AMERCO - Company Profile, Information, Business Description, History, Background Information on AMERCO

1325 Airmotive Way
Reno, Nevada 89502

History of AMERCO

Amerco is one of the largest privately held businesses in the United States. Its primary operational company is U-Haul International Inc., a leader in providing move-it-yourself rental equipment, installing custom towing hitches, and operating rental storage facilities. The company owns a fleet of more than 160,000 vehicles (including moving vans, pick-up trucks, and trailers), has more than 1,100 company-owned U-Haul Center stores in the United States and Canada, and uses the services of 10,000 independent dealers for its rental fleet. U-Haul was founded in the 1940s by L. S. Schoen as what he hoped would be the cornerstone of a family business empire. Since the 1970s, control of the company has been the subject of one of the bitterest family feuds in the history of American business.

L. S. Shoen was the son of a an Oregon farmer who lost his land during the Great Depression. The younger Schoen worked picking fruit, butchering cattle, and cutting hair to pay for a three-year stint at college, which ended when he was expelled for providing answers for a classmate. He then entered the U.S. Navy just in time for World War II. During the war he moved his family from military base to military base in borrowed trailers, an experience that led him to envision a nationwide company that would provide mobile Americans with reliable, rented trailers that they could use to move their belongings without worrying about how they would return the vehicles.

With the help of his wife, Anna Mary, Schoen launched U-Haul International in Ridgefield, Washington, a city just outside Portland, Oregon, in 1945. With a $5,000 investment, the Shoens began to buy and build trailers, painting and stenciling the company's name on each of the trailers themselves. The couple had six children by the time Anna Mary Shoen died in 1957, and L. S. Schoen eventually had a total of twelve children with three wives.

Throughout the 1940s and 1950s, L. S. Shoen built a business empire of trailer dealerships that had automobile service stations as their main outlets. Traveling by car for weeks at a time, he recruited new dealers for his U-Haul trailers and used the tool box he carried to patch and repair his company's rolling stock, often by the light of street lamps late at night. He also rented trailers to people who would travel to cities he could not visit, provided that they return those trailers to service stations he thought were potential U-Haul dealers. By the mid-1950s his dealer network stretched from Portland, Oregon, to Miami, Florida, and from Los Angeles, California, to New York City.

In You and Me, a 1980 book in which he chronicled his family's history and outlined his corporate philosophy, Shoen illustrated his entrepreneurial spirit and homespun management style. 'The first day we rented a trailer, I set my sights on 1,000 trailers, and when we got 1,000 trailers on the road, I wanted 10,000,' he wrote. He made surprise visits to his dealers, sometimes at night, and as an example to his employees of wasteful spending, he once threw $1,000 in cash from the eleventh floor of his headquarters building. Shoen stressed economy in all areas, mandating that his executives eat at fast-food restaurants and stay at cheap hotels on company business trips. Because he planned to hand over his business empire to his children, they were fully instructed in running the company, including painting and repairing the U-Haul fleet. As they grew up, his first four sons joked that they had orange U-Haul paint in their veins rather than blood.

In the 1960s U-Haul was the preeminent do-it-yourself trailer rental company in the United States and Canada. In 1967, at the height of the company's success, Shoen moved his corporate headquarters to Phoenix, Arizona. Four years later, in 1971, Shoen incorporated Amerco in Reno, Nevada, as the holding company for what he hoped would become a diversified corporation. Amerco later started the Ponderosa Group, a captive insurance company established to cover corporate risks. Through its real estate subsidiary, Amerco also acquired a property portfolio with an estimated value of $1 billion.

Events of the 1970s significantly altered Amerco's future. The first critical change arose from the founding in 1970 of Ryder System Inc. in Miami. Eventually becoming a formidable competitor, Ryder copied the idea and style established for the trailer and truck rental business that Shoen had founded. In 1989 U-Haul and Ryder each controlled nearly 45 percent of the United States market for do-it-yourself rentals of trailers and trucks.

While the long-term effects of Ryder's presence in the market was largely indeterminable in the early 1970s, the second threat to the Amerco's business was more immediate and forced the company to consider new businesses and directions. The 1973 oil crisis, which struck at the heart of the company's basic business by curtailing the mobility of Americans, also caused fundamental changes in the way gasoline was distributed and resulted in the closing of many of the independently owned service stations that comprised U-Haul's dealership network. In response, U-Haul expanded its operations by establishing U-Haul Centers--company-owned stores that offered a variety of rental services, from jet skis and party goods to sexually explicit video cassettes. A huge investment expense for Amerco at a time when its sales and profits were declining and competition was increasing, the stores were ultimately unsuccessful and brought the company additional losses.

