Family businesses are an important cornerstone of any economy, but often associated with the small and medium-size market segment. Few people know that some of the largest enterprises in the world– including US icon Ford and retail giant Wal-Mart – are also family-led.
Although no statistics are complete enough to map the presence of family businesses throughout the world, many studies have confirmed the importance of them for the global marketplace, which is especially true for the USA, where one third of all companies in the S&P 5002 index are family-owned.
While it is not publically traded and therefore not listed in the prestigious S&P directory, Utility Trailer Manufacturing Company is a regarded fellow of the ‘big business’ club – and nothing like the old mid-sized firm you would expect when talking about a family business. Expecting strong sales in 2013, Utility is a company on the move, fully aware that to survive in a fast-evolving business landscape, it has to out-innovate the competition and seek new avenues of growth, such as expanding to booming Latin America.
Specialised in the design and manufacture of refrigerated transport equipment, Utility’s portfolio also comprises the full range of dry freight vans, flatbeds and curtain-sided trailers, which keep adding to the brand’s success across the US and beyond. Altogether, Utility’s five manufacturing sites in North America produced 37,719 units in 2012, helping it cement third position in the US trailing equipment market.
Despite the impressive economic track record, though, there still is a sense of family surrounding the business. Founded in 1914, Utility is North America’s oldest privately owned trailer manufacturing business, and that heritage is a well-preserved asset – even in a time where continuously reinventing the brand is essential for survival.
Some say it is that stimulating dualism of ‘corporateness’ and family feel which has laid the foundation of Utility’s success, especially considering that the inherent ‘family matters’ that are exclusive to a family business make it a tightrope walk to constantly move forward without loosing the connection to the past.
One issue a lot of US family business are facing in that context is succession planning. Studies show that many a family doubt the next generation has the ability and desire to steward the business into the future, according to a 2012/13 report by consulting firm PwC. The number one concern is whether the next generation has a ‘knack for innovation’, which is a trait that cannot be epigenetically inherited.
Utility, however, has somehow managed to pass on the original level of entrepreneurship E.W. Bennett and H.C. Bennett demonstrated when they built the first single-axle trailer in 1914. Today, the third generation of the Bennett family is at the helm of the company, with Paul Bennett acting as CEO, Hal Bennett as President and Craig Bennett as Senior Vice President, Sales and Marketing. And the fourth generation is already waiting to take the lead, including Jeff Bennett as Vice President of Engineering, Stephen Bennett as Vice President, and Todd Bennett as Director of Finance.
For a company that is about to celebrate 100 years of home-grown success in 2014 and has basically sorted out the old succession issue, the family could have chosen the ‘easy way’ and stick to the tried and true business model – a fate PwC said many a long-running brand is facing.
But just as E.W. Bennett and H.C. Bennett, Paul, Hal and Craig understood early on that ‘business as usual’ wouldn’t suffice if the firm was to maintain and grow market share while dealing with a new breed of well-funded, often Asian competitors who urged into the US market. They knew action would be needed, and so they acted.
Prior to the GFC, the Bennett sestet therefore decided to radically change the way they constructed the brand’s flagship range of refrigerated transport equipment – and set an example for the entire industry. Historically, the existing machinery park and production line would determine the way a new vehicle had to be built, but Utility turned the tables and decided to build a whole new manufacturing plant in Utah and come up with a custom-tailored manufacturing process just to suit one new model, the 3000R. The 3000R range was to succeed the now legendary 2000R series, which had been the country’s most successful refrigerated van since 1986.
“The 3000R was a whole new approach to modern reefer design. It was a risk giving up on the tried and true production procedure, but it was well worth it,” says CEO, Paul Bennett, who is responsible for a workforce of more than 3,000 people. “Until today, the 3000R has maintained its position as the best-selling reefer in the industry, and I believe it’s safe to say that success is attributable to our commitment to continuous innovation.”
The new plant – more efficient and streamlined than before – helped the business endure the economic storm that unfolded during the GFC, and ensured on-going success in the aftermath, when the US economy dragged along for an extended period of time. In fact, it inspired Utility to introduce the 4000D-X model, a lightweight composite dry van that was so successful that the company had to build a second dry van factory in Glade Spring, Virginia. The result is solid growth in 2012 – also fuelled by the Bennett’s decision to expand geographically to the north and south.
