The Accidental Lender

'If I can export, anyone can' -- Bill Rucker

There's a guy down in Texas who does half of his $3-million business abroad. Forget market research, consultants, or expensive lawyers -- his first overseas sale came from placing an ad in a local magazine. Now, he uses nothing more sophisticated than an industry directory. And, most surprising of all, what he sells is junk. -- S.D.S.

This was the kind of moment that Bill Rucker lives for. Spread out before him, under the two-story-high ceiling of a corrugated metal warehouse, were piles of parts from old truck engines, parts coated with the grime of half a million miles on the road. Over there were half a dozen big engine blocks, over here a box of fuel pumps. Rucker didn't know where to turn first, a museum curator who had stumbled upon a room full of lost Cézannes.

Rucker, 32, is the founder and chief executive officer of Tracom Inc., a Fort Worth company that buys used diesel engines and sells the engines and parts to remanufacturers. His "bird dog," Tim Jordan, a parts dealer who works from the back of his Chevy pickup, had brought Rucker to this trucking company in Ennis, Tex., hoping for a finder's fee from any deal Rucker worked out.

But as the minutes passed Jordan sensed that Rucker's initial enthusiasm was waning. There's junk and there's "juuunnk!" -- the latter an inflection that signifies good stuff -- and this place had too little of that. Rucker was sparring now with the owner, pointing to a gaping hole in the side of one engine. He normally pays $500 for an engine and makes his money in a reversal of the usual economic logic: in the junk business, the sum of the parts is worth more than the whole. After he has broken down the engine, he knows he can get $800 for the cylinder block, $500 for the crankshaft, $200 for the blower, $60 for the gear train, $40 for the water pump, $2 each for the valves -- in all, $1,500 if all the parts are in decent shape. But they rarely are. The average engine brings him $1,000. These would bring less.

"I'll give you $7,500 to take this junk off your hands."

"You're about $7,500 short."

The owner came down to $12,000, but Rucker stood firm. If these parts had been here five years, chances are they would stay a while longer -- a good sign that he would eventually get his lower price.

Minutes later Rucker is back on the road, headed to Dallas. "Ain't no way we're just talking about blown-up engines back there, that guy and me," he says. "To this guy, the engines are like his children -- each comes with a story. I'll bet he could tell you what truck each engine came from, who was driving the truck, where the engine blew up. It'll take him a while to get used to the idea of selling them. But he will."

An hour later Rucker is in a skyscraper suite in downtown Dallas. No junkyard dogs here. Just four bankers dressed in dark wool suits. Rucker is wearing gray pants and a plaid sport shirt and hasn't bothered to check his pants for black grease marks picked up in Ennis. But the bankers don't seem to care. The talk centers on the markets where Rucker sells his engines, and nobody here is interested in northern Texas. The meeting focuses on Belize, Mexico, and Australia, and Rucker knows what he's talking about. Tracom derives 40% of its sales from exports, unusually high for a company that is just four years old, with sales in 1989 of $3 million and only 14 employees.

The bankers, principals in Bristol International Ltd., a trade merchant bank, have made Rucker's export growth possible, financing about 100 separate deals to date. In starting their own company two years ago, they had identified the same opportunity Rucker had: the widening window for small companies to expand overseas.

Every bend in the road can bring another junkyard, so Bill Rucker is a man accustomed by now to unexpected pleasures.

"America is a giant scrap yard," he says. "Look at how much junk this country has generated in 200 years. We throw off so much excess that it can't be accounted for. So if a trucking guy in Philadelphia puts aside five old engines a year in a warehouse, what's the economic value?"

None, of course, unless someone like Rucker can link the supply of junk to the demand. And the demand, Rucker has found, is worldwide. Last year he shipped about a million dollars' worth of product overseas. It takes a lot of old crankshafts and cylinder blocks to make an export order that anyone notices, yet it is small companies such as Rucker's that hold much of the promise of helping to narrow the yawning U.S. trade gap. Trade experts see these companies as a resource that has barely been tapped.

Bill Rucker agrees with that assessment, and adds that exporting isn't as formidable an exercise as it might appear. "If I can export," he says, "anyone can. Can you imagine going into a bank and asking to borrow $3 million to buy junk for export?" For Rucker, finding customers abroad was surprisingly easy; obtaining the capital to finance those deals was the hard part.

Rucker doesn't know exactly when he fell in love with junk, but it probably started on summer weekends when, as many kids do, he worked on cars with his dad. A mechanic when he graduated from high school, he wasn't satisfied staying one; he had bigger things in mind. In 1976, at the age of 19, he opened his own repair shop, then bought a gas station two years later. In 1982 he gave up the station and started a new company to buy and sell used school-bus transmissions made by what is now Detroit Diesel Allison Division of General Motors. The transmissions cost about $150 each from scrap yards, and within days he sold them for $300 to Allison dealers, who rebuilt them.

That year Rucker placed an ad in a local magazine offering Allison transmissions for sale. Somehow a copy of the magazine landed on the desk of Leon Will, who ran a Ford truck salvage yard in Australia.

"I got a call one day from Adelaide," says Rucker. "There was a lot of scratchiness on the phone. He said, 'How you doin', mate?' I was very surprised. What's this guy calling me for? Well, he needed some used Ford steering boxes, and I said I'd try to get them. I called up a guy I knew who had 100 steering boxes and wanted $5 apiece for them. So I called Leon back and said I wanted $25 apiece. He said that was the greatest thing he'd ever heard. He sent me $2,500, and in the end we shipped him $10,000 worth of Ford parts like fenders and hoods. I'd never done anything outside of Fort Worth before. It was exciting. That's what made me want to do more exporting. I didn't know where it would lead at that point."