The Colorado Limousine Association switched things up this year and made new operators feel welcome.
Each of these landmark events exemplified the industry stature of The O’Gara Companies, parent organization of both O’Gara-Hess & Eisenhardt and O’Gara Coachworks. While not the oldest of the coach-builders, the O’Gara organization has developed a reputation as one of the most visible and distinguished companies.
The O’Gara Companies were formed by brothers Ed and Tom O’Gara who entered the automobile business in 1978 as luxury car retailers in Beverly Hills. In 1980, the O’Garas started building limousines in a 2500 square foot facility in Southern California. The initial vehicles were designed and built for affluent private buyers who frequented the dealership in Beverly Hills. Production quickly expanded during the limousine boom in the early ‘Eighties causing O’Gara to become one of the “brand names” among coachbuilders.
As the coach-building operation grew, the company moved into larger quarters in Simi Valley, CA and a network of regional dealers was established. In addition to coach building, the company also became involved in armoring, aviation and international marketing. Now, Ed and Tom O’Gara head a widely diversified company of which limousine production constitutes approximately twenty percent of total sales.
Ed O’Gara spoke recently with Limousine & Chauffeur about his company’s current position in the limousine business.
Limousine & Chauffeur: O’Gara Coachworks is just one of your companies isn’t it?
O’Gara: Yes. The O’Gara Companies consist of O’Gara Aviation, O’Gara Coachworks, O’Gara-Hess & Eisenhardt Armoring, and O’Gara International. O’Gara Aviation is headquartered in Atlanta. We buy and sell business jets. I would consider medium business jets to be our forte. O’Gara-Hess & Eisenhardt Armoring builds armored cars for heads of state and a lot of other people. O’Gara International represents a number of companies overseas. We do representation work for a number of Fortune 500 companies in different areas of the world. We represent their product and services and so forth.
That’s the line-up, if you will, of what we do. They are all headquartered here and are run as separate operating entities. We also have offices in Cincinnati, Orlando, Atlanta, Washington, New Jersey, and Geneva, Switzerland.
Limousine & Chauffeur: What was the beginning of it?
O’Gara: We started with an automobile agency in Beverly Hills that we opened in 1978. That was the forerunner of the rest of our companies.
Limousine & Chauffeur: Did you start building limousines before branching off in the other directions?
O’Gara: The limousine business was an outgrowth of offering high-line cars in Beverly Hills. We sold a “Beverly Hills car.” It was a top of the line car with all the accoutrements you would expect on a car sold at the corner of Wilshire and Rodeo. So that was the initial genesis of the limousine business. We started building cars to sell to our clients in Beverly Hills.
Limousine & Chauffeur: Did you start as a dealership for another builder before getting into coach- building?
O’Gara: No. We sold a few limousines for other people, prior to building cars for ourselves, but we couldn’t find the kind of car that we really thought would sell well in Beverly Hills. That was the genesis of our automobile.
Limousine & Chauffeur: How big a part of your current operation is the limousine production aspect?
O’Gara: Not very big, relative to the whole business. Approximately twenty percent of the total entity. When we formed our limousine company, we entered the market with a really high-level car. That’s where we began. We didn’t even think about building cars for livery services. It wasn’t until 1984, when we decided to open a facility on the East Coast, that we really began thinking seriously about the livery car. The cars built up until then were corporate cars, individual cars, entertainers’ cars and government cars. Very few cars were used by liveries except those that catered to high society.
Limousine & Chauffeur: What year did you start building limousines?
O’Gara: 1980. We opened in 2,500 square feet in the beginning. Then we expanded to 5,000, and then 7,500 square feet. We started building cars for Penske Cadillac.
Limousine & Chauffeur: Were both you and Tom involved with the company?
O’Gara: Yes. I wouldn’t say that either one of us have been really active in the coach-building business in the sense that we were there on a full-time basis running the business.
Limousine & Chauffeur: Have you always had a company president running the coach-building operation?
O’Gara: Yes. Jerry Smith is the president. There’s always been somebody there as chief operating officer of the company
Limousine & Chauffeur: What has happened in the limousine industry during the years since you started and how has your company adapted its product?
O’Gara: I think it’s obvious to everybody that this is a low-technology business and the barriers to entry are few. All you need is X number of square feet, and the ability to weld and sew, and you’re in the business. That has engendered a lot of competition. It’s obvious because all you have to do is look at how many people are in the business today as opposed to how many people were in the business five years ago.
