In The News
The Downfall of Bentz Transport Products, Inc.
Details highlight the shrinking expedited freight industry and the challenges expediters face
Bentz Transport Products, Inc. — a leading supplier of custom-made, aftermarket sleepers for expediter trucks — closed its doors on August 18, 2009. This industry-significant event surprised some, saddened many and gave expediting industry players pause to reflect on the present state of the industry and its future.
At this moment in expediting history, ExpeditersOnline interviewed company president Keith Bentz, seven expediter truck dealers, five custom-sleeper manufacturers, and two expediters who own Bentz-equipped trucks. As a group, they describe a diminished and changing expediting industry in which few new expediter trucks will be purchased in the near term, no new expediter trucks are being ordered now, and expediters of the future will see lower freight volumes and lower margins than they did in the past. While everyone interviewed is expecting an economic recovery, no one suggested that an expedite boom cycle lies ahead.
The still-standing sleeper manufacturers have realized no immediate benefit from the Bentz departure. When asked about their own futures, they expressed a determination to continue to serve the expediter market while also diversifying into other markets. No dealer or sleeper manufacturer would be surprised to see another sleeper manufacturer fail if the market does not soon recover.
All sleeper manufacturers said they can service Bentz products. They are offering warranty assistance in limited forms to Bentz sleeper owners or discounted prices for work on Bentz-warranted products.
What happened to Bentz?
When the Bentz departure was reported on August 17, Keith Bentz said, “The root cause is a collapse in sales across all of our product lines. With no recovery in sight, there is no way to continue on.” In a follow-up interview, Bentz provided more details.
“At the [2009 Expedite] Expo, I already knew what was coming. What I found out down there confirmed that we would not be able to move forward at all. All four biggest expedite truck dealers, they all told me the same thing independently. With new, used and repo expediter inventory, they felt there is enough to carry us through end of 2010. After that, new orders would be small and incremental. The length of time to get through this downturn was too long for us to bridge.”
Bentz was asked if the company was forced out of business by creditors or if it was a voluntary departure. He answered, “Our bank exercised their position as the only secured creditor. We were current on all obligations through the beginning of July. When I reported our sales collapse and projected sales, the bank exercised their rights as a secured creditor. They shut us down and will liquidate the assets, but no Chapter 7 or 11 will be filed. The bank has entrusted me to sell the assets.”
It was not an entirely clean exit. While not pursuing that part of the story, EO became aware of one dealer with one or more trucks “left hanging there” and two suppliers left with unpaid bills.
One supplier said, “We have been severely damaged. We lost one of our top ten customers plus we are out a huge receivable from Bentz.” Another said, “They left us with quite a bit of a receivable. I let them go and go, and I got stuck. I'm a very small company... When they did that, it hurt me pretty bad.”
What’s Next for Keith and Charla?
When people learned Bentz was closing its doors, most responded with expressions of regret and sympathy, and wished Keith and his wife Charla their best. Many wondered what is next for this married couple who ran the company.
When asked, Bentz spoke in an upbeat tone and said, “Back to corporate life in Indianapolis. We moved to Ft. Wayne [Indiana] 12 years ago to buy out the business from my father. It will take two or three weeks of work to wind things down, and take a month or two to unwind and get our bearings. In 12 years, we have had three weeks of vacation together. We will take a nice vacation somewhere. In the February-March time frame, we will transition into corporate life. Our education and experience is such that we will do fine.”
Bentz added, “We will not be back in this when the market picks up again. The market is too cyclical. Margins and volumes are ratcheting down with each cycle.” He spoke of the stress and commitment, and of working at home until 2:00 or 3:00 in the morning. He said he and Charla ”˜want to focus on one job only” and not on the financial stress, customers and employees they had in the business.
What of the Employees?
Bentz told EO that two highly skilled employees quickly found new jobs with a Bentz supplier. Regarding the other employees, he said, “Others will migrate to other companies in the area and disperse into the economy in general. In Fort Wayne, there is not much left of the truck industry anymore.”
