415 West Main Street
The company will remain committed to providing a wide range of aftermarket products to jobbers, new car dealers, professional installers, government agencies, and do-it-yourselfers. It will continue to grow sales in the Professional Auto Warehouse division and to expand its jobber base through the Auto Value program.
Hahn Automotive Warehouse, Inc. is a distributor of automotive aftermarket parts to the East Coast and the Midwest. The company obtains the parts directly from manufacturers and sells them to both wholesale and retail establishments, such as independent jobbers, car dealerships, repair shops, and government agencies. Hahn's products include replacement and repair parts--such as exhaust systems, chassis parts, and ignition systems--and maintenance items and accessories, including oil, antifreeze, and transmission and brake fluid. Hahn also owns Advantage Auto Stores, a chain of jobber outlets. Hahn is the largest company participating in Auto Value, a nationwide auto parts program through which Hahn provides supportive marketing programs and operational assistance to both its own stores and its customers.
The Beginning of the Road: The 1950s
In 1952 Michael Futerman, the company's founder, traveled to the United States from his home in Israel. The 25-year-old visited a relative in Cleveland, Ohio, who owned an auto parts store. During his stay Futerman worked at the store and began to learn and like the business. He then traveled to Erie, Pennsylvania, where he worked for another auto parts store, this one also owned by a relative. While in Pennsylvania, he met his future wife, Sara, and began to search for an opportunity to launch his own auto parts business.
Futerman's goal became a reality in 1958 with his purchase of an existing auto supply business, Hahn Tire and Battery, in Rochester, New York. Two years later, in 1960, Futerman was able to expand beyond this small, redistributing jobber store. He convinced vendors to sell directly to Hahn Tire and Battery, in the process establishing his business as a wholesale distributor. This accomplishment marked Futerman's true entrance into the automotive aftermarket. In recognition of this fact, he renamed the company Hahn Automotive Warehouse, Inc. In its first year, Hahn did approximately $200,000 worth of business. In part because of this early success, Hahn would post increased earnings in 34 of its first 35 years.
Growth Through Acquisitions: 1969 to the 1980s
Over the next three decades Hahn grew steadily as it strategically acquired failing automotive parts businesses and successfully integrated them into the company. In 1969 Hahn made its first acquisition, F.A. Crossman, an automotive aftermarket warehouse distributor based in Syracuse, New York. With this purchase Hahn extended its sales region into central New York. Beginning in the early 1970s Hahn also expanded its network of wholesale outlets by purchasing small, independent auto parts stores. A milestone for Hahn was its 1982 acquisition of United Consolidated Industries, an auto aftermarket company on the East Coast. United Consolidated provided Hahn with seven additional distribution facilities, as well as four new company-owned jobber stores. With this purchase Hahn not only expanded its sales region but also established itself as a force along the entire eastern seaboard. United Consolidated's warehouses and outlets ranged along the Atlantic coast from Newburgh, New York, to Richmond, Virginia. In 1983 Hahn acquired another auto parts distribution center, Alco Standard Warehouse, located in Buffalo, New York.
In 1988 the company acquired the assets of a division of AI Automotive, an auto parts distributor based in Dayton, Ohio. It was the largest acquisition Hahn had carried out, and it provided Futerman's enterprise with four additional distribution centers and 23 new stores. More significant, however, was the fact that this takeover afforded Hahn access to the Midwestern auto parts market. Hahn's sales region now spread along the East Coast and stretched west to Indiana. Throughout the late 1980s Hahn also established its Advantage Auto Stores, at the time a chain of 51 commercial jobber outlets. These stores supported Hahn's rapidly growing warehouse distribution centers.
In the 1980s Hahn also sought to maximize its operational capacities. During this period the company became the first wholesaler to provide its jobbers with computer terminals. These terminals, equipped with modems, tracked the sales at each jobber store. This sales information was then sent electronically to the warehouse, which enabled Hahn easily to monitor and replenish its inventory. Hahn would thereafter continue to upgrade its computer system, most notably with the 1988 installation of an advanced system specifically designed for the auto aftermarket parts industry.
A New Path: Acquisitions of the Early 1990s
In January 1993 Hahn Automotive became a publicly held company with an initial stock offering of 1,610,000 shares at $12.50 per share. Trading on the NASDAQ stock exchange, shares rose quickly in price. Analysts were impressed with Hahn's moves into key segments of the aftermarket auto parts industry. Despite its new status as a publicly held company, however, Hahn remained a family-run operation. Futerman's son, Eli, had worked at Hahn from an early age, and he had gained a great deal of experience with various aspects of his father's business. In 1980 he had been made vice-president of the company, and he was appointed president in 1992. At the same time, Michael Futerman became the company's chief executive officer. The father and son team planned to continue Hahn's successful strategy of identifying underperforming warehouse distributors and parts stores. After acquiring them, the company would integrate them into Hahn's corporate structure and seek to return these new assets to profitability.
