[Md-sligo] {Definitely Spam?} Article: Barwood vs. Uber

[Lloyd Rasmussen]

>From the November 2015 issue of Bethesda Magazine:
Barwood vs. Uber

Barwood owner Lee Barnes is in the battle of his professional life with 
Uber.

By Eugene L. Meyer



7




Taxis often sit idle at Barwood’s White Flint Industrial Park headquarters. 
Photos by Lisa Helfert.

Lee Barnes wasn’t happy at all. The president and owner of the county’s 
largest taxicab company had lobbied councilmembers individually, and had sat 
patiently in the meeting room, letting others do the talking, as the 
Montgomery County Council slogged through a public hearing last December and 
six work sessions this year. Now, he’d had it.

It was July 21. The council had just passed a bill it promised would “level 
the playing field” between the county’s established cab companies—such as 
Barnes’ Barwood—and Uber, the new unruly kid on the block that claims it’s 
not really a cab company, just a technology vendor, and therefore cannot be 
regulated. So, after huddling with his advisers in the council cafeteria, 
the 62-year-old Barnes spoke his mind.

“I think the taxi industry—fleets, individual owners and drivers—is worse 
off,” he said. “The council hasn’t done anything to make the industry more 
competitive. Uber is more successful not just because it has the app, but 
because it has [billions] to take on anybody. It’s a corporate bully.”

Barnes, determined to continue the company his father founded more than 50 
years ago, has had a tough few years. In addition to fighting Uber and other 
transportation network companies (TNCs) such as Lyft, he’s been warring with 
his own drivers over such issues as the lease terms he requires on cars he 
owns, including daily rental rates of $100 or more, and credit card charges 
that the drivers argue are excessive. The conflict has led some drivers to 
switch to Uber and others to form a union affiliated with the AFL-CIO: 
MontCo Union Taxi, which is creating a co-op to compete against both Uber 
and Barwood.


Second-generation Barwood owner Lee Barnes.

The new legislation may indeed level the playing field for taxi drivers, but 
it probably doesn’t for companies like Barwood. According to the new law, 
the county will now decide how much taxicab companies can charge drivers to 
rent their cabs. The bill also adds 100 new passenger vehicle licenses 
(commonly called PVLs; the equivalent of New York City’s medallions) to the 
770 the county had allowed.

Half of the new PVLs are reserved for the co-op; 25 are to be split up among 
the three smallest cab companies operating in the county; and 25 for other, 
unaffiliated drivers—a new category, since all drivers before now needed to 
be affiliated with a fleet. The bill also allows cabs to be any color and to 
carry less conspicuous dome lights—in other words, to look less like cabs 
and more like, well, Uber.

Despite the changes in the law, it’s a tough landscape for nearly everyone 
in the industry, except perhaps for Uber, which says it has some 12,000 
drivers roaming the Washington, D.C., metro area just waiting for the next 
online request for service.

All of this matters to the riding public. Not only to those who profess to 
love Uber, including legions of millennials, but also to the segments of 
society to which Uber does not cater, including the wheelchair-bound; 
up-county residents; and people without cellphones and credit cards, such as 
the low-income elderly.

“It is a new world,” declared Councilmember Roger Berliner, transportation 
committee chair, after the July meeting. “A lot is changing. We’re trying to 
strike the right balance. Nobody is going to be happy.”

The taxi business used to be pretty simple. You needed a ride, you called or 
hailed a cab. For drivers, it embodied the American dream, the notion that 
anyone who worked hard could do well. At least that was the philosophy of 
Harrison Eugene Barnes, a World War II Army veteran from Taylorsville, North 
Carolina.

After the war, like a lot of GIs from rural America, he came to Washington, 
where he and his brother, Harold, owned country music bars and restaurants, 
and drove cabs.


Depending on the hour and the day, anywhere from four to 20 dispatchers are 
on duty at Barwood headquarters.

By the mid-50s, the District was regulating its growing number of taxis, and 
the Barnes brothers looked for less-plowed pastures. They found them in 
wide-open, unregulated Montgomery County. “Everyone heard Montgomery was 
better,” says Lee Barnes, Harrison’s son.

So, in 1958, the brothers started Montgomery Cab next to the Tastee Diner on 
Woodmont Avenue in Bethesda. In 1960, Harold left to sell used cars. Henry 
Woodfield, a Ford dealer in Damascus, took his place and threw in some 60 
vehicles. In 1964, Barnes and Woodfield became Barwood.

