Speak your mind
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How did Bibby Distribution get back on top of its game? CM speaks to CEO Iain Speak
Words: Steve Hobson
IAIN SPEAK TOOK OVER as CEO of Bibby Distribution in 2007 , but until last year, when the company hit the headlines with a series of takeovers, the company had made steady but unspectacular progress.
As a key part of the privately owned Bibby Line Group, the logistics operation has funds to continue its acquisitive streak in 2011, but Speak says he has no turnover target in mind.
“In my mind, scale is completely irrelevant,” he says. “If there is an opportunity to make an acquisition, then we can fund it, we can scale up and we can take a long-term view.” The takeovers of Taygroup, TM Logistics and parts of MRS last year propelled Bibby Distribution to a £250m-a-year operation with complete UK coverage. Even so, Speak says it is seen by some potential customers as too small.
“We talked to two car companies last year, and one said it wouldn’t use us because we didn’t have ‘scale’,” he says. “But Honda – which has now extended its contact with us for the next ive years – said ‘we like you because you don’t have scale’. What they were saying was that ‘because you are smaller, we will be more important to you’. And we have a fantastic relationship with them.
“There are some customers who won’t talk to us unless we are a certain size, and conversely, some who say ‘you’re too big for us’. It’s a dificult balance to strike between scale and service. It’s not about the size of the customer or the size of the logistics provider, it’s about the way they think and their corporate philosophy.” Before last year’s spending spree, Bibby was light on infrastructure in the South West. But just as growth in turnover will be a secondary goal for any future takeovers, Speak says illing any gaps in network coverage is also not a major priority.
“We would see geographical coverage as a secondary beneit,” he insists. “We have gone from hardly anything in South Wales to having a signiicant presence there with our acquisitions of Tay and TML. But we didn’t buy them for that reason. Would we buy someone who only operates in the South West? We may do, but it wouldn’t be just for that reason.”
Refused to specialise
Bibby has so far resolutely refused to specialise in any market, and has customers in a range of markets including grocery, automotive, plastics, healthcare, pharmaceuticals and packaging. “If there is a customer who thinks like us, it doesn’t matter what sector they are in,” he says. “It could be an old established business that wants to change the rules in their market. We are an old business – Bibby Line Group is 204 years old – but we are continually trying to change the rules in the sectors we operate in.
“We could talk to two customers in a sector we have no experience in and one will say ‘I’m not going to take the risk’, and the other will say ‘you’re not in our sector, so you will come along and challenge us and bring fresh ideas’. So it is a mindset. In the irst case, you will never convince them and it would be like pushing water uphill. In the second, we can deinitely do business and will deinitely be able to add value.” Almost by accident, however, the company has built a substantial presence in packaging.
“We do a lot in cans now,” says Speak. “In the broadest sense, the market that we have a strong foothold in as a result of the acquisitions last year is packaging – paper, board and metal.” Also more by coincidence than design, Bibby joined pallet network Palletline with its takeover of TML last year. “We have no intention to leave it and they have no intention of throwing us out,” says Speak.
Future takeovers
The criteria for any future takeovers are simple and won’t change, Speak explains.
“We are looking for businesses we can create long-term value from, a quick buck doesn’t really excite us,” he says. “We have set out on a plan and it is a complete plan, not just about a headline objective. It’s about growth on all fronts. There is a process – we look at where we are and say ‘if we want to get to a proit of £30m what are the levers we can pull to get there?’ “From there, we develop the thinking down to the business, not just in terms of buying company XYZ, but what does it mean for us as a business, where do we need to get our managers to, what do we have to do with IT?” Looking ahead, Speak says Bibby Distribution is “approaching a point where we will have some strategic decisions to make”.
“Do we do something big and if so where?” he asks. “Do we buy a competitor in the UK, or go overseas? Could we buy a German transport company? Or do we go to an emerging market or a market with similar macro-economic conditions to ours such as North America? So we have a lot of ideas but not yet any decisions.” ■
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