The Start of Something Big
The late Sam Lee enjoyed a long and distinguished career as one of America’s premier leasing innovators and strategists. Born and educated in Canada, Lee began his association with the automotive industry through Chevrolet dealerships, first in New York and then in Chicago. It was in Chicago in 1948 that Lee organized Lee Fleet Management, Inc., later moving the operation to Cleveland where he purchased a Ford dealership. This company became one of the largest fleet and equipment leasing firms in the nation.
Lee acted as a consultant to America’s largest concerns as they modernized their fleet operations. He also helped established lease companies improve their operations and assisted car dealers in the organization of their lease departments. Following the sale of his own companies, Lee organized the Fleetway System in California, installing lease departments in eight western states. This program was eventually merged into the Chevway system, organized by Lee for Chevrolet.
Lee was the editor and publisher of Lease News, and wrote three books: Introduction to Leasing, Automotive Transportation in Industry, and Fleet and Lease Manager’s Handbook. From 1972 to 1979, he was vice president of marketing for Alameda, Calif., Bancorporation’s subsidiary, First Leasing Corp. He was honorary member of the National Association of Fleet Administrators, as well as a member of the Society of Automotive Engineers and California Vehicle Leasing Association (now the National Vehicle Leasing Association). Lee passed away in 1985.
We’re proud to reprint part of our 1981 interview with Sam Lee, one of the industry’s true pioneers.
AF: Sam, you started in the fleet business in the mid-1930s. Do you recall how it all began?
Lee: I came out from New York to take a job at Orme Chevrolet in Chicago — Hyde Park. There was a man coming around selling Vogue tires; they were whitewall tires. We got to be pretty good friends. One day he said to me, “Did you ever sell Wrigley any cars?” And I said, “No.” He said, “ You ought to call on him; I sell him a bunch of tires. They have whitewall tires on every one of their cars.” The Chevrolet zone office was in the Wrigley Building.
The next time I was down there (I had to report every 10 days), I thought I’d go see Wrigley. I saw a man named Harvey Jacobs. He was a purchasing agent and was very receptive. He said “You know, you’re the first man who has ever come in here to sell us automobiles.” He often thought it was very strange that every time they had to buy automobiles, the buyer had to seek out the seller. He told his salesmen (drivers) to go out and get a couple of bids and send them in, analyze them, and then go through the usual routine of purchasing them. He said nobody had ever come around, except for the factory, which would send a couple of men around once or twice a year and take him to lunch. They weren’t salesmen; they weren’t selling anything.
on the second or third call, Jacobs told me they were going to buy some cars from me. He said that they would send a letter and that he wanted a bid. He said, “I want to tell you something. Don’t make the mistake of thinking that Wrigley wants to buy cars cheap. He doesn’t.”
Sure enough, a letter came in a few weeks later and they wanted to buy 18 cars. So I put a bid with a normal 10-percent fleet discount and back came the purchase order for 18 cars. So I thought, “Geez, how long has it been going on? There’s got to be hundreds of companies like this.” So I began to toy with the idea of fleet business.
About that time, Chevrolet called me up and said that they had a general manager job for me out in Berwyn, Ill. So I went down to the zone office. A fellow by the name of Earl Graham was the city manager, and he said, “ I’m going to call out there.” I talked to the dealer, and we made a deal right there over the phone. I was to go there April 1, 1935, and be the general manager.
I hung up the phone and said to Earl Graham, “You know, I’ve been toying with the idea,” and I told him what happened with the Wrigley thing right upstairs in this building. I said, “ It just started me thinking there has to be a lot of business like that. Maybe as long as I am making a change, right now might be a good time to try this. But I need to find a dealer who will see what I’m talking about and carry me along until it starts to click. You know it won’t happen overnight.”
He said, “It’s strange that you mentioned that. Sam Ruby and I had dinner the other night and Sam started to do a little business with the Marshall Field truck fleet. He was talking along the same lines you are — that there should be a lot of business like this.” So he called Ruby right there and made an appointment for me to go see him at his dealership the next day.