People saw an opportunity to take advantage of an expanding market. I think what occurred between, say, 1980 and 1984 or ‘85, is the same thing that happened to refrigerators back in the ‘30s. Everyone that needed one went out and bought one. Then all of a sudden, it stopped because there was no re placement cycle. The manufacturers had to wait three years, or whatever the replacement cycle was, to really begin production again and try to capture that major segment of the market that’s called the “replacement cycle.” I think there’s something similar going on in the limousine business today.
The limousine manufacturers geared up on a curve that was associated with the continued growth of the livery market. There’s no way of knowing anything about this industry, quantitatively, but if you could see the numbers, I’m sure the size of the industry increased dramatically during the early ‘Eighties. The livery people had legitimate business opportunities, but the manufacturers had the capacity to far exceed the demand. Now, there is a livery service in every town and I think the business is going to shrink.
The manufacturing side of the business is also going to shrink because a lot of people out there put the capacity in place to meet a demand that doesn’t exist today.
Limousine & Chauffeur: If shrinkage occurs, is it going to necessarily be the newer companies or will it include some of the older companies as well?
O’Gara: There’s no way I could pre diet which companies will prosper.
Limousine & Chauffeur: Aren’t size and diversification factors in surviving a slow period?
O’Gara: There’s no intelligent way of discussing this market. There really isn’t. I can sit here and tell you all that I think and all that I know, and you can go right down the street to Kelly Coachworks where they might, in good faith, tell you something else. There’s no common ground we can stand on to have a discussion.
Limousine & Chauffeur: Isn’t it uncomfortable, as a coachbuilder, to go along in the dark?
O’Gara: Sure. But that’s the nature of small business and I don’t think that’s unusual in a small business. Most small businessmen can’t avail themselves of all the information they might want.
Limousine & Chauffeur: Has your product changed over the years or is it basically the same high-end product it was in the beginning?
O’Gara: We still offer the high-end limousine but we also offer cars at medium and a low price points. We still build for the high-end corporate individual... the guy that we started with. One step down from that is the kind of elegant car that doesn’t have all the accoutrements and features that the higher-end car would have and yet it is a good working car for the livery service. Again, this car is for the higher-end livery service. Then, below that, is a real working limousine.
Limousine & Chauffeur: Would you compare the quality of your high- end limousine to that of the other more expensive cars on the market?
O’Gara: I like to think that we don’t have to compare ourselves with anybody at the upper level. Now everybody else would say that too. The work we’ve done with O’Gara-Hess & Eisenhardt Armoring Company on the presidential limousine shows the quality of our work. We’re building a car that’s a little better than what you might find from anyone else. Not that anyone else builds a bad car, but we put more time, money and effort into our cars. And we sell them for more.
If it took building junk to be in this business, I wouldn’t be in this business. I’d get out in a second and go find something else to do. We know there’s a market out there and that there are people who really want to buy a quality car. They don’t want an ordinary car that’s just been cut in half and that somebody put seven hundred extra pounds on. They’re willing to pay for quality. They tell us that all the time.
One of our largest problems, quite frankly, is that the market looks at our reputation and feels that we must be too expensive for them. We hear them say, “I can’t wait to get one of your cars when I can afford it. The perception is that our cars are much more expensive than anyone else’s when that isn’t the case. They aren’t much more expensive. They might be somewhat more expensive, but we think we’re delivering quality at a price point that makes sense and works for some people. That’s what we’re all about.
Limousine & Chauffeur: You’ve gone through some changes in the company in the last year that have affected your marketing and management programs haven’t you?
O’Gara: We still have the same basic marketing program. We have had some changes at the sales level, which I don’t think is unusual in any kind of business. We have had some changes in management and I think those changes reflect the changes taking place in the limousine market. It’s not the same business that it was two years ago.
Limousine & Chauffeur: A slower business, basically, or are there other differences too?
O’Gara: Slower basically. It’s a slower business and we’ve reflected that idea. We opened a second production facility in New Jersey last year when the growth curve was still going up and our eyes were wide open at how big and wonderful the market was getting. Then we decided to close that plant when the market slowed down. We judged that it was better to operate one facility at full capacity rather than two at half capacity. When you close a facility, that relates to the rest of the organization and it will reflect that.
