New Management and Technology Boost Revenues at J P Donmoyer
Oct 1, 1997 12:00 PM, James Russell
HIGHER fuel costs, driver shortages, and wide fluctuations in cargo levels are just a few of the roadblocks to financial prosperity that companies in the trucking industry encounter. J P Donmoyer Inc in Ono, Pennsylvania, is one of many medium-sized carriers that have managed to boost revenues and reduce operating ratios despite those challenges.
Donmoyer owns a fleet of pneumatic, flatbed, dump, and van trailers. About 70% of company revenue is derived from the dry bulk division, which handles mostly lime, limestone, ash, and coal.
The carrier reported $11.6 million in revenues for 1996, $10.6 million for 1995, $8.6 million for 1994, and $7.3 million for 1993. Operating ratios between 1996 and 1993 improved to 94% from 99%. The operating ratio represents operating expenses as a percentage of revenue.
Donmoyer was ranked 86th in revenues out of 154 carriers in Modern Bulk Transporter's most recent Gross Revenue Report (see May 1997 issue). The company is forecasting $13.4 million in revenues with a 90% operating ratio for 1997.
The success of Donmoyer has not gone unnoticed. In 1997, the company was selected as one of Pennsylvania's 50 Fastest Growing Companies by the Pennsylvania Business Journal. Ruth Dietz, company owner and chief executive officer, was selected Business Person of the Year for 1997 by the Lebanon County Chamber.
In 1996, she was chosen as Entrepreneur of the Year by Ernst & Young, USA Today, and the National Association of Securities Dealers Automated Quotations (NASDAQ). That same year, she was included in the Top Fifty Business Women in Pennsylvania and the Pennsylvania Honor Role of Women. In 1995, Donmoyer was ranked third in size as a Minority-Owned Business in Central Pennsylvania.
"The foundation of our success is attitude," Dietz says. "We approach challenging situations as windows of opportunities for both our customers and ourselves. We always have more to offer a customer."
Company Restructuring That success, however, came after many years of hard work and a major restructuring of the company organization. Founded in 1934, Donmoyer began as a small business with a handful of transports. After her husband died in 1970, Dietz found herself in charge of a company that was plagued with serious management problems.
Dietz had no industry experience nor did she possess any previous management experience. The logical choice would have been for her to sell the company and continue her career in nursing. Instead, Dietz decided to turn the fledgling business into a profitable company.
By 1991, Donmoyer had acquired transportation-related businesses that included convenience stores, truck dealerships, and a truck stop with a restaurant. Realizing that the company had grown too large and diverse, Dietz and her son, Jeffrey Bohn, company president, hired a team of seasoned managers from the manufacturing, van freight, and tank truck industries. Their first decision was to downsize or sell most of the related companies and focus on the transportation business.
"We grew from a mom-and-pop operation into a fragmented organization with about 200 employees reporting directly to me and Jeffrey," Dietz says. "The problem was reorganizing the company and maintaining the family business at the same time.
"A big hurdle for the newly hired management team was convincing us that we had to make major structural changes to succeed as a transportation company. We would have to sell about half of our business assets before any rebuilding of the company could begin."
Additional Terminal With that decision, J P Donmoyer became an Ono Transport Services Company. The truck dealerships and the chain of convenience stores were sold. Corporate headquarters and the truck stop remained in Ono. Current services are detailed at the company's website: www.onotrans.com/onotrans/-jpd/jpd.html.
In 1992, the company opened a second terminal in York, Pennsylvania. Twice a day, dispatchers participate in conference calls to update each other on the status of available equipment and drivers at both terminals.
To manage operating costs more efficiently, Donmoyer selected Keen Truck Rental & Leasing to handle maintenance and repairs of equipment at both terminals. Keen is a maintenance and leasing supplier with facilities in Pennsylvania, Delaware, and Maryland. To ensure employment stability within the Donmoyer workforce, Keen offered jobs to every Donmoyer mechanic, most of whom opted to work for the new company.