I didn’t even know Sam Ruby; I had never met him. The next day, I went out there and our fleet ideas clicked. I started working for him for a $40-a-week drawing account against a 3-percent commission. That’s how I got the background of fleet. I narrowed a GM “fleet list” down to about 326 active accounts that bought cars in the Chicago area. Some of them, like those out in the stockyards — Swift, Armour, Cudahy — were buying all the time, and other accounts would buy a few times a year.
At Ruby, I developed an annual replacement plan. We would take a fleet of Chevrolets, put them in service, and in one year, replace them for $200 net cash difference plus $18 for a new heater or $5 if they just wanted to transfer the heater from one car to another.
AF:What was the Chevrolet selling for in those days?
Lee: We had a business coupe sell for $590, plus transportation to destination and so forth. I wound up with nine accounts on that plan. And one of those accounts was in St. Louis, a big wholesale dry goods place. They went for this plan. I called one day a few months later. The sales manager of that company, Eli Walker, transferred up to Butler Brothers in Chicago. So he called me and said, “I want to talk to you about putting your plan in here.”
AF: What was their alternative?
Lee: The alternative was they were on the Runzheimer plan, or should they go through ours? They didn’t have the company ownership; they had the driver ownership.
I went out to see Walker in his office. While I was there, he pushed a button, and in came Harley Howell. Harley was the sales statistician in the sales department at Butler’s. Butler Brothers was a tremendous wholesale food company, and they also owned the Benjamin Franklin stores. They had about 450 cars on the road, so they were a very good account. Walker said, “Harley, I want you and Sam Lee to get together and I want a report to me on what Butler Brothers could save by going to company ownership under the Ruby Chevrolet annual replacement plan.”
There was no such thing in those days as a fleet manager, of course, except in the big yards at Swift and Armour where they would have 15 or 18 people in the fleet department.
They (Butler) had a big meeting. They called it the board of governors. They were not directors, but managers of their houses — that’s what they called their branches. At this meeting, the plan was presented (the $200-net difference plan from Ruby) to the board of governors. They asked me to sit in because they were going to ask Harley questions that he wouldn’t be able to answer. So Runzheimer asked to be present, too, because he was fighting to hold onto his account.
We had this meeting and Runzheimer and Harley Howell got into a big fight; it got really bad. They voted to go with our plan. I walked out of there with an appointment to get a contract the next day at the lawyer’s office. It was 750 cars, the biggest deal I ever had in my life. This was in 1939.
So I get the contract a couple of days later, figure out the offer, and take it in to Ruby, who said he wanted Larry West, our lawyer, to look at it. We go down to Larry’s office, and he goes over it. Two days later he comes up with “You know, there’s a clause in there that you have to guarantee to deliver 150 cars a month come hell or high water, because they don’t want to be caught with half company-owned cars on our plan, and half salesmen-owned on the Runzheimer program. They want to make sure that they get all 750 cars in a very short period of time.” This was about 1940.
Larry picked up the phone and called Ruby and asked if Sam could guarantee delivery of 150 cars a month. They had a discussion for a while and finally, Sam said, “No. You know, we’re a middle man, we don’t make these cars.”
“Will Chevrolet give you these cars?” Larry asked.
So, that night, Sam and I went over to Detroit and we visited every one of the brass there all the way up to Bill Haller, the national sales manager, and we couldn’t get them to guarantee 150 cars a month. We returned to Chicago, and took the contract back to Butler Brothers and told them that we would accept the contract on the basis that we would deliver the cars if we could get them from the manufacturer.
At that time, the U.S. was in the British/France purchasing commission (just prior to World War II), and our allotments had been cut, and everything was upset. I went down to Butler Brothers and said we would take the contract gladly, but we can’t positively guarantee to give you every car we can lay our hands on.
In the meantime, word went around Chicago that Butler Brothers was going to company ownership. That was a big, big deal around Chicago. Bill Hanley was the regional rep for what was then called the Fargo Division of Chrysler, which was their fleet division. So he came in pushing for Chrysler to get the deal. He brought Zollie Frank in with him.
