Fleet of thought

– Deal­ing with dif­fi­cult is­sues cre­ates an em­pa­thy that is in­valu­able when leading teams. If there is one ma­jor les­son that Thrifty WA CEO Richard Si­mons has learnt dur­ing his time in busi­ness, it is that all the de­ci­sions made in life and busi­ness has di

Business First - - CONTENTS -

Life is not all beer and skit­tles. Dif­fi­cult de­ci­sions, is­sues and commercial judge­ments must be made that im­pact prof­its, people and businesses as whole en­ti­ties. When Richard Si­mons joined Arthur An­der­sen in 1989 he gained first­hand ex­pe­ri­ence in fun­da­men­tal busi­ness is­sues from the per­spec­tive of or­gan­i­sa­tions that were in trou­ble. These were businesses of all dif­fer­ent sizes; from small fam­ily owned to large listed com­pa­nies, Richard dealt with sit­u­a­tions and made de­ci­sions based on the best way to re­cover a busi­ness or trade out of a sit­u­a­tion to max­imise re­turns to cred­i­tors.

While each busi­ness sit­u­a­tion was dif­fer­ent, the com­mon de­nom­i­na­tor was people.

“At a rel­a­tively young age I learnt that the de­ci­sions I made can have a real and sig­nif­i­cant im­pact on the lives of in­di­vid­u­als that work in these businesses; people that have in­vested all of their life into work­ing in a par­tic­u­lar com­pany,” Richard says. “I learnt quite quickly to have a de­gree of com­pas- sion­ate em­pa­thy for the people who are di­rectly im­pacted by the de­ci­sions that I was mak­ing.”

As he stepped into each com­pany with whom he has worked, Richard has taken that em­pa­thetic ap­proach.

“For me it’s re­ally about try­ing to be as ap­proach­able and ac­ces­si­ble as I can be. I try to walk around the site here and visit our branches around the state reg­u­larly, lis­ten­ing to the staff on the front counters and the guys that are work­ing on the tools so that they un­der­stand I’m as much a hu­man as they are. We talk about their lives, their fam­i­lies, what they got up to on the weekend and I try and de­velop a level of em­pa­thy with them so that they un­der­stand me. It helps when I have to make a tough de­ci­sion that I’m not com­pletely ig­no­rant or blind to the sort of im­pact that it might have on them.”

As a non-ex­ec­u­tive di­rec­tor and trea­surer of Cys­tic Fi­bro­sis WA Richard has seen many fam­i­lies hav­ing to cope with the hard­ship and con­se­quences of an in­cur­able dis­ease and gained a great deal of per­spec­tive.

“It’s a re­al­ity check and gives you some per­spec­tive, par­tic­u­larly in the cor­po­rate world,” Richard says. “I spent a lot of time work­ing in pub­lic com­pa­nies. In pub­lic com­pa­nies people can be­come quite dis­con­nected from the re­al­ity of what’s go­ing on. When you’re sit­ting in your ivory tower on St Ge­orges Ter­race or Ge­orge Street or Collins Street, you can make de­ci­sions very quickly and very swiftly that have a real im­pact on people at a very per­sonal level and that hu­man di­men­sion can get lost. With Cys­tic Fi­bro­sis WA I get to in­ter­act with people who have a whole mag­ni­tude of prob­lems that I can’t even be­gin to ap­pre­ci­ate. It’s in­cred­i­bly chal­leng­ing for these fam­i­lies and it just gives you per­spec­tive. What­ever triv­ial stuff is go­ing on in my life pales into in­signif­i­cance when you con­sider what people with kids suf­fer­ing cys­tic fi­bro­sis are deal­ing with on a daily ba­sis.”

Per­spec­tive is a per­sonal thing, but cer­tainly in­valu­able when run­ning large-scale businesses. Be­fore he joined Thrifty at the be­gin­ning of 2013,

Richard spent close to three years at Austal, an in­ter­na­tional de­fence prime con­trac­tor. Austal is an Aus­tralian com­pany that spe­cialises in the de­sign and con­struc­tion of alu­minium ves­sels. Its main prod­ucts in­clude pas­sen­ger and freight fer­ries, lux­ury yachts and mil­i­tary ves­sels. He says his time there was an “in­cred­i­ble learn­ing ex­pe­ri­ence”.

