The following
interview was conducted in San Jose, CA. Only
Coast’s CEO Tim McGuire and RV News Editor Don
Magary were present.
The format
presented here is "question and answers,"
Where necessary, background information is presented
preceding the question.
Background:
At the 1996 Coast Advantage Buying Show, Tim McGuire,
in a speech to dealers, concentrated on competing
with the Mass Merchandisers such as Camping World and
WalMart. RV News has been told on several occasions
that Travelux, a company supposedly owned by Coast,
sells products to WalMart.
RV News: Does
Coast sell products to WalMart? Does the company
Travelux have any relationship with Coast
Distribution?
McGuire:
Yes, Coast owns Travelux and Travelux does sell
product to WalMart. We got into that when we bought
United Sales in Texas in the 1980s. We realized that
there was a market there; however, there is no
Travelux product that the dealer can’t buy from
us and be competitive with WalMart.
RV News: Is
there an inconsistency with selling WalMart on one
hand and telling dealers that WalMart is a problem
for them on the other?
McGuire:
I don’t see the inconsistency because the dealer
is competitive. In my mind, that’s the issue.
Since we
have tried to keep the dealer competitive with this
channel, we have lost a lot of that business over the
years. Today, we have nine items, I think, that
we’re selling to WalMart. Dealers are
competitive on every single one of them.
You
know, if you stop and think about it, the best thing
that could happen to the dealers is that WalMart
bought all their products through distribution,
right? It’s when they buy it direct from the
manufacturer that there’s a problem for dealers
being able to compete. Most of the business
we’ve lost, we lost to Camco.
RV News: One of
the themes you have used in speeches during the past
several years is that CP Products, Coast’s
proprietary brand, is the dealers’ own brand and
that they would never see a CP branded product in a
WalMart. A distributor sent me a Travelux seven-way
connector that had "CP" stamped in the
cover? Can you explain why?
McGuire:
That was a mistake. Someone simply sent Travelux the
wrong product to be packaged.
Background:
Several manufacturer-suppliers have suggested to RV
News over the years that Coast’s proprietary
product was a copy, or "knock-off," of
their product.
RV News: Has
Coast ever copied another manufacturer’s product
and sold it as a CP branded product?
McGuire:
No. In the beginning we may have bought items from
the same company that was supposedly manufacturing
the product, but was simply buying it off-shore and
repackaging it themselves. We went to the source,
bought the product direct and repackaged it
ourselves. And by doing that we were able to get the
product to the dealer at a lower cost. Our motivation
all along has been to help our customers be
competitive. But no, we have never copied
anyone’s product.
As
we’ve gone along and become more sophisticated;
however, we have developed our own engineering and
quality control on the products we manufacture or
have manufactured. The Coast branded products today
are outstanding products with their own features and
benefits.
RV News: If
that’s the case, then why did companies such as
Thetford, Reese and others decide to stop using Coast
Distribution?
McGuire:
I certainly can’t speak for those companies, but
there are two issues here I think are important.
First, in every instance where we developed a
product, we never intended to discontinue selling the
branded product. Our goal was to give the dealer a
product that was competitive with other channels. We
are, after all, a distributor. That’s what we do
and do very well.
The
second issue is that in almost every case, we went to
the manufacturer first and asked them to provide us
with a product we could sell to dealers that would
make them competitive with Camping World and WalMart.
In several instances, those manufacturers did in fact
work with us to develop a product that we could sell
to dealers at a lower cost.
If the
primary manufacturer didn’t want to participate,
we engineered and developed our own product. And then
we would work with an existing company to manufacture
the product. Our Refresh chemical line is
manufactured by Century Chemical, a company
that’s been in the RV industry for many years.
Our CP towing products are manufactured by Valley
Industries.
RV News:
Thetford stated that their reason for discontinuing a
relationship with Coast is because Coast became a
competitor, and they do not do business with
competitors.
McGuire:
I understand what you’re saying, but a
manufacturer has competition with his product all the
way through the channel to the market place. Can you
imagine Gillette going into WalMart and telling them,
if you put Schick on your shelf, I’m taking
Gillette out of here. So it just doesn’t make
sense to me. If I’m manufacturing something, I
want that product in as many places as it could
possibly be where the consumer might buy it. And
Coast has a great vehicle to do that. The idea that
dealers are going to carry anybody’s product
exclusively is really unrealistic.
Background:
In 1996 some of the companies that left Coast put on
an event - their own show - across the street from
the Tropicana Hotel in Las Vegas where the Coast Show
was being held.
RV News: What
was your feeling about Reese, Thetford and others
holding their own show across the street at the MGM
Grand Hotel at the same time as the Coast Show.
McGuire:
It was certainly a distraction. It made work less
fun. I’m a positive guy. I want to come in every
day and do new things and build better relationships
with my customers and grow the business, and here all
of a sudden I’m involved in the middle of their
sale.
RV News: On a
related matter Automatic Equipment Manufacturing Co.
exhibited at the Coast Show and also had a suite on
the floor where the so-called "brand name
show" was being held. According to Jay Hesse,
president of Automatic, you ordered Automatic
Equipment out of the show prior to its conclusion. Is
that true?
McGuire:
You know, we didn’t handle that well. Jay
didn’t handle it well, that’s for sure. To
come into our show and then go across the street and
sell across the street was not a proper thing to do.
But, for us to say you make a choice — either
shut down over there or pick up your stuff and get
the hell out of here - that wasn’t the right
thing to do, either.
RV News: And
subsequently, did Coast and Automatic stop doing
business?
McGuire:
We never intended to discontinue selling Jay’s
product. In the long run I think it’s been
really good for us because we have built a great
relationship with Road Master and have been able to
give them national distribution. They have a great
product and customers really like it. We’ve done
very well with the product so far.