Zollie Frank was the little dealer on Western Avenue on Chicago’s west side. They guaranteed that they would deliver 150 cars a month and that if they couldn’t deliver new cars, if the government stopped production of new cars, or whatever, they’d get them used cars and guarantee them. They would recondition them, guarantee them, and deliver them where they were needed at no charge. Butler Brothers went for that deal. That’s how Zollie Frank got started.
AF: What happened to Harley Howell?
Lee: All through the war, I visited the Harley group every few weeks and we’d go to lunch. The sales department of Butler Brothers was going down and down in numbers. They used to have one whole floor the size of a block and that whole block was occupied with desks and people all over the place in the sales department. They got down to only nine people left on that whole floor. Harley kept worrying about his job and that his job was going to go by the boards. There was the war and they were doing no business, no traveling and what not.
I had developed a plan right when the war broke out called the Ruby Fleet Maintenance Plan for helping fleets keep their cars running during the war. It was quite successful from the standpoint that companies seized on it because they liked having someone they could turn to. You couldn’t get any help from the factories; you couldn’t get any help from anybody.
Harley Howell said to me, “Sam, I convinced Butler Brothers. I supplied them with the facts and figures, that they should go into company ownership away from salesman ownership. And, I can do this for other companies.”
“Harley,” I said, “I don’t think you can do it so easy. Because, at Butler Brothers, you were on the inside. You had access to all their figures and cost records. You won’t get that from other companies. They won’t open up their books to you or to any outsider and let you see what goes on in their company.”
I developed a fleet management plan for Ruby Chevrolet, and we were going to set it up in an office downtown in the Board of Trade Building. However, Ruby had become obsessed with some government business and turned the plan down.
So I told Harley one day, “Harley, look, what you’re talking about is something I have been working on. I’ll give you the whole formula. I’ve got it all set up. I’ll loan it to you and you can see how it’s set up.”
I had all the forms and everything all worked out. I gave the book to Harley, and that was the beginning of Peterson, Howell and Heather. He modeled it exactly after that book.
AF: What era would you say experienced the greatest change? Was it the ’50s?
Lee: Now, you’re really coming to the National Association of Fleet Administrators (NAFA) period. I’m the guy that really started that. I started in my suite in Detroit’s Teller Hotel. At that time, I had been preaching. I had held talks and had written that it was time for fleet managers to become professionals. Up to then, in one place (the fleet manager) would be a guy in the sales department, in another company, it would be someone in another department. There was no set pattern. So I was a bear on that. I kept preaching that. I met a guy named Emerson Parker who agreed with me. He was an all-time character. He was with Hartford Fire and Accident.
I used to throw a dinner for a little group of fleet managers who belonged to SAE, the Society of Automotive Engineers Transportation and Maintenance Division. This was in January 1957 at the annual convention in Detroit. Everybody at the convention was involved in space, that was a big thing then. So they had one meeting set up for Monday and another set up for Friday for transportation and maintenance.
We were sitting around Monday night, up in my suite having cocktails before dinner. It was below zero in Detroit, there was snow up to your butt, and the boys were saying, “Who wants to stick around here for a week just waiting for one meeting?”
Finally, one of the guys pipes up and says, “I don’t know why we have to belong to SAE. Why don’t we start our own outfit?” They all jumped on it, and I said, “I’ll tell you what. I’ve got the names of every possible fleet user in the country. We regularly mail to them.” I was writing my Fleet News at the time. I said, “I’ll get the letter out; you just tell me where and when you want to have the meeting.”
The first annual meeting was the next January in Detroit, and we had a hell of a time trying to get someone to sponsor things. The only guy who got into it was George Romney, who was president of American Motors at the time. He showed up there at 7:30 a.m., took off his coat, sat in on the meeting and paid for our breakfast. Ford popped for a lunch and General Motors popped for a lunch and that was the beginning of NAFA.