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Running on all cylinders: with a driven new owner in Nate Halberstein, Haleakala Motors Inc. has taken the long, winding road from troubled business to one of the highest volume dealerships in the state.

In 1984, when Nathan "Nate" Halberstein first arrived on Maui to retire after more than 50 years in the automotive industry, he asked residents to recommend a good auto repair shop. It wasn't because Halberstein needed a mechanic; it was just his way of gauging the community's attitudes toward local auto businesses. Instead of referrals, however, what he usually ended up with was advice on where not to go. "The most common answer I heard was, 'Anywhere but Haleakala Motors,'" remembers the now 72-year-old Kihei resident.

Halberstein wasn't too surprised when, in April 1986, the owner of Haleakala Motors contacted him for help. Businessman Robert Ching, who lived in Honolulu, had been the absentee owner of the dealership since buying it in 1957, when it already was 30 years old. Originally located in Wailuku, the business eventually outgrew the location and moved to its present site in Kahului in 1975. For many years, Ching was the executive vice president and general manager of Honolulu's Murphy Motors, and was thus unable to devote much attention to Haleakala, relying instead on his managers on Maui.

Then Halberstein--who had started an automotive consulting firm, Pacific Consultants--came into the picture. "I needed some help and I knew who Nate was," says Ching. "I thought he could help me run my business better." On Halberstein's first day at Haleakala Motors, the consultant found the General Motors/Mazda dealership in disarray. Gross sales at the Kahului outlet were about $12 million annually, but profit was "virtually non-existent," according to Halberstein.

But what really threatened to break down the dealership were the poor reputations of its sales staff and particularly its service crew, which, according to Halberstein, had a high "comeback rate"--that is, the team was often busy correcting its mistakes. "Back then, if you told somebody around here that you worked for Haleakala Motors, they probably would have thrown stones at you," says Damien Farias, president of Maui Toyota, Haleakala Motors' next-door-neighbor on Hana Highway. "The problem was that everything seemed to be taken for granted there. Not much attention was paid to giving employees proper training, the workers weren't motivated and so on. They were neglecting all of the things that keep a dealership on its main mission: to serve the public."

Over the next three months, Halberstein became so dedicated to the cause of rehabilitating Haleakala Motors that he became the firm's vice president. In April of last year, he bought it outright from Ching. Today, Halberstein is now the proud owner of a GM dealership barely distinguishable from Haleakala Motors circa 1985. The company's typical inventory has grown from 250 vehicles before Halberstein's arrival to 400 today, while the number of employees has jumped from 42 to 91. More important, revenues for the single-location business topped $87 million in 1990--up from $46 million in 1989--and Halberstein boasts its net profit was in the "high six-figures."

With those kinds of numbers, Haleakala Motors may be the highest-volume single-outlet dealership in the state, according to Halberstein. (Honolulu Ford earned that honor last year with 1989 sales of approximately $60 million, according to the national trade magazine Ward's Auto Dealer.) Halbers's jump-start of Haleakala Motors has not gone unnoticed, either. In March, he was awarded Time magazine's 1991 Quality Dealer Award, a national laurel presented to outstanding domestic and foreign car dealers for their community involvement and contributions to the industry. "It's nice to get awards like that but I really don't do it for the recognition," says Halberstein. "I get satisfaction out of running a successful business with the least amount of strife."

First gear. The business is in his blood. Halberstein spent the majority of his formative years at his father's Hudson Essex dealership in Connersville, Indiana, handling everything from servicing vehicles to collecting delinquent car payments. In 1935, finding it increasingly difficult to work for his dad, the 16-year-old Halberstein secured a full-time job as manager of a nearby auto parts store.

Two years later, he decided to seek his fortune in the automotive mecca of Detroit, Michigan. Landing a job with Ford Motor Co.'s parts department, Halberstein worked during the day while studying business and accounting at night school and through correspondence courses. His parts career was cut short, however, when he volunteered for duty in the Air Force in 1941. After the war's end, Halberstein decided he was ready to make some "real money" and embarked on a 16-year career in automotive sales, during which he was five times honored as one of Ford's five top-producing salepeople in the U.S.

Flushed with success--and tired of Michigan's cold climate --Halberstein began dreaming of a retirement on the beaches of Hawaii. He got as far as Visalia, a town in central California, where he moved in 1962. Bored with retirement, he became the manager of the local ford outlet and launched yet another phase of his all-encompassing automotive career. Buying into his first venture in 1968, Halberstein eventually purchased stakes in 15 other California dealerships, although he was never involved in more than two or three at a time. His strategy was simple: He'd buy into a business, resuscitate it, then sell it a few years later.

In 1968, Halberstein began his involvement in national automotive affairs with his election to Ford's San Jose District Dealer Council, which represents the interests of the area's dealers to corporate higher-ups. He subsequently boot-strapped his way to the company's Western Regional Dealer Council in 1976--he was elected to the Automotive Hall of Fame that same year--and finally to its National Dealer Council in 1980, a 16-member group which represents Ford dealers throughout the country. That same year, Halberstein became chairman of Ford's five-member national Product Quality Committee, and he launched a campaign to improve the workmanship of its cars and parts, which were then notorious for their defectiveness.

