MaxiTrans veteran Brockhoff looks for next challenge

By: Rob McKay


Michael Brockhoff Michael Brockhoff
maxitrans1 Buying Azmeb saved the company from five years of building a new market presence maxitrans1
Hamlex White Hamelex-White gave greater exposure to infrastructure construction Hamlex White
maxicube maxicube
brockhoff As he leaves MaxiTrans, Michael Brockhoff is looking to new challenges in the transport sphere brockhoff

Michael Brockhoff seeks new challenge after 17 successful years with Australia’s leading trailer manufacturer

 

After nearly four decades on either side of trucking and trailer manufacturing divide, MaxiTrans managing director Michael Brockhoff, is in search of new challenges.

He leaves a company that is all but unrecognisable from the one he arrived at around the start of the century.

Brockhoff has worked at only two companies, one listed and one unlisted, since starting as a trainee manager at Linfox 22 years before he left to lead the trailer-maker.

Founder and board director Jim Curtis was acting helmsman of what was then Maxi-Cube and Brockhoff, who had dealt with Curtis when buying his product, had been viewed as the talent that could take the company forward.

"I’d bought the product, so I knew it extremely well. I knew some of the people within the business, certainly from the Maxi-Cube side and I’ve always enjoyed the product side of the business, even when I was at Linfox.

"So it seemed a very natural extension to go to the other side of the fence."

His offering is a rare one. Few such senior executives boast experience and long service with both a privately held transport giant, including five years as head of its logistics division, and a listed equipment maker and retailer with which he has overseen successful local and overseas expansions.

Now, his last major project for MaxiTrans is to enjoy a seamless handover to successor Dean Jenkins including visits to New Zealand and China following a tour of the home country.

When Brockhoff came to the firm 17 years ago, it was much smaller and had only two brands and less than a third of the present turnover of $340 million.

A major part of the solution found for MaxiTrans was spreading business risk through diversification.

The strategy developed led to 11 trailer and parts acquisitions to broaden the product offering across the industry.

The Coonara wood heaters business and some property were sold, head office was relocated into a factory and in 2002 he designed the company’s first dealership in Derrimut, Victoria.

"It was a matter of right-sizing the business before starting to grow it again," Brockhoff recalls

"We didn’t have very long. We had to be very decisive in what we did."

But the need for strong, swift change has its own risks.

Personnel can become demoralised or lose faith in the company’s future as well as their own within it.

Bringing the best along with reform effort is a matter of proper communication.

"Sit down and articulate a vision and have them a part of implementing it," Brockhoff advises.

"As long as they believe in the plan and believe they can participate actively, they will be as enthusiastic as everybody else in delivering it.

"If there is no plan articulated and no strategy articulated, people will become very despondent."

A similar approach was sometimes needed after acquisitions.

"You are integrating private companies into a public company and sometimes the individuals who are running those companies, and the staff, struggle to deal with that transition.

"I think that’s the greatest challenge, merging cultures. Some of the requirements you have as a public company in terms of reporting.

"We have a monthly reporting cycle that’s very comprehensive in our company, with standard reports, standard KPIs, we measure the business the same way, regardless of which site or operation it is, so some people have struggled to do that when they are not used to it.

"And that’s not a criticism, they haven’t had to. They’re not used to seeing a P&L every month a balance sheet or a cash-flow forecast every month."

The strategy

A significant portion of the plan was diversification that allowed the company to spread its exposure and therefore its risk and saw the development of $100 million parts business with 21 retail and wholesale sites as an outcome, along with an expansion into new trailer market segments.

"That was designed to be a counter-cyclical revenue stream from the trailer division.

"[We were] reducing the cyclicality of the business because the business was very susceptible to economic environment, so by having six brands rather than two, you hope that only one or two are going down at a certain time and the others are up.

"What we effectively did was get involved in other parts of the economy, like rural, resources as well.

"It was about stabilising the revenue of the company."

The task was to identify the best brands in each sector and make strategic acquisitions.

That was not without its challenges, as the approach must be to successful owners and managers of firms.

Here patience was required, with some firms taking up to 18 months to woo.

"Sometimes the initial discussion goes nowhere and then you come back and reapproach it.

"They’ve had a discussion with friends and accountants about what the real value of the business is. More often than not, you can negotiate a fair deal."