Not much has really changed in the sales and marketing end of the company, but what has changed is the demand out there for the product. It is just not a buoyant market like it was when everybody was building cars for the Olympics. New people were getting into the livery business, and legitimately so, because cabs were on their way out. I don’t know how many livery operators are out there but it is a large number and many of them didn’t exist two or three years ago.
Limousine & Chauffeur: So you’re building the same models as you were a couple years ago and selling them basically the same way?
O’Gara: Exactly. I don’t think there’s anything that’s changed. We’re still innovating. We’re still doing new things. I think there’s an opportunity in this business that we’ve taken advantage of in the past, and we’ll be taking advantage of it in the future. It’s different right now, but it’s always different. Things never turns out the way you expect them to.
Limousine & Chauffeur: Do you think the operators of limousine services have benefitted from the competition between the coachbuilders or has it possibly been a negative thing with inferior cars coming on the market, and easy access to vehicles for people who might not have the capital or experience to be in the livery business?
O’Gara: Well, I don’t have a livery operator’s perspective on it. I can tell you from a builder’s standpoint, though, that competition is a good thing. Quality competition is something that generally expands the market for everybody. The end result is that the buyer gets more for less, which is a good thing when it’s done intelligently.
I’m not sure whether everything done over the last three or four years in this business has been very intelligent, though. I just run the business based upon what the environment is. You can’t change the environment.
Limousine & Chauffeur: Does an O’Gara buyer get more car for their money now than they would if there was less competition?
O’Gara: I don’t think so. I think that what we’ve probably done is maintain our price level in the last three years. There haven’t been any escalations in the price levels. From that standpoint, then, that’s probably true. But on the other hand, we haven’t had any price decreases to reflect the fact that we were overpriced in the market to begin with.
Limousine & Chauffeur: Some builders are starting to build corporate sedans and limousines based on less expensive cars like Fords and Oldsmobiles. Is that something your company would ever consider?
O’Gara: No. When it comes to the limousine market we are committed to being the manufacturer of the major products in that market. We know how to build in a quality way. We can’t do a lot of different things and do well at it. It’s just impossible.
This business, as I said at the very beginning, is low technology and the barriers to entry are few. There’s a lot of technical know-how that is resident with the people who build the cars and, in order to get consistent quality, you have to build that experience up over a period of time. It’s impossible to be all things to all people and do a good job. You just can’t do it and be cost competitive.
Limousine & Chauffeur: When did you get involved with vehicle armoring?
O’Gara: We purchased Hess & Eisenhardt Armoring Company, which was part of Hess & Eisenhardt manufacturing company, in 1982. At that time, Hess & Eisenhardt Manufacturing was closing their facility in Cincinnati and having suppliers build their limousines and convertibles.
In addition, Hess & Eisenhardt Manufacturing had sold their hearse business to Superior. All that was left was the armoring business which we bought. We moved into the Cincinnati facility and continued the armoring work that Hess & Eisenhardt Manufacturing had been in for forty years.
Limousine & Chauffeur: Was the factory set up to build limousines at that point?
O’Gara: It was set up to build a variety of things including limousines, hearses and convertibles. We’re in the process of building a new facility now and. will be moving out of the current one.
We recently changed the name of this company to the O’Gara/Hess & Eisenhardt Armoring Company. The change reflects the differentiation between ourselves and the Hess & Eisenhardt Manufacturing Company. We think this will provide greater visibility for some of the things that O’Gara Coachworks is involved in such as the presidential limousines.
Limousine & Chauffeur: Did you adopt a relationship with Cadillac when you bought the Hess & Eisenhardt Armoring Company?
O’Gara: The armoring company has supplied cars for the presidency of the United States in the past and we’ve continued to build those cars. So to that extent, yes.
Limousine & Chauffeur: And you built the Cadillac limousines that were sold to China last year. Was that project done in conjunction with Cadillac?
O’Gara: The sale of limousines to China originated with O’Gara Coachworks and the efforts of O’Gara International in China.
Limousine & Chauffeur: Is the Personal Security Vehicle built in Cincinnati?
O’Gara: Yes. PSV sedan versions are built there. PSV limousines are all built in Simi Valley at this point. We have the capability at both facilities.
