Interview with Chuck Miller
September 18, 2001
I was originally a management consultant to the Farr Company. I had met Spence and Dick through a man that I had befriended who came in to help himself to international operations. He was a former vice president at Lockheed International and he had told the Farrs that he could only do part of it and suggested they talk to me. I went out and made a sales call and that was in 1962 or 1963. I was a consultant to them for a variety of things for a couple of years. I left the consulting firm, went to another one and Spence and Dick kept calling me at the new place. I was giving information free that I used to charge them for because I had nothing to do with that kind of consulting anymore. They said, “Why don’t you join us?” I told them I didn’t feel it was ethical to go to a client, so this went on for some months. We’d have lunch and we’d have dinner and everything else. So they said, “Well, we want you to join us” and I said, “Well, as what?” They said, “Well, we don’t know, we just want you to come.” This went on and Spence sat down and made a yellow legal pad of sixteen or seventeen items written in pencil and said, “Well, look at this.” I said, “Well, that still doesn’t tell us anything.” Dick, said, “Look, Chuck, we like you. You like us. Come with us and take your chances.” And that’s how I joined the company. Some years later, sixteen or seventeen years later, I looked at that same list of paper. I think we’ve done four of them. Anyway, that’s how I wound up there. They were interesting times.
The company at that time, it was 1966, was 30 years old, doing about six million a year in sales when I started to be a consultant. It was slightly under 9 million when I joined. The year before they had bought the plant in Crystal Lake, like in April of ‘65 or something like that, and it was a disaster. They had made a very good buy on the plant. It blew down a month after they arrived by a tornado.
They spent time rebuilding it, but they had made the classic mistakes in buying a new plant. They had bought it to service EMD, the Electromotive Division of General Motors, but they had never thought about basing points or anything else to do with transportation, so it cost us almost as much to ship it the 30 or 40 miles from Crystal Lake to EMD as it did from El Segundo to EMD because of the freight rates and basing points. Spence took me back there and they had lost $354,000 on a million dollars of sales in the first year. The morale within the company was just devastating. It was not a happy time.
I got back there and I found out that the turnover was running in Personnel 54% a month. I made a local wage survey and found out that they were a major percentage under what the others were doing. I also found out that the unemployment rate, not only were they in the wrong place for basing points, but the employment rate was less than 1 percent in the county and there was virtually no labor pool at all. So, anyway, we went out and we took over with that and there were some other problems as well. I told your Spence and Dick, “First, we’re going to go out and find the best personnel manager we can possibly find and we’re going to find one from this area.” We found Bill Balloff. So, Bill Balloff joined the company, I don’t know, 1966, and he was there until he retired. The other thing that we did was that we put Clete Oster in charge of that plant. Clete and Balloff turned that thing around. It took maybe three years, but it became a nice plant.
I think, first, that neither Spence or Dick would have been successful in running a company by themselves. They both would have been very successful, but I don’t think the company would have never been started without their father. I think Spence would have been a CPA and a very good one and I think Dick would have been a school teacher. When he was finishing college in the middle of the depression he got offered a job at SC to teach school. The story that I heard and Dick used to tell me this. Morrill says, “No kid of mine is going to be a school teacher. You’re going to come to work with us and we’re going to have a business.” So Morrill was the catalyst that got it started, but Dick and Spence were the two that made it go. Each one had different strengths and weaknesses and together they built the company.
Spence and Dick were two entirely different kinds of people, but I think without Morrill there would not have been a business and without the two of them, it would never have been built. I think, like many entrepreneurs, they were only capable of getting to a certain point, which they did. If you will look at the sales history, for twenty-some years it was virtually flat. At the time I came, it was 85 percent railroad, capital investment and stuff, no repeat business. I think we had less than 15 percent in all the other businesses. We were too dependent upon one single customer, which was EMD (Electromotive Division of General Motors).
Dick Farr and Dick Esselman were very, very close friends. I guess they had been college classmates. Esselman was a very bright engineer, as well. That was one thing about the company is that we had some very bright people and we attracted other bright people as the years went by. Spence would stand out in the doorway and anybody walking down the hall he hadn’t seen before, he’d stop them and say, “Hello. I’m Spence Farr.” And meet them and greet them and get to know them.
People tend to think of Dick as the outgoing one and Spence as the shy one, but it wasn’t that way. It was the other way around. Dick was really the shier of the two. He was not nearly as outgoing. We ate lunch together, the three of us, and sometimes Esselman, but always the three of us, and as I say, sometimes we would eat, maybe twice a week at the L.A. Country Club and twice a week at the Bel Air Country Club and then Spence and I would go to Rotary on Fridays. We were at Bel Air Country Club and we would go down in the room overlooking the putting green and we had lunch. We were walking back up the thing and here comes this guy down with golf shoes on and everything else. Spence says, “Hello. How are you, nice to see you.” He says, “How are you? How’s the family? It’s great to see you.” We walked by and he says, “Who was that?” I said, “That was Bob Newhart.” He says, “Who is Bob Newhart?” I said, “He’s a comedian on television.” He says, “Oh, no wonder he looks so familiar.” That was typical of Spence. That’s someone who was something else.