He added, “We had tremendous employees. We had great people working here. We hated to see them go. We really had a good group of people here.”
Few people rose to criticize Bentz or celebrate the company’s demise. Indeed, praise for Keith and Charla Bentz, the company and its products ran deep and wide among all the people we interviewed. Comments by Jeff Jones and Larry Lewis are typical.
Jeff Jones is a sales representative with Stoops Freightliner in Fort Wayne. Previously with Fort Wayne Truck Center, he has been selling Bentz sleepers for 13 years. Jones said, “Keith and Charla are, I believe, two of the best people who have ever been in the business. I don't know anybody in this industry that have worked as hard as Keith and Charla Bentz did to make a good quality product and build a successful business, and I know a lot of people. When the economy comes in and crushes them like that, there is nothing they could have done. I mean they did everything right.”
Larry Lewis became an expediter following a 33-year career in fabricating and tool making with General Motors. He cited Bentz engineering and product quality, and the Bentzes themselves, as his reasons for buying two Bentz sleepers.
Responding to the news about the Bentz closure Lewis said, “I felt bad, terrible, felt really sorry for Keith, Charla, super-nice people. They have done everything I asked. We had minor trouble here and there. There was no qualm with them fixing it for us. I just felt sorry for Keith and Charla. He did stuff to make our life on the road better, to feel more comfortable. They went out of their way to really help the expediters. Some people have problems with them, I'm sure, but I feel they were very fair with us.”
Bentz Product Pricing
One criticism that was publicly made on the ExpeditersOnline Open Forum is that Bentz priced himself out of the market. When asked to respond, Bentz said, "I would challenge those people to examine their own businesses. We all want to maximize our revenue and profits.
“The factory fit and finish, the tooling, engineering and prototype builds did not have to be borne by our competitors. We catered to what we felt was a high-end customer. The R&D were amortized into the product. We were at the high end of the market but sales collapsed.
“The unique identity and advantage of Bentz — the things that provided us a competitive advantage — also provided a cost disadvantage. Our competitors that are still alive did not have to bear some of those costs.
“Our customer feedback was that we built the best product in the market. It was in the high end of the price range but it was not the cause of our downfall. The cause was the collapse in sales. We did not lose any business to our competitors. The business just evaporated.”
When asked what caused the Bentz demise, some sleeper manufacturers talked about the high costs of producing the molds — the tooling, engineering and prototype builds Bentz mentioned above.
Double Eagle Industries, located in Shipshewana, Indiana, has been building custom sleepers since the early 1970’s. Company vice president Rocky Miller spoke of the expense involved in designing the Bentz molds. “That’s a tremendous amount of work. That's one of the reasons they may have closed their doors. The return on a cash outlay like that needs to be something you can project.
“Cab structure, rear wall structure, [Bentz] was a complete different work.... In a good economy, it may have been sufficient for them. Very ingenious how they were doing it. R&D and engineering expenses made it hard to make ends meet.”
What of the Molds?
Among the things that made the Bentz products unique are “the molds,” as insiders call them. A new or existing sleeper manufacturer can use them. About the molds, Bentz said, “The intellectual property including the drawings, designs, solid models, engineering data in our computers, bills of material, cost data and pricing data have been sold." He refused to name the buyer or buyers, saying, "Any announcements would come from the people that bought the assets. Part of the arrangement was that I would not disclose any information."
At the time of the interview, the molds for the Kenworth and Peterbilt crew cabs that Bentz also built were still for sale. Bentz said he could not disclose the name, but he had a potential buyer.
Another Bentz business asset is the 135,000 sq. ft. building on 18 acres of land, located in the Ossian Industrial Park in Ossian, Indiana, approximately 10 miles south of Fort Wayne. Bentz bought it in February 2007 and moved into it in May.
