Industry Research

The Hess & Eisenhardt/Allen Merger

Posted on January 1, 1991 by LCT Staff - Also by this author

The Hess & Eisenhardt/Allen Merger

Are coachbuilder combinations and joint ventures the next step for the industry?

Although the vehicles are manufactured at the same facility, the Hess & Eisenhardt Park Row (left) and the Allen Coachworks Crown have contrasting interior features.

Emil Hess & Charles Eisenhardt entered the limousine business as office boys with a company called Sayers & Scovill, which was founded in 1876. By the 1930’s, the two men had purchased the company, renamed it Hess & Eisenhardt, and built custom vehicles for such clients as Carol Lombard and Harry Truman. Today, the Ohio-based Hess & Eisenhardt is the limousine industry’s oldest manufacturer.

With 25 years of coachbuilding experience, Allen Coachworks is another industry veteran. Founder Carlos Allen is a connoisseur of fine automobiles and his limousines are famous for inlaid wood cabinetry and other elegant appointments.

In 1989, these two companies joined forces as Allen Coachworks/Hess & Eisenhardt Limousines. Today, the production of both lines of vehicles takes place at the Allen factory in Nuevo Laredo Mexico. Allen Coachworks also maintains offices in Laredo, TX while Hess & Eisenhardt has offices in Blue Ash. OH.

Why did these well-known companies choose to merge? How do their vehicles compare after a year of collaboration? And what is their outlook for the industry. Limousine & Chauffeur posed these questions to Tom Forsythe, former vice president of Hess & Eisenhardt, and John Adams, vice president of Allen Coachworks. Forsythe is currently acting president of Hess & Eisenhardt Limousines.

Limousine & Chauffeur: How did the partnership begin?

Tom Forsythe: Carlos Allen and the Strike family who owned Hess & Eisenhardt have always had a very good relationship. We’ve been in and out of each other’s plants and we’ve carried on a good dialogue over the years — keeping in mind that their product and market has been quite a bit different from ours.

In 1989, I think both companies realized that there would continue to be a large number of builders operating in garages and bodyshops. In looking at that, we decided those companies are never going to go away. They’re operating on lower budgets than we are. Their marketing expenses aren’t as great. They’re not investing in tooling. If those people are always going to be there, then we’ve somehow got to find a better cost factor in order to remain competitive.

Certainly; Allen is known for highline cars with beautiful woodwork. They had a good reputation in an area that Hess & Eisenhardt had not been noted for. Conversely, we had strength in markets that. Allen had not been noted for. So we decided that combining our manufacturing facilities would put us in a more competitive position. It also gives us the opportunity to provide a broader product lineup for both Allen and Hess & Eisenhardt dealers.

L&C: Are there still two separate companies?

Forsythe: Essentially, yes. We have merged all of our manufacturing, accounting, and management functions. But we still have two entities — those underneath our Allen Coachworks, Inc. and Hess & Eisenhardt Limousines. We also continue to maintain two separate dealer organizations. And we continue to maintain separate product lineups even though we share some

components and engineering features. We’ve trimmed our operations while maintaining the broadest possible selection of models.

L&C: Are the vehicles manufactured on the same production line?

Forsythe: Yes. We manufacture all of our cars on the same two lines. We use one line for Cadillacs and one for Lincolns. Hess and Allen products are still unique, but they have manufacturing similarities so it doesn’t create a problem within the plant. It’s no different from what GM does in Arlington, TX where they build Chevrolets and Cadillacs in the same plant.

L&C: What percentage of cars are Hess & Eisenhardt versus Allen?

Forsythe: Probably around 70 percent are Hess and 30 percent are Allen. That reflects the economic situation we’re currently in. Hess has done well in the funeral industry and in the corporate industry with Cadiilacs. That segment of the market maintains a fair degree of stability.

On the other hand, Allen limousines have been most successful in the livery and private markets which have been impacted dramatically by changes in the economy. In our total product mix, we have tried to maintain the strengths of both lines of cars in the markets where they have historically done well.

The basic structure of all limousines is becoming more and more similar due to the Lincoln QVM program. It’s going to make everyone’s program almost identical in reality. Therefore, given that coachbuilders are in compliance with the QVM program in all structural areas, we will all build cars that are very similar in terms of the structural and safety areas. Variances are going to be mostly cosmetic.

L&C: Is it possible that Hess & Eisenhardt limousines will eventually be nearly the same as Allen limousines?

Forsythe: There is a difference in content. To give you an example, the Allen Crown is the most popular model. The Crown has a extra-high raised roof, VHS player, electric bar, and a lot of really nice amenities. That’s all standard. It is a competitively priced, luxurious limousine that appeals to a very selective market. And it’s done very well.

On the other hand, Hess & Eisenhardt has the Park Row which is a commercial limousine of the same length but without all of the amenities. This model appeals to the commercial livery operator who buys a large number of cars and runs them day and night. We put just enough wood in to make the car elegant but not as luxurious as the Crown.

L&C: What is the design process for the two lines of limousines?

Forsythe: We survey our dealers and our customers in great detail about the things they think ought to be in the limousine models. Then we come up with a package that clearly represents their needs and wants at a reasonable price.

We re-evaluate our products every 60 days to hone in on what our customers want. One of the great advantages we’ve had with our current relationship is that Carlos Allen is truly a creative genius. His ability to take a concept and bring it to form and function is remarkable. He can take a whole concept and, in two or three weeks, he’s got it done. It’s amazing.

