Industry Research

GCLA Panel: One-Third of Industry Could Vanish

Posted on February 18, 2009 by LCT Staff - Also by this author - About the author

LOS ANGELES — If a panel discussion at Tuesday night’s Greater California Livery Association meeting could be boiled down to a few sensational tabloid headlines, you would see the following in the New York Post:

“GRIM REALITY” FOR LIVERY

BANGING YOUR HEAD?

CUT YOUR VEHICLES FAST

CAST ASIDE YOUR PRIDE

1-3 VEHICLE OPERATORS ON THE BRINK

NO RECOVERY TIL 2011

THREE YEARS OF HELL

The above phrases and words were either taken from or inspired by the discussion among the California operators, who in the name of honesty and raw observation, served up a gritty dose of industry doldrums. Along with some dire assessments, however, came practical survival tips and a reassurance that the economy always turns around — except this time, the caveat question is not which quarter, but which year? Or, even worse, what decade?

Hosted by GCLA President Alan Shanedling, the panel consisted of Steve Levin, owner of Temecula, Calif.-based Sterling Rose Limousine; Robert Vaughn, owner of Best Worldwide Chauffeured Transportation of Huntington Beach, Calif; and Chris Hundley, owner of Limousine Connection of North Hollywood, Calif. The operators run vehicles throughout Southern California, and bring multiple decades of combined family experience to chauffeured transportation.

“This is not the time to be a one-to-three car operator,” Hundley said. “You are banging your head against a wall.” Hundley recently bought out two such operators who were behind on their vehicle payments that were tied to their homes. The operators now work for Limousine Connection. “From a dollars and cents standpoint, you’re not going to make money on one to three cars for at least two years,” Hundley said.

In his three decades as an operator, Hundley has survived several economic cycles. “We’re not going to see a turnaround until 2011,” he said. “I’ve been through downturns before, and this is a rough one.”

Vaughan told the California operators that his company had budgeted for an across the board reduction of 30% for 2009. He said the housing market has to settle down before any hope of a recovery. “We are a long way from celebrating,” Vaughan said.

Levin credited his company’s acquisitions for keeping his venture afloat. “The grim reality is a lot of operators will not make it,” Levin said. “If we hadn’t expanded, I’m not sure I’d be up here. This is not a normal time for businesses.”

And given that so many operators nationwide are reporting 30-40% declines in revenue, Levin said, “One out of three of us might not be here this time next year.”

Levin warned operators to never take equity out of a home to sustain a flailing business. “Do not put your home and family at risk,” he said.

Hundley summed it up best; while recounting the downturn in California during the early 90s, he said he assumed the worst. “We had a saying in 1992, ‘Stay alive until ’95. And for me it was almost as if on Jan. 1, 1995 it all turned around again. So if you can survive Hell now, it will be Heaven in 2011".

NEXT WEEK IN DRIVING FORCE: Levin, Vaughan, and Hundley share some survival tips and approaches for operators.

Source: Martin Romjue, LCT Magazine

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