On Jan. 1, John Washbish officially assumed the position as president and CEO of Aftermarket Auto Parts Alliance, bringing with him more than 35 years of experience in the aftermarket serving in various positions with industry manufacturers. Washbish succeeds Dick Morgan who retired at the end of 2009, after 15 years at the helm.
Washbish was national sales manager of Michigan Engine Bearings (1982-1986) and AEC Universal Joints (1975-1981). From 1987 to 2000, he was president of Clevite Engine Parts, acquired in 1998 by Dana Corp. In 2000, Washbish became president of the Dana Under Hood Group and in April of 2003 became president of the new Customer Relationship Management Group. In late 2004, Dana sold its aftermarket business to Cypress Group, a private equity investment firm. The new company was renamed Affinia Group and included WIX Global Filtration, Brake Parts, Affinia do Brazil and Quinton Hazell. Washbish was given dual responsibilities and held the titles of president, customer relationship management and president, Under Vehicle Group. He also served as a director on the Affinia Group board.
Washbish was born in Miami, Fla., but his family moved to Kentucky when he was a child. His experience in the parts business began at age eight when he started visiting his family’s successful automotive and heavy-duty parts distribution business in Louisville. He graduated from Northwood University with an associate’s degree in automotive aftermarket management and a bachelor’s degree in business administration in 1975. In 2000, he added to his aftermarket education by receiving the Automotive Aftermarket Professional (AAP) degree from the University of the Aftermarket.
In service to the industry, Washbish’s experience includes stints as president of the Automotive Sales Council and National Engine Parts Manufacturer’s Association. He has served as chairman of the Young Executive Society and the Manufacturer’s Advisory Council of AWDA. He has held seats on the board of directors for the Motor Equipment Manufacturers Association, the Automotive Aftermarket Suppliers Association and the Automotive Aftermarket Industry Association. He served on the Michigan Board of Governors for Northwood University, as well as on the school’s Aftermarket Curriculum Advisory Council. Washbish has been recognized for his leadership with numerous awards including the Automotive Warehouse Distributors Association Leader of the Year. He also received Northwood’s Automotive Aftermarket Management Education Award, and twice was recognized as the University’s Alumni of the Year.
In today’s Executive Interview, Washbish brings us up to speed on the Alliance’s new five point plan and gives us his thoughts on the state of the distribution business today.
What has been going on at the Alliance since you became president and CEO at the start of the year?
As you can imagine, just the normal course of business in today’s aftermarket has been keeping us pretty busy this year. Beyond that we’ve been working a five-point plan: customer relations, vendor relations, technology, our team and growth.
On the customer side we’re doing research and carefully analyzing our programs and products to make sure we stay in tune with what can only be described as a dynamic marketplace. We are steering the Good Ship Alliance into collaborative waters because that’s what it’s going to take to remain viable in the aftermarket, so both customer and vendor relations are vital for us. It’s important to meet with our suppliers and let them know what we’ve set out to accomplish and how they can support us. For the first time this year we’ll be using mutual scorecards for each of our vendor meetings at AWDA. They score us, we score them … should be interesting and helpful.
The wheels of adoption turn very slowly in the aftermarket, but they grind exceedingly fine. Some of the technology that’s been in use for five or 10 years in other industries is just starting to get traction in the aftermarket. As a group, we intend to continue to lead in offering technology that will help us take full advantage of our good customer and vendor relations. To that end, we held our first IT Summit for suppliers this year and it was such a success that we’re scheduling another one for 2011. Our focus is on education on the front side and information on the back to support the roll-out of our multi-function, web-based application called MyPlaceForParts. Price and availability have been the ante for aftermarket poker for some time now. Well, the ante has been upped to include technology and we’re “all in.”
Recently we’ve strengthened our Alliance team here at headquarters with some great additions. We added Dan Rader on the product side, Doug Wiggin in IT and Jon Owens to lead our sales efforts, which includes functioning as our field liaison with marketing. These are high-caliber people who just started this year and are already making significant contributions to our strategic and tactical activities.
Executing our plan on those four fronts customer and vendor relations, technology and people is the key to item No. 5, growth. We are looking at growth from every angle and good things already have begun happening. We’re committed to the course we’re on.
How did the Alliance respond to the recent downturn in the economy?
There really were two issues that we had to respond to late in 2008 and into early 2009, touching both supply and demand. On the demand side, there was so much uncertainty at a point in time that people just seemed to freeze. Nobody was spending discretionary money on anything. The Alliance is blessed to have the best distributors in the country as members, so our response to the sudden downturn in demand was both collective and individual. Our shareholders had the tremendous strength of our group to draw from, but they also had wide latitude to do what needed to be done in their respective marketplaces. We think this “structured individualism” has always been a core attribute of the Alliance, and it sure came in handy in early 2009.
On the supply side, some of our suppliers do a lot with OE, and the new car side gave them sort of an early warning. They really trimmed back their manufacturing prior to the breaking bad news about car production. We understand that was the prudent thing to do, but it resulted in them having trouble shipping to us, even though our business wasn’t so good at the time. The situation created some real fill-rate issues in the first six months of 2009. Those suppliers that don’t have any OE business stayed pretty constant. No gripes there, and the OE suppliers had us back in pretty good shape by the middle to the end of the year. I’d say the combination of our group strength and individual savvy turned a potential major pile-up into a fender-bender.
