The parallels between John Hertz of Yellow Cab and Morris Markin of Checker Cab are quite striking.
As we have discussed in other blogs Morris Markin immigrated to the United States at the turn of the century. Markin held various jobs: a tailor, pants factory foreman and ultimately Markin made a small fortune producing uniforms for the U.S. Army. Bankrolled, Markin started to invest in a series of Russian owned business in and around Chicago. One business invested in was: The Lomberg Auto Body Shop, that business would introduce Markin to the automotive world.
Like Morris Markin, John D. Hertz was an immigrant, born in Austria, Hertz also immigrated to Chicago, Illinois. In his teenage years, Hertz worked as a newspaper copyboy, sports writers and truck driver. His hard work paid off and he ultimately became a sports editor. Unfortunately Hertz’s successful career as a sports editor ended, he lost his job, the result of the merger of two Chicago newspapers.
As a young boy Hertz was a pretty good boxer, through his connections in Chicago sports, Hertz ultimately started a new career managing several boxers. Ultimately Hertz would find out that the parents of his fiancee’s did not approve of his career as a boxing manager. Hertz would find new work in automobile sales and start to make money. Successful in the automotive sales business, like Markin, Hertz would invest his money in a floundering Chicago company, the Walter Shaw Livery Co, new auto dealerships.
A dealer of high-end luxury cars the Shaw organization sold the American Berliet. Expensive, it was the American version of the French designed Berliet luxury automobile. Sales proved challenging but Hertz came up with an idea that would change the taxicab industry. In order to move American Berliets off the showroom floor, Hertz would offer higher trade-in values on the automobiles being exchanged in the new car sale transaction. The result was Shaw wound up holding a large inventory of over valued used cars, Hertz placed the cars into taxicab service. Profits that could not be made turning the used car over, would now be made via the revenue generated by taxicab service. The new business was established 1907.
Between 1907 and 1915 Hertz expanded his Chicago taxicab business. In 1907 taxi cab service was considered a luxury. Hertz again changed the rules of the industry by slashing fares. The resulting lower fares generated significant business for Hertz. He continued to innovate by differentiating his taxicabs by painting them yellow, in a sea of black cars, Hertz cab were highly visible.
He also focused on other product differentiation, Hertz demanded a high degree of customer service. Cab drivers were expected to be impeccably dressed, tailors were retained in each garage. Drivers could not be out on the street unless inspected. Driver were scripted and expected to open doors for passengers. A new slogan was developed “A thinking fella uses Yellow”.
Hertz also changed the way traffic in Chicago flowed. It was John Hertz that instituted traffic control lights on Michigan Avenue. Hertz paid for the entire system believing that reducing drive delays would efficiently move traffic and would reduce cost and improve customer service. Hertz promised the City of Chicago that if his signal lights did not work, he would remove them and pay for the cost of decommissioning the control system, those lights today are still move traffic on Michigan Ave.
As his business grew, Hertz started to buy other taxicab companies all over the US, thus creating the Yellow Cab System. Hertz was soon operating in New York City, Philadelphia and Kansas City. As his fleet grew, he believed there were additional ways to economize. Hertz commissioned a study to review automobile parts catalogs in order to investigate ways to reduce the cost of the taxicab fleet.
The analysis determined that it would be cheaper to buy parts and components to produce Yellow’s own taxicab fleet utilizing the “assembled car” process. This process, used by hundreds of small independent American car companies allowing them to economically produce cars via a strategic sourcing of engines, frames and bodies.
In 1915 seven years before Morris Markin created Checker Cab Manufacturing, the Yellow Cab Manufacturing Company was created by John Hertz. Between 1915 and 1926 Hertz would produce his own cabs and venture into the consumer car market, much like Morris Markin did some thirty years later.
Stay tune for part two of the John Hertz and Yellow Cab Manufacturing story,
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