MAYFLOWER GROUP INC. History

Address:
P.O. Box 107
Indianapolis, Indiana 46206-0107
U.S.A.

Telephone: (317) 875-1000
Fax: (317) 875-2214

Private Company
Incorporated: 1927 in Indiana
Employees: 2,300
Sales: $611,000,000

Company History:

Mayflower Group Inc. is a holding company for Mayflower Transit, Inc. and Mayflower Contract Services, Inc. Mayflower Transit, based in Indianapolis, Indiana, operates the fourth largest van line in the United States, providing worldwide transportation of household goods, electronics, trade show exhibits, and general commodities, and Mayflower Contract Services, a company based in Shawnee Mission, Kansas, leases school buses to more than 200 school districts throughout the United States.

According to an anecdote handed down from Burnside Smith, the president of Mayflower from 1929 to 1935, Conrad M. Gentry was lunching at the Mayflower Cafe in Dayton, Ohio, in 1927 when it occurred to him that 'Mayflower' was a better name for a transit company than for a diner. Gentry was then a grocer from Indianapolis whose trade was trucking produce from Monrovia, Indiana, to the state capital 20 miles away and returning to Monrovia with farming supplies. Gentry regarded as potentially profitable the idea of a long-distance trucking operation that would challenge railroads as the preferred transportation for residential moving. He proposed the idea to his friend Donald F. Kenworthy, a truck salesman, and together they founded Mayflower.

Gentry and Kenworthy opened sales offices in ten cities, offering customers direct, door-to-door pickup and delivery of their home furnishings and valuables. Initially, Gentry and Kenworthy used customized, padded vans which they sold to contract drivers to whom they promised moving orders. The enterprise was successful, with sales of $70,479 its first year, but required additional capitalization to take advantage of its potential.

Indianapolis businessman Burnside Smith was recruited to help obtain that added capital, and Smith brought in his business associates--Parke Cooling, Rufus Mumford, Fred Grumme, Emmet Huggins, George Burkert, and Brant Downey. Smith was named president of the company in 1928, and, drawing on his passion for flying, he renamed the company Aero Mayflower Transit Company. By 1932, its fifth year of business, Mayflower reported sales of more than $500,000.

Smith directed the company in recalling the driver-owned vans with which Gentry and Kenworthy had founded the company, replacing them with new vans driven by employees trained in the company's own driving school. Smith established a total of 19 branch offices--one in every major U.S. city north of the Ohio River and east of the Mississippi River--and added new outlets by establishing franchises among local household movers and household goods storage warehouses. Each of these developments was seen as increasing the company's dependability and raising its service standards.

By 1935 Mayflower had 287 such franchise operations. That year Smith was killed in an airplane crash. Parke Cooling succeeded him as president, and Smith's son, John Sloan Smith, was welcomed into the company's management team. Under Cooling's leadership, Mayflower's sales reached $1 million in 1936 and doubled in 1937 to more than $2 million. Cooling instituted a national advertising program for Mayflower and, in 1940, the Interstate Commerce Commission authorized Mayflower to operate in all 48 states, making it the first transportation company to be granted such a certificate.

During the 1940s Mayflower moved thousands of families, particularly those involved in the United States' military and industrial efforts of World War II. Mayflower's sales were $6.5 million in 1945. During the latter half of the decade, the company modernized its vans by eliminating tailgates that exposed housewares to weather and theft, completed its conversion to semi-trailer trucks, and extended its services to Canada and Mexico.

In 1952 the Mayflower moving company reinstituted a modified owner-driver plan that retained company-trained employees to load and pack while allowing drivers to own the tractors that pulled Mayflower's custom-built trailers. Furthermore, developments were made in packaging and wrapping household goods; standard wooden barrels were replaced with cardboard boxes and barrels, saving space, effort, and weight. Reported sales reached $25 million in 1953, the year before Cooling turned over the company's presidency to John Sloan Smith.

