One of the ‘big four’ handlers, WFS, appointed a new CEO just a few months ago – and he has clear plans for the company’s growth in the years to come
Craig Smyth joined WFS in August after more than two decades at John Menzies, his most recent post being CEO of Menzies Aviation (a role he assumed in 2004). A qualified accountant, he previously served as the company’s CFO. AGS spoke to him at The International Air Cargo Association’s 28th Air Cargo Forum & Exhibition held in Paris during October, to find out how his new role is panning out so far and how he sees the future.
Q. You were appointed to the post of CEO of WFS in August. Just a couple of months into the role, how have things been going?
A. Today I think is eight weeks in the post for me. I’ve been with Menzies from the start and I’ve closely followed other businesses in the industry. WFS was always a business I had followed closely and admired, and had certain views on. Now, I’m inside the business – in the guts of the business. I’ve been splitting my time between induction, learning, understanding and meeting people as well as some of the basic routines that have to be done in a big organisation – so, meeting with shareholders and bondholders, monthly reporting and setting up some of the routines of the future.
There are no big surprises. WFS is what you think it is: people that are steeped in cargo. It’s a 40-year-old business. Most people I’ve met have been with the organisation for more than 20 years so slightly more history than somewhere like Menzies. They’re all very passionate about what they do – very passionate about cargo. They’re all great people They’re ‘people people’ who are big into relationships both within the organisation and with customers. They’re not ‘here today, gone tomorrow’ with customers. Customers trust them implicitly over a long period of time. If things do go wrong, there’s a lot of patience and goodwill to sort out whatever the issues are.
Everybody has made me incredibly welcome. I did say to somebody the other day that WFS is like a league of gentlemen. At Menzies, we came from very humble beginnings with very Celtic roots so we were sort of the small guy hustling. I guess in the last five or 10 years or so the business came of age. WFS is very graceful – that’s probably the French heritage as well, plus the type of people that have grown up in that business. It’s a different culture – a culture that I’m happy to belong to, to grow and develop within their existing culture rather than change it to something that would be alien to them. That’s certainly not my intention.
Q. What particular skills and experience – whether from the handling arena or elsewhere – are you able to bring to your new position that you believe will take WFS forward?
A. Well, the caveat is that I’m only eight weeks old. I think WFS has grown up rooted in France with acquisitions, a bit of organic development and joint ventures. As most handling businesses have in common, it’s got great people, great safety and security, great financial performance and great customer relationships. It’s been incredibly successful in the main because it’s had really good people – and again, really good people in cargo and with cargo tools.
I do believe in people having the right tools for the job so there’ll be an element of further investment in cargo, honing the cargo product. WFS is the biggest and the best cargo handler in the world and we want to make sure that position is cemented for the future; there’s more support we can give to the people in the field when it comes to the cargo product – making sure we have the right chill stores, the right pharma trucks, the right capability to handle live animals or human remains or secure products or pharma so that we are a 21st-century business. Some of that will take a small investment. The IT system is quite good but there’s more technology we can harness. There are slightly different versions of some of the cargo systems so we’re looking at levelling up.
Cargospot is the main one that we use. There’s Hermes in one or two places and there’s still ABS out there. It could be that there’s a front end that could sit on top and drill down, and could give the KPIs and the customer information, so we’re looking at that.
WFS was run as a diverse geographical network with almost no central functions, so at the moment I’m building the central capability. Lots of the business is operating very well and has good processes and people, but it’s not really coordinated and run as a network. Without losing the entrepreneurial spirit out there, I want to give more central support so the WFS brand gets taken to the next level and you can say, ‘These are the 10 things you always get with WFS,’ be it physical or intellectual property.
I know the industry pretty well and my roots were in cargo – starting off with AMI with cargo forwarding, then cargo trucking, then cargo handling. Then ground handling was the big success – finding the magic formula for high-volume, low-cost and legacy airlines, that is, narrow body airlines. So I know the cargo business pretty well but I think my skill is as an ex-accountant who is an administrator and who usually never had an original thought in his life! But you see the best that’s out there and you think, ‘That’s a good idea, why don’t we do that somewhere else?’ Or, ‘That’s a good process or a good discipline or a good system.’ It’s about trying to put people together and borrow from different parts of the organisation or other organisations, be they in this industry or other industries that we could learn from.
That’s what I bring to the party: I’m an administrator of complex, multinational businesses in aviation services where you really are reliant on groups of people working as a team with common goals.
Q. Obviously WFS has different offices around the world. How do you bring the different cultures into play? How do you manage that?
A. I think it’s difficult to stipulate from a WFS point of view because I’m still learning the network and some of it is a crossover with Menzies while some of it is new. It’s trying to work with local people from local cultures and make them feel supported, be it with the tools or be it with the alignment of goals and the spirit. This isn’t absolute, but you have an American running America, a Brazilian running Brazil, a French person running France – and then fuse that with the process and structure and products of a cargo and ground handling business.
