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Seizing an Opportunity - Ed Davis, Waterhouse Motors
By Doug Kaufman
Ed Davis’ first love was motorcycles. Beginning with motocross and taking up cross country racing later on, the Tacoma, WA, native found he had a natural ability and excelled at the two-wheeled sport. During high school and vocational industrial machinist training, Davis hoped to try the professional circuit before age got ahead of him.
But, lying on his back for three months following a severe off-road racing accident, 20-year-old Davis found himself rethinking that future. Realizing his broken back eliminated him from future racing success, he considered making a career out of his other interest: becoming a machinist.
Luckily, his father, Larry Davis, owned Waterhouse Motors, a respected engine rebuilding facility founded in Tacoma in 1929. The younger Davis had worked part-time at the shop since age 15, but the accident forced him to reconsider his options. And now, twenty-two years later, he finds himself preparing to take the helm of the Engine Rebuilders Association (AERA).
By being poised to take advantage of the situation, Davis has taken over the day-to-day operation of Waterhouse Motors.
At a time when rebuilders should be taking advantage of every opportunity to help their businesses remain successful, Davis is concerned that some AERA members may not be utilizing the full benefits of their memberships. If he does anything during his tenure as incoming AERA chairman, Davis says he would like to somehow get members motivated to take advantage of what’s available to them through their memberships.
Struggling economy aside, Davis encourages engine rebuilders not to cancel association memberships in an attempt to save money. "Our business is pretty much a self-taught business. When you get that job that is different and new to you or your shop it probably requires some research for information or specs. This is where we use the data we get from the PROSIS program or we can call the tech line," Davis says. "You may say you didn’t get anything out of the association and can justify dropping your membership, but really, it’s up to you to take advantage of the many valuable business resources waiting for you to use."
Exposing more rebuilders to the AERA business programs available and getting the membership to take advantage of those resources are among Davis’ keenest desires as incoming association chairman.
"What I’ve realized, being involved in the association for a number of years now, is that it’s hard to realize just how much the association really does," says Davis, who believes this is understandable to a certain extent. "Unless you’re involved in the committees and going to the meetings, you may not realize what a great organization AERA is. When you’re just paying your dues, you might not notice the opportunities and value awaiting you."
Opening the Door of Opportunity
According to the incoming chairman, Waterhouse Motors has built a reputation as the place in the Puget Sound area to get your motor and machine work done. Larry Davis, just the third owner in Waterhouse’s 73-year history, cultivated that reputation with local, regional and national business/personal relationships that are still very much in existence.
"My dad is very much a ‘people person’," Davis explains. "He was the one who took this business to the next level, getting Waterhouse active with the associations and building friendships all over the country. My dad has taught me to be honest, have integrity and for God’s sake, use your common sense as you go through life. My dad and mother (Edna) have touched a lot of great people over the years, some great times were had by all they know who they are."
Davis says his father gave him the opportunity to succeed in this business, but he didn’t guarantee success. "Being the boss’ son requires you to carry yourself in a certain way. You’re under the microscope with everything you say or do people who are in this position know what I mean."
Ed Davis has a philosophy that you get out of something what you put into it. "Which in my mind means hard work and dedication," he explains. "I had never really liked working on cars, but I loved the machining aspect of the business. My motorcycle accident was a life-changing incident, indeed, so I guess I just shifted gears and direction at that point and took advantage of my situation at the shop to stay and learn the engine rebuilding business."
The younger Davis started in the shop’s teardown area at age 15 "where you bust your knuckles, cut your hands, cuts get infected right away, then start all over again the next day." Glamorous? No, but he gained real-world experience that would help him greatly in the years to come.
According to Davis, a struggling economy has affected his shop to an extent. "Where in the past we might have replaced people who left or retired, we now have other employees stepping in and doing the work. We adapt to the times."
And the times, Davis says, are still tough, regardless of what positive economic news you hear. "The fact is, overall, it’s still tough to do business as a remanufacturer. Even the big guys are taking a hit. I wish I could say I’ve heard a lot of positive things lately, but it’s been a while since people have been upbeat."