In 1957 the company capitalized on a year-old arrangement with the American Express Company, which agreed to represent Mayflower throughout the world by sponsoring the voyage of the Mayflower II, a reenactment of the 1620 voyage of the Mayflower sailing ship that transported Pilgrims across the Atlantic Ocean from England to Massachusetts. The voyage highlighted the company's new international presence.

In 1959 a five-year project was instituted to computerize operations, four years before Mayflower installed its first computer. The following year the company also began a separate $8 million project to convert its fleet of trailers to an air-ride suspension system in which traditional leaf springs were replaced by rubber air bags that helped ensure the safety of the trailers' contents. Mayflower's sales topped $50 million in 1960.

John Burnside Smith, the third generation of the Smith family to lead the company, was named president of Aero Mayflower Transit Company in 1969. Under his leadership, Mayflower developed a special fleet of vehicles that were to be used to ship delicate electronic systems, computers, art objects, and other sensitive or precious payloads.

In the United States, Mayflower's sales reached $100 million and its network had grown to 650 agents, allowing the company to pack, ship, and deliver the contents of a home from and to almost any place in the world.

Based on its success in the residential moving business, Mayflower focused on strengthening its role in commercial moving, using the special fleet that it developed in the late 1960s as the basis for its increased activity, including the moving of entire businesses as well as executives and their families. The company also mobilized its activity in air-forwarding services during this period, increasing the speed of sending special equipment and household goods at the customer's request.

Under the leadership of John B. Smith, the years 1974 to 1984 marked the most dynamic and progressive period in Mayflower's history, as revenues quadrupled from just over $100 million a year to $400 million. In 1976 Mayflower had its first public stock offering, making 300,000 shares of common stock available. Common shares were listed on the American Stock Exchange in 1981, and the company made a supplementary offering in 1983 to raise $17 million.

In 1982, Mayflower acquired Major Video Concepts, a company that distributed prerecorded videocassette tapes to retail outlets. The Major Video operation was a successful diversification move for Mayflower and it reported sales of $76 million in 1986. However, Mayflower was forced to sell the operation in 1987 to obtain the $16 million it needed to reduce debt incurred in a leveraged buy out. When it was sold, Major Video had an inventory of videocassettes that included 10,000 titles, which the company estimated to be worth $10 million.

In 1984 Mayflower received national attention when it moved the Baltimore Colts, a professional team in the National Football League, to the team's new home in Indianapolis. That year the company also ventured into passenger transportation with its purchase of R. W. Harmon & Sons, Inc., of Overland Park, Kansas, a 38-year-old company that claimed to be the largest family-owned school bus company operating in the United States. R. W. Harmon became the basis for Mayflower's Contract Services, a subsidiary built by Mayflower through 14 acquisitions between 1984 and 1990.

The late 1980s was a period marked by expansion and reorganization for Mayflower. It acquired three additional companies in 1985, including Dorsey Bus, Inc., known as the oldest and largest school bus contractor in the Pacific Northwest, Transportation & Marketing Systems, Inc. (TMSI), Alaska's largest school bus contracting firm, and Pace School Bus Service, Inc., which provided transportation to the students of the Independence, Missouri, school district. Within a period of five years Cook Transportation Company, Ellison Transportation Company, Handicabs, Inc., Allis Transport, Inc., Care Cabs, Inc., Safeway Lines & Tours, Inc., Colonial Transit, Bradford Transportation Sunstein and Lockwood were all acquired by Mayflower. To meet the needs of its expanding Contract Services operation, Mayflower Transit built and opened a new Fleet Training Center and installed a computerized driver dispatching system.

During this time Mayflower reorganized, becoming three divisions under the Mayflower Group: Mayflower Transit, Inc., representing the core business of residential moving that the company was founded upon, Mayflower Contract Services, Inc., the new name for R. W. Harmon, and Mayflower Consumer Products Inc. Later in 1986 Laidlaw Transportation, Inc., a Canadian transportation company, made a bid for Mayflower that led Chairman John B. Smith and Executive Vice Presidents Richard L. Russell and Michael L. Smith to take the company private once again in a leveraged buy out. They renamed the parent company MG Holdings. This move was accomplished with the help of two groups of New York investors--the investment firm of Smith Barney, Inc. and Mayflower Partners, a limited partnership that involved the principals of the investment banking firm of Morgan, Lewis, Githens & Ahn, Inc. After the buy out, Smith Barney owned 3.5 percent of the company, while Mayflower Partners held 35.01 percent of the company. John B. Smith held 13.67 percent of the company and Richard Russell held 8.23 percent.

