GSE Expo Report 2000
Cockerel Crows Once More
By Richard Rowe
Life has been a struggle for ground support multinational Teleflex Lionel Dupont (TLD) in recent years, but a fresh face at the top has helped the company tackle its inner demons. Richard Rowe reports on a remarkable turnaround.
It’s not often that a company’s senior management team disagrees so vehemently with its Chair that many choose to leave the organization rather than follow the lead of the boss, but that’s exactly what happened at Teleflex Lionel Dupont (TLD).
While senior management agreed that TLD should be a global supplier, it disagreed fundamentally with the approach. Dabbling in what was seen by many as non-core activity was unacceptable. So, too, were the centralization of all sales and marketing activities in Paris, rather than the empowering of regional offices so that they could react quickly and efficiently. The resulting decline in sales, and stiff competition from local suppliers, saw management mutiny on a grand scale.
Alain Fribourg must have wondered what he had inherited on arrival as the company’s new Chair in February 1999. "The situation was that we had lost a lot of people because of the problem between the Chairman’s strategy and top management’s opinion of it," explains Fribourg. "Second, we were losing money across all of our U.S. operations."
The feeling of destabilization had been exacerbated by a failed takeover of the company by HEICO in mid-1998. HEICO, of course, has since bought and then sold Trilectron--a competitor to TLD’s ACE equipment--to Hobart. The only good news for TLD at the time was that it had cash in the bank from the sale of its Teleflex-Syneravia/Precilec division to another French group, Intertechnique.
The U.S. part of the business, in particular, was limping badly. Having hit a high of US$25 million in 1997, sales dropped to $20 million in 1998, and $3 million by the first quarter of 1999. Lantis, based in Salinas, California, had some technical issues to overcome which, although minor, did little to boost the credibility of the company’s range of loaders through which it had made its name.
In Europe, the company’s operation was relatively healthy business-wise, but plagued by key departures in personnel. Similarly, the head of the Asian regional operation, Allen Fu, also took his leave, while the economic situation in the region was a cruel blow to TLD’s sales.
Step one for Fribourg was to demonstrate a business strategy that would not only convince departed senior management to return to the fold but also persuade those about to jump ship that there remained an attractive future for them at TLD.
With remarkable vigor, Fribourg spent the first two months of his tenure meeting with all of the people who had left the company during the last two years. "I tried to convince them to come back," he says simply.
One of those who returned to the fold was Antoine Maguin, ex-Chair of TLD Europe (known as AET at the time), who has since taken on the post of CEO of TLD America. The decision was easy, Maguin told GSE Today. "All the [old] top management at TLD loved the company and the business was very interesting," he says. "We really didn’t want to leave. When Alain came to me and said that we would get back to a strategy of product development, customer support and proper product management, I was ready to return."
Fribourg demonstrated a keen desire for open lines of communication, something that was sadly lacking in the previous regime, says Maguin.
Some months before, Allen Fu had also been convinced by Fribourg to return as CEO of TLD Asia based in Hong Kong, while Fribourg himself took on the position of CEO of TLD Europe and Jacques Roux remained responsible for sales. Elsewhere, key sales staff, and others on the point of moving, also stayed.
The three regional teams were in place – TLD Europe (with 61percent of TLD’s total sales), TLD America (23 percent), and TLD Asia (16 percent). Slowly but surely, each issue, and region, was dealt with in turn, with the end goal always the same--to restore the good name and credibility of TLD.
Big changes in the U.S. were crucial, not least at Lantis. Salinas may have been renowned worldwide as John Steinbeck country, but was less well known for the quality of its loaders.
"From the beginning, the first issue was Lantis," recalls Fribourg. "We were losing a lot of money, so we addressed the technical issues and reorganized the production. We worked hard to rebuild the reputation and spent $1million on a reconditioning program to do what was necessary."
"There was a year long campaign where we actively went back to our customers and upgraded our loaders to the standard they should have been before," adds Scott Gordon, Executive VP Sales and Service, TLD America.
The campaign has been a great success, believes Antoine Maguin. "The Lantis loader is a very good one, but we had a minor problem which destroyed the credibility of the product. But having fixed the problem we very quickly came back on to the market with a very successful product."
Loaders now represent the best selling product in TLD’s portfolio (14.5 percent). This is followed by air conditioning units (14 percent), air starter units (11 percent), conventional tow tractors (10.5 percent) and towbarless tractors (10 percent).
The improvement is clear. Sales in 1999 improved under Fribourg and topped out at $26 million. This year, TLD America expects to hit $45 million. Maguin puts this US turnaround down simply to the return to a customer-oriented operation. "With the support we can provide to the customer we are selling more and more loaders," he says.
The cash tills are ringing again and not just along Cannery Row. In October this year, TLD celebrated a batch of orders across its various operations. After intensive testing of towbarless tractor technology at Madrid Barajas Airport, Iberia placed a first order for four Tracma TPX200S towbarless tractors. Already a TLD customer for ACE air conditioning units, Erma CHTP ambulifts, and Tracma TMX400 conventional tractors, Iberia is the 24th customer worldwide to turn to Tracma’s towbarless tractor technology.
Meanwhile, KLM Royal Dutch Airlines has chosen Erma (with a 22-unit order) to develop and produce its pallet/container transporters TF10 FTC type with front, rear and side loading. TLD says that the new transporter is an improvement on Erma’s TF line which has more than 250 units in operation. The new design operates with the Flat Top Chain (FTC) and Multi Direction Wheels (MDW) transfer system which has already proven its performance on TLD’s Lantis container/pallet loaders.
