The 'turnaround' team
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Craig Bunker and his partners at Key3 believe they have come up with a formula that could save many failing transport businesses can they prove it?
Words: Louise Cole / Images: Tom Cunningham CRAIG BUNKER IS probably best known as the managing director of Key3 Partners, a consultancy that aims to turn around transport businesses.
In 2007, though, he took on another challenge a lack of interest among smaller players in the market.
He says: -At Key3, we said we would target the big third-party logistics (3PL) providers and the big in-house fleets.
"The question then became how we sell to the smaller companies. We ran all kinds of seminars etc, but they would not invest. So we decided that if we couldn't help the smaller haulage firms, we would compete against them."
Bunker's move was to buy AE Costin in June 2007 a transport business that was making a loss, and a workshop/ recovery business, sister firm Autorite, that was making a profit.
"AE Costin was two miles from the M6, with five acres of freehold; it had a strong local name, a loyal customer base, a good workforce and a good fleet," reveals Bunker. "We bought the right firm at the wrong time just before fuel hit £1 per litre and the recession bit."
After a two-year turnaround, Costin is "fundamentally fixed" and Bunker predicts a future of growth once the economy levels out.
"If the economy hadn't dropped, we would have been growing Costin and Autorite already. But I want to fulfil their potential.They currently turn over about £4m, but they have the potential for £7m-£10m. So far, they just haven't had the chance."
There are two reasons why Costin's success is important. First, Bunker and his partners sank every penny they made from six years' successful consultancy into the acquisition a fact, he admits, that occasionally still keeps him awake at night. But, more importantly, he wants to provide working proof to the haulage industry that firms can be turned around
provided they have the right management principles in place.
Bunker started in logistics fresh from university, with a job at Wincanton.
He progressed from operational roles to contract manager for petrol tankers Three years on. in 1995, he went to United Transport (UT) which was, "my first experience of something that needed fixing. At 24, I ran six sites and more than 100 vehicles and drivers I'm not sure quite how at that age.
"However. UT had adopted a shared user model rather than dedicated tankers, so had a £10m turnover with no profit."
Six Sigma
Bunker brought the division back to profitability within 18 months, drawing heavily on the corporate finance training he received while doing his economics degree. "That's when I learned the beauty of the weekly P&L [profit and loss], and I've never let that go. I had to justify everything to head office every week, and that's where the paranoia of knowing every figure started."
It is a paranoia that has served him well, along with the Six Sigma training he had in his next job at GE.
Six Sigma is a management strategy devised to improve the quality of business processes by removing errors, It's about quantifiable targets, and is the basis of the offering from Key3.
"We can bring most value to those that lack visibility and good quality management information," Bunker says. -Often companies have tonnes of data, yet when I ask a simple question what's your average vehicle fill or fuel consumption? they can't tell me."
Bunker believes there are several key challenges facing the UK road transport industry. Other than not making the most of the available IT (see panel above right), one of the industry's other failings is that it doesn't attract enough professional business managers.
Cost issues
Not all failing companies can be saved, but it becomes quickly apparent which ones can. Bunker reveals: "If it is a cost issue, it can be fixed. If it's because the firm was built on poor revenue, doing
the jobs no one else wanted, that's different. It's hard to convince lenders about sales-based rescue plans.
Bunker divides his time between billable hours as a consultant with his five Key3 team-mates and running Costin he's convinced Costin can prove, as a consultancy. it is different. "What hacks people off is consultants who come in, tell you what to do, send a big bill, and then disappear. "However, we learn a business, play it back to the staff and explain exactly what it is doing and how they are responsible for its solution. Our team will stay and help you implement it."
To put its money where its mouth is, Key3 will even take a slice of the fresh earnings or risk its pay if it doesn't work. "We'll look at fee-based work, equity-based, whatever."
For all Key3's success with Costin. Bunker believes his firm's turnaround skills can work at any level. "We want to be the turnaround team for logistics. We want that call from a bank that says: 'We have a £100m business for you to fix';" he concludes. •
• Craig Bunker will be delivering a presentation on persuading clients to accept rate increases at the Fleet Management Conference, which takes place on 21 October. Log on to www. nitconferences.co.uk for information.