Rihm Kenworth

Rihm Kenworth

Headquarters: St. Paul

Inception: 1932

Family name: Rihm

What it does: Sells commercial trucks and truck parts.

Type of ownership: Private, 100 percent family owned

Principal owner: Kari Rihm

Number of employees: 140

Number of family members in the business: 3

Number of family members on the board: 1

Until a few years ago, it looked as though John Rihm would be the last of his family to own Rihm Kenworth, the St. Paul–based truck dealership his grandfather had founded in 1932. He and his wife, Kari, had planned to eventually sell the company and retire, as their children pursued other career paths.

Then, in 2010, John was diagnosed with a malignant brain tumor—an illness that would claim his life a few months later—and Kari found herself the sole owner of the company, with a decision to make: Sell it or keep it.

John “J.B.” Rihm founds Rihm Motor Company in St. Paul.

Rihm officially becomes a Kenworth Truck Company dealership—the fourth in the nation and the first east of the Mississippi.

Walter Rihm succeeds his father as president of the company, dropping other lines to focus exclusively on Kenworth trucks.

Walter’s son John takes the helm, emphasizing sales of medium-duty trucks, parts, and repairs.

Rihm Kenworth adds its second location, in Superior, Wisconsin.

The company adds an Albert Lea location.

John Rihm dies of brain cancer; his wife, Kari, takes ownership of the company and adds a Sauk Centre location.

John and Kari’s son J.B. joins Rihm Kenworth. Sauk Centre location opens.

J.B. Rihm graduates from a training program to prepare him to eventually lead the company.

“When you have something major happen in your life, when it’s totally unexpected, it really causes reflection. Work gives you purpose, and that was a big motivator for me,” Kari Rihm says. “A good family friend approached me a couple of weeks after John’s death and asked, ‘Kari, what’s to become of the firm now?’ That was the first chance I had to think about it, and I said, ‘I guess I own a company; I better get to work.’ ”

Though she’d never been involved in the company’s day-to-day operations, she had been on its board for 12 years and knew the management team well. She also had worked in trade show-related communications for 15 years before starting a family. “I came into the office and thought, ‘You know, I can do this; I want to do this.’ There’s a great deal of family pride in the business, and I felt it was the right thing to do to continue to support the families that have worked here over the years.”

At John’s visitation, Rihm Kenworth employees approached Kari to recount the family’s generosity—everything from helping workers buy school supplies for their kids to lending emotional support during their own tragedies. Many employees “were really hoping that things would stay the same,” she recalls. “I felt we had a strong team of experienced people who wanted me to learn and to lead.”

Rihm Kenworth’s chief financial officer also encouraged John’s son, J.B., to come on board. J. B. was climbing the corporate ladder at a major jewelry retailer but shifted gears after that conversation, figuring he was familiar with repair services and inventory control. “I just felt it was the right thing to do,” he says. “Dad always told me we don’t have 100 employees—we have 100 families we take care of. Deep down, I felt that it was important that my great-grandfather, whom I was named after, [had] started [the company], and I realized how great it would be to be the fourth-generation leader.”

First, however, Kari had to take the wheel. Though she’d been a Rihm Kenworth board member since 1997, she needed approval from the Kenworth company to retain the dealership’s affiliation with the truck maker, as well as certify her status as Rihm Kenworth’s “dealer principal.” She immersed herself in the company and developed a business plan, traveling to Kenworth’s Washington state headquarters in early 2011 to make a three-hour presentation to company leaders, who liked what they heard.

“It was pretty intense—a short period of time to absorb a lot of info,” she recalls. “It’s been a steep learning curve, but I’ve learned a lot. It’s not mysterious: You have to treat people right, be willing and open to learn, and treat your customers with respect.”

