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Steady hands at the wheel

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While some claim to have trucking in their blood, it was literally stamped into Robey W. Estes Jr. He admits the mark of destiny was self-inflicted. “The first memory I have of a truck, I must have been 5 or 6 years old,” says Estes.

The grandson of W.W. Estes and son of Robey W. Estes Sr. —  two giants of 20th-century American trucking — was roused from his bed early on Saturday mornings to accompany his father to Estes Express Lines’ old headquarters and terminal on Gordon Avenue in South Richmond. In those days of manual billing in the 1950s, Rob Estes enjoyed playing with the stamp pads used to mark customers’ bills paid or unpaid. “I remember stamping my hand with those stamps,” recalls Estes.  “I had tattoos all up my arm.”

Looking back, Estes, 56, can see how he was marked in other, less visible ways by those Saturdays with his dad. In 1990, after the first decade of trucking deregulation, Robey Estes Sr. relinquished control of the family trucking firm to Rob.

That decision to trust a new generation proved to be pivotal in the growth of Estes Express into a national trucking leader. In 2007, it ranked 17th in the nation by trade magazine Transport Topics, the most recent industry ranking. Based on revenue, it’s the seventh largest LTL (less-than-truckload) carrier. 

Today, even as larger trucking companies search for cash, and others struggle just to stay in business, Estes Express is pulling ahead.  By updating technology, expanding its reach from Mexico to Canada and investing in new trucking facilities, the family-owned firm has edged into the fast lane.

Multiple loads, many customers
While “truckload carriers” typically carry freight over long distances from one point to another, less-than-truckload companies like Estes haul multiple loads of goods for different customers.

Even with its steady growth, Estes has been hurt by freight shortages created by the recession as tonnages dropped to record lows. In December, the seasonally adjusted tonnage index was down 11.1 percent from the prior December — the steepest drop since a trucking strike in 1994, according to the American Trucking Associations (ATA). Considering the pain, Estes Express fared pretty well, with a drop in 2008 tonnage of 4.4 percent compared with 2007, less than half the industry average.

“The freight environment is brutal,” says Thom Albrecht, a trucking analyst at the Richmond office of Stephens Inc., an investment banking company. “What drives the demand for LTL services is industrial production, which is expected to be down 8 to 10 percent this year, the steepest drop since 1950.”

Yet he says Estes Express is capitalizing on opportunities, including financial distress among major competitors. For instance, Estes Express plans to invest $150 million to buy and then lease back an undisclosed number of truck terminals from subsidiaries of Kansas-based YRC Worldwide (Yellow Roadway Corp.)  — facilities that came on the market as the company sought to boost cash flow.

In recent years, Estes Express has positioned itself as the go-to trucker by adding an air freight division and expanding to Mexico. In February, it added a third-party logistics subsidiary, Estes Logística.  Another company offering is what Albrecht calls a “value proposition.”

Competitors such as FedEx and UPS tend to focus on the more lucrative realm of overnight shipping. Estes Express provides overnight service, too, but clients such as Lowe’s, Home Depot and Wal-Mart can take advantage of cheaper second-day or later deliveries. “In a day when corporate cash flows are down, their value proposition has been a winning sales formula,” says Albrecht.

The DNA of work
Hard work has never been an issue for a family that started its business bumping along the pot-holed roads of Southern Virginia in the Great Depression. According to family lore, when company founder Webb Wallace Estes first drove out of Chase City in a used Chevy truck in 1931, he’d do anything legal to make a dime —  even carrying a single can of paint for a half dollar.

Asked by a reporter to reveal his secret to success, W.W. Estes, who’d started as a farmer, replied he had none. “Just hard work followed by more hard work.”

Robey Estes Sr. continued this agrarian work ethic with his son. Rob Estes recalls that his father enjoyed washing and repairing trucks. And, he adds with a wry smile, “He enjoyed seeing me work.”
Did he ever resent getting up early every Saturday morning until he was 17? With characteristic frankness, Estes replies, “I felt like I was sacrificing a whole lot more than I probably was.” Still, the lessons in labor and enterprise linger, usually with grains of good humor from the son who took over as president in 1990 and in 2001 became the company’s chairman and CEO.

