Survival attributed to the work of good people, the rewards of good risks and the whims of good fortune was the theme that emerged during the Thursday event (Sept. 19) marking the 90th anniversary of Fort Smith-based Arkansas Best Corp.
Blanketed by blue skies and joined by several hundred employees, former employees, political leaders and well-wishers, officials with the transportation holding company and a trucking trade group spoke about the trucking industry and the company’s past and future.
Arkansas Best began as a small local freight hauler – OK Transfer – in 1923 operating in the Fort Smith area. With a market cap of almost $700 million, the company now includes ABF Freight System, one of the nation’s largest less-than-truckload (LTL) carriers, and has grown organically and through acquisitions to provide global shipping and logistics services.
David Humphrey, vice president of investor relations for Arkansas Best, set the stage with opening remarks that noted the company had survived more than 30 acquisitions, a hostile takeover attempt and significant technological innovations.
Early owners and executives had to survive the dynamics of operating in a pre-1980 system heavily regulated by the federal government and the early chaos of a post-1980 unregulated marketplace. Roy Slagle, president and CEO of ABF Freight System, said 90 years for most businesses is great, but “it’s an incredible thing when a trucking company does it.”
Slagle said 1980 was a “watershed moment” for the trucking industry when the federal Motor Carrier Act deregulated the industry and greatly lowered the cost to enter the business. But Slagle proudly noted that of the top 50 carriers operating in 1965, ABF is the only one still operating under the same brand.
Considered to be a watershed moment for the company was when Fort Smith attorney Robert A. Young Jr., bought the company in 1951. The history page of the Arkansas Best website notes of Young: “The more than 20 acquisitions that followed illustrated the vision he instilled in the company. Every acquisition turned into a profitable operation within a year after it merged with ABF. Following the purchase of Best Motor Freight in 1957, the company's name was changed to Arkansas-Best Freight System, Inc., the name it operated under until the official name change to ABF Freight System, Inc. in 1980.”
Robert Young III, was 10 years old when his father bought the company. Young said his father was a “gambler, a risk taker,” and knew the company had a future. His father “hocked his life insurance policies” and assumed other debt to bet on that future.
The corporate history notes that all acquisitions were ultimately profitable. But Young, who followed his father as president and CEO of Arkansas Best in 1973 and still serves as Board Chairman, said Thursday it was often “touch and go” in the process of buying a trucking company that was going broke before they bought it.
“After each acquisition, it was hell getting them turned around,” Young said.
But within a year, the deals would become profitable, and Young said can still remember the first month they had $1 million in sales.
“That was a big deal,” said Young, adding that now the company makes $1 million in the first hour of the first day of each month.
The company posted revenue of $2.065 billion in 2012, the first year above the $2 billion level. Operating revenue for the first half of the year is $1.097 billion, better than the $951.41 million during the same period of 2012.
Young said his father did not micromanage and was “amenable to change,” going so far as being willing to adopt good ideas from competitors.
“He told you what he wanted the end results to be” and then he let you make it happen, Young said of his father’s management style.
With some emotion in his voice, Young wished his father could see the 2013 version of the company he acquired in 1951.
“I would love to bring him back for just 15 minutes to see how far we’ve come.”
The industry and company have further to go, said Bill Graves, president and CEO of the American Trucking Associations’ and former Kansas governor. Graves also noted that 90 years in the trucking business is even more impressive when considering there was not a trucking industry prior to about 1910. Grave said that Arkansas Best has been successful on a path that “many, many other companies have attempted but failed.
Graves said changes in the economy have resulted in a “proliferation of warehouses and distribution services” that are forming an “LTL sweet spot” for companies like ABF with a regional network model.
Ralph Garcia, a frontline worker who still logs about 100,000 miles annually in an ABF truck, also spoke Thursday. Garcia has driven 35 years for ABF and recently received the Neill Darmstadter Professional Excellence Award at the American Trucking Associations’ 2013 National Truck Driving Championships. It’s the top honor for drivers in the industry.
Garcia said ABF “practices excellence and practices integrity” in such a way that many drivers want to work for the company.
“The reputation on the road is, ‘Get me on with ABF.’ ... That’s what drivers talk about out there,” Garcia said, adding later that “It’s no accident that we’e been in business for 90 years.”
About 7,500 drivers, dockworkers and other specialty workers work under a labor agreement through the International Brotherhood of Teamsters. ABF and the Teamsters are still working to get full ratification of a new five-year contract that was approved June 27. However, seven supplemental provisions of the contract were rejected, with a vote in late August seeing five of the seven gain approval. It could be the end of October before the contract is fully ratified.
Arkansas Best Corp. President and CEO Judy McReynolds said the keys to past success were good people, a good culture and a willingness to change and adapt. Moving forward, McReynolds said success will also require leveraging technology, “investing in great people,” and providing great customer service.
McReynolds reiterated the company’s revenue goal of $3 billion by 2015.
“We are more than able to accomplish this goal,” she said.
In a statement about the anniversary, Fort Smith Mayor Sandy Sanders thanked the company for its community support.
“Not only is ABF Freight System, Inc., an essential economic driver, the company has been an excellent community supporter for the past 90 years. The city’s performing arts space in the convention center bears the name of ABF's parent, Arkansas Best,” Sanders said. “We thank ABF and Arkansas Best for its commitment to Fort Smith, and we look forward to the next ninety years.”