Prime Inc. rolls into 35th year

Prime Inc. has seen its share of ups and downs on the road to 35 years in trucking. Recent years, however, could only be described as a steady climb, with company revenues exceeding $559 million in 2003 and fiscal year 2004 projections topping $580 million. The Springfield-based company ranks No. 32 among for-hire carriers nationwide in Transport Topics’ 2004 top 100.

Still, the business Robert Low founded in 1970 out of a small Urbana shop has taken him on a roller coaster ride – the lowest point being bankruptcy a decade later. Today, Low talks candidly about the bankruptcy and views it as an element of the company’s long-term success.

Humble beginnings

The company with annual revenues nearing $600 million began as a summer job for a young engineering student.

“I came home (to Urbana) over summer vacation and tried to find a job. I ended up buying a dump truck and kind of buying myself a job,” said Low, who serves as Prime Inc.’s president and co-owner, with wife Lawana and mother Vera Low.

When the weather got bad, available work wasn’t enough to make the truck payments. Low adjusted on the fly – a characteristic he instills in the present-day company – and entered the over-the-road business. In the early years, the numbers of trucks, employees and revenues doubled annually, Low said.

“We went from 150 trucks (in 1979) to 300 in 1980. We relocated from Urbana to Springfield, in this location. We built a new facility, and continued expansion of the company,” Low said.

The decision to move was another made on the fly: A fuel crisis hit the country and Prime needed a terminal that was intermediate to destinations and close to an interstate.

The move also enabled Prime to attract management staff.

“Small towns certainly have their attractive elements, and my roots are certainly that of a small-town boy,” said Low. “But one of the problems we faced was I had guys that helped me manage this then, I don’t know, $40 (million) to $50 million company that were my old high school buddies. We just didn’t really have the quality of management team that’s really needed to run a company that size. Plus, I just kind of blundered into the business … and I wasn’t as smart as I thought I was.”

The customers and business were steady, but much of the capital used to grow the business was borrowed, Low said. When interest rates spiked in 1980, the company’s cash was tied up in building the $2 million Springfield facility.

“I think we made a profit of $1 million in 1979, and by 1980, we were bankrupt,” said Low.

Prime Inc. filed for Chapter 11 in October of 1981. With a solid customer base and the beginnings of a good management team, the company began rebuilding.

“We came out in February 1986,” Low said, “During the bankruptcy, we learned a lot of the basic tenets that helped us become successful.”

Expansion and niche markets

The trucking conglomerate that started as a one-employee, one-dump-truck operation now has an estimated 3,300 driver-associates and 650 non-driving employees.

First-year revenues were less than $100,000, while revenues for the 2004 fiscal year that ends March 31 are projected at $580 million. Revenues are expected to increase between 10 percent and 12 percent in 2005 – a growth rate that has been fairly consistent since 1986, Low said.

While the corporate office is in Springfield, the company has additional offices in Florida, Oregon, Oklahoma, Utah, California and Colorado. Refrigerated trucks were among the company’s first services; it has since expanded to include flatbed and tanker trucks.

Niche markets that balance client demand and Prime expertise are key. Clients that once used the refrigerated services are now also using the tankers to haul food-grade liquid bulk.

The company’s experience in refrigerated shipments also has grown into another niche: Prime Floral LLC, a floral division that was added in June.

Another offshoot is Prime Logistics, which designs

optimal solutions for large shipments, including inventory management and arrangements for rail and road transportation.

Pay for performance

Prime Inc.’s personnel philosophy can be summed up in three words: pay for performance.

“We came up with a lot of different programs that would tie people’s compensation to their contributions to our success,” Low said.

Its programs vary by job type, from base salary plus incentive pay to more performance-driven salaries.

Owner-operator Stanley Theriault is a direct beneficiary of the drivers’ performance pay program. Theriault, retired from the military, has been a Prime driver for 15 months.

“I interviewed with four or five different trucking companies, and Prime fit my needs the best and made me the best offer. I decided to give them a try, and as far as I’m concerned, it was a smart move,” Theriault said. “It’s the little extra things they do – it gives it a magic touch.”

In a world of high turnover – the trucking industry average is 116 percent, according to the American Trucking Association – Prime officials say incentives keep more drivers on board longer.

It seems to be working. Clayton Brown, Prime’s marketing manager, said Prime’s fleetwide turnover rate is between 80 percent and 90 percent. Turnover among Prime’s experienced lead seat drivers – drivers who have seven to eight months of experience and a 48-state verifiable driving record – is 40 percent, Brown said.

Additional perks

Ann Perkins, accounts payable clerk, has been with Prime for 27 years. She followed the company in its move from Urbana to Springfield.

“We went from a very small building with a shop to the nice building we have here. And of course, we’ve expanded even more,” Perkins said.

In 2000, Prime added the $10 million Millennium Building, and additional perks for staff and drivers were built into the facility. Day care, a full basketball court, 44-seat movie theater and full-service spa are some of the services offered.

“We have an in-house doctor, a mail room, a cafeteria on-site. We have a small store that comes in handy … a complete workout room with an in-house trainer. So there are a lot of extra benefits that we have available here that a lot of companies don’t have,” Perkins said.

For drivers, some of Prime’s benefits revolve around the Qualcomm satellite units placed on each truck. The satellite system allows fleet managers to pinpoint the exact location of any truck. Drivers can call in and get the lowest fuel price from a choice of gas stations at a specific exit, Brown said. And a panic button has allowed drivers to obtain help in medical emergencies, said Perkins.

There will always be challenges in the industry, from fuel costs to government regulations. But Low sees the opportunities over the challenges. “There’s a lot more that we can – and are going to – do,” he said.

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