It will be business as usual after Les Schwab

May 30, 2007 11:00 pm

The Associated Press

Even before tire magnate Les Schwab died this month his hand-picked successor took steps to ensure the Schwab business tradition would continue.

Chief Executive Dick Borgman reaffirmed the company's commitment to running the business the way its namesake did.

"Les had very clear principles about how he wanted the business to operate," he said in an e-mail exchange with The (Portland) Oregonian. "The best way to ensure continuation of those principles is for the family to retain ownership of the company."

It could be a tricky transition, since both of Schwab's children have died.

His wife of more than 70 years, Dorothy, and four adult grandchildren survive him. All are on Schwab Tire's board. Borgman said they, and he, will rely on the traditions that built the business to carry it forward.

"I plan to continue Les's unrelenting focus on providing world class customer service through extensive employee training and continued employee profit-sharing programs," said Borgman, a longtime Schwab Tire executive named CEO in December.

Schwab shared yearly profits from each store with its managers and staff. That helped produce employees who worked like race car pit crews, rushing out to greet customers on arrival.

Schwab Tire promoted exclusively from within, creating a consistent corporate culture across 410 tire stores in eight states, from Alaska to Utah – including Crescent City.

When Les Schwab died May 18 at 89, the company he founded from scratch in 1952 had annual sales topping $1.6 billion and 7,700 employees.

"We plan to add from 10 to 12 new stores this year, mostly in California and Utah," Borgman said. "Based on our current business model we expect the majority of our new store expansion over the next few years will be in California."

Schwab Tire's record of success is unquestioned, said Mark Hirschey, a University of Kansas finance professor who has studied the company. Now, though, he said the company faces the sort of transition that breaks many businesses apart.

"I think the biggest challenge that Les Schwab Tire faces is finding an ownership environment that will be conducive to the Les Schwab tradition," he said.

Sometimes, Hirschey said, the best way to keep a family business together is to sell it. A new owner who respects the founder's vision – Hirschey suggests billionaire investor Warren Buffett – who admired Schwab and has the money and stability to keep the company together.