Limousine & Chauffeur: How important is the armored vehicle market?
O’Gara: It’s a small market that primarily involves specialty cars. I don’t think it will ever be a very large market.
Limousine & Chauffeur: Is it big enough to keep the Cincinnati plant going or will you possibly build some limousines or other vehicles there?
O’Gara: At this point, it’s sufficient to keep a small facility going. Armoring has always been a standalone business and I think it will continue that way in the future.
Limousine & Chauffeur: I understand you have a replica of the limousine that Hess & Eisenhardt Armoring built for President Reagan.
O’Gara: I wouldn’t consider it a replica of the car as much as I would consider it a car that was built for the Cadillac Division and that is representative of what a Cadillac limousine could ideally be. It is a world standard limousine that effectively fills the void that’s been left by the Mercedes 600 and the Rolls Royce Phantom Six.
It’s a state-of-the-art limousine. You certainly couldn’t build a car like this with front-wheel-drive. So, for a rear- wheel-drive car it is state-of-the-art. We perceive it as representing a world standard for a limousine.
Limousine & Chauffeur: Could it become a production vehicle?
O’Gara: It could be a very limited production car, depending upon the demand for the vehicle.
Limousine & Chauffeur: It’s not armored is it?
O’Gara: No, it’s a standard limousine but it has some security features that you don’t normally find on a limousine. It’s an incredible car it really is. The size and the grandeur of the car are really impressive. The tires are massive, but they fit the car. It all fits together and it is really beautiful. It will help position Cadillac as absolutely the top-of-the-line automobile.
Limousine & Chauffeur: You have been building more Lincolns in the last couple of years haven’t you?
O’Gara: I’m not sure whether we have or not.
Limousine & Chauffeur: As I recall, when you built the limousines for China, those cars were the only Cadillacs in the plant at the time.
O’Gara: I think that was probably during the time when Lincoln had a 5-liter engine and Cadillac still had a 4.1-liter engine. We just couldn’t build Cadillacs then.
Limousine & Chauffeur: Cadillac seems to be trying to regain their position in the limousine industry. Do you think they might be planning to build a new factory limousine that would compete seriously with those of independent coachbuilders?
O’Gara: Obviously Cadillac has got the financial strength to invest heavily in tooling for the cars. They can get long production runs for the model and, through their dealer network, Cadillac would be extremely formidable as a competitor in this business.
Limousine & Chauffeur: So maybe we’re in a temporary era of independent coach-building while Cadillac develops its next generation of factory limousines?
O’Gara: It could very well be Certainly that’s a plausible scenario. Cadillac may decide they can build a car that will have the acceptance to dominate the market as they did in the ‘Seventies.
Lincoln, in the meantime, has not demonstrated a willingness to build their own car, which in turn, gives the coachbuilders who build Lincolns some comfort in that they are working with a manufacturer who, in the long term, is going to support the coachbuilders. Whereas we could certainly read what David John said in Limousine & Chauffeur (September/October ’86) as an indication of their intent to compete with coachbuilders. That could significantly decrease the Cadillac coachbuilder market. It wouldn’t necessarily make it go away because, obviously there would be some things that a coach- builder alone could do, but the market would shrink. If that happens, the Cadillac limousine market could end up being taken over by the factory.
Limousine & Chauffeur: When a knowledgeable operator goes out to buy a limousine, they’re looking for a coachbuilder who will still be there in a few years if they have trouble of some kind. What you said earlier, about not really being able to read the future very well, implies a kind of day-to-day approach to the business. Does that mean you’re tentative about your future as a coachbuilder?
O’Gara: I didn’t mean to imply that we are anything but committed to the business. I sincerely think that there is a role for the independent coachbuilder in this business, no matter what happens.
I don’t know what the business is going to be like five years from now, but I do know that we’re committed to this business and we feel like we understand it as well as anybody can understand it. There is an opportunity for a quality manufacturer in this business and we think that we’re one of them. We’ll be here to sell product to people who are looking for the kind of quality and dependability that they’ve come to expect from us. That’s our position and it has been all along.
Limousine & Chauffeur: Well, you started with the high-end market and maybe it will be there despite whatever changes take place in the limousine business.
O’Gara: Exactly. That’s the one part of the market that we really do understand and we believe in the longevity there. There’s a requirement out there for a quality car and that’s the niche we want to fill.
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