Q. How much involvement do you think Platinum Equity is going to have in determining the future of WFS?
A. I had my second op con, which is like a board meeting, last night and they’re very supportive. If you look at what they did, they invested a lot of money in WFS and then three months after that committed a similar amount of money to buy the CAS business in North America, so that was a very bold move – a statement of intent. That business is doing very well integrating and a lot of the heavy lifting of that integration will be done by the end of the year. Then they can focus more on the product and what the customers want to be the next level of service or efficiency. I think that’s a fantastic platform to grow organically and to me, where a customer actually wants you and has taken to you, that’s the best type of growth.
Where we see opportunities, be it new markets or synergies like the CAS deal, then there’ll be sponsorship from Platinum.
We’ve got tremendous support from bondholders as well (that’s how the business is funded: a combination of debt from bondholders and equity from Platinum Equity). Carrying on our success, there will be more money to invest.
Q. What can you tell us about the direction the company is taking now? Is it continuing on the course set prior to your arrival, or are you seeking to change things significantly? Either way, can you outline your plans/strategies for the future?
A. Again, the caveat is I’m only eight weeks old! There’s no getting away from the fact that this is a very strong cargo business with a very strong pedigree. We want to grow and develop cargo. We’ve got facilities all around the world. We will be looking at making them more efficient to create more capacity so we can handle more airlines. We’re improving the IT systems – again moving up to newer versions rather than completely throwing them out and starting from scratch.
I’d characterise it as gradual evolution rather than revolution anywhere in the world. I’m keeping the progress that’s been made in cargo going. In many places we will need new capacity in existing airports over the next five years so we’re looking at that and being proactive with that – we want to invest in this business.
There are little nuggets or jewels of ground handling around the network (passenger and ramp handling), for instance in the US or Spain or Paris, but it’s not been a particular focus of the company in the past so we can probably do more. It’s certainly a very attractive market and there are customers that want to have a different product – a better product – but still at an efficient cost. So that’s a market I’m looking at closely to see how we can improve our capability to respond to customers’ needs.
Q. When you go more into passenger and ramp, will you grow that organically or through acquisitions?
A. I think it would start organically just to prove the case and prove that there’s a market there that is not being served – or is being poorly served by some handlers in those markets today. It’s where I enjoyed a lot of success over a long period of time so it’s an obvious thing to look at and try some things. And if it doesn’t work, we’re still a big successful cargo organisation. But going from cargo into ground handling, once that’s done then we are going to look at some of the ancillary services, be it lounges or fuelling… These things, from a business point of view, are about maximising or leveraging the infrastructure you’ve got: you’ve already got a management team on site hiring and training and serving customers; from a customer point of view, there’s a whole batch of services they want to buy.
WFS has some great examples of ancillary services such as wheelchairs in Hong Kong, PRM, a cruise terminal we run in Hong Kong which is very successful and growing rapidly. These are examples we’ve got already and we’ll get to other things too eventually.
Having an integrated cargo/ground handling/aviation services business would be the goal. That may take five years or it may take 10 years but it’s coming out of the very strong cargo core business and getting into these products is what the template plan could look like.
Q. What are your thoughts on the trend for consolidation in the industry?
A. There’s a ‘big four’ emerging: Swissport, WFS, dnata and Menzies (with the ASIG business). There are scale benefits because you’ve got one central infrastructure; you’ve got tools and pillars that support the brand; and you can invest. I think there will always be room for the small players – the single airport, the single country, entrepreneurial people running a business themselves in a very efficient way with local customer relationships.
I think if you’re stuck in the middle that will be difficult, and that’s what will keep consolidation going. The stronger will get stronger and there will always be opportunities for the small guys, but in the middle, that’s always going to be quite a difficult place to be.
The airlines have still got an awful lot of choice out there in most markets so I think they will support continued consolidation. Consolidation means, usually, synergies as well – the benefits can be shared between customers and shareholders, so I think it’s good for the industry. Whether or not four becomes three, becomes two… I don’t know. But I think there are plenty of opportunities for the ‘big four’ to carry on with consolidation.
With any business, and this happened to me with Menzies, you start off very small and you can never afford the overhead or the infrastructure or the next IT investment; you have scarce resources and you have to be careful how you allocate those. Most businesses go through growing pains. That’s why, to me, this is the right moment for WFS to have a proper suite of central services, be it centralised safety or security, network standards, training, global people function (again, not getting involved in local HR, which is done very well, but in terms of the talent management and development or bringing in the right talent from outside), a central commercial function, making sure we’re attending to all of our global key accounts…
It’s about upgrading. As I said, every business goes through growing pains and I think at WFS, in order to grow again successfully and consistently, we’ve got to strengthen the centre of the business to go and support people in the field.