Willi Betz Company Profile
The image of this transport operator with interests all over Europe is largely a product of its trucks that are painted in the rather staid "Willi Betz” livery. However the modernity of the group belies the staid image: a modern IT-supported logistics network that supports the production and sales of customers in Europe, Asia Minor CentralAsia and the Near East, modern distribution centres with automated high-bay racking and trading offices for customers in niche markets. ITJ editor-in-chief Ursula Schmeling spoke with managing director Thomas Betz about the company’s image and expansion plans.
Mr Betz, the public perception of your company is that of a haulier who clutters the roads with its trucks, and as a employer of cut-price Eastern Bloc drivers. Does your company deserve this image?
If that is so, then it must be the fault of the press, whose reports about us are often rather shallow. Our customers in the automobile, consumer goods, chemical, electrical engineering and health care industries have a completely different attitude.
We offer an efficient transport network, not only in Western Europe but also in the growing markets of Eastern Europe, Asia Minor, Central Asia, not forgetting the currently difficult Middle East. Our customers value our reliability. And we offer them much more than pure carriage: cost effective customs clearance and import/export processing, distribution platforms with West European standards in Eastern Europe, on the Balkans, in the CIS countries and Central Asia. In some countries, we have established trading agencies through which we can handle spares procurement on behalf of manufacturers. Our contract logistics activities extend way beyond the regular ones such as order picking, labelling, packing and warehouse management, we also offer the assembly of system parts and their delivery right to the production line. We give our customers advice in such questions as whether it is more effective to import their goods as finished products or in kit-form to markets in Eastern Europe, Central Asia and the Near and Middle East.
You are committed to doing business in "high risk" countries!?
Yes, that’s a company tradition. Competition in the transport industry is tough. In order to survive and make reasonable profits, we have to concentrate on specific markets in which we are able to develop a certain strength.
At the end of the sixties and the beginning of the seventies, we found our niche in the Near and Middle East and in Eastern Europe.
Thirty years ago, we signed a cooperation agreement with Somat, in those days a state-owned Bulgarian transport operator and the biggest road haulier in the Eastern Bloc. Somat took over our swapbodies and trailers at the Austrian frontier and took them through Eastern Europe and the then booming Near East as far as Iran and Pakistan. In exchange, we took over their trailers and swapbodies at the Austrian frontier for delivery to destinations in Western Europe. Both companies were able to optimise the load factors and Somat was able to modernise its fleet.
This proven partnership has continued down to the present day, after we
acquired 55% of Somat Corp. in 1996 and increased this stake to 93% in 1997. The average length of service of Somat’s employees is 15 years. Many of the present staff are the second generation of their families to work for this firm.
And when we make new appointments, we give preference to the relatives of existing employees. We thus have access to a huge reservoir of experience. This means, for example, that when our drivers go to Kyrgyzstan or Turkmenistan, it is not a completely new territory. Many Somat employees have already been there, or they get first-hand experience from their fathers or some other relative about the route or local customs.
This means that the risks for us in these new markets are not as great as for many other Western European companies.
Did you acquire the Bulgarian truck fleet at a "knockdown" price?
No, certainly not. The purchase price for the 50% share was USD 55 million, while the remaining 38% only cost DEM 25 (EUR 12.5) million. Since 1994, we have invested around EUR
125 million in Bulgaria.
What is the percentage contribution of haulage to your total sales?
Around 45%. Every day we send out on average 300 trucks to destinations in Germany, about 40 to Great Britain, approx. 50 to Spain, 150 to Russia and 40 to Turkey.
Competition among Europe’s road hauliers is relentless. Even though the volumes are increasing year by year, the rates are 30 to 50% below those of 20 years ago. How do you see thefuture of the haulage industry?
The threshold for entry in the business is far too low. Before you set up shop as a hairdresser, you have to complete an apprenticeship, but many new entrants start up without knowing the first thing about how to run a business and it is they who drive the prices down.
For our part, we are determined to respond to increasing costs by raising our rates. And I am confident that our customers will accept them.
How do you plan to continue optimisation of your costs?
In national traffic, we already operate shifts. On some international routes we are already using two drivers, to Great Britain, for example, in order to make optimal use of our capacity, for safety reasons and to comply with national regulations. But the increasing com
plexity of the regulatory environment in Western Europe and the low rates are forcing us to limit our haulage activities with our own vehicles there — and instead we are concentrating on building up our business with Central Asia, Georgia, Armenia and Azerbaijan.
A recurring charge is that you pay "dumping wages" and charge "dumping prices".
In their homelands, our drivers enjoy a purchasing power which their western colleagues can only dream of. A Bulgarian driver can support 16 dependents. Somat Corp. pays the driver’s training costs and his health insurance. If our wages were really as low as is claimed, we would have certainly had more problems with staff turnover.
Our branches in Eastern Europe are legally separate entities. Our East European drivers operate in full compliance with the law with CEMT licences, (Conférence Européenne des Ministres de Transport).
All experts are agreed that congestion on roads in Western and Central Europe will increase. How are you dealing with this situation?
