A local company with a global presence
As the Material Handling Equipment Distributors Association’s largest distributor member, with over 1,000 total employees, 500 of whom are service technicians, Barloworld Handling, headquartered in Charlotte, North Carolina, expects to do over $200 million in sales this year at its 35 branches. It is the largest Hyster forklift dealer in the country. Not bad for a company that began by selling calculators.
In 1943, Wrenn Brothers, Inc. was organized by siblings Paul and Preston Wrenn to distribute Friden calculators and other business machines in western North Carolina. A third brother, George, joined the company upon his return from duty as a Navy fighter pilot in World War II, sinking his military pension into the firm. Soon, the brothers’ interests turned to material handling, and they began selling Colson casters to various industries. Their big break came in 1949, when Wrenn Brothers was awarded the North Carolina, South Carolina and Georgia dealership for Hyster, which remains the company’s core product today. This partnership was a catalyst of Wrenn Brothers’ expansion throughout the Southeast.
The Wrenn brothers understood the value of industry education and networking with other distributors and became very active in the early days of MHEDA. They served many different roles within the organization, with Preston elected as association president in 1962 and George in 1972.
Becoming a Larger Company
Wrenn Brothers, Inc. became Wrenn Handling in 1979 upon the brothers’ retirement and sale of the company to Barlow Handling Group, a subsidiary of diverse brand management company Barlow, Ltd. of Johannesburg, South Africa. Barlow Handling was looking to expand its geographic footprint, and the Wrenns’ Hyster dealership was a good complement to the Hyster and Caterpillar construction equipment it already sold. More acquisitions followed, and in 1987, Wrenn Handling added Brungart Equipment, the Hyster dealer for Florida and Alabama, to its holdings. Hyster Mid-South, the Hyster factory-owned dealership for Arkansas and western Tennessee, was added in 1992. Ditch Witch and Freightliner dealerships were added in 1999 and 2000, respectively. The acquisition activity led to several name changes, and since 2000 the company has been known as Barloworld Handling. (Barlow, Ltd. officially changed its name to Barloworld, Ltd. in 2000.)
The man behind many of these acquisitions was the former CEO of Barloworld Industrial Distribution, Ken Brown, who retired last fall after 36 years with the company. Current Barloworld Handling President Stan Sewell speaks fondly of Brown. “He had a strong vision for growing through acquisition, and he led us through a period of expansion and economic growth,” he says. “Ken was a good mentor. The secret to good leadership, at any level, is that you need to know when to put your hand on the rudder and when to take your hand off the rudder. You’ve got to empower your people, be there to support them, remove obstacles, set the tone, set the vision and communicate.”
Barloworld Industrial Distribution is one of several divisions under the larger Barloworld, Ltd. umbrella. Others include capital equipment, motors, cement and lime, scientific products and coatings. Barloworld Industrial Distribution is currently under the leadership of Brown’s successor, Brandon Diamond, who oversees the four businesses which comprise the industrial distribution division: Barloworld Handling U.S., Barloworld Handling U.K., Barloworld Freightliner and Barloworld Leasing. Each of these businesses has its own separate management team that reports to Diamond, and each, in turn, has its own formalized structure. Barloworld Handling U.S., managed by President Stan Sewell, has three regional vice presidents who are each responsible for a different geographic area—one for Florida and Georgia, one for North Carolina and South Carolina, and the other for Alabama and Mid-South. Each of those regions has various regional managers and branch managers, completing the structured organization.
It all seems somewhat cumbersome, especially compared to the majority of MHEDA companies that have one branch and one boss. However, despite the complexity of the structure, Barloworld Handling maintains a close-knit and employee-focused atmosphere.
“Think Global, Act Local”
Unlike some large companies, where bureaucracy, committees and red-tape are part of standard operating procedure, Barloworld Handling maintains a decentralized management style. “We don’t want to lose our entrepreneurial and customer service focus,” Sewell says. “We empower our local management teams and our people to operate at the grassroots level with our customers. Branch managers have a responsibility for profit, loss and balance sheet assets. They are authorized to manage that investment as if it was their own money and to give us the best return on investment within the guidelines established.”
