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20th July 1995, Page 40
20th July 1995
Page 40
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Which of the following most accurately describes the problem?

Just 18 months ago, while most hauliers were licking their wounds in the worst recession since the war, three former Hays directors set up WRM Logistics. They now run a fleet of 400 vehicles with 700 staff and a turnover approaching £40m a year. We examine the rise and rise of WRM Logistics...

Soon after leaving Hays Distribution Services Brian Marr and David Winkworth sat down in Mares lounge and drew up a business plan for their own company. With Geoff Regan, who had left the Hays subsidiary in 1991, they launched WRM Logistic& There's nothing unusual in all this, except that WRM didn't just survive—it took off like a rocket.

By January 1994 Winkworth, who is executive chairman, and co-directors Regan and Marr had arranged finance and bought the Hertfordshire-based contract distribution company TDP. That acquisition was followed by AM Transport of Cumbernauld in Scotland, which took WRM into paper distribution, Then the company entered the fresh produce sector by taking over Wood Distribution in Kent. And earlier this summer it bought the 100-vehicle Kent-based fresh food operator Henley Transport for around £9m, Winkworth, Regan and Marr barely gave their cheque books a week's rest before paying out £3m for another paper distribution company, North West-based Bewick Transportation. That would be more than enough for most management teams but WRM is now negotiating to buy a fresh pro f.; duce transport operator in the South of France and it's already looking for a further u continental acquisition. ,16 In just 18 months WRM has grown from W nothing to a fleet of 400 vehicles with a work

force of 700. Turnover will have quadrupled 'ct from flOm in the year ending 30 April 1995 to ,s1

£40m by 1996.

8 Considering all the problems that the 5 Transport Development Group has suffering I in shepherding and reducing its own flock, many hauliers are bound to wonder why WRM appears to be trying to emulate the Stock Exchange-quoted giant's earlier record of acquisitions.

Winkworth denies WRM is producing an old-style TDG: "We're organising on product lines with a single identity and there's no parallel with what TDG used to do," he says. "We won't let our companies compete for the same contracts either."

But some of their competitors have reservations about WRM's ambitions. "It's easy to acquire companies because they have the business you want but there is never an easy cultural fit," says one. "It can end up with disparate workforces being unsuccessfully asked to do something new. Neither of ATM's sectors sound like goldmines to me."

Business plan In their defence, the WRM trio point to their business plan. It states they are aiming for a turnover of around £80m (the maximum they believe which allows close executive board contact with customers) generated from contract-backed distribution work throughout Europe. The plan also includes a section on "empowering" staff to maintain motivation. Winkworth, Regan and Marr reckon that they are creating, if not a goldmine, a good money-spinner. Next April they expect WRM to make around 10% on turnover, equating to £4m profit.

The paper, fresh produce and contract distribution sectors were targeted after 18 months of research beginning with research into the profitability of a number of product areas.

Car transport and building supplies were immediately discarded, but the team was attracted by the large number of small hauliers working in the paper industry. Taken as a percentage of total production costs, WRM estimates that paper distribution costs are around twice as high as the average for all UK industries. As Manputs it: "Paper has been traditionally advised by the haulage industry and now it desperately needs to be serviced by the logistics industry. We're convinced we can take costs out of their distribution."

They are not deterred by the turmoil caused by soaring paper costs: "The paper industry has got to be more efficient," says Winkworth. "The situation will squeeze costs but not margins." The fresh-produce sector generally offers lower profitability; it has been chosen as a long-term prospect. WRM believes that within the next five years its customers will be the retailers rather than the present growers and importers.

WRM's first purchase TDP, which is turning in around 30% profit on its half-dozen long-term contracts with the likes of WI-I Smiths, provides the financial stability to the whole portfolio.

So far the three men have spent around £28m on acquisitions and plan to spend around £10m more, most notably on the French fresh food carrier and possibly a TDP lookalike in the west of England or the Midlands. Long-term plans include buying out or co-operating with companies in the Netherlands, Spain and Portugal.

But Winkworth, Regan and Marr hope that this meteoric progress will settle down, leaving them to work on a corporate identity for all the WRM companies and to concentrate on other strategic functions.

Recruitment agencies are currently searching for a senior management team to improve co-ordination between the companies, leaving the day-to-day operation with the existing management at WRM's companies.

In 10 years' time Winkworth will be 61, with Regan, the youngest, in his early 50s. At about that time European Acquisition Capital, the venture capitalists backing WRM, will doubtless be looking for high returns on its investment.

Winkworth and Marr say they are too busy to think that far ahead but concede that a Stock Market flotation or an open-market trade sale could be among their long-term goals. They deny that the decision to form WRM reflects badly on their time at FIDS. "We like to think we had a large impact on creating HDS as it is today," says Winkworth. "At Hays we tried to create a single entity from 13 companies but started with raw materials over which we had no choice. The corporate culture can mean you can be stuck with baggage and there can be personality conflicts. There are a whole raft of reasons to do what we wanted to do in a freer environment"

11 by Karen Miles


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