Deregulation and Me

Editor’s Note: This is an excerpt from my autobiographical work in progress.

In life, the world seems unknown until one lives it. Whether or not I would have found CRST, Inc. without my job search is an open question.

CRST, Inc. exploited the 1980 Motor Carrier Act that deregulated trucking and helped break the teamsters’ unions. This legislation passed during the Carter administration and was implemented during the Reagan years. While some trucking employees continued to be represented by the union, their numbers diminished after deregulation. Shippers benefited from lower costs and the expense reduction came mostly from new, non-union companies, made possible by lower wages and fewer benefits for employees. It was another feature of the Reagan Revolution.

Founded as Cedar Rapids Steel Transportation, Inc., on March 1, 1955, when I joined the firm on March 29, 1984, it was very much a “Company on the Grow.” While founder Herald Smith did not have a business education, through entrepreneurial energy, an ability to carve out a niche in the highly regulated transportation business, and a willingness to confront unions and union rules, he was able to establish CRST as a viable entity in the years before de-regulation. When the Motor Carrier Act of 1980 deregulated trucking, Smith, and people like him, took advantage of the new operating environment.

According to In It for the Long Haul: The Story of CRST, published to note the company’s 50^th anniversary in 2005, CRST Inc. was the third company in the nation to secure 48-state operating authority after deregulation. Smith sought to eliminate the part of his business that was unionized, reducing pay and benefits, and creating cost efficiencies to support a lower rate structure. He did this by hiring independent contractors who owned and leased their own tractor-trailer rigs to CRST, Inc. and by acquiring companies that had non-union company drivers and then keeping them that way. This practice kept the number of union employees in decline as the company continued to grow.

By the time I joined the company, annual revenues were about $60 million and the “tough on employees” environment that characterizes many entrepreneurial businesses was evident throughout the organization. To me, it was something new and exciting, a natural extension of having served in the United States Army. I looked forward to the new opportunity.

I remember walking into the operations office during my job interview and saying to myself, “I hope I don’t have to work in that room.” In the office of what had previously been an LTL cross dock, was the core of the operation: van operations from the Midwest to the east coast, flatbed, and trip lease. Van operations had an island of workstations in the center, with additional work stations around the perimeter. A number of employees were smokers and a grey haze of tobacco smoke filled the room. The language was on the blue side, indicating an acceptable means of expression and interacting with others. It was a mostly male environment, although there were some women, most of them working in clerical positions behind a glass wall on the East side of the room when I entered that first day.

I had applied for a position in the shop, but my interviewer thought I was overly qualified for the position. He referred me to operations. The supervisor had been with the company a long time, was a Vietnam veteran, and had an office in the operations department. He interviewed me and then introduced me to the person who managed a company called Lincoln Sales and Service, which was becoming the growing, non-union part of the company.

Lincoln Sales and Service sought to hire management trainees, train them in the business and then have them open growth terminals throughout the country. All three interviewers treated me well, and with my military experience, they viewed me as having the “aggressive” personality traits they were seeking for management staff.

CRST, Inc. characterized itself in the newspaper ad to which I responded, “CRST is an aggressive, rapidly growing, major motor carrier transportation company based in Cedar Rapids. To help us in our expansion plans, we need a dedicated, career minded individual to fill a management trainee opening in our maintenance department.” Emphasis was on being “aggressive.”

I took notes after my interviews, writing on March 13, 1984: “Impressions: A good company, Iowa owned, they offer good benefits, and an entry a step ahead of other management positions I’ve been looking at. I feel the benefits of the other interviews to date.”

I was interviewed on March 12, went for a company physical on March 13 and was offered the job the same day. That night, I laid out the pros and cons: “PRO: good pay, pay incentives, location, benefits good, family owned (vs. public), I can relate to the people to whom I talked, expanding company, 65/100 of major carriers, chance for advancement, yearly evaluations, interesting, leadership, use more of my skills. CON: 2^nd or 3^rd shift, relocation in a year.” As indicated, I began work on March 29.

I did my research on CRST, Inc. and the characteristics of the job and company met my expectations.

…the Interstate Commerce Commission’s rigid controls on who could carry what freight at what rates over the nation’s highways were reduced almost to the vanishing point by the Motor Carrier Act of 1980 and by greater leniency on the part of the commission itself. Since 1981, about 9,000 new carriers have thronged into the field. When the 1982 recession almost simultaneously reduced the amount of available freight to be handled, an orgy of rate-cutting and discounting resulted…

…Nevertheless, a few companies, such as CRST, are enlarging their volume and profits even at a time when the industry’s excess capacity still is holding down freight rates. CRST’s success at swimming against the tide is all the more notable because it isn’t one of the giants of the trucking business and because it is a full-load carrier where the competition is the hottest.

Wall Street Journal, Feb. 13, 1984.

Goals for CRST, Inc.

• Keep a business journal with entries at least monthly.
• Learn the basic elements of the trucking industry…sales, maintenance, administration, terminal operations, etc.
• Develop as a person, increasing my ability to communicate and motivate subordinates.
• Write an article about my entry level experiences.
• Demonstrate my competence prior to the six month review date.
• Within one month, draw up a list of quantitative goals and achieve them.
• Demonstrate that I am the one in a hundred who can best do the job.

Business journal entry, March 28, 1984.

I started work on March 29 and was one of a class of 16 management trainee and new exempt employees who began training on April 2, 1984. Of the 16, Mike Gannon, now Groups President of CRST International, Inc., is the only remaining person at the company as of this writing.

It was an exciting time, and I was glad to be a part of this growing, Iowa-based company. Too, the initial salary of $17,000 per year was enough to enable Jacque to stay at home while we tried to start a family. Things looked pretty good in March of 1984. Jacque left me a note the morning I left home for my first day of work as a maintenance coordinator.

I encountered no surprises during my first two days with CRST. I trained with the first shift breakdown coordinator in the shop. He was located in the maintenance office, where I met him and other employees who worked there. I got a good feeling for the operations of the company, where they are, and what kinds of maintenance problems the drivers experience on the road. My initial impression is that these are people dedicated to getting the job done right.

[…]

Having been an Army officer, I appreciated the approach the company made to providing training to assimilate me into the company. As a company with growth plans, they recognized the need for training, and while there was not a specific training agenda, the company wanted me to think like the management team did regarding operations. At the same time, having managed soldiers in Germany, I possessed a firm sense of myself and quickly cut through the inefficiencies of my predecessor in the position to make changes to what I felt were more viable solutions to daily problems.

Having this awareness from the beginning of my employment enabled me to make good suggestions for process improvement and at the same time contributed to a disengagement from the prevailing management outlook at CRST. This would be a positive for my career in the first couple of years of my work in transportation. My stock within the company would grow in value. There was a direct consequence on my writing and home life.

Business journal entry, March 31, 1984.