As these changes were occurring, strife arose between Shoen and his eldest children, who were not getting along with his second wife, Suzanne Gilbert. Disputes between Gilbert and the Shoen children while L. S. Shoen was out of town on business sometimes had to be settled by the Phoenix police. In 1977 the couple divorced.

Over the years Shoen gave his children progressively greater shares of the company in preparation for eventually handing it over to their control, so that by the early 1980s, his seven sons and five daughters owned 95 percent of the outstanding shares of the company, while he controlled only 2 percent. Relations between Shoen and his four eldest sons, Sam, Mike, Edward J. (Joe), and Mark, began to deteriorate in the mid-1970s, when the four siblings had moved into the upper management of the company. The sons believed that the investment in the 1,100 U-Haul Center stores, which offered a wide variety of rental items, was not benefitting U-Haul. They argued that the stores detracted from the servicing and maintenance of U-Haul's aging fleet of trucks and trailers, which were put in greater jeopardy with the growth of rival Ryder Systems.

By 1979 Joe and Mark Shoen had resigned from U-Haul because of this dispute over the direction of the company, and a year later Mark's relationship with his father and brother Sam deteriorated still further when they refused to help him out of a financial predicament by buying some of his Amerco stock. Mark Schoen, who later became president of U-Haul International, noted in an interview with the Los Angeles Times, '[We] were millionaires in name only. We were told we were wealthy, but we didn't have enough money to buy a car.'

Mark and Joe Shoen set out to wrest control of the company from their father and brother Sam. By 1986 Joe and Mark Shoen had drummed up enough support among their brothers and sisters to oust L. S. Shoen as chairman of the corporation. The brothers moved quickly after assuming control of the company to return it to its basic businesses. They kept U-Haul's rental storage facilities but eliminated many of the company's extraneous rental offerings, focusing on trucks and trailers, boxes, moving pads, and packing materials as featured items at the company's U-Haul Centers. In addition, they cut back on the company's work force, purging executives who supported L. S. and Sam Shoen.

At the 1987 annual meeting, Sam and L. S. Shoen appeared to have convinced enough family members to return to their side; by early 1988 Sam and L. S. Schoen hoped to control 52 percent of the corporation. Joe Shoen, a lawyer with an MBA degree from Harvard University, foiled that plan by wooing 53 percent of those voting to his side.

To retain his control of the corporation, Joe Shoen issued 8,099 shares of the corporation's treasury stock to friendly executives. In March of 1989 the company's annual meeting allegedly turned into a brawl when L. S. Shoen and his son Mike attempted to set up a tape recorder to record the proceedings. After the meeting Mike Shoen posed shirtless for a photographer and alleged that his brother Mark had hit him, while Joe Shoen said in an interview with the Arizona Republic that no one was 'beaten up.'

On August 6, 1990, Eva Shoen, the 44-year-old wife of Sam Shoen, was murdered. The homicide, which news reports claimed had signs of a professional hit, remains under investigation, and as of mid-1992 police had no suspects. The murder became the source of a libel suit filed by Joe Shoen against his father, L. S. Shoen, who said publicly that he believed Joe was involved in it. That libel suit is one of several ongoing court proceedings that involve the Shoen family and the company; all of the cases argue that one or another of the family factions was the rightful managers of the company.

During the 1980s Amerco's annual income rose from a $2 million loss in 1981 to gains of more than $41 million in 1984, but the corporation's earnings were never steady. Though in the late 1980s and early 1990s revenues increased in part due to Amerco's improvements of U-Haul's core rental business, income generally remained on a downward trend. Net income for 1990, for example, dropped 39 percent from the previous year to $28.3 million; revenues, however, rose significantly to $737.6 million in 1990 and to $986 million in 1991. Analysts blame inconsistencies and roller coaster-like changes in the company's profit on the instability brought on by feuding among Shoen family members.

Principal Subsidiaries: U-Haul International Inc.; Ponderosa Group; Amerco Real Estate.

Additional Details

Further Reference

Adelson, Andrea, 'Gains at U-Haul Dampened by Feud in Owning Family,' New York Times, January 31, 1989.Tomsho, Robert, 'U-Haul's Patriarch Now Battles Offspring in Bitterest of Feuds,' Wall Street Journal, July 16, 1990.'A Murder in the U-Haul Family,' Time, August 20, 1990.Groves, Martha, 'Family Feud Weighs down U-Haul,' Los Angeles Times, September 4, 1990.Tomsho, Robert, 'Supporters of Joe Shoen Take New Steps to Strengthen Grip on U-Haul Empire,' Wall Street Journal, September 28, 1990.Freudmann, Aviva, 'IRS May Appeal Tax Court Rulings on Captive Insurers,' Journal of Commerce, April 9, 1991.

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