EXCLUSIVE: Scotts will take time to clean up private equity mess

By: Jason Whittaker

Bruce Scott has bought back Scott’s Refrigerated Freightways but the new owner expects it will need at least 12 months

Bruce Scott has bought back Scott’s Refrigerated Freightways but the new owner expects it will need at least 12 months to fix the "mismanagement" practices of its former private equity fund investor.

In a scathing assessment of private equity’s involvement in the transport industry, Scott’s company secretary Jason Murray criticised its previous owners of running a family-owned company with a strong reputation into the ground.

The company went into administration amid claims by the renamed Pure Logistics of skyrocketing fuel prices.

But Murray says the direction of the company was to blame for its failure. He says Pure focussed too much on squeezing as much profit as possible from Scott’s rather than offering a complete service, in turn alienating customers.

Because of this, Murray says it will take about a year to consolidate Scott’s position and restore its reputation in the marketplace.

He says Scott’s has been through "turmoil" the past two and a half years, and has "lost a substantial amount" of revenue.

While saying he does not want to disparage the former owners, he says the company suffered from a lack of leadership and focus.

"Unfortunately from two and a half years of mismanagement and lack of direction from the former CEOs we have got a lot of rebuilding to do to instil a bit of confidence and pride back into the business," Murray says.

Murray is particularly derisive of Pure’s decision to replace Scott's employees with hand-picked managers from overseas.

He says they were involved in warehousing and logistics and had no understanding of refrigerated road transport in Australia.

"They [Pure] just disregarded 50 years worth of history and 50 years worth of people," he says.

So dismayed at the direction the long-time carrier was taking, Murray says Bruce Scott felt an obligation to buy the company back.

The push is now on to restore the company' to its former glory, and Murray says there is strong support which shows Scott's can gain back what it has lost and even grow in the future.

He points to the response from its core group of customers, which he says were overwhelmingly supportive of the news Scott re-purchased the company his family founded more than 50 years ago.

Furthermore, Murray says employees are keen to purge the company of the corporate mentality of Pure and return to the family-owned model of strong employee and customer focus.

"It is a long and complicated story but I think everyone knows that the Pure Logistics cold chain business had been struggling for the last two and a half years since the change in ownership," Murray says.

Scott’s was purchased along with McColl’s in 2005 by ABN AMRO Capital and re-branded Pure Logistics.

A spokesperson for Pure told ATN last month Scott’s suffered from the "double whammy" of diesel use to run the trucks and the refrigerated trailers for chilled and frozen goods.

Upon purchasing both companies, Pure hoped to become the leading national refrigerated and bulk transport and supply management provider.

Despite the failure of Scott’s, McColl’s Chief Operating Officer Peter Williams says the other half of Pure Logistics is primed to grow. The company has dropped the Pure name and is now operating under McColl’s.

To read the full story of Scott’s plans and its take on the failure of private equity in transport read the August edition of ATN. Click here to secure your copy.

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