Follow the leader - the plight of pilot car services companies

The economic downturn has put a huge dent in the pilot car and permitting services business.

"Lead, follow, or get out of the way." - Thomas Paine (USA founding father, 1737 - 1809).

Thomas Paine probably wasn't talking about the pilot car or permitting business when he made that prolific statement, but it does apply beautifully to this important sector of the heavy haul business. Pilot car and permitting businesses are truly the leaders of the pack.

While the permitting companies lay the groundwork for assuring regulatory compliance for a haul, pilot car companies generally lead the way for convoys carrying overweight, over-dimensional cargo on the streets, freeways and roadways of North America.

The economic downturn has taken a huge toll on the pilot car and permitting business. Some companies have had to lay off workers, and some have gone out of business.

Those that are holding on and hoping for an economic upturn are optimistic for a turnaround by year's end.

John Incontrera of New York City-based High Wide N Heavy says getting paid is the biggest challenge his company faces right now.

"When times are good the money flows but when times are tough we are the first to get hit," he says.

"Some [customers] do it on purpose but most just can't help it. Recovering debt is the most challenging thing we have to deal with. We have been asking for payment up front from new customers and keeping others on a very short leash."

While business is off, Incontrera says, "We have the best clientele in the industry so we will survive and grow in a time like this. We try to stay away from the cut-throats and the desperate.

"This seems to be working. We also don't climb over others to get work. Most of the time when you do that you get hurt. We try to keep to or self-impose standards which keep us grounded."

High Wide N Heavy processes permits throughout the country but specializes in the Northeastern area of the US. The company also provides pilot car services.

"Our escorts are some of the finest out there, I know because I am one of them," he says.

"Our permit office has built relationships with the people in the state permit offices so we can expedite permit applications with ease."

Incontrera says he continues to see a mix of hauling jobs. "We have seen a great drop-off in the amount of boats moving around," he says.

"Construction equipment and infrastructure for the construction industry is our bread and butter. New York and the surrounding area still has a good deal of work.

"When the economy recovers, I am certain we will see a lot more of the commonplace items like boats and hunting lodges."

Flo Schall, president and owner of Transport Permits, with offices in Des Moines, IA and Denver, CO, says her company is down in 2009, but thus far hasn't had to lay off employees.

Transport Permits adapts and orders permits for large manufacturing and heavy haul companies and for the single driver company.

"We have drivers call us and trucking company dispatchers call us," she says.

So far she has not had to change pricing structures but the fees charged by state and municipalities have gone up considerably, with some fees doubling.

"But they were pretty low to start with so it hasn't been a horrible increase but I'm not the company that pays those fees," she says.

Schall says her biggest test "is continually finding ways to differentiate ourselves from our competition."

She says her company achieves this by providing customers with the most cost-effective way to order and receive permits, using the company's web site to help customers gain efficiency and keep permit costs to a minimum.

Other challenges include keeping up with constantly changing rules, regulations and ordering procedures of each state. She says it's all about remaining flexible for customers.

While business is down, she is optimistic that business will increase this year as the economy starts to rebound. Farm and construction equipment are the company's largest source of business.

Scott Boehm with West Chester Permit says it is a struggle to keep up with continuously changing rules and regulations for multiple jurisdictions so that customers can get their permits back in a timely fashion.

"Fortunately our high permit volume enables us to stay abreast of these changes as they occur and our company methods maximize efficiency and deliver the permits in a timely fashion," he says.

Despite the current state of the economy, Boehm says business has actually been doing surprisingly well.

"Word of mouth about our customer service and permit turnaround time is spreading and our customer base is growing," he says.

"2009 was actually our strongest year to date and we experienced over a 125 percent increase in sales.

"This necessitated the opening of our New York office. We remain optimistic and anticipate 2010 to be another growth year."

Jake & Patt Kimmel own San Antonio-based Trailblazer Pilot Cars. Patt Kimmel says the economy has hurt their pilot car business because some companies are now using their own drivers as pilot cars to keep from laying them off.

The company has lost close to 60 percent of its business over the past year.

"Right now the only things moving are the wind mill towers and blades, which we don't do," she says. "A lot of companies are running their own pilot cars.

"We used to escort the 26-foot wide dump beds and now the manufacturers are cutting them in two so they don't need escort cars. We used to do hundreds of those jobs."

"We're hoping it will get better," she says. "It cannot get much worse. We lost one customer because they are using their drivers as pilot cars because they want to keep their people working."

While she understands this reasoning, she says that there are some safety issues to using untrained, uncertified pilot car drivers.

"But if it's an oversized truck driver, they know what is expected of a pilot car," she says. Both she and her husband are certified pilot car drivers.

While some firms have gone out of business, Kimmel says "I believe that's made the pilot cars that are left more valuable because they are more experienced."

She also pointed out that firms that use their own employees to drive pilot cars need to make sure they have the right type of insurance.

"You have got to have the right kind of insurance or you shouldn't be escorting," she says.

Katherine Phipps co-owns Cheyenne's Pilot Cars with her daughter, Jennifer Jeffries. Cheyenne's does route surveys and provides escort vehicles for over dimensional loads.

Most of Cheyenne's business is in the Baltimore/Washington D.C. area but the company will work out of the region if need be.

Business is down for Cheyenne, Phipps says. "We were working five days a week steady. Now we are down to two maybe three days," she says.

She too has lost business to companies using their own employees to do pilot car work rather than pay another company. "The ones that use us have used us since 1986," she says. "But our customers are not getting the work either. It's a domino effect."

In the D.C. area, she says there is always something to move for the federal government and that general construction has done reasonably well. "Things not government related are not moving," she says.

"We are trying to hang in there. Things have been slow but the majority of our cars are run by retirees and they do have another income or their spouses work. Some have taken other part-time jobs to pay their bills."

Fee adjustment has also become a problem, with the need to get to the bare minimum and still make a profit.

"Everything is negotiable," she says. Some companies are undercutting just to get the work. A lot of people are desperate."

Maureen Mandich, president of New York Truck Escorts and Permits Inc., says business has not been off, but "what has been off are the payments for work that has been done," she says.

"Independents and large companies are paying their invoices later. If you factor in bankruptcies, it is very easy to see why the anxiety level is so high."

New York Truck Escorts and Permits specializes in the New York City metropolitan area and the East Coast region, but they provide services from coast to coast.

"General building construction and the rebuilding of our transportation infrastructure have kept the haulers busy," she says.