New Orleans transmission shop successfully expands into total auto care

In 1988, Frank Cato, a 54-year-old repair technician, got the entrepreneurial itch and opened a Cottman Transmission Shop in New Orleans, LA. Today, under the ownership and management of his two sons, Rusty and Randy, the business has grown to include three franchises – two in New Orleans proper and one in nearby Gretna, LA – offering transmission and total auto care. The brothers have found operating multiple locations allows them to maximize their tools and tailor both their assets and manpower to the three shops’ varying work loads.

The brothers, both in their forties, have found that expanding beyond transmission work to include general auto repair allows them to better utilize both their tool and manpower capabilities. The company’s sales have grown by two to three percent in each of the last five years in a region that continues to suffer the dual impact of a devastating hurricane and an oil spill.

The Catos also credit the technical and marketing strength of a national franchise organization. The Cottman organization began in 1962 and has grown to include several hundred franchises nationwide.

The Cato brothers feel fortunate to have “come of age” in auto repair at a time when vehicle manufacturers were introducing electronic controls. Under the guidance of their now-retired father, the Catos, as ASE certified techs, familiarized themselves with changing automotive technology while they were in their 20s.

Luck also played a role in the company’s growth in another way. By 2005, with six employees (not counting themselves), six bays and three lifts, the Catos came across an opportunity to buy a second shop at a location that didn’t experience flooding caused by Hurricane Katrina. When the hurricane flooded their first shop on Earhart Boulevard, they moved their operations to the newly-acquired second shop in La Place, which also has six bays.

Katrina strikes New Orleans

Repair shops that stayed open during Katrina’s immediate aftermath benefited from the influx of orders from repair centers that closed. The Catos’ first shop was back in operation in about two months.

By that time, the company was on a growth curve, thanks to the expansion beyond transmission work to general auto repair, a move shared by the Cottman franchise organization. This required adding air conditioning equipment to their existing tool arsenal.

“We were doing that (general repair) work anyway,” Randy explains. “We just now advertise it.”

This past year, the Catos opened their third shop in Gretna, LA., a town just across the Mississippi River from New Orleans.

Franchise organization provides resources

As a part of Cottman, the stores offer a warranty and have access to a technical company hotline. The national franchise organization also runs professionally-produced TV commercials and has helped provide a professional looking Website and a social media initiative.

The Catos keep up with changing technology by reading trade publications and occasionally attending trade shows. They learned the importance of electronic scan tools in the early Nineties, when these tools were just coming on the market.

They were introduced to computerized diagnostics years ago when they were having trouble identifying a problem with a Chrysler transmission just when the Snap-on tool truck happened to pay a visit. The Snap-on distributor was able to look up the problem with his electronic scanner and identify a solution in less than 20 minutes. “It was a problem we had been working on for a while,” Randy recalls. That very moment, they bought a Snap-on MT2500 “Brick” scanner.

Ever since, they have put a strong emphasis on having the right tools for computerized diagnostics. The company currently uses three different scan tools, housing one scanner in each of their three locations. The La Place shop has the Snap-on tool, the Gretna shop houses the OTC Genisys scan tool, and the main shop has the Autel MaxiDAS. “They all do different things very well,” Randy says. If the scanner at a particular shop isn’t the best one for a particular problem, they use another shop’s scanner.

Three repair data systems

The brothers have a similar system for making use of different automotive repair data software: Alldata, Mitchell 1 and Identifix. Each shop houses one of the three systems. “One has a lot of information (and is good for estimates). One is good on wiring diagnosis. One is good at easy to find stuff (with easy-to-follow diagnosis and repair steps),” Randy explains.

Randy says he holds each of the three data systems in high regard. The more information he has, the better he can diagnose a vehicle.

Having three shops has allowed the company to acquire not only a diverse offering of tools that are important in today’s auto repair business, but a highly versatile staff of technicians and transmission rebuilders. Two of the shops have three techs, one has two techs, and each shop has a dedicated equipment rebuilder.

If one shop gets extra busy, techs from one of the less-busy shops can help out as needed.

Each shop manages its own billing and receivables under the brothers’ supervision. The brothers shuttle between the shops regularly.

Dual management roles

While the brothers’ management roles are not strictly defined, Randy focuses more on overseeing accounting, payroll and customer relations. Rusty focuses on soliciting wholesale accounts.

The Cato brothers make all buying decisions about shop-owned equipment, which includes electronic and air conditioning tools. The techs keep their hand tools in tool boxes and roll-around carts.

Shop-owned tools are kept in cabinets. Randy says there is no organized system for tracking shop-owned tools on the shop floor. So far, the technicians have done a good job returning tools; lost tools haven’t been an issue thus far.

Transmission technology evolves

Randy says transmission systems have changed the most in recent years. He particularly looks for different tools that allow him to diagnose both the electrical (scan tool, meter, labscope, powerprobe, etcetera) and mechanical parts (pressure gauge, run-out dials, seal installers, bearing presses, files, oil pump installers, snap-ring pliers, torque wrenches) of a transmission.

The Catos send their technicians to transmission service seminars. For general repairs, they rely on training videos.

The Catos’ tool arsenal allows them to successfully complete almost all repairs they are presented. Once or twice a year, a European car presents a challenge that requires them to call a dealer. “It’s usually an oddball car that I don’t see a whole lot of,” Randy says.

The techs are responsible for keeping their work areas clean. There is a full-time shop maintenance supervisor for the main shop.

While electronics have made it easier to diagnose and repair problems, some models that have the transmission control module (TCM) built into the transmission can be a challenge. The TCM can be on the transmission case or in the valve body, which requires a transmission rebuild, making the whole job expensive.

“You have to raise prices if cost goes up,” Randy says. “It’s getting harder to explain to a customer what it costs to repair a 10-year-old vehicle. They just don’t see the value (of a costly repair) in a 10-year-old car.”

Finding good help a challenge

Another concern he has is certainly not new: the availability of qualified technicians. So far, he has been fortunate in having a stable group of technicians. In the meantime, he is concerned that junior colleges don’t offer as much automotive training as they once did. This concerns him since he would like to expand to more franchises. “There are not a lot of people who want to get their hands dirty,” he notes.

In retrospect, the brothers are glad their father took the risk he did back in 1988 and launched the company. They have no idea if they would have gravitated to the automotive business on their own, and it’s a business they have found rewarding, both financially and mentally. They say they like being challenged.

“There’s always something new,” Randy says. “It doesn’t matter how many cars come in, there’s always something new and challenging.”

Keeping on top of new electronics is an ongoing task. Randy notes that today’s new vehicles don’t make their way to the repair shops until after the OEM warranties expire, which can be as long as four years.

In the future, the brothers hope to add one or two more shops. They believe with the right tools, people and business model, they can expand their success in the greater New Orleans area.