You ask...you shall receive..............
To: All Vitran Team Members
From: Chris Keylon
Yesterday, our 2nd quarter earnings were released and a subsequent conference call was held to discuss the earnings. Although everyone is disappointed with the results of the quarter, we have to keep things in perspective and focus, because there has been much done to improve this company.
I am going to detail for you our position, but first tell you the story. Vitran US has struggled for a minimum of 6 years. An argument could be made that it was actually longer than that. Vitran US is comprised of a lot of smaller companies. When each smaller company was brought into the Vitran family, very little was done to integrate those companies into the greater Vitran. As a result of this repetitive action, it created a situation where the company was fundamentally broken. Losses started to occur, and a leadership change was made in January 2012.
In January 2012, I came on board to lead Vitran. What I found early on was what I have previously mentioned. We had a company that was not put together and had no system wide foundation. We did not have leaders over the most important areas of our company such as: Operations, Sales, Maintenance, and Pricing. Without a singular leader over these functions, it was impossible to put the company together into one. I am speaking about things such as a common line haul network, consistent policies and procedures across the system, and the list goes on. So, putting in an organization structure was one of the first tasks I had to complete. If this was not done, we would not have accomplished one-tenth of the things we have done over the last 18 months.
We had to create a common line haul network, because this is what provides the service. The service we were providing was very poor. It was also dishonest. The corruption and dishonesty within this area was astonishing. No company in any business can survive built on lies and deception. So, the dishonesty was cleaned up. The line haul model was built, and today we provide much better service than in the past. It is still not where we want it to be, but it is significantly better than the past. This was the first area where we had to start. A service company is built on service. So, we had to build a model that provided the foundation for our existence. From there, we build.
There have also been literally hundreds of other things done to improve the company. Many of these items surround a huge increase in technology, which is essential to cost savings, efficiencies and better customer service. However, it does not stop there. There have been countless projects to continue to build the foundation in every part of our company. We are well on our way to having this completed.
Although we have done a lot to build or improve the foundation of our company, during the time this work was ongoing, we were losing business. There are many reasons why we lost business year over year. Let me detail some of these for you.
Service - While we were building the foundation, we struggled with service. This was expected when making wholesale changes. The issue is the customers have experienced less-than-desirable service for many years. Some customers had enough and moved on. Now, the good news is we are getting some of those customers back today.
Pricing - You may not be surprised, but we didn’t have a costing model in this company before June 2012. We have one now. This is the most crucial part of our business to be able to accurately charge prices for our service product. We had thousands of expired contracts to work through. This issue goes back to no leader in the past; therefore, nothing was being done. We have had to play catch up and clean up in working our expired contracts. This has been good for us for the long term to get customers current, but it also has cost us business. Because some customers were not excited about taking much needed increases when they have not for years, they left. Again, some are coming back.
Sales Team - There has been a tremendous amount of work done in sales (foundation-building work) that will help us grow business. Much, if not all, of this was non-existent. We are set today to take off in growth. In the short term, we have been hurt by roughly 50% of our sales people being new. When a new salesperson comes on board, they need time to cycle their territories, and understand the company and product so they can grow business. So, the good news is they all have tools now to help them do their jobs better. We just have a lot of new folks who will need a little bit of time to get up to speed. I do want to correct something that was said on the earnings call yesterday. Most of our former salespeople have left us for other opportunities, as opposed to the company firing salespeople. We have never had a corporate initiative to remove salespeople or anybody else for that matter. The fact is when there is a lot of change, the probability of people leaving is much higher. We have certainly seen this at Vitran in all areas.
In the past few months, we have had several visitors in our company validating our work. To the group and person, they have commented to us and the Board that the work done in the past 12-18 months is nothing short of phenomenal. Many have said they have never seen this much work done to fix a company in such a short period of time. For that, I am proud of all of you and the work that you have done over this time period to help turn our company around.
But the fact is, this company has been broken for a long time. It will be fixed, but it is not going to be fixed quickly. However, it will be fixed much quicker than otherwise possible, had all the work done the past 12-18 months not occurred. We are in a position today where we simply need to grow revenue and business. Everyone has this responsibility. You may not be the actual salesperson, but what you do everyday and how you do it is what our salespeople are selling. So, do your job to the best of your ability and with a positive attitude. If everyone does that, we will progress much faster.
In closing, as disappointed as we are in the 2nd quarter results, I am very thankful and proud of the work you have done over the past 12-18 months to turn the company around. We need to capitalize on this now, and start performing at a higher level. Stay focused. Take one day at a time, and do the best of your ability. If everyone does that, then we will be very successful.
Thank you!