Dick Esselman was put in charge of Canada. Esselman was a great engineer and a very fine guy. I have a great deal of liking for Dick Esselman. He was not a great manager. None of the three were managers. They were doers. Spence was a better manager than the other two. I think that’s one of the reasons the company was so successful the first twenty years that he ran it because he was the manager. Dick was always called the salesman, which he was, and he was always called the inventor, which he was. He was a great manufacturing guy, too. Dick was a tremendous manufacturing guy. He’d look at a thing and see how it was made and figure out a better way to make it.
I ended up with Canada. Esselman was replaced and I took over Canada in maybe 1975 or 1976 and I got to settle that strike thing. We locked them out. Dick hated strikes and some other things. We had to settle within the month and we broke the union. We locked the doors and built a fence around the place. We put barbed wire on top of it. We brought in armed guards with police dogs and we locked the doors. There was a lot of violence going on during that one year. It had been a year since they were organized. They were throwing things through people’s windows and slashing their tires -- just stuff that was uncalled for. I fired the labor attorney we had and I got another one. I still don=t know how it was settled, but I said, “I want the meanest, toughest labor attorney I can find.” I told him, “This company is but a pimple on Farr’s whole organization.” I said, “We either settle it or we close it and never open our doors again.” Within a month it was settled. The union was thrown out. As far as I know, there has never been a single day of work stopped since then. I really think what he did is he went to the government and forced them to be done. I don’t know. He just got it settled.
I’ll comment on some of building the company. If you look at the growth rate and everything else then you sit down and we went from about nine million to thirteen or fourteen million. Dick, he would get on his kicks about developing products. He had borrowed a lot of money and the bank cut us off. I don’t think this happened before we got to $21 million, but I think it was at $13 million we sat down and by then we had started the planning process. There were probably five or six of us and we decided we were going to triple the sales of the company in three years and we did it. We went to $21 million. We were making money and Dick, at some point along in there, Dick had borrowed all the money and things weren’t going well. We were losing money and the bank cut us off. I can’t remember what triggered the losing of the money or what triggered the cutting us off at the bank, but that was the first time we had ever been cut off at the bank. It was a very, very serious thing.
The other thing I want to say about the Farr Company and about those two guys and that’s one word: integrity. I would never work for a company one day or one minute that didn’t have integrity, nor would I work for people, or a man for one day that didn’t have integrity. That was probably the greatest characteristic of each of them is integrity. I can remember going to Spence early on when I first got there and I said, “This is the problem. These are the possible solutions. This is what I recommend. This is the legal situation.” He looked and me and said, “Do what’s right.” That’s the way the company was run. That was a new one for me in my experiences. I was a business school graduate and all that kind of stuff, but do what’s right and it’s absolutely the premise on which the company is built. It was true of both of them.
I think that, talking about personalities, let’s take Dick. Very, very bright, I’ve already mentioned a great engineer. He wasn’t a marketing man, he was a salesman. He didn’t really understand marketing. He understood sales. Integrity, but above all tenacity, perseverance. He would set his eye on a goal and nothing would waiver him from that goal. Nothing. He used to say, “Don’t bother me with facts, my mind is made up,” which was really true. He made his mind up, he put his eye on something, he couldn’t back down. Spence could be swayed much easier. He oftentimes, had whoever the last person talked to, had that viewpoint. Above all for both of them, it was integrity. They had a fine company. The other people within the company were the same way.
Let’s talk a little bit about the growth first. Once the company was in financial trouble, we sat down and made a strategic plan. The strategic plan became an important part of what we did. We started the planning process with a vengeance. We already had a small corporate planning group which we formed some years earlier, starting with marketing research. We attributed most of our growth from the early 70's until the time I left in ‘82 came about through strategic planning and following our plans. We successfully diversified the company from 85% of the railroads and capital goods into where over 50% of our sales were on aftermarket sales of disposable filters, so we built a good base there. We’d gone into four or five different markets so that we were not dependent on any one market. Richard loved all this kind of stuff and so did I. At the time I left in 1982, for the year of 1982, we hit our sales target, our statistical and forecasted target, I think, within a million dollars, within 2 or 3 percent of what our estimate had been a year and a half earlier on the plant track. We were running the company by plan. We had budgets. We had systems. We had follow-through. We had all of these other things.
I think one other thing in terms of starting to get the company from being a sole proprietorship was Howdie Koontz. Howdie Koontz was a professor at UCLA. Spence had met him when he went through the management program at UCLA. Howdie was a very bright college professor. He took Spence to Europe the first time. Spence saw all those big buildings and he said, “We’re going to have a business here.” So, Howdie opened doors to them that they might never have seen. He’s probably the catalyst that got them going on the international business.