RV News: We
don’t want to keep bringing up Reese and
Thetford, but Reese for example told RV News that you
had come to them saying you wanted a competitive
product. According to Reese, they said: Okay, we will
build a competitive product. And that’s when
they brought out the American Tow Champ line. But Bob
Mater, president of Reese, said that didn’t
satisfy you because Coast wanted it exclusively. So
was the issue exclusivity rather than having a
competitive product?
McGuire:
I think in the case of Bob Mater at Reese, he kind-of
got caught in the middle of the buzz-saw because when
we started to talk to Reese, it was not with Mater;
it was with the previous managers. We got nowhere. By
then we were out looking for alternatives and began
to develop an alternative with Valley. I think had
Mater been there from the beginning, we probably
would have worked out something with Reese. But I
think that by the time Bob got his feet on the ground
in the job, it was already too late.
RV News: When
Reese left shortly after Thetford, they said it was
for the same reason — Coast had become a
competitor. Privately, Reese told RV News that they
did not believe Coast was forthright with them about
plans to manufacture a fifth-wheel hitch.
McGuire:
As far as being a competitor, we have always had a
proprietary brand of towing products and it is Husky.
Husky is manufactured for us by Eaz-Lift. And we sold
Eaz-Lift and Husky, and we still do to this day. We
went to Valley and had them manufacture the ball
mounts for us because we felt they were the most
efficient and they manufactured the best ball mounts.
That’s how the program started. We didn’t
really decide to get into the 5th wheel business
until we realized that the relationship with Reese
was shaky and that maybe they would stop selling us.
In our conversations with them, we could tell that
all wasn’t going too well. What we were doing
day-to-day they may not have been aware of; but they
certainly were aware of what our needs were and what
we felt the needs of our customers were.
RV News:
Let’s move on to some other topics. Does Coast
have plans to go retail?
McGuire:
No. Absolutely not.
RV News:
It’s been suggested on more than one occasion to
RV News that Coast’s ultimate goal is to sell
direct to the consumer and there is a plan locked
away that can easily be dusted off and put into
motion, supposedly when you reach 4,000 products in
your proprietary line. But you unequivocally say, no?
McGuire:
The answer is no. Think about it. Coast does business
with thousands of RV and marine dealers —
that’s our customer base. We did over $150
million in 1996 — selling to this customer base.
The first time we sold one item retail, that business
would dry up overnight. I don’t care how clever
you are, you cannot overcome that loss of business in
time to recover and start a retail operation. It
makes no sense for Coast to sell retail. Coast is a
logistics company. We distribute products and sell
them to RV dealers. Unlike some distributors who have
some kind of retail operation Coast does not. We have
always been wholesale only. Coast has no plan tucked
away nor do we have any plans to ever go retail.
RV News: We hear
from time to time that Coast systematically
substitutes proprietary brand products when the
customer actually ordered a particular brand of
product by number. Does Coast do that?
McGuire:
No, we do not. If the item ordered is not in stock,
we advise the customer that the product is
back-ordered, and that if he needs the item
immediately, and Coast has a similar product —
our brand or another brand — we will suggest he
can substitute — but it is the customer’s
decision, not ours.
RV News: People
tell RV News that Coast refuses to do business with
smaller companies and that if they aren’t doing
$100,000 a year, Coast is not interested in doing
business with them. Is there a minimum dollar amount
necessary for a dealer to qualify as a Coast
customer?
McGuire:
Coast wants to do business with all legitimate
dealers. How that rumor may have started is after we
acquired companies in the 1980s, we would go over the
company’s customer list and qualify them. If
they were consumers, Coast would not sell to them.
But any legitimate company is certainly welcome to do
business with Coast.
RV News: And
finally, many people were surprised by your decision
to advertise in RV News magazine and create an
alliance with RV America On Line in view of the fact
that RV News has been a vocal critic of some of
Coast’s decisions. Some have suggested that RV
News and Coast have an agreement where Coast
advertises and RV News gets off Coast’s back.
Did you ask for or did RV News offer to change its
editorial philosophy to be more favorable to
Coast’s position?
McGuire:
No, there was no agreement asked for or given.
Coast’s decision to advertise in RV News was a
business decision. We saw RV News as an economical
way to get our monthly specials in front of a lot
more dealers than doing it in-house as we had been
doing before. We were printing and mailing the
monthly specials flyer to about 5,000 people. RV News
goes to 14,000. As it turns out, the RV News program
actually costs us less than the program we had before
with much greater penetration.
As far
as the alliance with RV America, we wanted to create
an opportunity for our dealer customers to be able to
participate in the growing opportunities of the
Internet. We looked at several options, but
ultimately decided to work with RV America and
we’re happy with that decision.
If there
is any difference in the editorial content of RV News
as it relates to Coast, it’s probably because we
are talking today where we weren’t before. As
you said, we were adversaries but had never really
talked to each other. We had made the decision to not
respond to criticisms. I’m a very positive
person and dislike controversy so I simply did not
want to say anything negative. As I look back it was
probably a mistake not to respond.
But if
the program between RV News and Coast works for both
companies, why should anyone have a problem with it?
RV News thanks
Tim McGuire for agreeing to answer some of the more
controversial questions that have been on our mind
for several years. McGuire’s answers seemed
candid and forthright. There was no question that RV
News asked that McGuire refused to answer, and
McGuire’s demeanor during the interview was
relaxed and good natured. RV News believes the slate
of past issues have been addressed and now that RV
News and Coast Distribution are talking, if other
issues arise, we will be able to satisfy our
curiosity and report on the issues immediately.