“That’s where I learned to drive a truck,” Estes says of his Saturdays with the man known as Mr. Robey. “He did not pay well, usually whatever was in his pocket. I remember I got a dollar for working eight hours — I figured out that I got paid 12 and a half cents an hour.”

Even as he jokes about his late father’s tight-fisted ways, Rob Estes turns serious as he stresses the importance of other family members to the company’s success. They include cousins Billy Hupp, chief operating officer; Steve Hupp, corporate secretary; Trish Garland, vice president of corporate communications; Bobby Speight, general manager of Estes Specialized; and Tom Donahue, vice president of human resources. 

Operating as a private, family enterprise allows the company to nimbly face new challenges. “We don’t have to worry about next quarter’s earnings reports going to Wall Street,” says Estes. “We can make decisions that are more long-term in nature, not short-term.”

Case in point: In 2004, torrential rains from tropical storm Gaston flooded the company’s below-ground data center in Richmond — knocking out computer and phone communications with far-flung truck terminals for five days.  A plan to update IT systems already was in place. However, in response to the storm, the company quickly replaced the damaged equipment with the latest technology and backup systems.

Rob Estes is clearly proud of his company’s legacy and the newest members of his supporting cast: daughter Carrie Estes Johnstone, 29, manager of special projects, and son Webb Estes, 25, assistant manager of special projects.

Johnstone says via e-mail that she likes working for her father. “When I go to him with a question or problem, he gives great, solid and consistent advice, and somehow he ends up making me feel like I had the solution all along.”

Webb Estes says via email that what he enjoys most is “how my dad still plays the role of dad … His ability to challenge me to work hard while letting me know that he’s already proud and cares … that’s what I treasure most.”

Business after deregulation
Recalling the deregulation decade of the 1980s — which “scared my dad to death” — Rob Estes found his business and accounting degree from the College of William & Mary helpful in navigating the rough waters of free market competition. This was especially true when it came to setting prices for hauling.  Before that, the Interstate Commerce Commission set all the prices and controlled the routes.
The end of government control paved the way for the younger Estes to play a bigger role.  Though he downplays his impact on the company, the numbers speak volumes. Under his leadership, Estes Express’ revenues have grown tenfold, hitting the $1 billion revenue mark in 2004. The company, which doesn’t release net income or salary figures, announced 2008 revenue of $1.48 billion.

This is the fourth recession Rob Estes has weathered since 1980. “The others pale in comparison to what we as a company are going through, and certainly what we as a country are going through.”
While the recession has deflated the profits of many trucking companies, Estes Express managed to minimize the impact on much of its work force. The company laid off about 500 employees last fall and lost more than 500 by attrition — dropping its work-force headcount from 13,500 to 12,230. Still, Estes’ workers received a cost-of-living raise of about 2.5 percent in November. “It was probably not the best financial decision,” says Estes “but in 2008 the cost of gasoline they buy, the cost of oil, the cost of food is up.”

His board room reflects the company’s lack of pretense, with little of the glitz or gold-plated touches of some large companies. Across the room hang paintings of his grandfather and father. “They sit there and watch us and tell us: ‘Don’t get too highfalutin,’ or as Dad said, ‘Don’t get too big for your britches.’ ”

Debt-free discipline  
Estes Express celebrated its 75th anniversary in 2006, shortly before Robey Estes Sr. died at age 85. Even in his final days, Mr. Robey would ask his son, “Do we owe the bank any money?” Usually, Rob could say, “No,” and his father went into his office with a smile. Even today, the company’s debt-free discipline is helping it survive the economic downturn.

Mr. Robey no doubt would smile to see his grandchildren — the fourth generation of the Estes family — working at the family business. “That is exceedingly rare,” says Matt Rutherford, an associate professor of management at Virginia Commonwealth University. “While the literature varies, less than 15 percent of family firms make it to the third generation, and less than 2 percent to the fourth.”

Charles Gallagher, director of VCU’s Virginia Family & Private Business Forum, has not worked with the Estes family. But “in general,” he says, “owners of successful family businesses are passionate about their family and they see the business as their legacy.”

This trait seems to fit the Estes clan to a T — or perhaps to an E.

Estes Express Lines at a glance:
Founded:  1931
Employees: 12,230
Headquarters: Richmond
Number of terminals:  200 terminals in the U.S., with direct service to all 50 states, Puerto Rico, the Caribbean, Canada and Mexico.

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