“We have some big competitors with global reach,” says chief executive Graeme McFaull, “but we don’t have the resources to be global. Our strength is our customer relationships.”
“We have strong offerings in France, Germany and eastern Europe,” he says. Until recently, Wincanton had a relationship with Kuehne & Nagel that gave it a global freight forwarding capability. However, that was terminated when K&N bought rival ACR. Wincanton has been looking for a replacement partner that can cover mainland China and the whole of Europe and expects to announce a deal in the next couple of months.
Wincanton was founded in 1925 but it is over the past 12 years that the most dramatic growth has come with sales rising from £300 million to £2 billion.
The takeover of P&O Trans European in 2003 gave Wincanton a strong position in Germany along with operations in eastern Europe. However, says McFaull, it was still sub-scale in France. That situation was rectified in October 2005 with the takeover of Premium logistics. Premium had sales of £67m focused mainly on the FMCG sector – one of Wincanton strengths.
Following the Premium deal, McFaull’s strategy has been to focus on four key markets: the UK, France, Germany and Poland. He is quick to point out that Wincanton has good businesses in the Netherlands, Hungary and the Czech Republic and will not turn its back on them. But the bulk of the growth is expected to come from the big four markets.
There are also opportunities to move further east into Russia and Romania. Spain has proved more difficult. Wincanton closed three loss-making sites there at the beginning of the year leaving just one location which is important for its international customers. “You have to play the cards you are dealt,” he says.
“In the longer term, Spain is an attractive market. We have looked to buy there but the prices are high.”
Looking ahead, McFaull sees a real opportunity to develop an international transport operation across Europe tying together Wincanton’s operations in its core markets.
Domestically, last year saw the company taking over Lane Group giving it a larger presence in the two-man home delivery market – it was already working for Comet and B&Q. And it took its first steps into the construction business with the takeover of the RDL group. McFaull points out that a lot of this business is still in-house with a low level of outsourcing, “but companies are under pressure and looking for a greater level of professionalism”.
He describes RDL as a well run business with old-fashioned high standards. It has relationships with a number of industry leaders including: Ibstock, Hanson, Lafarge, Brett Landscaping and Omya. RDL employs 350 people and has 200 vehicles on 38 sites across the UK.
“We are still acquisitive – we want to add further scale in our core markets,” says McFaull. “There is some bulking up we can do tactically with in-fill acquisitions. We are sticking to our formula of looking for well-run businesses – modestly priced.”
Organic growth has also been substantial with some notable wins such as Somerfield. Wincanton has long run a sizeable chunk of the Somerfield distribution operation but last year became the sole provider in a deal worth £900m over five years. And in January it began distribution of ‘non-production’ material for seven locations of Volkswagen Logistics. It is handling distribution of workshop equipment, tools, engines, packaging material and rejected goods.
Wincanton was an early mover in the reverse logistics sector tying up a deal with US returns specialist Genco five years ago. It’s fantastic software,” says McFaull, although he admits it has been slow to take off in the UK. That could all change with the advent of the WEEE directive.
Wincanton has an alliance with Valpak, the compliance scheme provider to offer complete solutions that will enable manufacturers and retailers with producer responsibility to discharge their obligations under the WEEE regulations. The idea is to offer clients turnkey and bespoke solutions, whereby Valpak registers the producer and manages producer compliance, and Wincanton designs and manages the transport and treatment solutions.
Wincanton has made the investment and has already carried out a trial with Argos to dispose of goods in a WEEE compliant way. This could be the year when success means going into reverse for McFaull.
Graeme McFaull is an accountant by profession. He started his career as a graduate trainee with Geest in Lincolnshire before moving to London to join Cargill, the commodities specialist.
He then joined Pepsico as finance controller moving on to become finance director for the food division in eastern Europe from 1991 – 1994.
1994 Finance director of Wincanton’s Retail Division.
1999 Managing director of the Retail Division.
2003 Managing director of Wincanton’s UK and Ireland business following takeover of P&O Trans European.
2005 McFaull took over as group chief executive on the retirement of Paul Bateman.
He is a Fellow and vice-president of the Chartered Institute of Logistics and Transport.