Richard was in charge of the global fi­nance func­tion, with re­spon­si­bil­ity for all as­pects of fi­nan­cial strat­egy, fi­nan­cial reporting and com­pli­ance, cap­i­tal strat­egy, M&A and In­vestor re­la­tions and IT.

“When I started there in 2010, Austal was still very heav­ily fo­cused on the commercial ves­sel sec­tor and had quite a strong man­u­fac­tur­ing base in Aus­tralia. It was man­u­fac­tur­ing ves­sels from four lo­ca­tions in Aus­tralia and em­ployed close to 1,500 people. Then we won a very large de­fence con­tract in our Amer­i­can busi­ness and we saw the po­ten­tial for it to grow very quickly. So what we had to do was re­ally fo­cus on how to set the or­gan­i­sa­tion up so that it could run on a de­cen­tralised ba­sis. His­tor­i­cally Austal’s busi­ness was cen­tered in Aus­tralia and there­fore all the sys­tems of con­trol and man­age­ment were geared around be­ing able to reach out and touch the in­di­vid­u­als in­volved in the de­ci­sion. As we moved more and more cap­i­tal into the United States, we had to be ready to make de­ci­sions on a com­pletely de­cen­tralised ba­sis and re­ally re-in­vent into a de­fence com­pany – which is a very dif­fer­ent mind­set to a commercial oper­a­tion. A lot of what I did was help the busi­ness get its fund­ing struc­ture worked out so that it could take on those projects in the United States.

“Once Austal had won its sec­ond large con­tract in the United States, there was an aw­ful lot that the com­pany had to learn about be­ing a prime con­trac­tor for the United States Navy … and the way you work for the United States Navy is un­like the way you work for any other client, the pro­to­cols, the con­tract struc­tures, the se­cu­rity as­pects are all very dif­fer­ent. So we had to spend a lot of time un­der­stand­ing the dif­fer­ent type of re­la­tion­ship that we would have with them. A big part of what I had to do was to com­mu­ni­cate that to our stake­hold­ers. We had a West Aus­tralian mind­set or an Aus­tralian mind­set around how you do busi­ness and we as­sumed it would be the same work­ing for the United States Navy. It wasn’t. I gained ex­pe­ri­ence in terms of how you have to work within those rig-

One of the re­ally valu­able lessons com­ing out of my ex­pe­ri­ence at Austal was the im­por­tance of know­ing your work­force and un­der­stand­ing first hand, the chal­lenges that they are deal­ing with.”

id struc­tures and had to com­mu­ni­cate those lessons learned to our in­vestors. The de­fence in­dus­try was some­thing that we thought we knew, but con­tract­ing to the United States Navy in the big­gest de­fence mar­ket in the world was tak­ing things to a whole new level. I think we un­der­es­ti­mated the de­gree of the chal­lenge.”

For Richard, this po­si­tion re­in­forced to him the value of open com­mu­ni­ca­tion and it was some­thing he took with him to Thrifty WA.

“One of the re­ally valu­able lessons com­ing out of my ex­pe­ri­ence at Austal was the im­por­tance of know­ing your work­force and un­der­stand­ing first hand, the chal­lenges that they are deal­ing with.”

Lis­ten­ing to em­ploy­ees, learn­ing from their ex­pe­ri­ences, shar­ing in­for­ma­tion with them about the busi­ness and the mar­ket so that ev­ery­one is clear about what the busi­ness needs to do and the roles that in­di­vid­u­als have to play was valu­able prepa­ra­tion for tack­ling the tremen­dous change that Thrifty was un­der­go­ing when he took the reins just over one year ago.

Thrifty has an enor­mous name glob­ally and is one of the world’s largest ve­hi­cle rental fran­chises. How­ever, while still be­ing part of a fran­chise Thrifty WA is pri­vately owned, which throws up a range of chal­lenges when you are man­ag­ing a brand, but do­ing it in a pri­vate way. The mas­ter fran­chise is held by King­mill, which is a sub­sidiary of the NRMA. The com­pany Richard works for is a fam­ily owned busi­ness run by own­ers Keith and He­len Bedell who started the busi­ness 35 years ago. The sit­u­a­tion in WA as the con­struc­tion boom tran­si­tioned also posed prob­lems for the busi­ness and once again Richard had to look at new ways to grow.