He nominated the acquisition of Azmeb as a pinnacle achievement as it saved the firm five years of building its own presence in the resources sector.

It was a similar story, mixed with fortuitous timing with agriculture-focused Lusty EMS, a purchase that gave it the advanced Stag B-double tipper that was still quite new.

"Graham Lusty at that stage was getting on and was prepared to sell. We felt we had a distribution set-up that was second to none, so we felt we could grow the business.

"And whist that was product centric to Queensland and northern New South Wales, it didn’t give us the coverage we wanted in south-eastern Australia.

"That’s why we went out and purchased Hamelex-White. And to give us exposure to infrastructure construction – sand and gravel."

Brand loyalty

Still, that did not mean MaxiTrans was averse to doubling down on a particular sector if the purchase was complementary.

Why? And what builds brand loyalty in trucking?

Brockhoff has a one-word answer: "Relationships".

"The industry and the business are built on relationships," he emphasises.

"Things go wrong with products and services but it’s how you deal with them and how you fix them that makes the difference.

"And if you like the person you’re dealing with, you keep going back."

That also speaks to a great deal of trust in what some insists is a shrinking commodity in the industry but Brockhoff won’t hear of it.

"I don’t agree –deals are still done on a handshake," he says.

"You work with people you like working with and people you trust, be it a supplier or customer", he adds, saying he’d just had dinner with a customer and their relationship has lasted 30 years.

Creativity                                                                                                 

"Transport operators get the majority of their economic gains out of changing the shape and size of trailers – longer trailers, different combinations.

"It been something at MaxiTrans, we’ve focused very heavily on over the past seven or eight years.

"Over the past 10 years, we’ve had 28 new products... and they related to safety and productivity."

It is a function of strong support for internal research and development that Brockhoff is very keen on.

"It’s been one of my passions – I’ve had R&D reporting directly to me for a long period of time," he says, recalling a time when the firm may have had only one researcher but now counts R&D personnel many times that.

"The Australian logistics market is the most efficient in the world," Brockhoff says.

"That’s because the transport industry operators are very innovative.

"They’re always trying to get another carton or kilo into a trailer."

This has led to a proliferation of models, makes and sizes, so its production runs are generally very specialised and don’t lend themselves to such automation.

So, where does he see the advances coming from in the foreseeable future?

"I think you’ll see far more use of composite materials – kevlars, plasticsand materials we don’t even see today – all allowing lighter-weight trailers.

"I see aerodynamics becoming a much greater issue in the industry as fuel costs increase.

"There’s really very little work being done to design a very efficient integrated prime mover and trailer solution.

"We’ve got a long way to go."

Along with the returns not being strong enough, he puts the local industry’s reticence on combination aerodynamics down to the GFC, the fall in fuel price and the increase in fuel efficiency.

"As to the future, I now believe trailer manufacturers will shift towards providing packaged solutions, as is now happening in prime movers."

Personnel strength

Brockhoff would not be drawn on the best innovation in his time at MaxiTrans, preferring to focus on those who work for the firm.

"As a result of growing the company and acquiring a number of other companies, it’s allowed people the opportunity to grow within their roles. That’s why we’ve had so many long-term employees."

The latter point is one of pride and extends beyond managers’ offices.

"I’ve tried to keep a family-type culture in a public company."

Asked how hard that can be, he says it’s a matter of staying true to one’s vales.

"If you stay true to your values, not too hard if it’s something you believe in."

But it helps that the company’s shareholders appreciate the industry’s nature and have generally taken a longer-term view.

The company culture supported it through the mining boom, when skilled labour was being wooed to the extractive operations on the promise of untold wealth.

"If people like the environment and they like the culture and it’s a growing company and they see opportunity and you pay people properly and well for the job they do, then you shouldn’t have a high turnover [of staff]," he says.

Safety

Not all company cultural transitions are due to mergers and acquisitions. Sometimes the whole firm must adjust to the realisation that old ways must change.

Brockhoff is proud of the MaxiSafe initiative introduced into the company nearly four years ago

He credits the DuPont-based program for reducing incidences by more than 50 per cent over three years.

"That’s required a very big cultural change in the way people behave and think about the jobs that they do. It’s been absolutely relentless."