Harrison Barnes owned a light-blue 1964 Thunderbird. At the time, most 
Montgomery County cabs were black, so the senior Barnes chose light blue to 
distinguish his. Would Barwood ever change its color? “No way,” his son 
says.


Barnes says that some nights, business is off 50 percent compared to what it 
was before Uber.

Lee Barnes grew up in the Wyngate neighborhood of Bethesda off Old 
Georgetown Road, not far from where he lives now, and graduated in 1971 from 
Walter Johnson High School. As a kid, he rode often with his father, who, in 
addition to owning the company, drove cabs. He remembers his dad giving him 
a dime each time he opened the door for the “little old ladies” to whom he 
gave rides.

During the summers, Lee Barnes worked in the cab company’s dispatch room and 
garage, in an old house at 8215 Wisconsin Avenue that had rental rooms for 
drivers. As a teenager, he cleaned cabs and answered phones, experiences 
that taught him the importance of customer service. “You have to learn how 
to read your customers, their wants and expectations,” he says.

Barnes was studying accounting at the University of Maryland and driving a 
cab to make money when his father suffered a heart attack in October 1974. 
Barnes dropped out of school the next day to help run the business, and the 
two worked together until Harrison Barnes died in 1983 at the age of 63.

“Washington is a town of movers and shakers, and I’ve had my share as a 
driver,” Barnes says. “When I drove, [presidential adviser] Clark Clifford 
was one of our regulars, and he always asked for me. He was a really good 
tipper. I drove [television news commentator] Eric Sevareid, [AFL-CIO 
President] George Meany, [columnist] George Will. I drove [former Vice 
President] Hubert Humphrey.”

Barnes is proud that his father hired the first female and African-American 
drivers in the 1950s, and that he refused to cater to the Southern 
sensibilities of some of his white customers. “In 1965, 1966, you’d get 
[white women] who’d ask not to have an African-American driver. My dad would 
say, ‘Be polite, say no, we can’t do that.’ ”

In 1970, Barwood moved its headquarters to Metropolitan Avenue in 
Kensington, near the train tracks. Twelve years later it moved to 4925 
Nicholson Court in Kensington and then in 1995, moved again, this time next 
door, where it’s been ever since. The 3-acre site, on a cul-de-sac in White 
Flint Industrial Park, encompasses a sea of light-blue Barwood cabs, a 
repair shop and a two-story brick office building.

Office walls and hallways are adorned with family and Barwood photos. 
Upstairs, a former locker room is now a prayer room to accommodate the 
company’s large contingent of Muslim drivers. The call center on the ground 
floor is a warren of 16 cubicles. Four to 20 dispatchers are on duty at any 
time, depending on the hour and day.

Over the years, the driver demographic has changed from all white to a 
rainbow of colors and ethnicities. Barnes says the company often sees an 
influx of drivers from countries that are experiencing upheavals. In the 
late 1960s, Iranians began driving; in the 1970s,
Nigerians; in the 1980s, Afghans; and in the 1990s, Ethiopians. Today, most 
are African immigrants, many of them
well-educated and happy to be in America.

Barwood got to be the leading company by buying up others, but the road hasn’t 
always been smooth. A 2006 traffic accident involving a Barwood cab resulted 
in a $3 million judgment—and bankruptcy in 2007. To repay its debt, Barwood 
persuaded the county to allow it to sell up to 250 of its PVLs to its 
drivers at an average price of $62,000, according to Barnes. To buy the 
PVLs, many of the drivers took out loans from Barwood that they’re still 
repaying.

Barwood retains 300 PVLs, plus 159 affiliated drivers with their own PVLs. 
Regency Cab is next with 113 PVLs and 22 affiliates, followed by Action Taxi 
with 62 and 17, Sun Cab with 60 and 11, and Orange Taxi with 14 and 12. 
Currently, there are no independent cab drivers in the county, but that’s 
scheduled to change by Jan. 1, 2016, under the new law.

No sooner had Barwood begun to emerge from bankruptcy than a new threat 
appeared: Uber. The company promised drivers they could earn more by using 
its Web technology to lure customers—without having to meet stringent state 
standards applied to traditional taxis and drivers.

