The Mazda Parts Story

                                            The Mazda Parts Story

                                                              1985

                        A true story and psychological lesson in business for my son

                                   Written 9/2012 and Re-written 03/31/2016

                                                       Howard Yasgar

  

     In 1970 my companies specialty was dealing in automotive electrical parts

     At the time most of our business was for U.S. made automobile and truck parts

     But during the late 1970’s the automotive market was already changing, more cars

Were being imported from Japan.

     So to fill the needs of our customers  we started importing and selling starters and alternators for Japanese vehicles

     Most all the parts we  imported were coming to us from Japan or copies of Japanese parts that were being made in Taiwan.

     The market for Japanese car parts was growing at a rapid pace.

     Our South American customers were telling us, that although the Japanese cars were cheap to buy, and very popular, when they broke down there was always a shortage of spare parts to fix them..

     They said that was the reason they were now  coming to Miami was to hunt for Japanese repair parts.

     They were telling us that in their countries Japanese cars were parked everywhere waiting for spare parts to fix them.

     At just about the same time this was happening, we had just started buying truckloads of  surplus automotive items from dealers in Mid-West, primarily the Chicago and Detroit area.

     For some reason these two cities had become a good place for us to find quantities of new surplus automotive parts.

     However, finding honorable suppliers was always a difficult thing, because many of the dealers in surplus parts were not known for their honesty.

     However we eventually settled on Barney Kaplan Surplus in Detroit , and George Lustig and Billy Keene of Fleet Supply, and Abe Greenstein of Automotive Supply, in Chicago.

     Even though we had found these people to be relatively honest suppliers, we still we always had our nose to the ground, while looking for new dealers of surplus parts.

     We always knew that there were several other surplus dealers in  the Chicago and Detroit area, but most of them had such bad reputations in the industry that we simply avoided them.

     At the time of this story, the economies of the Central and South American countries was booming, and the importers wanting to buy spare parts were coming to Miami in droves, but they were all asking that we find more Japanese automotive items for them to buy.

     Some mornings, we would show up for work to find five or six importers all waiting in line for us at our front door, however now most of them were now only looking for Japanese spare parts.

     In the city of Chicago, we had always heard about a surplus parts dealer named  Fizzy

Nelson.

     However Fizzy’s  reputation had preceded him, and we were advised to be careful if we did business with him.

     However, after a while we had heard his name so often  and several people we knew said we were missing a opportunity by not dealing with him, so they gave us his phone number.

     I called Fizzy, and made an appointment for us to visit his warehouse in Chicago.

     When we got there, we were pleasantly surprised to find Fizzy Nelson, was a real character. He didn’t have one good word to say about any of the other dealers we were presently doing business with.

     Fizzy said, he was the only honest surplus dealer in Chicago.

     He had a very big warehouse, and it was absolutely loaded with surplus parts.

     What caught our eye was shelf  upon shelf of new Japanese Mazda Japanese car parts. There was at least two 40 foot container loads.

     I was excited, I had already heard from all our South American customers how popular Mazda automobiles were in their countries.

     Fizzy told us that when the Mazda USA company consolidated their parts distribution system, they moved everything to one big central warehouse.

     Mazda sold all their excess inventory to Fizzy.

     We told Fizzy that we were interested in the Mazda parts as we sold to customers in Central and South America.

     Fizzy said that he had already sold some of the Mazda parts to South Americans, and the customers were very happy. We later learned  that it was a lie, he had never sold any Mazda parts to South America

     Fizzy said that if we bought the entire Mazda parts deal from him, he would sell it to us for .16 cents a pound, FOB Chicago.

     It sure sounded like a good deal, so we carefully looked the Mazda parts over.

     I thought I recognized some of electrical items, but unfortunately all the information on the boxes besides the part number was in Japanese.

     Mixed in with all the Mazda parts were fenders and hoods, which for us was all cumbersome metal parts that we didn’t need or want.

     Also we knew that those kinds of parts took up way too much room to store, so we decided to talk to Fizzy about it.

     We told him that we didn’t want any of the Mazda sheet metal parts as it was not our type of business.

     Eventually, Fizzy relented and he said he would remove all the sheet metal parts, and we agreed to buy two 40  foot container loads of the new surplus Mazda parts for .18 cents a pound.

     After that we all shook hands on it, my partner asked Fizzy if he could use his rest room.

     Fizzy said yes, the bathroom was located in the rear of  his warehouse.

     When my partner came back from the restroom he told me that Fizzy had a big cardboard sign in there, called “Fizzy Nelson’s Shit List” and on the list were the names

of all our other suppliers in Chicago  and Detroit.

     From the quantity of names on the list It was apparent that Fizzy had a lot of enemies that he didn’t like, and some were our friends, it was certainly not a good omen.

     When the parts showed up in Miami, it was overwhelming, Because there were so many Mazda parts, it was all we could do to unload them into our warehouse.

     We had agreed to pay Fizzy .18 cents a pound  to leave out the sheet metal parts that we didn’t want.

     Well, Fizzy never removed them all and many of the sheet metal parts were still mixed in.

     I then received a bill from Fizzy for $18,000.00 and the freight was $3,200.00.

     Our total cost so far was $21,000.00 and that was not counting all our other expenses.

     Yes, we complained to Fizzy, but it was to no avail, Fizzy said he had removed all the fenders and hoods.

     Anyway the rest of the Mazda parts looked so good, we felt they would all be easy to sell, so we stopped complaining, and paid the bill.

     We spent  over a month sorting out the parts I took out all the sheet metal fenders  and we put them all outside up on the roof of the warehouse.