Elsewhere, Brazil’s fastest growing airline, TAM, has turned to TLD to provide 22 ACE-302-CUP air conditioning units for its fleet of Fokker 100, Airbus A-319 and A-320 aircraft. To date, 11 units have been delivered with a further 11 being delivered in time to face up to the fierce Brazilian summer.
"Our manufacturers have a clear product strategy just like our sales and service organizations," says Scott Gordon. "Our biggest sales tool is our after sales support and whether you are Delta, American, United, or a small ground handler, we supply the same kind of service and are ready to respond and be flexible.
Almost everything that Fribourg has initiated since his arrival has been designed to cut costs and make the company more cost effective. Out have gone the global bosses of purchasing, sales and support, and in have come three, regionally empowered operations that can be nimble footed when doing business.
The swanky headquarters in the 8th arrondissement of Paris has been replaced with a new office close to Orly Airport, and not far from the old AET sales operation in Rungis. TLD Europe staff has been almost halved, as has the cost of the headquarters.
Although with genuinely global reach, TLD is not a big group, points out Fribourg. "The goal is to have one boss for each regional operation and to meet and communicate ideas regularly."
Like in the U.S., the European operation has been fine-tuned. Although business was healthier in Europe, it still had one or two production issues that needed to be resolved. Orders were up, but on time delivery and product quality were not what they should have been, says Fribourg.
Traditionally strong in its "home" market of Europe, the company will be pleased with a growth rate of 20 percent . However, a similar 20 percent growth this year in Asia, as is forecast, is seen as almost disappointing.
"The market has not been so good up to now, but is increasing. We have development plans in China where we already have a factory [in Shanghai], and as Asian countries recover, they need equipment," adds Maguin.
Fribourg is convinced that the TLD name has now been enhanced throughout its global network. "The reconditioning of the loaders was meant on a global basis," he says. "The core work was performed in the U.S., but we also worked hard in Europe and in Asia."
TLD now has a much rosier future and the company firmly believes it can be all things to all people. "We are a global group that can provide support for a global company and for the smaller ones," says Maguin. "The merging of the ground handlers is a major opportunity for us, and we are looking to see where we can provide partnership and support.
"We are already major suppliers of people like Swissport and GlobeGround. We can deal directly with their headquarters, but we are also everywhere that they are. We offer genuine global support and that’s why they like us. Swissport may buy equipment in Zurich for an Australian operation, but we will also be in Australia. That’s a big plus for a customer."
"If customers want us to be global and discuss at a global level then so be it, but we also provide a very decentralized service with local people," adds Fribourg. "We are close to the end user of the product. The customer sets the rules, and we adapt to them."
For a company keen to highlight and eliminate wastage and extra costs, observers might point to duplication of products at certain factories, but this is not a concern, says Maguin. The 929 loader, for instance, is made at both the Lantis and Erma (in St. Lin, France) factories, but the company is keen to stay close to the customer and remain market responsive rather than go all out on cost cutting. The expertise of Erma in high capacity loaders has certainly helped TLD share engineering efforts in developing the Lantis main deck loader line.
"We believe that specialization of each factory is important, especially on key products for us such as loaders, towbarless tractors, and air starters," comments Maguin. "The level of quality is more important than anything else. We will not try and manufacture, say, towbarless tractors in Shanghai to save on manpower because we would not get the same quality of product. In Shanghai the aim is not necessarily to produce one product line but to be competitive with local products and companies."
Rather than try to fill any perceived gaps in its already extensive product line--the company does not manufacture deicing trucks or refueling units, for example--Fribourg’s primary goal is to make present products better.
"I have more interest in turning our good existing products into excellent products," he says. "We don’t make deicers or refuelers, but they are specific businesses. If there is an opportunity either to work with a manufacturer or even to acquire such a company then that might be of interest, but it is not a priority."
Now under Fribourg’s watchful eye, there seems to be a renewed focus across the board at TLD. It will not dabble where it feels it doesn’t belong. "Other manufacturers are looking to offer maintenance as well, but that’s one thing we have stepped away from. It’s not our forte," says Scott Gordon. "We are manufacturers, and we do it well."
This is the kind of non-core activity that was so unpopular with the last Chair. We have decided not to enter such a business, confirms Maguin. "I really believe that the customer needs very good service from us when they have a problem. Our goal is not to make additional revenue out of such service."
"Doing that [maintenance] there is also a risk of becoming a competitor of our core customers," weighs in Fribourg. "We number handling and maintenance companies as customers."
As TLD’s rehabilitation continues, it is focusing on reorganizing to suit the business of its customers - customers whose needs are likely to change sooner rather than later, not least with the arrival of the next generation of aircraft such as the A3XX.
TLD is already investing heavily in Research and Development to bring existing equipment in line for use with the new A3XX family of aircraft, as well as designing new, tailor made equipment. Such an R&D effort is all part of what Maguin says is TLD’s attempt to be an industry leader. "We need to increase the number of our locations and the number of places in the world where we can provide support. Above all, we must stay a very reactive company."
TLD’s strength, adds Maguin, is the fact that it is the largest company in the world that only focuses on GSE. "Our competitors are all part of larger groups," says Maguin. "This is our only business, and we can be much leaner than the others."
Most importantly, says Scott Gordon--one of the key management whose patience had been tested by the old regime--one of the best things that has happened at TLD in the last year is that it now has continuity and communication.
"It’s now a very enjoyable working relationship," he says. And everyone knows that a happy company is usually an extremely productive company.