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Oregon man has built a tire empire

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PRINEVILLE, Ore. — The inside of tire baron Les Schwab's massive warehouse is a miniature city. Dozens of forklifts, dwarfed by skyscrapers of black rubber, hum busily along narrow concrete alleys as they ferry piles of tires through the quarter-mile-long building.

Schwab, 85, gently steers his gold Chevy Trail Blazer through the labyrinth and out a sliding door, into the crisp central Oregon air. Thousands more tires — some taller than the SUV itself — sit stacked in piles around the sprawling industrial lot.

"We had tires sitting outside when we first started, and we still have tires sitting outside today," Schwab said.

In 50 years, Schwab has watched his company grow from one rundown tire retreading shop to an empire with 350 stores — including several in Utah — and more than $1 billion in annual sales. Les Schwab Tire Centers offer a range of domestic and foreign tire brands and make a point of offering customers what Schwab calls a "supermarket selection."

"I never thought I'd do $1 million in sales, so I've been 1,000 times more successful than I ever thought I'd be," said Schwab, who doesn't have a college degree and was orphaned at age 15.

The privately held company employs 7,000 people nationwide and sells 6 million truck and car tires annually. It adds about 20 new stores a year — and pays for them all in cash — while maintaining virtually no debt, said Schwab.

Schwab's success stretches beyond the numbers.

Until about five years ago, he appeared in nearly every Les Schwab Tire commercial that aired, making him one of the best-known faces in the West. The celebrity permanently fixed himself in the region's collective consciousness as the company's icon — a no-nonsense rancher with catchy slogans and a characteristic Resistol hat.

In the Northwest, the company's flashy red-and-yellow signs are only slightly less famous than its employees, who wear their hair above the collar and sprint to customers' cars when they pull in.

"They are known for their service, and dealers from around the United States will travel to Les' stores to see how he does business," said Bob Ulrich, editor of the Modern Tire Dealer, which ranked Les Schwab the No. 2 independent tire dealer nationwide in 2002.

"Superb customer service is the key, and Les just happens to be better at it than anyone else."

Analysts attribute his trademark customer service in part to a unique profit-sharing program that put 55 percent of profits — or more than $60 million — in employees' pockets in 2002.

"Why wouldn't you work for him? You've got to work hard, but what if you were guaranteed to retire wealthy?" Ulrich said. "His profit-sharing is a great program, and it's rare."

Schwab is fiercely committed to keeping the company's headquarters in Prineville, a rural town of just over 8,000 located in central Oregon's high desert. All tires must be trucked to the remote warehouse and then redistributed to stores across the West.

He owns an 80,000-acre ranch near Prineville and often repeats that he employs 900 people in that town alone. Schwab recently nixed a suggestion by his executives to move the headquarters to Bend or Redmond, two nearby cities, he said.

"That'll never happen as long as I'm alive," he said. "The most unique thing about this company is that it's based in Prineville. It's a damn miracle to build a company this size here."

Over the years, Schwab has carefully cultivated the laid-back, cowboy image of rural Oregon and used it to his advantage.

In 1963, he started the "Free Beef in February" promotion as a way of boosting sales during the slow winter months. Thirty-nine years later, Les Schwab Tires still gives away $15 of free beef to any customer who buys four tires and $7.50 worth of beef to those who buy two.

Last year, the company gave away $1 million in free beef and spent more than $1 million on advertising it. Every Les Schwab store rents a freezer for a month, he said.

"It's a good promotion," Schwab said. "It's such a conversation piece. And competitors, if they have a readerboard, will sometimes say, 'No beef, no bull, just good prices on tires' or something like that."

Schwab's success wasn't always guaranteed.

Born on a hardscrabble homestead in Fife, Ore., he grew up in a two-room shack at a nearby logging camp, where he attended grade school in a converted boxcar with "crooked windows cut in the side."

His mother died of pneumonia when he was 15, and his father, an inveterate alcoholic, was found dead in front of a bar just before Schwab's 16th birthday.

An aunt and uncle offered to take Schwab in, but he instead rented a room at a boarding house for $15 a month in downtown Bend and delivered newspapers for The Oregon Journal while struggling to finish high school.

Schwab secured the coveted downtown delivery route and added a "motor route" in Bend's outlying areas the following year. By 17, he was making $200 a month — about $65 more than his high school principal — and owned the only new car at school, a Chevrolet two-door sedan.

"I never took a dime's worth of welfare," he said.

After graduation, Schwab married his high school sweetheart, Dorothy Harlan, and continued selling newspapers full time. At 25, he took a job as circulation manager of The Bend Bulletin, but by his early 30s he was anxious to try his hand at a more lucrative business.

He borrowed $11,000 from his brother-in-law in 1952, sold his house and borrowed on his life insurance policy. He walked away with O.K. Rubber Welders, a dilapidated tire franchise with no running water and a two-holer, outdoor toilet. He didn't know anything about tires and had no formal business training.

"A man wanted a couple of 6-ply tires mounted on his wheels," Schwab writes in his book "Les Schwab: Pride in Performance," of his first day at the tire shop. Schwab didn't have any idea how to mount the tires, but "one of the two other men finally came in and saved me."

By the end of the first year, Schwab had done $150,000 in business at the store — five times more than its previous owner — and by 1955 he had opened four more stores, two under the name "Les Schwab Tire Centers."

Schwab has now handed most day-to-day duties over to President Phil Wick, who started working for Les Schwab at age 21 in the Bend store. Still, most days still find Schwab in his office reviewing financial records, lunching with his top management at the local country club or tapping out a monthly column for the employee newsletter on his 1943 Royal typewriter.

"Most tire dealers admire Les Schwab for what he's accomplished, with special kudos for doing it his way," said Bob Davis, special projects reporter for tirebusiness.com. "He has carved out his own identity."