Earth Friend

East West Auto Parts Uses Unusual Tactics

Jeff Siegel
(first published in November / December 2000 UpFront)

How many times have you read a story about a salvage yard getting an award from one of the country's leading environmental organizations?

Not often - but a lot happens at Ken Freeman's East West Auto Parts in Tulsa, Okla., that doesn't happen too often in the auto recycling business. His approach might not follow the step-by-step outline in most business books, but it has paid off for Freeman and wife Gale.

For instance, there's the solar panels that heat the office building and warehouse; the furnace fueled by waste oil that picks up the slack; the decision to change the business' focus from late-model to collector parts, and Freeman's commitment to operating an environmentally-friendly operation. The latter earned Freeman a Friend of the Earth award from the Sierra Club.

"Ken is a good person, and he tries to do things the right way," said Judy Reid, who chairs the Tulsa group of the Sierra Club. "I even hate to call his business a yard. It's really cared for as an acreage, and the way he cares for it is impressive."

Freeman Changes

Most of this was just an idea when East West opened as a late-model yard in 1991. Freeman knew the late-model business because his father had owned a yard. He didn't exactly know the direction he wanted to go, but he knew how to start... and that meant late-model parts.

"What we had was the Wal-Mart philosophy," said Freeman. "No part was too small. We tried to carry something for everyone. It was very good for the walk-up business, but it was a good news / bad news kind of situation."

That's because Freeman found himself in a situation where it too often cost him more to acquire a part for a customer than the customer paid for the part. Although the concept was working - at its biggest, East West had 12 employees, including three countermen, and some 3,000 cars on its 17.5 acres near Tulsa's airport - it didn't make Freeman happy. He firmly believes that people should find work that satisfies them.

"I've always liked older cars, but when we started I didn't know how to make a living doing parts for them," said Freeman. "So, about five years ago, I rethought the whole concept. It was a logical progression to go from late models to collectors. So we crushed out all but the GM and some European imports."

The result is a streamlined business that handles parts for select imports, like Saab, and General Motors cars, especially Pontiacs, from the 1960s and 1970s. The results have been impressive. Said Harry Miller, a long-time customer in northeastern Pennsylvania who buys parts for a 1963 Pontiac LeMans transaxle convertible, "His service is good and his prices are good. I recommend him highly to all of my friends."

Although he didn't want to offer figures, Freeman said East West has increased its average invoice, reduced costs by eliminating employees and cutting back on inventory, and maintained sales.

How He Did It

Along the way, the yard has:

• Cut work hours; cut the number of cars in half; and cut all but four employees - Freeman, Gale and two mechanics.
• Nearly eliminated walk-up and counter sales. Freeman said he no longer worries about customers wandering around his yard looking for parts, wreaking havoc with his inventory, and tearing up the yard looking for a single part.
• Increased off-site sales. Freeman estimated that 97 percent of
  his business comes from mail orders and three quarters of
  that is generated by East West's Internet site. The web site -
  www.eastwestautoparts.com - features a real-time, searchable database of the yard's 60,000-parts warehouse.
• Developed a market niche with higher margins, reduced marketing costs and reduced competition. Freeman used to spend $1,200 a month for Yellow Pages advertising. Today, his annual ad budget, spent in car collector magazines like Hemmings, is less than $1,200.
• The yard's specialty has become old Pontiacs like Miller's. And Freeman said that where he used to compete with 35 to 40 yards for business, he now has only one other competitor in town. In addition, he has increased his market area from Tulsa to most of the United States.

"We have to do a lot, like packing and shipping that is more complicated than before," he explained. "But I now know the market better and I know the inventory better. We're selling to a different type of customer. Before, we were selling to people who wanted to spend as little money as possible to repair their car. Now we're selling to people who want to spend money to get our parts. When you're restoring an old GTO, cost doesn't become as much of an issue."

Environmentally Friendly

That's not the only sophisticated approach that East West has taken. Consider the award from the Sierra Club, which is awarded to businesses throughout the state with outstanding environmental practices. It's not something, said Reid, that is given out every year. It's only awarded when the group feels a company has done something to deserve it.

East West Auto Parts, which Reid called fascinating, did deserve it. It's not just recycling the motor oil that's impressive, she explained, but everything the company does, from preserving the wildlife on the site to reusing bricks and wooden pallets.

"I have always believed in taking care of the land," said Freeman. "We've been environmentally conscious since day one. We drain all the oil from cars. We don't use pesticides. We let the grass grow where there aren't cars. We've got two ponds on our 17.5 acres, and we have lots of animals we want to keep around like red fox, deer, quail and rabbits."

Then there is the heating system, which Freeman described with unabashed pride. Not only is he helping to preserve the environment by reducing his use of fossil fuels, but he is saving money - lots of it. The passive solar
system combined with state-of-the-art insulation, enables Freeman to cool his office with a single window air conditioner during the miserable Oklahoma summer and provide so much heat during the winter that he rarely turns on his waste oil furnace. The system that cost $20,000 to install in 1990 has long ago paid for itself.

In fact, not only does East West save an estimated $1,000 a month in natural gas bills, but the company collects used motor oil from other yards to fill its two tanks - one with 2,500 gallons and one with 1,500 gallons. No wonder the Sierra Club was so impressed.

It's that kind of foresight that has helped Freeman develop such a successful business.

"He definitely is one of the best I have seen," said Miller, who calls Freeman more a friend than someone who sells him parts. "You deal with so many of these businesses and they couldn't care less about the customer... about giving good service. But Ken really is concerned."

And it shows in every part of Freeman's business.