DeWitts Turn Family Crisis
Into Business Success Story

For 40 years, L.G. DeWitt ran the trucking company he founded in 1945 from a blueprint in his head. The company ran smoothly until the late 1980s, when uncontrolled growth started to destroy his firm. Then, in 1990, Mr. DeWitt died, leaving his widow and daughters to wrestle with mounting losses and almost certain failure.

DeWitt Trucking was founded by L.G. and his wife, Carrie, to haul peaches and produce. To reduce the cost of returning empty trucks, the company solicited different types of commodities that required refrigerated transportation. The strategy was highly successful. By the mid-1980s, DeWitt was a national carrier with a truck fleet of 250 tractors and 300 trailers.

But, like many family-owned companies, DeWitt was unprepared for sudden, uncontrolled growth. A lack of management depth and reluctance to delegate responsibilities led to difficulties. Equipment financing, accounts receivable, fuel costs and equipment repair all contributed to a severe strain on financial resources. The inability to administer programs for a national company led to problems in other areas, including driver training, which caused insurance rates to skyrocket.

The company's sudden expansion to Central and Western states made it more difficult to obtain adequate backhauls to the East Coast, and the percentage of unpaid miles mushroomed. A sales staff attuned to regional operations did not have the customer contacts to sustain the requirements of a national fleet.

To counteract the problem, DeWitt opened offices in Chicago, Arizona and California. While these offices were moderately successful in increasing sales, distance and a lack of training prevented employees from becoming true members of the company team. There was little concern for controlling the cost of equipment repairs, fuel or tires. The goal was to "keep 'em moving" at any cost.

As scheduling pressures mounted, trucks did not regularly visit the central garage in Ellerbe, and preventative maintenance virtually disappeared. The increasing frequency of major repairs required more mechanics. And inadequate driver training led to more accidents, which led to the need for a body shop and employees to sustain it.

By 1988, mounting inefficiencies and equipment failures resulted in late pickups and deliveries. Cash expenses on the road led to cash flow shortages, causing late payments to vendors. By 1989, declining profits made it evident that DeWitt Trucking must change its ways.

Mr. and Mrs. DeWitt decided to downsize the company and become a regional carrier again. Hauling lanes for two nationwide customers were sold to a Texas carrier, and the excess trucks for coast-to-coast hauling were sold.

Unfortunately, the death of Mr. DeWitt in 1990 interrupted full implementation of the downsizing. In many respects, including the number of maintenance and clerical employees, the size of inventories and large truck repair operations, DeWitt continued to operate as if it were a large company.

After Mr. DeWitt's death, the company lacked clear leadership. Mrs. DeWitt was in her late 70's, and had not actively participated in company management. Losses mounted for several years when it became evident to the family that major changes in management structure and operations were necessary for DeWitt Trucking to survive.

The DeWitt family was determined not to fail. After several years of significant losses, they brought in the outside expertise needed to chart a new blueprint for profitability.

Mrs. DeWitt and her daughter, Nancy Daugherty, started the turn-around by contracting with George S. May International. In the weeks and months that followed, Mrs. DeWitt made her daughter, Nancy, president of the company with complete authority to reorganize the management structure and create the efficiencies necessary for survival.

Some of the initial steps included the creation of an organization chart and job descriptions that outlined the duties and responsibilities of management personnel. Mrs. Daugherty formed a SWAT-team of top managers and charged them with making the necessary changes.

With the new management structure in place, steps were taken to make changes that would strengthen the company. An operating budget was developed that showed sales volume and line item expense constraints necessary for profitability. Each operation was scrutinized to ensure that it was necessary and efficient. Each department manager was required to justify expenses and employees.

The executive team developed a long-range business plan that is the company's road map for growth and profitability. Budget projections for income, expenses and profit were included.

The most significant decision in the company's reorganization was to lease power equipment (trucks) instead of owning it. The monthly lease payments amounted to less than monthly loan payments on the owned equipment. Fuel efficiency increased by one mile per gallon, leading to fuel savings of $400,000 per year.

Mrs. Daugherty and Art McKenzie, company general manager, increased employee involvement in DeWitt Trucking's success by developing incentive plans for dispatchers, drivers and sales personnel, rewarding employees for exceeding budget standards in their areas.

The company realized an additional $700,000 per year in savings on repairs, parts and tire costs. Also, reducing maintenance staff from 24 to 7 created wage and benefits savings of $300,000.

The company also acted on the recommendation to increase its emphasis on the use of owner-operators for handling increased trucking volume.

The George S. May International Company also worked closely with Fred Daugherty, Sales and Marketing Manager, to develop a sales and marketing plan and increased customer services, including: communications and satellite tracking of the trucks; Electronic Data Interchange that permits instant inquiry of load status by the customer; and Electronic Billing that eliminates much of the paperwork. In addition, the company has adopted competitive rates and achieved an on-time record of better than 98 percent.

DeWitt Trucking adopted a formal "Distribution Quality Assurance" program to assure customers of total quality from the initial order placement to final delivery. "Committed to Excellence" is the new motto developed in a company-wide contest, and it is used on all correspondence as well as on trailer decals.

From L.G. DeWitt's death in 1990 through today, the dedication and determination of Carrie DeWitt and Nancy DeWitt Daugherty have changed L.G. DeWitt Trucking from an unprofitable company with an uncertain future into a growing, profitable company with plans to expand into new markets. They started by getting the counsel they needed, then followed through with the implementation started by George S. May International Company consultants.

CELEBRATION AT THE ROCK

Two hundred guests and dignitaries gathered at North Carolina Motor Speedway to celebrate the selection of the DeWitt family as George S. May International Company's Entrepreneurs of the Year.

Mrs. Carrie DeWitt and her daughters, Nancy DeWitt Daugherty and Jo DeWitt Wilson own and operate L.G. DeWitt Trucking Company, Ellerbe, N.C., and North Carolina Motor Speedway, known fondly as The Rock due to its location in Rockingham. Both enterprises have benefited greatly from our consulting services.

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