Can a streamlined Ryder System appease shareholders and keep would-be suitors at bay?
by David Villano
A lean, mean, more focused Ryder System Inc. That's how CEO and Chairman M. Anthony Burns describes his company following an infusion of top managers and a consolidation of Ryder's two remaining business units. The moves, Burns admits, are designed to resuscitate a stock price that lost nearly half its value between April 1998 and the end of last year. "We think we've got the company right where it ought to be," says Burns.
Unfortunately, Wall Street is growing weary of such optimism. While Miami-based Ryder (NYSE-R) remains a company long on reputation -- ranked tops among highway transportation companies by Fortune magazine two years in a row, with kudos for workplace satisfaction -- Ryder remains short on performance. In 1998 the company earned $159 million on $5.2 billion in revenues, but earnings chronically fall short of projections.
Charged with reshaping the 70-year-old company is Gregory T. Swienton, a railroad industry veteran who arrived last June when Burns gave up the president's title he'd had for 20 years. Swienton now serves as president and chief operating officer. (Two months earlier the company brought in Koch Industries veteran C.J. Nelson as its new chief financial officer.) Swienton's first major initiative was combining the company's two independent business units -- commercial transportation and integrated logistics. Aside from eliminating some redundant operations, the move allows all salespeople to promote Ryder's range of services.
Businesses contact Ryder for truck and trailer leasing and maintenance as well as solutions to overall transportation needs, from inbound raw materials to the distribution of finished goods. Ryder recently created its Asset Management Group to rein in the costs associated with its massive fleet of 176,000 trucks and other vehicles. Burns says the measure is already paying off. Within months the company reduced the number of non-revenue producing vehicles -- those sitting idle -- by about 25%. The company also has launched a financing arm, Ryder Capital Services.
To be sure, Ryder System is now a very different company than it was just five years ago. At that time, Ryder functioned as something of a holding company for six separate operating divisions employing more than 60,000. In 1995 Ryder sold off its aviation management services group. In 1996 it dumped its consumer truck division, whose bright yellow trucks had become the company's trademark. A year later Ryder's auto carrier division was sold, and last September the company unloaded its public transportation division.
Today Ryder employs just under 30,000 people in nine countries. Burns says the company no longer operates in business segments prone to sudden downturns. Now, Burns says, Ryder's average contract length is five years. "We're now focused entirely on the least cyclical, most profitable parts of our business," says Burns.
Whether Wall Street will buy that is uncertain. Dan Moore, an analyst with Stephens Inc. of Little Rock, Ark., says shareholder patience is wearing thin. If earnings don't improve quickly, he adds, Burns' 17-year stint in the CEO's seat could be in jeopardy. Meanwhile, rumors are circulating throughout the company's sprawling west Miami-Dade County headquarters that the company has been weighing buyout offers. Burns insists the rumors are unfounded, but Moore says an under-performing company with good brand recognition, like Ryder System, is sure to attract suitors. "Something has to happen," says Moore. "Management believes the company is more focused, so now it's time to show some results."
In the News
Boca Raton -- Construction is under way on a 160,000-sq.-ft. retail center on Glades Road across from Florida Atlantic University. The 19-acre site is one of the last remaining major retail sites in southern Palm Beach County. The $15-million center, whose tenants will include Bed Bath & Beyond, Barnes & Noble, Whole Foods and Organized Living, will be built by Boca Raton's Kaufman Lynn Inc.
Elmwood, N.J.-based Medical Manager Corp. acquired Mednetrix.com, a 30-employee Boca Raton company that designs websites for physicians. Publicly held Medical Manager develops physician practice management software and technologies that enable the exchange of information over the web between doctors, patients and suppliers. Founded in Alachua in 1979, where the company still has research facilities, Medical Manager [Florida Trend, Sept. 1999] relocated following its merger with a New Jersey company last year.
Broward County -- Ground has been broken on Fort Lauderdale's first new major hotel in 15 years. The 233-room Renaissance Fort Lauderdale Hotel, located on the 17th Street causeway near the Broward County Convention Center, is scheduled to open in early 2001.
A restructuring of Winn-Dixie's procurement operation will result in the transfer of as many as 100 jobs from Pompano Beach to the company's Jacksonville headquarters.
Fort Pierce -- Calling it "North America's most diverse estuary system," the Washington, D.C.-based conservation group Scenic America has named the Indian River Lagoon near Fort Pierce a "Last Chance Landscape." It is one of only 12 sites nationwide to receive the designation and the only one in Florida. The group is opposing plans for a 67-acre industrial port on the east side of the Indian River.
Miami-Dade County -- A year after announcing the possibility of relocating its corporate headquarters out of south Florida, Burger King Corp. has agreed to remain in Miami-Dade. The company will not renew the lease on its sprawling corporate headquarters, but company officials say they have decided to build a new 300,000-sq.-ft. facility at an undetermined location. Burger King, which employs 1,700 locally, was founded in Miami in 1946.
Downtown Miami's venerable Dupont Plaza Hotel has reached an agreement with Ramada Franchise Systems following a $1-million makeover of the 42-year-old property. It will be renamed the Ramada at Dupont Plaza Center.
Miami's WTVJ-NBC 6, which alarmed local officials last year when it announced plans to move to Miramar in southwestern Broward County, will build a broadcast studio in downtown Miami's newly opened AmericanAirlines Arena. Executives say the 2,500-sq.-ft. studio, which will be used for special-events coverage, will allow Florida's oldest television station to maintain a high-profile presence in Miami.
Volkswagen Latin America selected Miami's Blue Lagoon area over sites in Atlanta and Broward County for its new Latin American regional headquarters. The Latin division had been based in Germany. The move will create 30 jobs.
In a stinging rebuke to local leaders, organizers of the first-ever Latin music Grammy Awards said they will stage the event in Los Angeles. Officials from the National Academy of Recording Arts and Sciences had earlier named Miami its top choice. The announcement was made after county officials, citing a Miami-Dade ordinance forbidding the county from contracting with any firm doing business with Cuba, refused use of the AmericanAirlines Arena or any other public venues out of fear that a Cuban artist would receive an award.
West Palm Beach -- Skypass, a $29-million bridge and elevated roadway at the Port of Palm Beach, is finished. The first phase of a $91-million renovation package, it will allow movement of container carriers to and from the port without disrupting traffic on U.S. 1.
Air Base Grounded
Competing development proposals, along with fierce opposition from environmental groups, are threatening to derail plans for a commercial jetport at the former Homestead Air Force Base. Despite county backing and continued support from local civic leaders, the plan was put on hold two years ago after opponents lobbied Clinton administration officials to order an environmental impact statement. An early draft of the statement, released last December, found that the jetport is not likely to cause significant damage to nearby Everglades National Park and Biscayne National Park. Nonetheless, Interior Secretary Bruce Babbitt is urging county officials -- who expect to take title to the surplus property later this year -- to consider alternatives. Among them: a commercial spaceport, an aquarium and marine research facility, and a mixed-use resort and office development.