As a result of that pragmatic ‘keep calm and carry on’ strategy, the brand can now draw on a dealer network that expands all throughout the US and Canada and as far south as Chile, effectively offering a higher level of “cradle to grave” service. In addition to trailer sales, most of the 106 locations offer maintenance/repair service as well as aftermarket parts sales.
“You can definitely say the current leadership generation has taken a risk or two to ensure we will maintain our position in the market,” says Craig Bennett, Senior Vice President of Sales and Marketing pointing out that North America is still Utiliy’s core market – including all the challenges that naturally come with it.
“In North America, you have to react to a multitude of variables that determine how a trailer has to be designed to survive in the market. It’s not just a murky economy, it’s a fatal mixture of a deteriorating highway system, increasingly aggressive corrosive de-icing chemicals in the winter time and a shortened haul trend resulting in higher duty cycles, all of which have kept our engineering team on the edge for the last decade or so” says Craig Bennett.
On top of that, new regulatory requirements keep challenging the industry’s ingenuity, leaving it in a state of constant change that is just as demanding as promising. The latest change, for instance, has come in the form of international traffic between the US and Mexico, following the implementation of a new cross-border commercial trucking program between the two countries that transportation and trucking officials hope will spur continued growth for the trucking industry.
“We’ve been around for almost a century and have seen a lot of change over time,” says Craig Bennett. “It’s only natural and we always try to position ourselves in a way so we can turn any challenge into an opportunity. And history has proven us right, just take a look at the balance sheet – with more than half of the market share, Utility is the number one in the refrigerated segment, holding that position since 1994. And overall production places us comfortably as the third largest manufacturer in the US, with nearly 16 per cent of market share. I believe that’s a very solid foundation for future business.”
While President Hal Bennett is confident to set ‘market leadership’ as a long-term goal, he is also aware of the fact that the real challenge has only just begun. After all, the international competition has used the time to gear up and enter into the North American OEM market as well.
While some may use that situation as an excuse to ‘wait and see’, the market itself doesn’t really allow for hesitation. From a total production of 79,000 trailers in 2009, the industry bounced back to over 240,000 in 2012 and the overall sentiment is positive again. Hence, production has to keep up with growing demand while the engineering department has to ensure the product portfolio is ready to compete.
“The modern US fleet is looking for the ideal mix between performance, weight, and price, so we have to work hard to find the right balance,” says Hal Bennett. “With increasing fuel costs and new regulations that ultimately add weight to the prime mover, weight continues to be a growing concern in the fleet segment. But while the economic concerns over the past five years have definitely driven pricing considerations, life cycle cost is still seen as a more critical variable that the initial price of the trailer. So, that’s what we will be focusing on first and foremost.”
To stay ahead of the pack, Utility’s multi-million dollar R&D centre is constantly working on new designs and innovations, and to do so, it can draw on a company-owned ‘torture’ track. “Having our own test track for over 40 years has given us the ability to design against bench marked successes. We test, re-test and test again until we get it right”, says Craig Bennett.
Emphasizing quality before price, Paul Bennett is in line with many a family business in the world, finding that consumers tend to associate that type of business with quality production and a more honest approach to doing business. In a way, that ‘family brand identity’ has thereby become a tool to effectively differentiate Utility in the crowded US marketplace – and with Jeff, Stephen and Todd in the business, there is no sign of backing down.
In fact, it is scientifically proven that the high performance of family businesses is the result of the inherent strengths they have compared to public counterparts, including a high level of commitment, knowledge continuity as well as reliability and a sense of personal pride.3
“Many family members identify with the company and are usually willing to work harder and reinvest part of their profits into the business to allow it to grow in the long term,” according to a World Bank report. They also make it a priority to pass on their accumulated knowledge, experience, and skills to ensure the company’s original identity will be preserved in the long run – which is especially true in Utility’s case, where the two generations are working hand in hand to make the transition as smooth as possible.
“At Utility, we have always responded to the changing needs of the market, but one thing that will never change is our dedication to providing satisfaction to each of our customers,” says Paul Bennett. “But at the end of the day, we are a family business – regardless of our global footprint or turnover.”