On the other hand, Hess & Eisenhardt has been well known in business and funeral circles for many years, and we bring a marketing touch to our combined efforts that perhaps has not been the mainline of Carlos’ business. So we have taken the very best each company has to offer.

L&C: How is customer service handled now?

Forsythe: The service manager is located in Laredo, TX. The service manager takes care of all service issues and parts issues right at the plant. That is where our resources of parts and knowledge are.

We keep very precise notes on warranties on all different categories of calls so we can immediately pinpoint areas that may need improvement. Carlos is particularly strong on that. All the limousines are likened to little kids for Carlos. Each one is equally important.

L&C: Who are the key people?

Forsythe: Carlos is chairman of Allen Coachworks Inc. and is also an officer of Hess & Eisenhardt, as are John Adams, Louis Strike and myself.

L&C: How many models are there?

Forsythe: Hess & Eisenhardt currently builds the Park Row for the commercial limousine service market. We build the 24-Hour car for the commercial limousine service and/or funeral service. We build the formal limousine which is a big hit in the northeast and is aimed directly at the corporate market. And we build the Park Hill six-door which is a standard in the funeral industry.

Allen, conversely, builds the Crown, which is an absolutely beautiful luxury limousine aimed at private individuals, certain corporate markets or at commercial limousine services wanting a very high quality car. They build the Diva, which is aimed at the commercial limousine business. They build a Lusso, which is a short stretch for the private market.

Allen also has a separate manufacturing plant called the Toy Store. We custom build custom limousines there such as Rolls-Royces, Mercedes-Benzs, and BMWs. We do a good deal of work in the European market through the Toy Store.

L&C: Is there any overlap in your marketing program or other areas?

Forsythe: We’ve got to truck new product out of south Texas to the major markets in the northeast or north central or the west coast. We ship both Allen and Hess products on the same trucks. And we have two or three dealers who handle both Hess & Eisenhardt and Allen. Since the two makes cater to different markets, we find that it doesn’t dilute our business. In most major cities, we have two separate dealers. In New York and Chicago, for example, we’ve got two of the biggest dealers in the country.

L&C: What other differences are there between the two companies?

Forsythe: Warranties vary a little bit because customer demand varies in different markets. The advertising we do within our individual markets is completely separate.

L&C: What do you see for the future for your company and the industry?

Forsythe: I think we will continue to have two name plates in the foreseeable future. I think we will continue to be one of the top builders, but I don’t think anyone will emerge as the dominant builder. I expect there may be five or six builders who will typically make three to four hundred cars a year. But these companies will probably only account for 50 or 60 percent of the business.

There will be a lot of market available for smaller companies since people buy limousines because of personal relationships to a very large degree. People spend a lot of money for a limousine and they normally buy from someone they know and respect. Some people wouldn’t buy a car from me because they don’t like the way I part my hair or whatever it may be. That happens to everyone. So we find there’s a definite value in having different nameplates and different individuals involved. If you had a GM in the limousine industry that had 60 percent of the business, it might be a whole different story. But we don’t have that, and I don’t see in the near future that any one manufacturer will totally dominate the marketplace.

L&C: If there was one builder who could do that, wouldn’t you guess it would be a company manufacturing at lower labor rates like yours.

Forsythe: I think there are certainly some economic advantages to building cars the way we do. But there certainly are some disadvantages, too. We have to deal with tariffs and costs that other builders don’t have. The main value in the Allen Coachworks and Hess & Eisenhardt relationship is that its gives us enough of an advantage in cost that we can be very stable, consistent, and offer good value year after year.

L&C: Will we see other consolidations among manufacturers?

Forsythe: Where you will probably see joint relationships among manufacturers is when we help each other build specialty products to fit niches in the marketplace. It is impossible for any one builder to be all things to all people. Yet, for a number of prudent and professional builders to survive, they will have to have a broad range of products. There may come a day when it becomes cost effective for .builders to build products for each other in different niche areas. That is no different than what General Motors and Ford have done for quite a number of years now with import firms.

In fact, H&E and Allen have done some private label building and will continue to do so. The improved quality of vehicle manufacturing is going to promote that. As the chassis and the basic structure become similar between builders, it is easy to affect cosmetic changes.

Interview with John Adams

L&C: Why did Allen Coachworks choose to work with Hess & Eisenhardt and how is it working out?

John Adams: We have become a very strong combination. Hess & Eisenhardt customers are not the same as Allen customers. Allen has always been a high-line, custom limousine with lots of glitz. Allen limousines are considered to be about as far as you can go with a limousine. While Hess & Eisenhardt products are more conservative and cater to commercial and funeral liveries.

L&C: So if there’s a new idea in building cars, you would expect Allen to have it first?

Adams: Go through Limousine & Chauffeur and look at the design concepts in VIP cars. You’ll see that Allen has introduced many ideas that have become popular in the industry. Like burlwood. Burlwood is now a big deal in limousines. It used to be that a lot of people thought they couldn’t afford it. Now it has almost become a requirement. Carlos Allen’s design concepts have always led the industry.

Carlos builds a very elegant vehicle. Hess & Eisenhardt vehicles are also elegant, but they are also very functional. For example, Hess has traditional limousines for places like New York that nobody can beat.

What we’re doing by working with Hess is doubling the value for our customers. By maximizing our efficiency, we are able to build quality products at competitive prices and still invest in customer service. By putting the two companies together, you get the economy of scale that you need in order to stay in this business today. The industry capacity right now is double what is required to supply the whole world. That is why our partnership makes so much sense.

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