As he looked around the room, tears rolled down his cheeks. "That was a sad day for this company," says shop manager Jack Brownlow. "A very, very sad day."
* * *
Two days later, Carmell stood in almost exactly the same spot. Taich had agreed to stay on for three months to ease the transition.
Carmell talked a bit about his goals for making the company more efficient. We're too bogged down by paperwork, he told them; we need computers. He also introduced David Borovsky, Consumers' new vice-president. Borovsky, Carmell's 24-year-old brother-in-law, had been an associate consultant at the firm of Bain & Co.
Carmell also issued a warning that "bribery of any kind will not be tolerated." He followed that up by indulging in a bit of symbolism. He drove his wife's car in for a set of new tires. How should we handle this? asked the counter salesman. I'll pay for it with my Visa card, declared Carmell, and bill me at the full retail price.
Making his way through Consumers, Carmell hacked away at waste. Aside from rearranging the inventory and consolidating the showrooms, Carmell focused on personnel as the fastest way to cut costs. The day before buying the company, he laid off 27 people. In a little more than a year, he reduced the work force from 58 to 20.
He worked hard to root out inefficiencies. He asked all 15 drivers, for instance, to list their stops for a day. To his dismay, he found that some of them were stopping at the same place as many as seven times a day. Customers would watch in amazement as two different Consumers trucks -- one from tires, the other from parts -- pulled into the parking lot within minutes.
Carmell cringed; it cost about $50 to process every purchase order, not to mention the labor and truck-maintenance costs. So he made up a schedule for each driver and drove the routes himself to prove they were doable. That enabled him to whittle down the number of drivers from 15 to 7, and eventually to 3. He shrunk Consumers' fleet from about 25 vehicles to 8, saving at least $50,000 a year. But Carmell couldn't escape reminders of the previous ownership.
He could hear Taich on the phone, talking to customers. "Don't worry," he'd assure them. "Consumers will do business exactly the way we did before." That bothered Carmell. Then there were Freddy's suggestions after the two of them had visited a customer. If I were you, he'd tell Carmell, I'd send a box of steaks to this guy.
Carmell ignored Taich's comments. After three weeks, Taich asked if he could be let out of his contract. I don't feel comfortable around here anymore, he complained. He would have felt even less comfortable had he stayed around a few weeks to greet those visitors from the FBI.
When Carmell heard they were downstairs, he drew a deep breath. Luckily, he knew what to expect; his father, a labor-union lawyer, had dealt with the FBI often over the years. Just answer their questions, he told himself.
The two agents followed Carmell back up to his office. We want to make it clear, one said, that you are not personally under investigation. Their probe into city purchasing practices was continuing. Had he found anything unusual in the records? Had employees told him anything suspicious?
In June 1986, two months after taking over, Carmell received a subpoena for certain company records. "I started thinking, 'This thing -- whatever it is -- could break wide open,' " he says. "I wanted to get this place turned around, so if the you-know-what hit the fan, we'd be prepared for it."
Carmell worked fast. He lopped off unprofitable business segments, such as recapping and wholesaling tires. But he wasn't just Conan the Destroyer. He had Borovsky replace the company's arcane leased phone system with a modern $20,000 system. Carmell inaugurated an employee-retraining program so, say, a paint-mixer learned to change tires. He also visited as many as 40 customers a week, asking: How can we serve you better?
But with every layer of the company he peeled away, he seemed to uncover another soft spot of rot.
While investigating the sales staff, for example, Carmell was told that a salesman who was earning about $60,000 a year was offering "5% spiffs," or kickbacks. Just then, that salesman entered the hospital with a heart ailment that he blamed on Carmell. He recovered but left Consumers soon after. Carmell didn't find evidence against any other salesman.
Some corrupt employees got caught red-handed. One afternoon, a supervisor was rummaging through some trash hunting for a document he had misplaced. He spotted a pile of official-looking forms that had been ripped into pieces. It turned out an employee had been tearing up bids and was also feeding information about Consumers' sourcing and pricing to a rival. Carmell had the employee fired the next morning.
Carmell uncovered some other damaging documents. One day, he was sifting through old invoices when he stumbled upon an unfamiliar folder. Here were purchase orders, with notes attached to them: "35mm camera," one said. Another had "VCR" scrawled on it. There were notes regarding coffeepots, gift certificates, turkeys, and booze. Perhaps the Taiches had bought some of these items at cost and given their customers a break. Not likely, but Carmell looked for corresponding checks. He found none.
Carmell's finding helped explain a pattern he and Borovsky couldn't understand. Consumers' products and services had not changed one whit in the first few months. Nevertheless, many of the company's customers slipped away. "We made no conscious effort to weed out customers, yet a fairly large number of them disappeared," says Borovsky. Did Fred's leaving signal something to them? "I just couldn't get an explanation for it," Borovsky says.