"Using an outside vendor has allowed us to manage maintenance expenses as a fixed cost," says Bill Gerhart, terminal/sales manager. "Drivers are able to bring equipment to the shop for preventive maintenance when it doesn't conflict with delivery schedules.
"Keen provides mechanic training, including updates on new repair technology and equipment. They keep track of warranty work and we don't have the expense of an in-house parts department.
"Keen has a network of vendors on our delivery routes. If we have a breakdown somewhere in New Jersey, for example, then someone is available to handle an emergency repair. We also have immediate access to short-term leasing of power units."
Under new management, Donmoyer continues to streamline company operations and develop technological concepts to improve transportation efficiency. One of those concepts is Bulk Inventory Networking Systems (BINs).
Sensing Customer Inventory Based on a computerized inventory system, sensors at the customer's place of business are connected on-line to the Ono terminal. The sensors monitor the level of dry bulk storage, which provides computer data that includes current volume and rate of use.
When product level falls below a certain predetermined point, the computer software activates an alarm that alerts dispatchers to the need for a product delivery. A driver is scheduled to pick up the product and deliver it to the customer without any phone calls from the customer or shipper.
"For example, lime from Carmeuse in Annville is delivered to Bethlehem Steel in Steelton at the direction of our computer at the Ono terminal," says Mike Egbert, director of operations. "Neither Carmeuse nor Bethlehem Steel is involved in the order process. The computer monitors Bethlehem's lime inventory seven days a week, 24 hours a day.
"The BINs technology allows us to more efficiently schedule drivers and equipment. Our company offers a total logistics package that can be tailored to any business, regardless of volume, distance from the supplier, or fluctuation of business requirements.
"Customers with just-in-time deliveries no longer have the need for additional inventory storage or employees to perform inventory management. They can devote more time to their business instead of making phone calls for deliveries."
Donmoyer is working with several customers in surrounding states to develop BINs sites for them. Some corporations have asked the carrier about the possibility of marketing BINs as a stand-alone program.
"We are a technology company that specializes in transportation," says Frank Costanzo, vice-president and general manager. "Technology operates the same in all types of businesses. It forces people to develop a work process that is more exact and efficient.
"When customers input orders into their computer system, they automatically appear in our system. This reduces the possibility of a mistake through a phone call or incorrect information in a notebook."
Monitoring Fuel Mileage Statistical Process Control (SPC) is another example of technology used by Donmoyer to process and measure the success of company goals. One goal, for example, is to maintain a fleet average of six miles per gallon. Tractor fuel consumption by division and driver is posted weekly at both terminals.
"SPC allows us to determine if we are meeting certain goals of company revenue per mile or per tractor," Costanzo says. "If there is a variance, we can locate the problem, determine why it happens, and correct it."
Donmoyer already is preparing for the next generation of customers who will require a higher level of product integrity. The company says that by the end of this year, it will become the first dry bulk carrier in Pennsylvania and the second in the Western Hemisphere to achieve ISO 9002 certification.
"When a customer in the manufacturing sector asks us to haul a product for the first time, we will have the resources to certify the washing of a tank trailer, physically inspect the tank vessel, and guarantee that it is free of any contamination."
Seeking to empower its employees, Donmoyer provides leadership development as part of company training. Members of senior management already have completed a course taught by the Dale Carnegie organization. Donmoyer is researching the possibility of offering similar courses to other employees.
"Planning, vision, and teambuilding skills are crucial for the success of any organization," Costanzo says. "At the least, employees need some voice in where their company is going. It's important to have people who can carry the company flag and clearly communicate the breadth and depth of our services to customers."
Sharing Financials Sharing of financial information by a privately held company with its employees is rare in any sector of commerce. It certainly is more unusual in an industry with a reputation for establishing rigid top-to-bottom management directives rather than consensus-building.
Donmoyer, however, posts monthly revenue figures on employee bulletin boards at both terminals. The information includes the carrier's top 10 shippers and top 10 customers for that month.
"We believe in the open-book concept," Costanzo says. "We want to remove any mystique of business and have employees understand how Donmoyer is managed.
"Here's how much money that was made, spent, and reinvested to keep the company growing. Employees know that we are not trying to hide anything."
