The Alco Computer Story

1992

A True Story

Written 2004* 735 Words*

By Howard Yasgar

This story is a true story about a Miami company that spent millions designing a fantastic computer program for the automotive parts rebuilding industry, however they forgot one important thing.

In 1990, my partner Don Chait and I were in the automotive starter and alternator rebuilding business, located in Miami.

At the time, having an in-house computer program was something relatively new, and programs designed for auto parts rebuilding businesses like ours were not yet available.

It was obvious to us that computers were going to be in our future, but we knew nothing about how to go about getting one that would work for us.

We contacted a couple Miami computer companies, and two of their salesmen came to visit us.

They all offered to completely computerize our company but in the end the costs were way too expensive.

It was not only the cost, but we could see that neither of them had any concept of how our rebuilding business worked.

A rebuilding business was far more complex than a manufacturing business, because in rebuilding we used a large proportion of good useable or salvageable parts whereas in manufacturing everything is brand new.

All the program designers we spoke to said we would have to have a special program designed solely for us, and that it would cost a lot of money to do it.

It soon became obvious that thousands of rebuilders like us needed an affordable computer system, and it was also obvious that trying to develop a program on our own would mean years of work and a lot of expenses.

Eventually several larger companies got the idea that they could design a program for the rebuilding industry and then sell it to smaller companies like ours.

One of those companies was a large auto parts rebuilder in Miami named ALCO Industries, and just by luck, the owner Al was a friend of ours.

So, we called Al up, and my partner and I made an appointment to meet with him.

At our meeting Al explained that he had joint ventured with the Singer Corporation, Al said his company had designed the operating program, and Singer had provided all the mainframe computer hardware.

As we sat in Al’s office, he explained everything that he had done, and everything he could offer to us.

He said that if we used his program, it would tell us how much it cost to make each rebuilt product, and how much we should be selling it for. He said his program was running his company. and it could run ours also.

Al was extremely proud of all the hard work that he had put into the program, he said his program had been running his company for over two years now.

He said that it told him his exact cost of rebuilding each item, and it calculated the selling price he charged.

He told us the program considered how many parts he used that were reclaimed, and how many new parts were used.

Al said his program would run our company just like it was running ALCO Industries. It would take the guess work out, and ensure we made a profit.

Al asked us if we wanted to see how the program worked, and of course we did.

He said pick an item for him to check.

That was easy, at the time the most popular starter that his company rebuilt was called a 3124, it fit most Ford automobiles.

Al had one of his company catalogs and his current price sheets were lying on his desk.

I opened his catalog up and I saw that he was currently selling a 3124 starter for $22.50 ea.

So, I asked Al to run a cost analysis in the 3124 starters.

We walked down the hall and entered a climate-controlled room with anti- static carpeting.

Al went to a keyboard and typed in instruction.

Immediately the room was buzzing with noises coming from eight giant Singer main frame computers that were hard at work.

Al said, “It will take about fifteen minutes for a complete report”.

We returned to the computer room in fifteen minutes and there was a ten-foot-long printout just waiting for us.

Al ripped off the 10 foot long print out and we returned to his office.

He laid the printout on his desk and read aloud to us what his cost was to make a 3124 starter, it was $24.50 ea.

I said, Al, the computer says your cost is $24.50 but you are selling them for $22.50 each, look at your price sheet.

Al was speechless, he said it must be a mistake. He grabbed the printout and his catalog and stormed out of his office to the computer room.

His company was selling all their rebuilt starters for $2.00 each less than it cost them to make them.

It was obvious someone was getting fired.

We didn’t buy his program.