John B. Smith was quoted in the Indianapolis Star at the end of 1987 as stating that Mayflower had trimmed its operating costs and was in a position to make significant payments on its leveraged buy out debts in 1988. Smith said at that time that he expected a 5 to 10 percent increase in sales for 1988 that he expected would make the company's debt burden easier to bear. Further, in March 1988, Mayflower sold $50 million of accounts receivable each month for a 24-month period in an effort to reduce fees and interest payments on its debt.

Smith and Richard Russell attempted to arrange financing in October 1989 to buy out Smith Barney and Mayflower Partners. However, a decline in the company's performance in the second half of 1988, combined with penalties that would have been due to its bond holders, warrant holders, and shareholders, prevented Smith and Russell from arranging financing for their scheme. Also that year, the company introduced Brewster Lines, an international transit line providing space on ocean-going vessels for the transportation of household goods and the first to segregate household goods from industrial and chemical cargos. In 1990 Mayflower signed an exclusive agreement establishing freight service with SovTransavto, the former Soviet Union's largest trucking and road transportation organization, and restructured its pay formula, basing it on driver performance and customer satisfaction.

After Smith retired in 1990, his son Michael L. Smith was named chief executive officer of MG Holdings, a company that was staggering from the dual effects of a heavy debt burden and low cash flow. Michael Smith told the Indianapolis Business Journal in April 1990 that he expected the company to separate its two remaining operating divisions: 'Our long-term ambition is to unbundle the two divisions and operate them as separate companies. Our shareholders have deemed that the company's optimal value would be a situation where the two are separated.' Mayflower Contract Services, Inc. would become its more profitable segment, a publicly-held company, with Mayflower Transit, Inc. remaining a privately-held firm owned and operated by a new group of managers, employees, and agents.

By mid-1992, MG Holdings was renamed Mayflower Group, and the company announced that it had received the approval of its bondholders, warrantholders, and shareholders to restructure the company after the formula that Michael Smith outlined two years before. While it struggled with the debt from its leveraged buy out, Mayflower Transit continued to announce innovations in its services.

Mayflower Contract Services--also operating under its parent's debt burden--currently operates 7,532 school buses or transportation units from 136 facilities in 25 states. It employs 9,316 people, including 7,614 drivers, and serves more than 200 institutions. The company appears to be headed toward fulfilling Michael Smith's prediction, and indications are that its separation will yield two solid corporations, one a growth-oriented public company and the other a mature, privately-held firm.

Principal Subsidiaries: Mayflower Transit, Inc., Indianapolis, Indiana; Mayflower Contract Services, Inc., Shawnee Mission, Kansas.

Further Reading:

'Mayflower: Our Footprints Lead into Tomorrow,' a history of the company for its 50th year anniversary, published by Mayflower Transit Company, Indianapolis, Indiana, 1977. Indianapolis Business Journal, September 30, 1986, p. 1. Indianapolis Star, November 4, 1986, p. 1. Indianapolis Star, May 16, 1987, p. 16. Indianapolis Business Journal, May 25, 1987, p. 1. Indianapolis Business Journal, June 8, 1987, p. 1. Indianapolis Star, December 29, 1987, p. 13. Indianapolis Business Journal, March 14, 1988, p. 1. Indianapolis Business Journal, October 31, 1988, p. 1. Indianapolis Business Journal, December 12, 1988, p. 1. Indianapolis Business Journal, March 20, 1989, p. 1. Indianapolis Business Journal, April 23, 1990, p. 3. Journal of Commerce and Commercial, May 16, 1990, p. 1.

Source: International Directory of Company Histories, Vol. 6. St. James Press, 1992.