Hahn carried out an important acquisition in November 1993, when it spent $13 million to buy the faltering AUTOWORKS Holdings, Inc., of Phoenix, Arizona, from the Northern Automotive Holdings Corporation. This purchase marked the first time that Hahn had ventured into the retail market. At the time, AUTOWORKS consisted of 159 retail stores, as well as a warehouse distribution center in Ohio. The AUTOWORKS stores carried a range of automobile replacement parts, maintenance items, and accessories for the "do it yourself" customer. With the addition of AUTOWORKS, Hahn's revenues soared 50 percent. Moreover, the acquisition tripled the number of stores owned by Hahn and extended the company's sales region into 13 states, including Illinois, West Virginia, Missouri, and Kentucky. Sales for 1993 totaled $119 million.
Hahn continued to expand with its September 1994 acquisition of both Meisenzahl Auto Parts, Inc. and its subsidiary Regional Parts, Inc. Hahn kept the name of Meisenzahl and incorporated the company into a new division, which it named Professional Auto Warehouse. With the Meisenzahl acquisition, Hahn moved into the last segment of the automotive aftermarket industry it had not touched--direct distribution. In this new, "two-step" distribution, Hahn sold directly to professional installers, fleet operators, vehicle dealerships, government agencies, and do-it-yourselfers. In this way Hahn eliminated a distribution step and attained a greater margin of profit than in the traditional "three-step" distribution method. The acquisition of Meisenzahl was a successful one. By the end of 1994, Hahn posted net sales of $215 million. The AUTOWORKS retail stores contributed 43 percent of sales, while Advantage Auto wholesale outlets provided 24.5 percent. Sales to independent commercial customers accounted for the remaining 32.5 percent of the total.
Despite its strong sales volume, the AUTOWORKS acquisition was not a resounding success for Hahn. Although Hahn's corporate strategy was to revitalize underperforming operations, the problems with AUTOWORKS were too great for its parent to cure. After more than four years of operating losses, the AUTOWORKS subsidiary did not prove to be a viable entity for the company. The subsidiary filed for bankruptcy in the Bankruptcy Court for the Western District of New York on July 24, 1997. The liquidation of AUTOWORKS was completed in November of that year. The proceeds of the liquidation sale were used to pay down portions of AUTOWORKS' outstanding loans. As a result of the bankruptcy filing, an Official Creditors Committee was established to evaluate potential claims against Hahn. In February 1998 an agreement was reached with the committee, and the company resolved approximately $6.5 million in claims against it. In this settlement Hahn was to pay $1.6 million in five equal annual installments. Eli Futerman stressed the positive aspects of the settlement. In an April 22, 1998, press release, he emphasized that "this resolution permits Hahn to direct its total focus to the operation of its existing business."
Developments from the Mid-1990s
Hahn continued to explore new opportunities for expansion. In June 1995 Hahn became the first American company to enter the Israeli auto parts market. It did so by embarking on a joint venture with Pinros Automotive Spare Parts, Ltd., an Israeli distributor, and Federal-Mogul Corporation, an American producer and distributor of auto parts. Because the Israeli market was thought to be fragmented, Hahn saw potential for its own growth in the area.
In September 1996 Hahn's Professional Warehouse division was chosen by the state of New York to be the exclusive supplier of replacement parts for all state-owned vehicles. The agreement--which covered 17 different product groups, including lighting, rubber products, fuel systems, electrical components, and bearings and seals--increased Hahn's opportunities to obtain further government contracts. The next month Hahn acquired Nu-Way Auto Parts, Inc., a group of direct distribution centers located in Rochester, New York. As with Meisenzahl, Hahn maintained the Nu-Way name but integrated the company into its Professional Auto Warehouse division. In 1997 Hahn acquired Finn Auto Parts of Canandaigua, Inc. This company became an Advantage Auto Store within Hahn's wholesale division.
By the late 1990s the company stocked more than 156,000 name-brand and private-label products, which it purchased from approximately 320 manufacturers. Hahn also maintained valuable relationships with many of its manufacturers dating back to the early years of the company. Hahn delivered these products to its 85 company-owned Advantage Auto Stores and more than 1,400 independent jobbers through strategically located distribution centers. It also serviced car dealerships, independent repair facilities, government agencies, independent fleets, and retail consumers. During this period, moreover, Hahn was benefiting from changes in vehicle ownership. Nationwide the number of vehicles was growing, and the percentage of cars on the road more than ten years old had tripled between 1972 and 1995. These older cars required more frequent repair and as a result more aftermarket parts.
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