6 minute read
PERFORMANCE ANXIETY, SIZE SHAME
Why fortune will favour towing businesses that invest in long hauls
BY GIDEON SCANLON
Offering ‘friends rates’ might sound like a bad business philosophy, but, for mid-sized towing service providers looking to carve out a ‘blue ocean space’, there are advantages in certain situations.
This month, one of the most respected papers on the auto repair sectors, the 13th annual white paper, A 2018 Profile of the Evolving U.S. and Canada Collision Repair Marketplace from the Romans Group LLC, made it clear that Canadian tow businesses may now be in a position to one such situation.
In Canada, collision repair shops are—on average—smaller than in the United States.
That is also true of the sector’s dollar value. The U.S. collision industry is 15 times as profitable as its Canadian counterpart—but there are only 11 American cars for every Canadian one.
More interestingly, there are only seven times as many repair businesses open in the United States as in Canada. On a per-business level, the average shop in the United States is 2.4 times as profitable one up north.
This shop size difference is key to understanding why Canadian businesses are not able to generate as much profit as their American peers. As a shop’s volume of business increases, their efficiency in making repairs also increases because those businesses have the means to invest in the latest technology, training and industry certifications.
As they grow, they tend to drive less efficient businesses in their areas out of business.
This is not happening as frequently in Canada as in the United States. While some larger facilities are able to thrive up north, they tend to be clustered in one of two places: around the outer edge of metropolitan commuter belts, or within mid-sized, regionally important cities.
Within the more expensive downtowns, specialty shops can sometimes find their niche, but mid-sized locations are hard to spot downtown.
In more rural locations, small to mid-sized businesses tend to rule the roost—limited local demand being a cap on the market.
With 8.75 times as many Americans as Canadians, living across a slightly smaller landmass, far more of the United States lies in the ‘Goldilocks zone’ for larger, better equipped facilities.
In Canada, with its relatively dispersed population, smaller operators have a healthy niche. While these businesses may not be as efficient as bigger ones, their proximity to population centres often means they will be the most economically optimal place for a vehicle to be towed.
And therein lies the rub—or, rather, the opportunity.
Mid-sized fleet businesses that are able to establish business relationships with these premier businesses, have a distinct opportunity to expand their spheres of geographic control.
By reducing the cost of long-haul rates, tow providers essentially increase the amount of territory it becomes economically efficient to tow a vehicle to a top-tier shop.
As these businesses expand, the value of being a favoured—or formal—towing provider also increases. As smaller shops become less favoured, their doors close, leaving larger and larger areas of ‘blue ocean space’ for towing fleets.
Of course, smaller towing providers—especially single truck operations— will also struggle to compete with tow fleets able to use the economics of scale to appeal to collision facilities and to auto insurers.
Gideon Scanlon is the editorial director of Media Matters, and the editor of Collision Repair magazine and Canadian Towing Professional. He can be reached at 905-370-0101.
YOU DON’T KNOW JACK!
Eagle Towing’s Jack Poladian on equipping an industry in transition
Towing industry advocateJack Poladian is the operations manager at Eagle Towing, Ontario’s only distributor for NRC Industries towing and recovery equipment. Poladian fills us in on how a family-owned company, kickstarted in the 1970s, is still booming today–and about what he wishes people knew about the industry.
Eagle Towing general manager Jack Poladian between founders Victor and Simon Poladian.
Collision Repair: Over the years, Eagle Towing has expanded from a one-truck company to a fully functioning business in a 15,000 square foot facility, how?
Jack Poladian: At the end of the day, it all comes back to true dedication. My family has put their heart, soul, and every waking minute into this company. Eagle Towing isn’t treated as a business, it’s treated as a lifeline and every moment Simon and Victor [co-owners] are thinking about their next move and how to support their customers.
CR: What do you think the future of Eagle Towing looks like?
JP: Personally, I believe the future of this business is a bright one. Ever since I’ve been on board, we’ve increased sales by 300 percent, our service amounts have almost doubled, and we’re still pushing forward. CR: Nearly every industry faces some negative misconceptions–but it is a particular issue towing professionals face. How is Eagle Towing working to redefine the public’s conception of the towing business?
JP: Many people have misconceptions about the towing industry due to a few bad apples. They are ruining things for the good ones! But at Eagle Towing we hold ourselves to a higher standard, and we deal with a lot of tow
companies where the owners have a passion for what they’re doing, care for their customers and employees. There’s so much good in the industry. We all want to change that persona that the towing industry has by doing good quality work, and making sure everyone’s equipment works right and feels safe.
CR: What is one thing you wish people knew about working in this industry?
JP: It would be nice if people acknowledge towers as a form of emergency response because there’s a lot of people who risk their lives waiting on the side of the road for help. If civilians could pull over and respect tow truck operators that would be great because, at the end of the day, everyone has a family and people risk their lives to help others in a jam. There’s nowhere in the rule books that says “you have to operate a tow truck,” these guys choose to come out and help no matter rain, sleet, hail, snow, or cars on fire. We are on-site doing whatever they can to help.
CR: For any collision repair business looking to expand into towing, what is one piece of advice you would give?
JP: It’s tricky, because depending on what area you tow out of, collision repair companies and towing companies need to be segregated due to towing regulations. However, to collision repairers who really want to expand in this industry and can. I want to say to all of them, be fair with everyone–It’s our job to do incident management and help others while staying humble. Do your best to do the best quality of work that you’re capable of. Where Eagles Dare: A closer look at Eagle Towing in Cambridge, ON
A family that owes much to Canada's towing community is makes good on its debt
The Poladian family of Cambridge, Ontario, owes much to Canada's towing and recovery sector.
In 1978, two brothers who had emigrated to Cambridge, Ontario from Armenia, founded Eagle Towing. While today, the firm may be one of Onrario’s best-known tow truck distribution companies, back then, it was a service provider operating alongside a humble gas station.
Over the next forty years, Victor, Simon and their children poured their energy and ideas into the business. The dividends on their efforts were paid in full.
Today, the company operates out of 15,000 sq. ft. facility, keeping their growing crowd of customers happy and drivers safe on the roads. It is the Poladian’s passion for their work that keeps them afloat.