Depending on your perspective, Davis says Waterhouse is either a large custom shop or a small PER. "We build 6 to 10 motors a day primarily automotive but also marine, truck and industrial engines. If it’s a gasoline motor, we probably won’t turn it away, because we’re capable of rebuilding it correctly."
That capability, says Davis, is due to his crew. "We’ve got a great group of guys very experienced. We have a very good reputation in the area because we’ve been here for so long and give great honest, consistent service. Our two crank grinders, for example, have 46 years combined experience. We grind a lot of crankshafts for other shops, something that not many shops are doing in our area."
Davis says he’s pleased that the guys all get along very well. "No prima donnas here, just a great, solid crew," he says "They make my job much easier. ‘Just call Waterhouse,’ is what people say in our area about our engines."
One of his goals for the company, Davis explains, is to do more specialized OHC cylinder heads. "Obviously, that’s what everything is going to these days. The challenge is to adapt to the different product requirements. Guys get set in their ways doing the old-style heads and have to learn a new routine."
Because the original equipment manufacturers aren’t lined up outside his shop doors begging to offer him technical information on their late model engines, Davis has had to turn to other methods of getting information about rebuilding them. For that, he believes, AERA offers a wealth of support.
"The Tech guys at AERA have so much data at their fingertips that can help rebuilders," Davis says. "You call boom they’ve got the answer. If they don’t, they call you right back. I don’t think all of the AERA membership takes advantage of that resource the way they should. My guys feel comfortable calling them whenever they need to."
Being able to call Dave Hagen, Mike Caruso or Steve Fox at AERA’s tech support line whenever he needs to is a huge comfort to Davis. "Knowing that someone there can possibly help you can maybe get you out of a pinch is a pretty good feeling to have. And a few of those pinches can be worth your entire membership!"
Waterhouse Motors has been located in its present 17,000-sq. ft. shop in downtown Tacoma, WA, since 1963. Although he could easily have more capacity with a larger shop, Davis has made a concerted effort not to grow the business any bigger. "Sooner or later, I think the business runs you. If we got any bigger, we’d have to make the big commitment to personnel, equipment … You have to ask yourself if you’re happy with the capacity you’re at. Do you have your niche and serve it well? Bigger does not always equal happiness or success. We’ve chosen to stay this size."
But like a modern day David taking on Goliath, Davis finds competition coming in from around the state. Waterhouse sells in the Puget Sound corridor (along Interstate 5 between the Canadian boarder in the north to Portland, OR, in the south), choosing not to cross the mountains to the east. "There are a lot of rebuilders in Spokane doing battle we don’t want to get into that fight with them," says Davis. "But many of them come over the Cascades to sell against us."
Davis feels Waterhouse has the advantage when it comes to countering the "foreign" competition. "We preach that we’re local. If you need service or have a problem we’ll get to it right away. It’s definitely an advantage over our competitors. Our customers recognize that and appreciate us getting things turned around for them because their customers appreciate getting back on the road."
Knowing and focusing on serving his local market first has helped Davis and his shop remain strong. Because 85 percent of his business is to the wholesale market, Waterhouse does almost no advertising. "We could probably pick up some additional retail business if we advertised, but to be honest, I don’t want just any Joe Blow installing our engines," Davis explains.
"We try to work with top notch installers, but we even have problems with some of them. We constantly look at the warranty returns we get from certain installers and think, ‘do we really want to sell engines to them any more?’ It could be simple stuff, but sometimes we just look at an engine going out the door to certain customers and think ‘there’s a warranty waiting to happen.’" Davis says.
"I’ll let other guys sell to retail. I’d rather go after the experienced, professional installers."
Davis explains that he finds he can’t just build engines anymore like many other shop owners, his business has gotten to the point where he has to watch out for everything else, too.
"I wear a lot of hats because we choose to be smaller. I never know what’s in store for me when I come to work every day. It’s so far from a regular 9-5 job. You sometimes have to have thick skin, but it’s pretty exciting," Davis says.
"It’s just like being chairman of AERA. Although I’m not responsible for the success of the association, my responsibility is to contribute as much as I possibly can during my time on the board. You get out of it what you put into it. It’s up to you."