We are working on the assumption that in five years the road network will be even more severely congested than now. Insufficient investment in new infrastructure all over Europe is forcing us to seek new solutions and to look out for new areas of business activity. At the same time, we have to optimise our rates and cost management.
In the short to medium term, we want to extend our commitment to intermodal traffic (road/rail) and in the RoRo inland navigation all the way to the Caspian Sea. However, the poor condition of the railway infrastructure in many countries and the inefficiency of many railway operators is hindering substantial growth of intermodal traffic. As for inland navigation, it is still being affected by as yet unrectified damage from the Kosovo War in Serbia.
RoRo shipping on the Danube and Black Sea is set to play an increased role.
Do you want to reduce the size of your truck fleet?
No. But you should remember that we not only use directly employed drivers and company-owned trucks. Around 15% of trips are conducted by contractors.
Your vehicle fleet is considered by many to be one of the most modern in Europe. Is it really?
Yes, we drive very new Mercedes trucks with large fuel tanks. All our vehicles in the East are equipped with GPS. In Germany, we manage our fleet with a cellphone-based system. That is more economical. Our IT-controlled fleet and freight management system ensures that we always tank up where it is cheapest (as in the ocean shipping industry — Ed.).
How do you see the future of e-marketplaces and freight exchanges?
We have an internal freight market, through which 90% of all loads are allocated to our own drivers or contractors. The remainder is so to say "manually" assigned from company headquarters at Reutlingen.
We are not interested in third party freight exchanges.
What do you think of cooperatives?
We work with cooperatives such as IDS and 24plus and do haulage contracts for them. However, we do not belong to any cooperatives and do not want to join any either.
What proportion of total turnover is contributed by logistics activities?
Presently around 20%, but this proportion is set to climb. We act as the provider of complete logistics solutions not only in Europe but also in Central Asia and through our contracts with renowned firms such as Bosch, DaimlerChrysler etc., we have been able to demonstrate operational competence.
Our IT competence centre is located in Sofia, Bulgaria. There and at Group headquarters, Reutlingen, we employ some 100 IT specialists. Our IT know-how has been acquired in close partnership with Hewlett Packard. In 1995, we especially established LGI GmbH (Logistics Group International) as a joint venture, which we completely took over in 1999 and integrated in the Group.
In the coming months, we will expand the existing logistics centres in cooperation with our customers. In addition, we intend to extend the scope of our logistics services further upstream up the production line.
That means that you want to continue growing?
Yes. Both organically and through acquisitions. Although, of course, we are only interested in acquiring sound transport and logistics businesses that can contribute to the optimisation of our network. A major consideration is the impact of the respective national transport and licensing regulations.
How big a contribution do <
Around 20% of Group turnover is generated by real estate, 15% by trading activities. The latter include general dealerships for DaimlerChrysler and Mitsubishi in Central Asia and Eastern Europe.
Buying or leasing? What is the best solution for your vehicles and warehousefacilities?
I am a complete agnostic in this regard. Our decision is always guided by the tax regime in a given country.
If the fiscal regime favours leasing as in France, for example. then we lease, otherwise we buy the site or building.
Yours is a successful family business. Do you plan to remain in private hands?
Yes, we as a family want to keep all the reins in our hands. After all, the business was founded by my father.
That means Willi Betz is not up for sale?
No, but on the other hand, we want to keep all options open. We are in the process of changing the company’s legal status so that we can raise capital on the stock market. That does not mean that we intend to seek a stock market quotation in the near future. However, we would not exclude the possibility of a medium sized business taking a financial stake in one of our subsidiaries.
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Willi Betz – company snapshot
Established: 1945
Headquarters: Reutlingen (Germany)
Sales: EUR 750 million (2000/2001)
Workforce: 6950 worldwide, of which 1500 in Germany
Fleet: about 3800 owned trucks plus contract trucks
about 4000 swapbodies/trailers, road trains, lowloaders, silo trailers, tanker trailers, car transporters
Warehouse capacity: 20 locations with a total of 390,000 sqm;
• approx. 100,000 pallet slots at Reutlingen;
• approx. 75,000 pallet slots and 100,000 container slots at Gültstein, Böblingen, Karlsruhe,
• approx. 25,000 pallet slots at Scharnhausen (Stuttgart Airport) (all in Germany),
• storage facilities at Zakupy (Czech Republic), in Sofia (Bulgaria), Istanbul (Turkey).
Business areas:
Road haulage in Europe, Central Asia, Near East, Balkans, ClS countries, national and international breakbulk, RoRo traffic on the Danube and Black Sea, inland navigation, special transport (reefer, automotive, hazardous goods), on-site factory transport, system transport, road/rail intermodal transport, spare parts logistics (worldwide), commodity logistics (Europe-wide), reverse logistics (Europewide), value-adding services (kitting, outfitting), warehousing for reefer and hazardous goods, bonded warehousing.
Customers include:
Blaupunkt/Bosch, Delphi, DuPont, Dynamite Nobel,
Ferrero, Hewlett-Packard, Ikea, L’Oreal, MasterFood,
Nestlé, Philips, Procter & Gamble, Siemens, Kodak.
