Car dealers are a resourceful bunch. None more so than Joe Agresti.
The 48-year-old CEO of the multistore Dream Motor Group in suburban Houston has turned a health crisis into a business opportunity.
With the U.S. economy in a pandemic-induced coma by mid-April, Agresti had a problem. Revenue at the six-store group had plummeted 40 percent. And about 480 employees were depending on him for their next paycheck. Instead of jettisoning jobs, Agresti went scouting for new business to keep the main one afloat.
"We made a decision that we were going to do what we had to do to make sure that we didn't fire people," Agresti told Automotive News in June.
The entrepreneur pivoted to an improbable side line — selling personal protective equipment to the public and private sector. The venture, which is profitable, has helped Agresti keep all of Dream Motor's employees on the payroll, while also keeping them protected from the coronavirus.
Since launching the equipment business in April, Agresti has sold more than 80 million N95 and Level 2 surgical masks to corporations, state and local governments, and hospitals. And he has donated about 200,000 masks to first responders and others.
"Dream Motor has sold or ordered more masks than some U.S. states," Agresti said.
The venture is really not about profit — just survival.
"The only reason we did it was because we wanted to make sure that we could pay our people even more during the COVID-19 shutdown," the dealer said. "With so many people losing their jobs, our employees needed to take care of themselves and their significant others."
About 65 percent of Dream employees received more pay during the COVID-19 shutdown than they did at the same time the prior year, Agresti said.
Agresti, who has been in auto retailing for about 25 years, was the second employee at Asbury Automotive Group.
But at age 27, Agresti left his corporate job managing operations for the then-private dealership group to build his own retail empire. He acquired a Mercedes-Benz franchise in Baton Rouge, La., in 2005. Since then, Agresti has acquired four more Mercedes stores and an Infiniti dealership, mostly in the Southeast.
Agresti, a former Arthur Anderson accountant who describes himself as "the math guy," got an early heads-up on the economic fallout of COVID-19 via a quantitative hedge fund in which he is a founding partner.
"No matter what the fund's algorithms said, the markets were behaving irrationally," he said. "We quickly realized that COVID was the straw that was stirring the drink."
The idea for a personal protective equipment supply business came from weekly calls Agresti hosted with the fund's investors, which include large corporations, health care organizations and professional sports teams. Investors complained about difficulties reopening their businesses amid the pandemic. A major issue: procuring masks, gloves and the like to keep employees from contracting the virus. "Every call ended with, 'We need this,' " Agresti said, noting that by April, wait times for supplies had stretched to June.
Once Agresti realized he had a viable business, he got to work on the execution. The dealer turned to his corporate connections to put together a network of nearly 10 manufacturers in China, eventually settling on Shenzhen-based automaker BYD — which added mask production — as his sole supplier. Agresti hired two engineers and a doctor to test the supplies to ensure they were effective and met U.S. health standards.
Sourcing the masks would be one thing. Getting them to the U.S. reliably and cost-effectively was another. Again, Agresti tapped his entrepreneurial vein to find a creative solution.
Agresti teamed up with others in the gear business to strike a deal with a lobster supplier, who had seen his air freight costs double in the wake of the pandemic. His group agreed to cover the cost of shipping the lobsters from Maine to China. In return, the distributor handled importing of the personal protective equipment from China to the U.S. "We were able to provide this man with a business-saving opportunity," Agresti said. "Meanwhile, we used an importer and freight forwarder for the PPE materials."
In the early days of the venture, Agresti got some critical help. University of Alabama football coach Nick Saban, who co-owns four Dream Motor stores, kicked open doors for the fledgling business by doing an online testimonial video about Agresti.
Meanwhile, Anthony Guzzi, CEO of EMCOR Group, a large electrical and mechanical construction and facilities company, lent a hand with distribution and logistics. Guzzi and Agresti sit on the Johnny Mac Soldiers Fund board.
"We had stuff flying in from China and being dropped into his warehouse," Agresti said. "They were arranging it and shipping it out for us as we sold the equipment."
Agresti has invested about $40 million in the venture, including leasing two 35,000-square-foot warehouses in Houston. He expects to continue the business until there is no longer a need for masks.
"It's a noble effort that turned into a bit of a monster, work-wise," Agresti said. "I've been working 16 hours a day, seven day a week, from home, spending a good three-quarters of that on the PPE business."
The investment in dollars and hours has been worth it — for one reason: "When we were challenged with a problem for which there was no playbook, we went back to our core principles and culture and took care of our people," he said. "Once that happened, we knew they would take care of everything else."
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July 05, 2020 at 11:00AM
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