How are conditions looking now?
In 2010, business is much improved. Our very good overall year in 2009 has turned into a fantastic year so far in 2010. So fantastic, in fact, that we again find ourselves in the midst of a lot of fill-rate issues. This time we can’t blame it on the OEs. Our business picked up a lot more quickly than most of our suppliers expected. As the Alliance always does, we have worked closely with our manufacturing partners and their shipping performance continues to improve. Fortunately, we have a group of very solid and robust WDs that are not afraid to stock inventory. Through the toughest times our distributors were still showing fill rate numbers to their customers in excess of 95 percent.
So business has continued to be strong through the third quarter and we are cautiously optimistic about the rest of the year and on into 2011. It looks like people have decided to keep their vehicles rather than buy new ones; miles driven is inching up and gas prices remain volatile but relatively reasonable. The aftermarket environment seems very “livable” right now for seasoned veterans.
There’s been recent consolidation in program group distribution. Will this continue?
I think it’s logical that we’re going to continue to see consolidation in the aftermarket. Even though the aftermarket is “livable” it’s no place for the squeamish and many people see joining forces as a way to multiply strength. So I think we’ll continue to see distributors, jobbers and in some cases even installers consolidate. As far as program groups are concerned there has been some activity as well. Here at the Alliance, we always are looking to make our group stronger. However, it is difficult to find another group composed of the type of members we like to have. It goes back to that structured individualism that I talked about earlier. We have a good solid base of distributors and we won’t solicit new people just to say we’ve got new members. Our design planning is based on quality and geography and is much more strategic in nature.
What makes the Alliance attractive to members?
There are a few things, but first and foremost I’ll have to go back to our structured individualism. That term refers to, but does not adequately describe, the combination of collective strength and individual freedom that makes the Alliance what it is. We provide a whole menu of services that are available at each member’s option.
For example, we’ve got some members that have fabulous houses in their own right. They’ve been in business for a long time with multi-store locations; they advertise on TV and pretty much sell their own brand. They don’t need our corporate signage, but they do need our technology such as MyPlaceForParts, training programs, marketing programs, our jobber and Certified Service Center programs and so on.
Having a whole toolbox of options to choose from doesn’t limit our members’ entrepreneurial strengths, it adds to them. That freedom to choose from a wide array of tools, which they themselves have helped to create, is a major draw for the types of members we’re looking for.
Then there’s Alliance Parts Warehouse, our private label operation in Little Rock, Ark. It handles our house brand, Parts Master, as well as a few smaller product categories in other brands. It has shown excellent growth and profitability over the years. And while there is at least one other example of a program group having its own private label warehouse, the thing prospective members find extremely attractive about APW is that it is 100 percent member-owned. When you become a member of the Alliance, you also become a joint owner of APW.
Another piece for us that is attractive to potential members has to do with information technology. We think the Alliance is a leader in this category. Dick Morgan, my predecessor, launched our data warehouse 10 years ago. Because of the information that’s in it, we’ve been able to develop a number of tools to assist our shareholders in several ways. One of the major advantages it gives us is the ability to manage our inventory all the way through the channel.
The information that the individual members can harvest from their data warehouse on a daily basis is incredible. Our most popular tool today is our IOT Inventory Optimization Tool that helps the entire Alliance chain, from distributor to installer, get the right mix of parts on their shelves. It’s a proprietary, homegrown tool that uses lots of information, like registration data, manufacturer’s data, warranty data, etc., to help us design our stocks. We’re having great success with it. Of course our vendors also have access to certain areas of the data warehouse and many of them use the information to great advantage.
When we go out to talk to potential Alliance members, I watch as we go through the presentation. We can show them sales; we can show them marketing; we can show them purchasing; but when we get into the IT stuff, they really start taking notes. That tells me there is a lot of benefit in what we do in the IT area.
What does the future hold for the Alliance?
You know, one of the unfortunate things about this terrible recession is that first and hardest hit were the Ouija board and crystal ball manufacturers. But even without that valuable assistance, we believe our business in the aftermarket will remain relatively stable, with slight growth for the foreseeable future. I think the OE side will, too. Of course, stable for the OEs means we’re a long ways a way from building 16 million vehicles in this country. We may never do that again, but I think we can probably count on being in the range of 11 million to 13 million. We think our manufacturing partners that do OE have sort of adjusted to that.
From the supply side, we’re going to see some new, interesting challenges because as the globe continues to get smaller, we’re starting to see more and more international suppliers. A lot of European companies have gotten involved in America. Some of this has happened through acquisitions and mergers, some is just a case of looking to expand marketplaces. Globalization has been tough on all “developed” nations, but particularly so on the USA. Everyone here is struggling to manage the change it is bringing about. Given our track record, and knowing how we’ve gotten to where we are, there is no question that the future holds success for the Alliance. As for the exact path to that success, we would need a Ouija board or a crystal ball to tell you that.