Leading YRC Worldwide back to profitability may be the toughest job in trucking, and it belongs to James L. Welch.
Welch’s July 22 arrival in Overland Park, Kan., as YRC Worldwide’s new CEO began a new era for the less-than-truckload operator. How long that era lasts will depend largely on the decisions Welch makes as he and a new board of directors search for the best route toward an actual profit rather than just improved earnings before taxes and other charges. In his first 100 days as CEO, Welch won’t spend much time at his desk.
“I’m going to walk every floor in this 10-story building and listen twice as much as I talk,” he told The Journal of Commerce in a July 25 interview from YRC’s headquarters, his first full day on the job. “I want to be out in front of as many employees as I can be, I want to listen to what they like and dislike, what they are concerned about.”
Welch has plenty of reason to listen to YRC Worldwide’s 25,000 Teamsters employees. Three rounds of wage, benefit and pension concessions from those workers saved the company more than a $1 billion and kept YRC Worldwide alive. He’s certain to get an earful from employees whose wages are 15 percent lower than they were in 2009 and whose company pension contributions are down 75 percent.
Sidebar: Road to Recovery.
Welch also wants to bring the message of a re-energized YRC Worldwide to shippers. “I want to be in front of as many customers as I can,” he said. “We’ve got to work with our customers. We want to regain business where we’ve lost it.”
His first message for shippers: “I’m at YRC because I want to be, not because I have to be. I think there’s a road to success here, or I wouldn’t have come back.”
Welch spent most of his career with YRC Worldwide and its predecessor companies, Yellow Roadway and Yellow, starting in 1978 as a Yellow Freight sales representative in Houston. He became president of Yellow Transportation in 2000, replacing William D. Zollars, who was named chairman, president and CEO of Yellow in 1999. Welch left the company in 2007, as Yellow Transportation merged with Roadway Express to create national LTL carrier YRC Inc.
Welch now succeeds Zollars a second time. Zollars retired with the completion of a $500 million financial restructuring that brought in the new board. James E. Hoffman, former president of Alliant Energy Resources, is chairman.
Welch’s long career with Yellow and YRC gives him a deep interest in the business’s revival. “I wrestled with the decision, but ultimately I decided I wanted to come back and help the company where I had worked for so long,” he said. “If I hadn’t done it, it would have nagged at me for the rest of my life.”
He brings more to the job than an exceptional familiarity with YRC Worldwide, the Teamsters union and the LTL industry. Until July 22, Welch was president of Dynamex, a $407 million same-day delivery specialist based in Dallas.
When Welch took control of Dynamex in November 2008, the company was struggling after absorbing several companies through acquisitions. “Structurally, I had to make a lot of changes,” Welch said. “When I got there, they were experiencing very high turnover in sales. I had to tear down the whole sales process and build it back up. We also consolidated regions in Canada and the U.S.”
“James was instrumental in building Dynamex into a highly respected brand,” said Alain Bedard, chairman, president and CEO of TransForce, which acquired Dynamex late last year for $248 million.
Welch said he learned some important lessons along the way. “The same-day business is a lot more difficult than the LTL business,” he said. “Dynamex offers customized solutions. It wasn’t a cookie-cutter operation like a lot of LTL operations. I learned a lot about creativity and how to work with customers to build solutions for their needs at Dynamex. And there’s a lot that I can bring from that to YRC.”
Welch returns to a company and a domestic LTL trucking industry reshaped by the recession and increasingly complex and dynamic global supply chains.
“Third-party logistics providers have a larger presence than they did four years ago,” he said. Brokers and 3PLs account for more than a third of YRC Worldwide’s revenue, a company executive said last year, but the carrier’s relations with 3PLs haven’t always been smooth.
“We’ve got to work with those folks to demonstrate the value we can bring to the marketplace,” Welch said.
Distribution patterns also are changing. “We’ve got to be sure the network is aligned properly and lane density is maximized.” LTL “isn’t the old long-haul hub-and-spoke business it used to be,” Welch said. “It’s a much more dynamic industry, with more providers and 3PLs added to the equation.”