ease. So I think coming aboard, we’ll be in fairly good shape. We’ve got some history into how to integrate some of these legacy systems. Is it going to be easy? No. Is there more work to be done? Sure. I know too little right know to comment on this intelligently, but I’m reasonably certain that it can be done fairly and expeditiously. I know Pronto has already been doing work in this area and once we get past this transition stage and I’m firmly officed in Justin, Texas, we can go to work on this with a vengeance.

12. Bill or Mike: The merger announcement stated that other personnel changes might be announced on April 1st. Are you able to tell us any more about this?

MM: I will be the only person making the move to Pronto.

BM: And that is not a reflection on those people, it’s a reflection on business economics. It’s really been a tough decision to go through that process. A lot of time and effort has gone into it this decision.

Mike’s title was executive director of RPM but he may as well have been president and I’m president of Pronto. We’re both working executives. Everybody within our organization works. We don’t have extra people and we didn’t see that we would need to have extra people in the future. As it turns out Mike’s capabilities in terms of data management are huge. That’s really a natural fit to have him join us as director of supply chain initiatives.

Mike Mohler will continue as our vice president and director of product management. Kerri Gulick is our manager of member services. Then we have Marcia Bejorum, who does all of our accounting. Murray Sullivan will continue to be our director of business development, strictly dedicated to the growth of the group.

When will the first combined national conference/meeting take place?

It will take place May 4, 5 and 6 in Dallas, Texas. The combined meeting will take place May 4-5. We will have our board meeting on May 3, with a cocktail reception that evening. At this point, we think we’ll have close to 300 people there. It’s really an exciting time for us.


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