Initiated by Halberstein, the push for quality at Ford continues to this day and is manifested by the corporation's now-familiar motto, "Quality is Job 1"--a casual remark made during one of Halberstein's committee meetings which eventually stuck. As chairman, Halberstein led his committee members into every Ford plant in the country to impress upon plant managers, foremen and union workers that poor quality was hurting domestic dealers. "Our factory work was getting so bad that dealers were having a hard time selling the stuff," says Halberstein. "We needed to tell our people in the factories that we had to have quality at the source or none of us could survive."

There were even problems conveying that message to some of the top brass. One day in late 1980, Halberstein met with William Burke, then Ford's executive vice president, and Marvin Runyon, then manager of factories. Finding the pair unresponsive to his concerns, Halberstein reportedly dumped on Burke's desk a collection of clearly defective parts which had been purchased from a nearby parts store and thundered, "Is this what you call quality?!" News of the incident circulated and earned Halberstein a reputation at Ford as someone dedicated to improving the business. "It's really amazing how much Nate knows and cares about the industry," says Honolulu Ford President Dans Callans, who sat on Ford's San Jose District Dealer Council with Halberstein in the early 1970s. "Quality and the public image of the industry were always something he felt strongly about, and he's done a lot to improve both."

Cleaning house. But by 1984, the then 65-year-old Halberstein felt that he had done quite enough, and sold all remaining interests in his California dealerships to retire in Kihei, Maui. True to form, he soon began "climbing the walls" and formed Pacific Consultants. Ironically, Halberstein was considering his third attempt at retirement in summer 1986 after completion of his consultation job at Haleakala Motors, but that idea was quickly shelved with the offer to make Halberstein a company vice president.

The turnaround at Haleakala Motors didn't happen overnight, nor was it because of any single innovation of Halberstein's. He credits a comprehensive remolding of the dealership's business strategies, personnel and public image--what Halberstein calls "applying a little tender loving care."

The main reason for the increase in revenues was Halberstein's pursuit of "fleet" business, in which a dealership purchases vehicles from mainland factories at wholesale cost and sells them en masse to entities such as rental car companies and government agencies. Haleakala Motors enjoys a near-monopoly on such contracts on Maui, and Halberstein estimates they account for roughly half of the company's sales. "Nobody wants to fool with fleets because all you have to do is make one mistake--like leaving one option out--and the cars won't be accepted," he says. Halberstein admits the per-unit profits made on fleet business are much less than retail sales of individual vehicles, but says the quantities he deals with more than make up for it.

As vice president, Halberstein also established a yearly business plan for Haleakala Motors, which included setting up annual sales goals for the first time in the company's long history. That general target could then be broken down into daily goals for each of the 14 salespeople, and allowed Halberstein to track their progress. "Without a business plan, you go wandering aimlessly without any particular objective, which is basically what was happening here before," says Halberstein, who is aiming for 1991 sales of $100 million.

But Halberstein says that ironing out the company's procedural bugs was easy compared to correcting an "attitude problem" afflicting some members of the former sales and service staffs. Believing that part of the blame was the Peter Principle, he reshuffled his personnel to better utilize their skills and strengths. He also surveyed the educational level of each employee-finding it inadequate in most cases--and established a policy of flying mechanics to Honolulu to undergo periodic training programs conducted by General Motors. Graduates of these classes were then rewarded with raises and promotions upon the passing of nationally certified tests.

During the tune-up of the dealership, four managers "left to pursue other interests" and Halberstein impressd on those who remained that their way of thinking would have to change. "It was a deplorable situation and the attitudes I found here were simply intolerable," says Halberstein, who is reluctant to go into detail. "I will say that I don't think any business in Hawaii can survive if they're not prepared to deal with all levels of income and all ethnic backgrounds."

In keeping with his focus on a kinder, gentler management, Halberstein has made it company policy to pay for the rehabilitation of employees suspected of having problems with drugs or alcohol. He has referred about a half dozen workers over the past five years to Alcoholics Anonymous and Castle Medical Center's Alcoholism and Addictions Program in Windward Oahu. "I want to help my staff with their problems but I also want to keep them clean, because my mechanics have my entire net worth in their tool boxes," says Halberstein.

Halberstein's efforts at Haleakala Motors have reaped rewards in more ways than on the balance sheet. For one, the company was honored with GM's only customer satisfaction award in Hawaii last year, presented on the basis of feedback from buyers. Halberstein believes he made great strides toward mending fences with the community in July 1986, when he placed an ad in $IThe Maui News$N announcing that the dealership would rectify any past or present complaints about its sales or service departments. "I just put my money where my mouth was and it restored the public's faith in us," says Halberstein, who relates that the company ended up performing $80,000 worth of free service work.

Today, Haleakala Motors is no longer a local pariah, but Nate Halberstein's retirement seems farther away than ever. Perhaps it was meant to be. "I don't have to work. I could be out laying on the beach right now," he acknowledges. "But I just can't resist the challenges of this business."
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Author:Martin, Daniel
Publication:Hawaii Business
Article Type:Biography
Date:May 1, 1991
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