     After we unloaded the two trailers of parts, I spent most of the next month trying to organize them and doing an inventory.

     Making an inventory was difficult because besides from the part number, all the writing on the boxes was in Japanese.

     We called several  Mazda agencies, and we estimated that at Mazda’s selling price what we had  was worth over $250,000.00.

     However by calling the Mazda agencies we learned that all the parts we had was for Mazda’s used in the Mid- East. They were not for the U.S. or South American market.

Fizzy had lied o us.

     We eventually spent several two months doing the sorting, I estimated that we now had over $26,000.00 invested in the Mazda parts deal.

     We started letting our South American  export customers look at the Mazda parts, but they didn’t recognize anything. It was now obvious the parts were for the Mid-East market, and we didn’t have even one customers from Mid-East,

     We now realized that was why Fizzy sold us the parts so cheap. He knew that they were only for the Mid-East market, and he had lied to us by saying that he already sold some of the Mazda parts to South America.

     After about two years out in the rain, the fenders that I had put on the roof started rusting, and we had them taken down and throw them all into the trash.

     By 1985, I started noticing that our customers From Venezuela and Colombia were not coming in as frequently as before, and it became obvious  that there were serious economic problems going on in those countries.

     Also as business slowed down, we were concerned that we were really going to lose our shirt on the Mazda parts, as we had no Mid-Eastern customers.

     It was heartbreaking for us as we knew the parts were worth $250,000.00 in the Mid-East.

     Then one day, I received a call from my fiancée Katherine, she was managing a large British freight forwarding company in Miami called MSAS.

     Her company specialized in shipping merchandise to Europe and the Mid-East.

     Katherine said she had customer who just flew in from Egypt that was looking for a deals on automotive parts.

    I told her to send him right over to see us.

    The next day a dignified looking Egyptian fellow came over, he said his name was “Mr. Solly.”

     My son Jack was working with me at the time, so I asked him, to take Mr. Solly over to look at all the Mazda parts.

     When they came back Mr. Solly said, “We have a lot of Mazda cars in Egypt, and he said that he was interested in buying all the Mazda parts, He asked “How much did we want”?

     At first, I thought I could talk to Mr. Solly easily, just like any of the hundreds of export customer I have dealt with over the years, but I was wrong.

     I told Mr. Solly, that I wanted $40,000.00 for all the Mazda parts.

     But Mr. Solly said, “No way”, the most he would pay was $10,000.00.

     I could see from his attitude that the only way Mr. Solly would buy the Mazda parts was like it was a bankruptcy sale, he wanted us to lose money.

     He wanted us to sell him the Mazda parts for less than we had paid for them.

     I concluded that Mr. Solly would only be happy if he made sure we were losing money.

     So now it became  obvious to me that  selling the Mazda parts to him wasn’t going to be easy.

     The next day Mr. Solly came back and said that he wanted to check out some of the part numbers with his associates in Egypt,

     So I watched as he called them.  They discussed the part numbers for half an hour.

     That night I couldn’t sleep, I was troubled by the fact that Mr. Solly was the type of guy that wouldn’t be happy unless he was taking advantage of us, and I didn’t like that, so I knew that I had to be smarter than him if I intended to sell him the Mazda parts.

     The next day, when Mr. Solly returned, I knew it was a good sign, it meant his associates in Egypt obviously wanted the parts.

     That was when he said he now could only pay us only $8,000.00 for all the Mazda parts.

     My son Jack was sitting in on the meeting and listening.

     I hoped that this negotiating with Mr. Solly was going to be a good learning experience for him, because I had a good idea.

     I said, look Mr. Solly, you appear to be a trustworthy and honest fellow, so I think the best thing we can do is for us to be partners on the Mazda parts

     My company has more than $26,000.00 invested in the Mazda parts, and I have the receipts that we can show you.

     We know that the parts are worth over $240,000.00 or more  in Egypt.

     If you will pay us our cost of $26,000.00, we will load the containers and ship the parts to Egypt, freight collect.

     Then when you sell the parts we will be 50/50 partners on all the profits.

     You can deduct the cost of the freight, and my son Jack will fly to Egypt to collect our share of the profits from you.

     I could see that Mr. Solly was scheming in his head. He couldn’t believe I was so stupid to trust him to be our partner.

     Mr. Solly knew he could sell the parts in Egypt for probably $300.000.00 dollars and he would never have to  give us any of the profits, so he agreed immediately. We shook hands, as now we were partners.

     The next day, Mr. Solly paid us, and we loaded three 20 foot containers full of the Mazda parts. I was 100 percent sure we would never hear from him again, but I was wrong.

     About six months passed, and I received a call from Mr. Solly who said he was in Egypt.

     He regretted to inform me that the Mazda parts had arrived in Egypt in very bad condition, and consequently he had lost his money and regrettably there was no profit for us.

     So, you see, after all the bad thoughts I had about Mr. Solly, the Egyptian who wanted to screw us, he was really such a nice guy by calling us to tell me he had no profit for us.

     For me it was all an exercise in getting rid of the Mazda parts, and recovering most all of our money. I’m sure Mr. Solly made a handsome profit selling the Mazda parts in Egypt.

     I hoped that by letting Mr. Solly think he got the upper hand, it was a good business lesson for my son to see.

     One day, I told my son Jack he was lucky, he didn’t have to fly to Egypt to collect our profits.

     He smiled, and I hoped that he had understood, and benefitted from the business lesson that had happened.

     My partner and I had also learned a business lesson, we never went back to Fizzy Nelsons place, and I am sure if you go there you will find our name on his shit list.