Values

Brockhoff acknowledges there is more to do if it is to reach the world class level it aspires to and points to Linfox as an exemplar.

"I was incredibly fortunate that I had Lindsay Fox as a mentor for 22 years,"

"He taught me very early on and it was his belief that people are your number one asset in any company and you treat them as such. And if you do that, it’s very hard to go wrong."

Given Fox’s success, he had no need for having public company shareholders to look after, but it is possible to imagine him viewing at least one of Brockhoff’s actions during the global financial crisis (GFC) as a canny move.

Not least because public company leadership involves internal and external relationships and examples.

As markets went into spasm and confidence plummeted, MaxiTrans management took a pay cut to help the company through the downturn.

"The management team recommended to the board,that it took a 10 per cent pay cut, as did the board,’ Brockhoff says.

"We felt that we had a responsibility as a management team to share the pain with the shareholders.

"This was implemented for 12 months."

 "Unfortunately, a few people were made redundant as well, which we found incredibly difficult to do.

 Brockhoff adds that such actions in spreading the burden actions the crises demand, such as halting overtime, "comes back to your core values and how you treat people.

"It’s very hard to ask someone else to take the pain if you’re not taking the pain yourself."

Brockhoff’s plans for the future? Have a short holiday and look for the next challenge in the logistics industry, an industry he loves.

An industry and its constraints

While Michael Brockhoff has a deep regard for the trucking industry, he is less enamoured of the policy inertia and drift that has plagued its suppliers for years, no matter who is in charge in Canberra.

"Manufacturing is getting increasingly difficult in Australia. Both political persuasions don’t understand its importance and that’s going to be to the great detriment of Australia in the future.

If you don’t make things, you don’t add value to a country.

"The cost of manufacturing is killing us.

"In 2015, Boston Consulting did some analysis. If you look at the cost of wages, electricity and energy, we are twice as expensive and the United States, 2½ times as expensive as China and we are the most expensive out of 25 of the other countries.

"That trend is getting worse as energy costs continue to rise."

Asked why he believes the nation has such a hard time raising freight transport productivity when the solutions are not really insurmountable, Brockhoff nominates a lack of urgency in government in supporting the few reforms the country has managed in the past two decades, such as performance based standards (PBS).

"We’ve got incredible red tape with PBS," he says.

"It takes too long to get PBS approvals. The time it takes to get a trailer that we’ve had built approved and put on the road, is outrageous.

"Trailers are often sitting at the factory waiting to be approved to put on the road.

"Manufacturers should be able to certify PBS units themselves the way we do a normal trailer, saving the industry a lot of time and cost.

"You multiply that by the whole industry, plus our customers have prime movers waiting to go on the road, that’s an enormous cost."

The responsibility here goes to a lack of political determination to bring the nation along and get the reforms done.

"You’ve got two problems – one is there is no articulated vision for transport in Australia and we are blocked by both political persuasions not having the clear air to develop and implement one," Brockhoff says.

Under-sight

He was speaking just after the federal minister responsible for road charging reform, Paul Fletcher, visited the Shakey Isles to gain insights into that country’s system.

"New Zealand is doing some interesting things and has a road tax structure that we don’t have in Australia.

I think the time is coming to seriously consider that. It has new systems like e-Road onboard GPS road tax system.

"The management of road tax is becoming very easy and you can easily deduct off-road use from the bill.

"It automatically replenishes. That will allow variable charging of road taxes, so you can end up with congestion taxes and rates differently to non-congestion periods.

"I think that’s an inevitability as we move forward."

Brockhoff is aware of industry opposition but, with the prospect of a diminishing road tax take but infrastructure needing to be built and maintained he feel these ideas have to be explored.

"You don’t have to reinvent the wheel. If New Zealand has something that works, why not pick it up?"

He is concerned at the lack of uniformity across Australia on commercial vehicles having annual roadworthy inspections.

It’s not a requirement in his home state of Victoria.

"That allows a lot of less-than-satisfactory equipment to be on the road.

"I don’t know why it’s not a requirement.

"And I think it should be done independently.

"There are self-accredited systems that I’m not sure are as effective as they should be. The load-restraint legislation is a mess.

"I know it’s being rewritten at the moment but it’s too hard for the enforcement officers to understand and implement fairly and effectively."

Read the full feature in this month's ATN.

 

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