Many Barwood drivers who did not own PVLs are now driving for Uber. This 
move to Uber has left anywhere from 50 to 200 Barwood cars idle, depending 
on the time of day and who’s counting. Since Barwood still owns the PVLs on 
these vehicles, no one unaffiliated with the fleet can use them. Uber 
drivers, of course, don’t need them.

“Some nights our taxi business is off 50 percent,” compared to what it was 
before Uber, Barnes says. “We’ve probably lost 75 or 100 drivers. They go 
[to Uber] because there are none of the regulations. Nobody’s ticketing them 
[$200] for not filling out a paper manifest.”

Launched in 2010 in San Francisco, Uber quickly spread to cities around the 
country—and beyond. Its expansion sparked controversies, from riots in Paris 
and Mexico City to outright bans in South Korea, the Netherlands, Romania, 
Berlin and Geneva.

Uber’s unregulated entrance into regulated markets also led to an ill-fated 
effort by New York City Mayor Bill de Blasio to limit its number in 
Manhattan. It has even become an issue in the 2016 presidential campaign, 
with Hillary Clinton denouncing, without naming Uber, the “gig economy” that 
she says denies rightful benefits to workers. Others, primarily Republicans, 
have praised the company’s entrepreneurial free-market spirit.


Uber driver Richard Sassoon says he doesn’t drive for money; he does it to 
meet interesting people and socialize.

Meanwhile, lawsuits have been filed against Uber from coast to coast. In 
California in June, the state labor commissioner ruled that a former Uber 
driver was an employee entitled to reimbursement for past expenses, and not 
an independent contractor merely using its digital platform, as Uber 
maintains. Uber is appealing the ruling. In August, a separate California 
agency ruled that another former Uber driver was an employee, eligible to 
receive unemployment benefits.

Cashless payments from riders go to Uber, which returns 80 percent to the 
drivers. Uber also sets the rates through a “dynamic pricing” strategy that 
includes “surge prices” pegged to supply and demand. Riders rate drivers on 
a scale of 1 to 5, and Uber can essentially fire those who are low-rated. 
Drivers also rate riders, and can steer away from low scorers.


Ride requests are made through Uber’s app.

Despite mounting challenges, Uber so far seems to have a winning strategy. 
The company was recently valued at $51 billion. It operates in 329 cities in 
59 countries on six continents. It claims more than 3,500 employees 
worldwide (a figure that excludes drivers but covers marketing, 
communications and operations personnel), hundreds of thousands of “driver 
partners,” and “millions” of riders.

Uber is less forthcoming about its local operation, other than to say it has 
more than 12,000 drivers in the Washington, D.C., area who are able to move 
freely back and forth across jurisdictions—a perk not available to local cab 
companies, which are only allowed to pick up passengers in Montgomery 
County. “Specific numbers of drivers and riders in the area is proprietary,” 
says Uber spokesman Taylor Bennett. The Uber office in downtown Washington 
is off-limits to reporters

Uber calls its service “ridesharing,” a term suggesting that it is not a 
business transaction. Uber insists it merely makes its app “platform” 
available to drivers it calls “providers” and to riders who use it to 
facilitate a no-cash transaction. Users must have a cellphone and credit 
card, requirements that Uber critics contend exclude many low-income riders.

“Borders didn’t go out of business because people wanted to stop reading 
books,” says John Marshall, an attorney for the Coalition for a Competitive 
Taxicab Industry (CCTI), the local taxi trade association. “A percentage was 
hollowed out by Amazon. In the transportation industry, where it’s really 
troubling is if cab companies go under, what happens to those passengers who 
don’t use a cellphone, what happens to the elderly? Uber has no interest in 
transporting those people. The disruption is to people who really can least 
afford to be disrupted.”

Uber’s unregulated arrival here in 2011 drew the ire and opposition of 
established cab companies and their drivers. But, responding to aggressive 
Uber-driven social media campaigns, first the District in October 2014, then 
Virginia last February, enacted laws providing a framework in which Uber and 
other so-called “ridesharing” services could operate legally. In both cases, 
the rules that applied to Uber and other similar services were far less 
restrictive than those that already applied to traditional taxis.

“Uber bullied the [D.C.] council with social media, tweets, to make it look 
like the government was evil,” Barnes says. “They don’t want a level playing 
field.”

