Flailing economies aside, the show must go on in the business world. Conventional tactics will lean towards tightening up existing business, rather than expansion. All the more intriguing then, that automotive logistics company Gefco’s strategy reveals the opposite. And the man with the vision is company chairman and chief executive Yves Fargues.
Fargues exudes confidence in the face of the downturn. Speaking in Deauville late last year he shrugged off concerns over dips in demand and outlined his business strategy for the coming years. He pointed to the last automotive crisis in 1993, when market share dropped nearly 20 per cent. “It only took us 15 months to recover,” he said.
He upped the stakes when he told listeners of a multi-million euro, four-year investment plan. This would carry it well on its way towards its target of achieving 4.7 billion euros in sales by 2012, and a ten per cent operating margin. Fargues took the helm from Louis Defline, who had managed the company since 1999. Since then Gefco, a fully owned subsidiary of the PSA Peugeot Citroen Group, has more than doubled in size. In 2007 it bagged 3.5 billion euros in sales making it one of Europe’s top ten logistics groups.
Fargues stepped up as chief executive of Gefco with a wealth of experience in transport and logistics. He joined the company in 2002 as head of vehicle distribution and preparation, one of the group’s three business lines, where he was a major contributor to the company’s success. This put him in prime position for the top slot.
Gefco has gained international reach by expanding outside of western Europe. In fact, half of its growth now comes from operations in central and eastern Europe, Russia, China and Mercosur. And Fargues plans to continue in this vein despite the economic slump.
He singled out Russia as being an area of particular focus, saying that, “it plays a key role in the development of eastern Europe”. He homed in on the exponential growth the country has recently undergone, stating that its economy grew more than eight per cent in 2008.
He said that port infrastructure expansion is on the cards, and pinpointed strengthening positions in the Baltic and Black Seas. This will help provide direct access to Russia.
One of the flagship projects last year was the export of new vehicles produced in China to Russia. Plans are in motion to develop rail networks in these areas, because neither country has enough road support.
This will involve plans to set up a daily line between seven of the central European countries.
Fargues revealed that several acquisitions are in the pipeline, and pointed to Turkey as one of the target countries. “Turkey has a great future in making and exporting cars. It’s already exporting to western Europe, and it is the natural gateway where East meets West.” Gefco has been collecting more and more subsidiaries over the years, and Fargues said the plan is to create two more subsidiaries each year, and will target countries with the most promising economies, such as Kazakhstan. He also outlined railroad development opportunities in Latvia and Kazakhstan.
Gefco ships thousands of parts from its 38,000 sq m automotive centre in Le Havre, northern France’s equivalent to Felixstowe. The centre’s main role is to consolidate and accelerate traffic flows to help cut shipping times to customers. Here 80 per cent of operations take place in 48 hours, and 100 per cent in four days.
Value added services will be a priority at the centre this year. “Reusable packaging is something that is being demanded more by manufacturers,” said Fargues. Gefco is also planning to step up its offering in areas outside of automotive such as retail and electronics. These are challenging targets, but audacity could well pay off in the coming year.