Those guidelines are embedded in the company culture. “Our core values are representing leading brands of equipment, delivering service solutions that build customer loyalty and new business, providing an atmosphere that promotes growth and learning, and following our Code of Ethics,” Sewell says. The Code of Ethics is posted on the walls of each building, and it says that the company will obey the law, be fair, be honest, respect others and protect the environment. Following these guidelines ensures that the company is an epitome of corporate responsibility. “I really do believe we have a duty to our communities,” Sewell says. Even though they are part of a multinational company, Sewell encourages his employees to live by the adage, “Think global and act local.” To back up that sentiment, last year Sewell initiated a program whereby employees received a paid day off to perform community service work.
An extra day off is only one of myriad benefits Barloworld offers its employees. The company reimburses 80 percent of tuition expenses for employees who want to go to college for a business-related degree. It provides a 401k plan that matches dollar for dollar on the first four percent of an employee’s contribution. Also, Sewell notes that employees are often asked for input through regular opinion surveys about how to make their experience better. “You can’t over-communicate to employees, especially in a large organization like ours, whether it’s newsletters, monthly meetings or letters from me about company results.” Discussing profit and loss statements and other financial benchmarks is a recent implementation that Sewell thinks has helped employee morale by keeping people informed of what’s happening in the company. “There are no secrets when it comes to reviewing the financial health of the business,” he says.
The Advantages of Size
While communicating with 1,000 employees across 35 branch offices in eight states poses a challenge, the large size of Barloworld Handling presents other challenges, such as the cost structures necessary for employee development, health care and information technology. Also, Barloworld is a publicly owned company, so it is under more scrutiny than a smaller, private organization would be.
But Sewell is a believer that the size of his company is nothing if not advantageous. “When you have a large business with a thousand employees, you can tap into more of what some call the ‘intellectual capital’ of the business,” he says. “We need new and innovative ideas, because I don’t have all the answers.” Another advantage is the ability of employees to grow along different career paths while still with the same company. Sewell himself started in human resources before moving into operations, and he speaks of branch managers who’ve gone into sales, salespeople who’ve become branch managers, and many other career shifts.
Beyond the advantages of being a large company, Sewell also recognizes the perks that a large corporate parent can provide. “We have access to capital and we can leverage global synergies,” he says, citing DaimlerChrysler as an example. In addition to Freightliner dealerships in Arkansas, Barloworld, Ltd. owns a Mercedes dealership in South Africa and Barloworld Handling sells and services fork trucks for a Mercedes plant in Alabama. Barloworld Handling’s service technicians drive Dodge Sprinter vans. Thus, Barloworld is a DaimlerChrysler supplier, dealer and customer. “We fill all the roles for them,” he says.
Value Based Management
Despite lower profits during the past few years of economic downturn, Barloworld Handling refused to eliminate what Sewell believes is the most tangible and appreciated benefit the company offers, its profit sharing program. Every year, the company invests some of its profits, typically about 12-15 percent, back to employees. “Even with profits down last year, our contribution ended up being about 23 percent,” Sewell says.
Employee satisfaction is integral to the success of any company, particularly one so large. “We have to provide a place where people can work that’s clean and safe and where they know we’re interested in their development,” Sewell says. But it isn’t only the employees who need to be satisfied. In recent years, Barloworld as a global company embarked on a program called Value Based Management, designed to ensure that all business processes and activities are aligned to create value for employees, customers, shareholders and suppliers. “It’s not something that’s just ivory tower thinking,” Sewell says, proving his point by again alluding to employee value measures. “People want to be part of a team with challenging goals, and they want to understand the bigger picture and where they fit in,” he says. “People want to be treated fairly and make a meaningful contribution. Creating employee value is more than providing a paycheck and benefits.” With customers, Value Based Management involves creating smart partnerships that add solutions and value to business processes. For shareholders, that value comes from the cash flow return on investment generated by the company’s working capital.