In 2013, Maryland’s Public Service Commission (PSC) sought documents and 
information from Uber regarding its operations to learn whether it should be 
subject to the same rules as traditional taxis. That December, the PSC staff 
issued a brief that was sharply critical of Uber. “Through its vehicle 
requirements, screening processes, billing system and rating system, it is 
apparent that Uber is managing a high-end brand of for-hire transportation,” 
it asserted. Uber hired H. Russell Frisby Jr., former chairman of the PSC, 
to represent the company.

In Maryland, several cab companies, including Barwood, filed suit in 
Baltimore federal court in July 2014 to stop Uber. “If left unchecked,” the 
suit warned, “Uber will upend the vehicle transportation industry in 
Maryland, creating a two-tiered market of ‘haves’ and ‘have nots.’ ” The 
suit was later withdrawn on technical grounds.

On the local level, Montgomery County, which had last overhauled its taxi 
regulations in 2004, was eager to update its laws. Bills were drafted that, 
among other things, were designed to address TNCs like Uber. But even as the 
council was holding a public hearing and work sessions on its proposals 
earlier this year, a bill moved through Annapolis that superseded its 
efforts.

In its state lobbying, Uber sought a framework similar to the District’s and 
Virginia’s that would place it under the PSC—with fewer rules than applied 
to taxicabs. On April 13, at the last meeting of the 2015 Maryland General 
Assembly, the legislature passed the Uber bill. It allows companies like 
Uber and Lyft to conduct their own safety inspections and driver criminal 
background checks, which do not have to include the fingerprinting required 
of traditional taxicab drivers. Under the new law, the commission is not 
allowed to require more stringent background checks until April 1, 2016, at 
which time the TNCs can ask that such requirements be waived.

One concession: The TNCs must contribute 25 cents per ride to a fund, 
overseen by the Maryland comptroller, for taxi drivers to make their cabs 
wheelchair-accessible. The TNCs are honor-bound to report all rides, but the 
information they provide is deemed confidential.

“You took to Twitter and Facebook, and sent countless emails and phone calls 
to stand up for ridesharing in Maryland,” Uber blogged to supporters on 
April 14. “Thanks to your support, [Uber] now has a permanent home in 
Maryland.”

Richard Sassoon is not the first UberX driver to respond to my ride request 
one recent morning. First, there is Mushkbar (4.8 stars) who, Uber texts, 
will arrive in six minutes. Moments later: “Unfortunately, your driver had 
to cancel the trip. Please request a new ride and we’ll get you moving 
shortly.”

Then: “All nearby UberX drivers are busy but one should free up soon. Check 
back in a minute or choose another Uber option.” Uber’s least expensive 
option, UberX connects riders with the driver of an everyday car such as a 
Toyota Prius or Honda Accord. More expensive services include UberSUV or 
UberBLACK, which hooks riders up with a recent-model black sedan with a 
black leather interior.

Before I have to splurge on one of these higher-cost options, I receive a 
message saying: “Your Uber is on the way. Richard (4.9 stars) will arrive in 
8 minutes.” As a shiny black 2011 Honda CR-V pulls up, a text alert says, 
“Your Uber is arriving now.”

The 10-minute, 2.38-mile ride from my home to the Silver Spring Metro 
station costs $7.43, according to the emailed receipt. That’s about what 
Barwood would charge, I learn from an estimate I glean from its iPhone app.

My driver, Sassoon, 60 and now retired, was chief of capital operations and 
programs for the Department of Veteran Affairs. He holds a master’s degree 
in public administration from the University of Maryland and lives in a 
house in downtown Silver Spring.

In January, Uber released a study that analyzed the demographics of its 
drivers. Except for his age, Sassoon reflects those findings: Uber drivers 
are more white, more educated and younger than traditional cabbies. About 37 
percent have college degrees, and nearly 11 percent have graduate degrees.

Sassoon and his wife, Jane, are empty nesters. After 37 years with the 
government, he has a healthy six-figure pension, and Jane works as an 
accountant. “Being a retiree is an isolating experience,” says Sassoon, who 
drives for Uber about twice a week. “I enjoy meeting people.” He says he’s 
driven people from Saudi Arabia and Slovakia. He took three young ladies to 
a Taylor Swift concert, and drove a journalist from Mother Jones.