Growth is central to her plan. Rihm Kenworth, which sells what it describes as the “Cadillac level” of trucks to commercial fleets that range from about 35 to 100 vehicles (owner-operators also are customers), had boomed in the ’80s and ’90s under John Rihm’s father, Walter. After John took over in 1993, the company continued to grow as it increased its focus on medium-duty trucks and parts sales, repairs, and other higher-margin services. John expanded the business to Superior, Wisconsin, in 1997 and Albert Lea in 2008; Kari added Sauk Centre in 2011 and has plans for another outpost in the next couple of years.

“Whereas I don’t have years of industry experience, I saw the company needed someone with a vision and leadership skills to get people to jump on the bandwagon and help work toward that goal of growth,” says Kari Rihm, one of only two women in the country who own Kenworth dealerships.

In just two years, she has boosted Rihm Kenworth’s headcount by a third, to around 140 employees. Medium-duty truck sales have grown five-fold and total revenue has skyrocketed about 90 percent over 2010; the company operates around the clock from Monday through Saturday morning to meet demand.

Going forward, Rihm Kenworth plans to improve facilities and open additional service locations as Kenworth rolls out its new MX engine. Previously, its trucks had engines made by other companies and could be serviced elsewhere. The MX can only be serviced by a Kenworth dealership; such dealerships are now expected to have at least 50 percent of their sales consist of trucks with the MX engine.

Despite the heavy-duty trucks’ price tags—about $100,000 to $2 million—the company has very low margins, says Kari Rihm, and while truck sales constitute about 80 percent of the company’s revenue, they account for less than 35 percent of profits. Instead, she says, “the backbone of our business is parts and services.” Customers tap the dealership for maintenance work, repairs covered by warranties, a wide array of parts, even paint jobs. Looking abroad has also bolstered Rihm Kenworth’s bottom line: The company bills itself as the top U.S. dealer selling heavy-duty truck parts internationally.

“They’re just good people to do business with,” says Chuck LeFebvre, vice president at Elk River-based freight transporter LeFebvre Companies. LeFebvre, also a third-generation family business, has been buying trucks from the Rihms since the early 1950s. Rihm Kenworth now supplies nearly 90 percent of LeFebvre’s equipment. “You have to appreciate the values of the generation ahead of you and make the changes necessary to move the business forward, and the Rihms have done a great job at that,” LeFebvre says.

Kari plans to run the business for 10 years, after which J.B. is expected to take the reins. His current titles are international sales manager and business analyst, but he moves among departments to learn about all operations, much as his father, who started at the company by sweeping floors, did before him. “I feel it’s important to work in every aspect of the business to get the respect long term,” he says.

At 32, J.B. is already making his mark, leading promising negotiations for potentially sizable sales internationally. He also has introduced detailed goals for salespeople, electronic expense reporting, and even a Facebook page. Last year, he enrolled in a year-long American Truck Dealers Association program of eight 40-hour training sessions, covering everything from finance to truck parts. He likens it to an industry-specific master’s program.

Nonfamily board members and employees also have played important parts in keeping Rihm Kenworth on track after John Rihm’s death. Kari Rihm, who is currently the only family member on the company’s board, notes that nonfamily input is essential, citing one director who “tells it like it is and doesn’t worry about stepping on toes.”

In fact, an inclusive attitude toward nonfamily employees has been key to the Rihms’ success, says Pat Duffy, the company’s director of truck sales. Duffy has worked for three generations of leadership during his 30-year tenure. “I’ve never felt like it was us against the family—we are part of the team,” he says. “In meetings with John and Walter, we all just talked it out, and [the Rihms] value other people’s opinions.”

Many Rihm Kenworth employees work alongside their own siblings, parents, or children; in some cases, there are four family members in the ranks. The Rihms say their strong family values helped them build a loyal workforce with a low attrition rate. “You can lose your reputation in one false move,” Kari Rihm notes, “but it takes years to build a good one.” With J.B. and, more recently, his sister Libby (now a warranty assistant with the company) joining the company, the Rihm family looks prepared to maintain that reputation for a new generation.