“Thrifty WA had been al­most ex­clu­sively fo­cused on ve­hi­cle rental to the re­sources con­struc­tion in­dus­try and dur­ing the min­ing boom in Western Aus­tralia, it grew ex­tremely quickly. The vast ma­jor­ity of in­come was com­ing from the Pil­bara and most of that was from long-term rentals on the var­i­ous con­struc­tion projects that were un­der­way. As you no doubt know the re­sources con­struc­tion boom in Western Aus­tralia has well and truly ended and it ended very, very quickly. So what was ap­par­ent was that we needed to re-in­vent our busi­ness model, cut costs to meet the new mar­ket con­di­tions and we needed to do it quickly.”

It was about Septem­ber 2012 when the first shud­ders in the iron ore price oc­curred and that was when com­pa­nies like Fortes­cue were im­me­di­ately im­pacted and they started lay­ing off people. Then Rio Tinto an­nounced it was go­ing to cut $5 bil­lion dol­lars out of its budget.

“That meant we had an im­me­di­ate drop off in rev­enues and ended up with a sig­nif­i­cant num­ber of ex­cess ve­hi­cles. Dur­ing the boom you couldn’t get a rental ve­hi­cle for love nor money. Ex­ter­nally we’d seen tsunamis, earthquakes and other in­ter­na­tional dis­as­ters that had af­fected ve­hi­cle pro­duc­tion and so the sup­ply of commercial ve­hi­cles was un­der im­mense pres­sure. The only or­gan­i­sa­tions other than the ma­jor min­ers who could still ac­cess new commercial ve­hi­cles in sig­nif­i­cant num­bers were the rental com­pa­nies and that was be­cause the rental com­pa­nies were for­ward or­der­ing large vol­umes with the man­u­fac­tur­ers. Our busi­ness alone was buy­ing 1,500-2,000

ve­hi­cles a year and bea­cause of that sort of com­mit­ted vol­ume our sup­plies were as­sured. In hind­sight it was a bub­ble that had al­lowed the in­dus­try and along with it, this busi­ness to grow very quickly across the state. All that im­me­di­ately came to an abrupt halt when the iron ore price crashed.”

Shortly af­ter Richard joined Thrifty, on a trip through the Pil­bara with the com­pany’s owner, they saw close to 4,000 ve­hi­cles be­long­ing to rental com­pa­nies, con­struc­tion com­pa­nies and con­trac­tors parked up and left to rust. Richard’s con­cerns for what was hap­pen­ing were well founded. The or­gan­i­sa­tion had be­gun to cut its fleet back, but in Richard’s view not quickly enough. He took the board through a com­pre­hen­sive re­view of the macro fac­tors: what was go­ing on in China in terms of steel pro­duc­tion and de­mand for Chi­nese steel and how that flowed on to the de­mand for iron ore and there­fore iron ore pric­ing and what that meant for the fu­ture of con­struc­tion in Western Aus­tralia. The ques­tion was how does Thrifty WA sus­tain its foot­print as the largest rental com­pany in Western Aus­tralia in terms of fleet size and lo­ca­tions around the state. The fleet would have to re­duce, but the com­pany didn’t want to shrink the ge­o­graph­i­cal foot­print.

“When I looked at the busi­ness the thing that was ob­vi­ous to me was that there was a mas­sive amount of in­ter­nal ca­pa­bil­ity; there’s a lot more in­volved in rent­ing a ve­hi­cle than sim­ply just hand­ing over the keys at the air­port. Over the years the com­pany had built up a tremen­dous in­ter­nal ca­pa­bil­ity in terms of procur­ing its ve­hi­cles, equip­ping them for harsh op­er­at­ing en­vi­ron­ments, get­ting them out into the field then sup­port­ing them while they’re in the field. The com­pany had built up a strong com­pe­tency in terms of the skill sets of its people; it had de­vel­oped ex­cep­tion­ally good fa­cil­i­ties right across the state and had the sup­ply chain in place to sup­port all of those ve­hi­cles. What was ap­par­ent was that we had this ca­pa­bil­ity to sup­port large num­bers of ve­hi­cles in very re­mote lo­ca­tions and many of our cor­po­rate cus­tomers also had big fleets of their own and we saw an op­por­tu­nity to ef­fec­tively help them sup­port their fleets. We have in­vested in the foot­print, we have the in­fra­struc­ture, the people, the sup­ply chain and we are do­ing it for our­selves any­way. There was the op­por­tu­nity to start do­ing it for our clients.”