Barloworld Handling also provides comprehensive training for both employees and customers. The company invests over $1 million to this cause and employs five full-time trainers under the supervision of a full-time training director. Programs include both operational and technical training, and they can be done on site or at one of Barloworld Handling’s 10 training center locations throughout the Southeast.
An emphasis on Value Based Management is not the only change the business has undergone over recent years. In fact, according to Sewell, the company has “changed more in the last five years than it did in the previous 45.” One big change was a switch in 1999 to SAP, a large integrated computer system. Also, Barloworld has added a logistics support center in Atlanta, which has the primary function of centralizing inventory and procurement processes. The logistics center places large orders to vendors, who can ship the large orders back to the logistics warehouse, from where they are distributed. “We can invest in fast moving inventory and eliminate the dead inventory,” Sewell notes, saying the center helped realize procurement savings of $800,000 last year. Another change was an insistence on long-term maintenance agreements, which Sewell credits as a major cornerstone of survival through the lean years. Another new program, Barloworld Fleet Leasing, enables the company to lease and maintain customer fleets. “It makes for a great combination to go to the customer with a full package of equipment and service solutions.” Also, Barloworld Handling is putting greater emphasis on safety. It saw a 32% reduction in accidents last year, and the largest branch, Atlanta, recorded no accidents.
Working with the Government
Barloworld Handling sells to customers in all types of industries, from companies as large as Michelin Tire to the small, family-owned business with one lift truck. Sewell believes in the importance of selling to all customers, regardless of their size. “Some small businesses think that because their operation is small, they won’t be treated the same as a large customer. But the key is to determine the needs of each customer and focus on a solution that works for them,” he says.
Sewell sees customization as the future of the industry. “We should enhance our customers’ value by differentiating on their needs and profitability. Good customer segmentation is key.” The more Barloworld Handling can specialize its services to meet a particular customer’s exact needs, the better chance that the customer will continue to do business with Barloworld. As Sewell says, “Do for your customer what they want, not what you think they want. Know your customers’ priorities.”
One of Barloworld Handling’s growth opportunities is its involvement with the General Services Administration (GSA). The GSA required Barloworld Handling to become certified and approved as a supplier, and now the company can market and sell its products to state governments, prisons, the Coast Guard and the military. “The GSA gives us an opportunity to work with government agencies and provide them with our products and services. We see that as a growing part of our business,” Sewell says.
Strategies for Growth
In addition to the GSA program, Sewell also points to several other strategic operational initiatives that provide growth potential in the years ahead. One is partnering with logistics companies to provide them with fleets of equipment and maintenance services, and marketing off-lease used equipment. Another strategy involves trying to increase the business they do with their current customers. While not necessarily a new strategy, it certainly is a logical one. “We do a lot of business with a lot of customers, and if we focus on increasing the ‘wallet share’ of business we already have, we will have a very strong future.”
Sewell is very intrigued by what he calls a “service force automation project” currently underway in Europe. “Can we cost effectively equip our technicians in the field with technology that would allow them to close work orders and reduce some non-value-added steps? If we can get that right, it has a lot of opportunities to improve our efficiency and service to our customers.” He thinks this is an industry trend to watch for, although it may take some time for the cost of such a project to come down to where a majority of people could take advantage. “I don’t think this is restricted to only large companies. It’s expensive at first, but like everything else, the cost will come down.”
It isn’t only on-site technology that Sewell sees as a growth area. He believes that getting involved with customers’ electronic back office is a service gaining in popularity. “Being able to share information with customers electronically cuts down on administrative costs. I think that gets more bang for the buck than e-commerce,” he says.
Looking to the Future
Barloworld Handling is already one of the nation’s largest material handling dealers, but don’t think Sewell is content to rest on his laurels. “We’re always looking for ways to change and improve. The next few years we want to build upon what we’ve already established.”
From South Africa to the southeastern United States, one large material handling company has figured out what customers want: to be treated properly. Barloworld Handling does it well.