When the building was purchased, Bentz, voicing the optimism of the time, said, “The new facility will enable us to increase our capacity to support growing demand for our products and position us to take on new business in the future. The larger facility is a key part of our growth plans over the next several years, particularly in anticipation of the forecasted increase in our market in 2008 and 2009. We have grown tremendously the past five years and have diversified both our product base and customer base. The new facility will help us to grow our business with existing customers and take on additional business with new customers.”
Bentz’s forecasted increase did not materialize. About the same time Bentz bought the building, American Trucking Associations chief economist Bob Costello pointed to second-half 2006 and early 2007 truck tonnage numbers and said a freight recession had begun. In September 2008, a global financial crisis hit the trucking industry with full force, driving hundreds of carriers out of business and thousands of truckers off the road. Bentz put the building up for sale or lease in August 2009.
Soon after Bentz closed its doors, some sleeper manufacturers began advertising that they can service Bentz products. Regarding warranty service by other sleeper manufacturers, Bentz said, “No warranty agreements have been made. I have talked to ARI, ICT and Double Eagle directly. All three will do a fine job servicing our products. I have talked to no other companies about servicing our products.” Bentz added that many sleeper components like TVs, microwaves and generators are warranted by their respective manufacturers.
Unsold Unit Pricing
Bentz estimated that there are less than 50 Bentz-equipped trucks remaining in dealer inventories and said no warranty support from Bentz is available. When asked what effect, if any, this would have on dealer prices, Bentz said, “Since Bentz is no longer in business, there is no warranty coverage. A knowledgeable customer would expect a dealer to discount so [the customer] can bank the money.”
Bentz Product Lines
Bentz estimated that more than 1,000 Bentz-made expediter truck sleepers were sold in the company’s 17-year history. He said they were a core product and, “In a normal year, they were 30 percent of our sales.”
Bentz listed the company’s four product lines — expediter truck sleepers, “big-bunk tractor” sleepers, crew cab modifications for Kenworth and Peterbilt trucks, and operator cabs for front-load cement mixer trucks. He said each product line represented 15 to 30 percent of the company’s business, depending on the year.
The Future of Expediting
EO asked Bentz what the end of his company said about the future of expediting. He answered, “When expediting first took off, it was common for many of the loads to get two to three dollars a mile. Expediting teams tend to be second-career people. It was attractive for them to get into trucks and make much better money than tractors.
“The industry matured, and revenues began to fall, as well as the margins and the number of players. Revenue per mile will continue to fall. [Carriers] that had business taken from them by expediters have revised their models to get the business back. Models have changed. The really good companies like FedEx have been able to adapt quickly as the business changes. People with superior information capabilities are going to win. The winners use tech.
“[Less-than-truckload carriers] got the pants beat off them in the '90's by expediters. To get the business back and grow, they used technology and communications to gain back much from expediters. It has put pressure on margins. Customers don't care about exclusive use. They care that their shipment gets through.
“Expediting started with [just-in-time shipments] in the automotive [sector]. Expediters were the safety net to take up the errors in the automotive industry. It made more sense for them to pay expediters three dollars per mile to not shut down a plant overnight, and to not have plants all over the place. As the auto industry got better in information and logistics management, the need to use expediters has fallen away.”
Will Others Fall?
EO asked Bentz if he expected to see other aftermarket sleeper companies exit the business. He said, “That's a great question. I know all of them, have talked to all of them, and I cannot and will not speak for them. All are struggling, some more than others. There will be some challenges to some of the business models that are in use. All are struggling in some capacity.
“Do I hope that others exit? No. I would not wish this on anybody. I hope they all pull through. I personally think there are probably too many right now. I think that one or two might have to go or consolidate. There is just not going to be that much demand over the next couple of years to support them all.”
EO concluded the interview by asking Bentz if he had anything to add. He said, “Char and I really enjoyed our time in the industry. We met some great people along the way and really enjoyed it. There are some great owner-operator, husband-wife teams out there that should be proud of themselves. We had some great employees. We met some great friends along the way. The business has come and gone but the friendships will last a lifetime. Char and I are putting this behind us now and moving on. It's behind us now and we're moving forward.”