They re­branded the busi­ness as Aus Fleet So­lu­tions and now op­er­ate five

sep­a­rate but still com­mon brands into the mar­ket­place. Thrifty WA re­mains the prin­ci­pal mast­head as the pre­em­i­nent ve­hi­cle rental busi­ness in Western Aus­tralia and they now pro­vide me­chan­i­cal ser­vices to ex­ter­nal cus­tomers at sev­eral lo­ca­tions across the state, util­is­ing the Thrifty WA in­fra­struc­ture, un­der the name of Aus Me­chan­i­cal Ser­vices.

Aus Fleet So­lu­tions also in­cludes a large commercial ve­hi­cle panel re­pair busi­ness, Aus Smash Re­pair, a commercial ve­hi­cle sales busi­ness, Aus Ve­hi­cle Sales and a ve­hi­cle leas­ing busi­ness, Aus Ve­hi­cle Leas­ing.

This new di­ver­si­fi­ca­tion strat­egy has al­lowed the busi­ness to un­lock hid­den value from within its own in­ter­nal ca­pa­bil­i­ties and it has now opened up a much larger range of mar­ket op­por­tu­ni­ties be­yond just ve­hi­cle rental – all of which how­ever ul­ti­mately sup­port de­mand for Thrifty WA.

The change was a step-by-step process and again Richard was very mind­ful of who would be im­pacted.

“You have to bring people along on the jour­ney with you and so those points that we were mak­ing be­fore about com­mu­ni­ca­tion and em­pa­thy are re­ally im­por­tant in es­tab­lish­ing cred­i­bil­ity,” Richard says.

“I took the view that these are all in­tel­li­gent people; ev­ery­one has their strengths, ev­ery­one has their own ca­pa­bil­i­ties and I just talk to them very plainly and very fac­tu­ally about what is go­ing on. I gave them some con­text around why things were hap­pen­ing and how their work­load was be­ing in­flu­enced by what was go­ing on in the macro en­vi­ron­ment. So when I talked to them about the op­por­tu­nity that I could see in terms of ap­ply­ing their skills and ca­pa­bil­i­ties to a dif­fer­ent type of cus­tomer and a dif­fer­ent type of client they said ‘yeah ok, that makes sense, we can see the logic in do­ing that’. Once they un­der­stood, things changed quickly. No change is easy and we are still work­ing through a lot of it, but they un­der­stand the di­rec­tion that we’re head­ing in and why we need to do it. We have re­ally re-in­vented our­selves now from be­ing sim­ply a provider of rental ve­hi­cles to be­ing a fleet ser­vices group where if you have a large fleet of ve­hi­cles there’s a mul­ti­tude of things we can do to help you sup­port those ve­hi­cles in the field.”

The ex­tra ser­vices cer­tainly set Thrifty WA and Aus Fleet So­lu­tions apart from other rental com­pa­nies and Richard’s first year in the job has been a chal­leng­ing one. How­ever busi­ness mod­els need to evolve and staff mem­bers and stake­hold­ers need to un­der­stand that change is not made for the sake of it. The best way to get this mes­sage across is to be em­pa­thetic and un­der­stand­ing and prop­erly com­mu­ni­cate the need for change. Richard’s core val­ues are in­tegrity, mu­tual re­spect and loy­alty and he has man­aged to bring these to each or­gan­i­sa­tion, through pe­ri­ods of change, be­cause of strong com­mu­ni­ca­tion.

“I’d like to think that the breadth of ex­pe­ri­ence I’ve had has helped us re-shape Thrifty in Western Aus­tralia and given us a strong po­si­tion go­ing for­ward,” Richard says.

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