Operations at Donmoyer are organized into four divisions with 72 pneumatic, 39 flatbed, 13 dump, and 18 van trailers. Business is focused in Pennsylvania and bordering states, but the carrier has authority to operate in 48.
Local hauls usually are within 150 miles of the company. Over-the-road trips sometimes extend as far as the Carolinas. About 70% of bulk commodities is comprised of lime, limestone, ash, fertilizer, and coal.
Donmoyer drivers pick up 35 to 50 loads of lime per day from Carmeuse of Pennsylvania. The facility in Annville, Pennsylvania, operates five rotary lime kilns with a production capacity of 400,000 tons.
Donmoyer specifies Heil dry bulk trailers. Trailer size ranges from 1,000 to 1,600 cubic feet. The carrier recently purchased several 1997 model trailers from the Heil factory in Lancaster, Pennsylvania.
The 1,350-cu-ft trailers are constructed of 5454-H32 aluminum. They have Spicer inverted-drop-center axles and Rockwell WABCO antilock braking.
Five-Ton Payload Increase Weight-saving components include Accuride aluminum wheels and LiteFlex composite springs. The carrier is testing widebase super-single tires on a limited number of transports. Donmoyer says payloads have increased by more than five tons during the past four years by reducing the tare weight of the transports.
Donmoyer runs 96 power units built by Peterbilt, Volvo, Freightliner, and International, which is the dominant brand among the fleet. The average tractor age is about two and one-half years. All are equipped with Caterpillar engines.
For its latest purchase, Donmoyer selected a 1998 International 9200 conventional with low-roof Pro Sleeper. The Caterpillar C-12 multitorque engine is rated at 355/410 horsepower. The engine is fully electronic and has computerized diagnostic capabilities.
Other drivetrain components include a 10-speed Fuller RTO-15210C transmission, Spicer clutch, and Eaton drive tandem with a 3.90 ratio. The tractors are specified with Bendix ABS, Eaton automatic slack adjusters, and Fontaine fifthwheel.
Most tractors are equipped with Gardner Denver blowers. However, the company has been testing Drum blowers for about 18 months with good results.
Driver comfort is an important element of the newest tractors. Driver amenities include Panasonic AM/FM weatherband radio with tape cassette player and National Cush-N-Aire air-suspension seat.
Recognizing a critical shortage of qualified drivers, Donmoyer established a driver training school in partnership with the Sage Corporation. Classes at the Lebanon County Career School are certified by the Professional Truck Driver Institute of America.
"With the number of LTL carriers in this area, competition for qualified drivers is fierce," says Jeffrey Bohn, company owner and president. "Instead of continually spending money on advertising, we decided to make a long-term investment in something that we can control.
"Each student must complete 100 hours in the classroom and 44 hours behind the wheel with a school instructor. When Donmoyer selects graduates of the Lebanon school for employment, we know they have received top-notch instruction."
Since its opening in 1993, the for-profit school has averaged about 100 graduates per year. Donmoyer competes with other carriers for driver graduates. Forty-four of the 122 drivers who work for Donmoyer are graduates of the school.
In January 1997, Donmoyer paid the $3,000 school tuition for 11 student drivers who were selected as employees. Nine still work for the company. The company plans to offer free tuition to more students on a regular basis.
To qualify for the free tuition, selected candidates must pay a $300 deposit and work for Donmoyer at a lower pay scale for six months. After the six-month period, they receive a pay raise and the $300 deposit is returned. Drivers are paid a percentage of revenue for each load.
Driver applicants with previous experience must be at least 22 years old to qualify for employment at Donmoyer. The amount of initial training is determined by the individual's prior truck driving experience, but most newly hired drivers spend two weeks to a month with a trainer.
To encourage safe work performance, the company offers several bonuses, including a $150 annual bonus that increases with every year of safe driving. Each terminal pays $100 to the employee who is selected as driver-of-the-month.
Providing drivers with comprehensive training, new equipment, and state-of-the-art technology has contributed to Donmoyer's success. The company is proof that a niche carrier can thrive in today's market.
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