In business for the long haul

Nation's Business, April, 1997 by Albert G. Holzinger

The U.S. Chamber of Commerce's new chairman is a trucking entrepreneur who will keep the wheels turning for pro-business initiatives.

The story of Michael S. Starnes, chairman, president, and chief executive officer of M.S. Carriers, Inc., of Memphis, Tenn., is a tale of entrepreneurial achievement of grand proportion.

His trucking business, started with his wife from their home less than 20 years ago, will gross an estimated $400 million in sales this year while employing about 3,300. Moreover, Starnes, 52, recently was named 1997 chairman of the world's largest business federation, the U.S. Chamber of Commerce.

Almost from the beginning, it was apparent that Starnes was determined to make something of himself. Growing up as the oldest of four children on a farm in Oxford, Miss., he began working at a young age--including a stint selling soft drinks during football games at the nearby University of Mississippi.

He graduated from that school in 1968 with a bachelor's degree in business administration. His tuition was paid largely with money earned driving a delivery truck in Oxford for Rebel Motor Freight, a small business owned in part by his father.

Fresh out of school, Starnes accepted what he calls "some menial job" at General Electric Co. in Memphis, about 60 miles away. After about eight months, GE identified his potential and offered him management training. But he declined because it would have required frequent relocations, an unpalatable prospect for him as he was about to marry his college sweetheart, Nancye.

Instead, Starnes accepted a sales-representative job in the Memphis office of Western Gillette, a Los Angeles-based trucking operation acquired in 1975 by Roadway Services Inc. Western Gillette had 92 territories at the time, and Memphis was at the bottom on the productivity list.

"I took the territory to No. 1 in a year, and the guys in L.A. asked, `Who is that masked man?'" Starnes says with a laugh. Turning more serious, Starnes says in his self-effacing manner: "I was just lucky. The territory had a lot of good potential customers, but it hadn't been worked very hard."

Western Gillette soon named him manager of the company's terminal in Fresno, Calif. Then he was reassigned to a troubled terminal in El Paso, Texas, and the company's plans for him became apparent. "They intended to keep sending me wherever they had problems," he says.

The prospect of frequent relocations remained unappealing to Starnes, so he returned to Rebel Motor Freight as day-today operations manager. Within five years, he doubled the company's sales, to about $ million. Yet all was not well internally. His father's two partners had become disgruntled about their diminished influence on the firm's direction since the younger Starnes had joined the operation. "It wasn't a very pleasant situation," Starnes recalls. "It made me uneasy, and I knew it was time to leave."

In 1978, with his father's blessing and at the stir-young age of 33, Starnes and his wife founded M.S. Carriers. Their operating capital amounted to $10,000 in savings and a $20,000 bank line of credit. For six months, a spare bedroom m the Starnes home in Memphis was large enough to house the fledgling company, which operated a solitary truck.

But even though Starnes initially was short on capital, hauling capacity, and working space, he was long on confidence. "I had a customer base in Memphis and a good track record and a high integrity level," he says. "Also, there had been talk m Congress about deregulating trucking I sensed that it would actuary happen and felt that when it did, I'd be m a good position to grow and expand in a free market"

In 1980, the landmark Motor Carrier Act, which deregulated the transport of goods across state lines, was enacted. (Intrastate trucking was not deregulated until 1995.) Although the M.S. Carriers fleet had grown to about 50 trucks by the Jan. 1, 1981, effective date of interstate deregulation, its growth had been hard-won. "I spent about half my time the first two years in my attorney's office, which was just ridiculous," Starnes remembers. "Deregulation was a great relief. And it was fun."

The new competition among trucking companies began changing the conventional wisdom among manufacturers that the most reliable, cost-effective way to get goods to and from suppliers, subsidiaries and customers was via private fleets.

"Manufacturers began realizing that getting goods delivered didn't have to mean tying up capital in trucks and being in the trucking business." Starnes says. "We be came heroes to the shipping public. We could move their products anywhere in less time than it had taken before and much cheaper. And we made a lot of money in the process."

Indeed, from 1981 to 1986, M.S. Carriers grew by an annual average of 47 percent in both revenues and net income, to $34.8 million and $3.6 million, respectively.

In 1986, when M.S. Carriers had about 250 trucks and was still growing rapidly, Starnes made what he still calls his most "major, major decision." He took the firm public. The public offering "was good for me personally and for the company," Starnes says. "I had all my money tied up in M.S. Carriers, so it gave me some liquidity And it gave the company the capital it needed to continue expanding."