So, how much does he make? For one two-day period, during which he drove for 
about 20 hours, he says he grossed $385. From that, Uber withheld its fee of 
20 percent, lowering his payout to $308—a little more than $150 per day, 
minus his expenses for gas, maintenance and insurance.

“It’s really a social experience for me,” he says. “I don’t want it to turn 
into a grind, don’t need it. I don’t need money per se. It’s a quasi hobby, 
I suppose. A pastime.”

Driving a cab is not a pastime for Nelson Biama. In order to further his 
education, Biama, 49, emigrated 23 years ago from Cameroon, where he’d 
studied accounting. “But when I got here, one of my sponsors passed away and 
I had no support to pay for school,” he says. He worked in construction, 
then as a delivery driver, but the economy tanked, he spent his savings, and 
he lost his job and his house in Prince George’s County. In 2009, he started 
driving for Barwood.

He now lives in a $1,900-a-month, three-bedroom apartment in Rockville with 
his wife and children. He says he drives 14 hours a day, seven days a week 
to support his family. His wife is a home health aide. They have two 
daughters, a 21-year-old who attends Montgomery College and a 16-year-old 
high school student, as well as a 17-year-old son who goes to Wesley College 
in Dover, Delaware, on a scholarship.

“On good days,” he says, “I can go home with about $100 or $110 after paying 
my [$110 daily rental] expenses with Barwood,” which holds the PVL on the 
car he drives.

Why didn’t he defect to Uber? “To tell you the truth, I put in my 
application with Uber. They offered me to go, but I didn’t. Everybody was 
praising Uber. I was taking a wait and see attitude to see what it would 
entail. For me, the jury is still out.”

What he did do was get involved with the union in a leadership role. He says 
he doesn’t want to go to Uber before seeing what he and his colleagues can 
achieve through the co-op. “We have to change the system from within,” he 
says. “At the end of the day, our customers need us.”

One recent morning, seven or eight cabs were lined up at a taxi stand near 
the Silver Spring Metro station, some light-blue (Barwood), others green 
(Sun Cab), red (Action) and white (Regency). One former Barwood driver said 
he was now driving for Sun because it charged him less to lease his cab. A 
Barwood driver in a Prius who owned both his car and a PVL said he is 
hard-pressed to support his wife and four children on what he earns.


Barwood driver Naftali Ayele, who owns his own PVL, says it is difficult to 
support his wife and four children on what he earns as a cab driver.

“I’m not happy now,” said the driver, Naftali Ayele, a 43-year-old Ethiopian 
immigrant who said he paid $78,000 to buy his PVL from Barwood, borrowing 
the money from friends, Barwood and the Ethiopian Community Development 
Council.

He said if he weren’t locked into a five-year contract with Barwood, he 
might switch to Uber.

Neither Uber nor Lyft attended the July 21 county council meeting. But 
cabbies were there in force—and were divided. Those allied with the union 
and seeking more PVLs to establish a co-op were on one side. They wore 
yellow T-shirts that said “MontCo Union Taxi.”

Those who owned PVLs sat on the other side. Worried that the issuance of 
more PVLs would devalue theirs, they carried signs that said, “No Free PVLs” 
and “Our Families Are Our Business.” Barnes and other company officials sat 
somewhere in the middle, uncomfortably, by themselves.

As the council voted to have the county issue 100 more PVLs, there were loud 
cheers from the union drivers—and boos from the rest.

“This is a mess we helped create and perpetuate,” Councilmember Marc Elrich 
said, “and now we’re trying to clean it up.”

After the meeting, a convoy of light-blue taxicabs exited the adjoining 
garage—toward a daunting and unsettled future.

“It’s an uncertain time,” Barnes said a few weeks later at Barwood 
headquarters. Outside his office, as many as 100 cabs sat idle for lack of 
drivers.

But Barnes is not giving up without a fight. He was recently in talks with 
Verifone, a Silicon Valley-based firm whose technology allows passengers to 
directly charge their rides without giving a credit card to the driver. The 
company is also developing an app, similar to Uber’s, that will show riders 
where cabs are and how long they should expect to wait. As with Uber, the 
app will allow riders to rate drivers.

“This is very similar to the TNCs of the world,” Barnes said, being careful 
not to mention Uber specifically. “I use their name as little as possible. I 
don’t like to use four-letter words.”

Lloyd Rasmussen, Kensington, MD
http://lras.home.sprynet.com