Business

Q&A: Robert Sanchez, CEO of Ryder System Inc.

 
 
 <span class="cutline_leadin">CEO: </span>Robert Sanchez, CEO of Ryder, who has been in the position for a year at Ryder headquarters, March 5, 2014.
CEO: Robert Sanchez, CEO of Ryder, who has been in the position for a year at Ryder headquarters, March 5, 2014.
CHARLES TRAINOR JR / MIAMI HERALD STAFF

Ryder System Inc.

Founded: 1933 in Miami by James A. Ryder

CEO: Robert E. Sanchez

Revenue: $6.42 billion in 2013

Employees: 28,900

Vehicles managed worldwide: 210,300

Headquarters: 11690 NW 105th St., Miami-Dade

More info: 305-500-3726; ryder.com


ebenn@MiamiHerald.com

In 1993, Ryder’s future CEO wanted to work for a Chicago consulting firm, not a Miami trucking company.

“I reluctantly came to Ryder because it was in Miami, and this is where my wife wanted to be,” recalled Robert Sanchez, at the time fresh out of business school, the Wharton School of the University of Pennsylvania. “All I knew about Ryder were the iconic yellow rental trucks. That wasn’t the business I saw myself in.”

Sanchez, 48, who was raised in Miami by Cuban-born parents, took an IT position at Ryder 21 years ago and worked his way up to top management of the Fortune 500 company. As CFO, he steered Ryder through the recession. And when Gregory Swienton retired in January 2013 after 13 years as CEO, the board tapped Sanchez, then COO, to lead the $6.4 billion company that he was once hesitant to join.

“Let’s just say that coming back to Miami and joining Ryder turned out to be a great decision,” Sanchez said. “After that one, I learned to listen to my wife on all decisions.”

In his first year as chief executive, Sanchez saw year-over-year profits rise 13 percent in 2013, to $237.8 million, and watched per-share earnings jump nearly 11 percent, to $4.53 a share. Profits and revenue also grew last year, by 13 and 3 percent, respectively. In an earnings call last month, Sanchez told analysts that he expects “another record year” in 2014.

Headquartered in northwest Miami-Dade County, Ryder is growing in both of its two main divisions: fleet-management and supply-chain operations. (Ryder got out of the consumer truck-rental business in 1996.) On the fleet-management side, Ryder leases and maintains trucks for companies big and small. Its supply-chain services include storing, transporting and distributing materials across the globe.

In North America, Europe and Asia, Ryder’s 28,900 employees manage some 210,000 vehicles and 31 million square feet of warehouse space.

Sanchez, who is Ryder’s fifth CEO since Jim Ryder founded the company in 1933, talked with Business Monday about his plans to keep the financial success rolling.

Q. What does Ryder do?

A. We tend to joke about that. I grew up in Miami, and everyone here knew Ryder for the yellow trucks that you’d see everywhere. What I realized after I came to Ryder was that it’s about so much more than the yellow trucks. That truck-rental business, which we’re no longer in, was less than 10 percent of the company. The vast majority of what Ryder does is outsourcing. Companies outsource to Ryder their transportation and logistics functions. So whether it’s a fleet of trucks that a company may need to move their product to their customers, or whether it’s running warehouses, companies will outsource all of that to us.

A good example is in the automotive industry. A lot of automotive companies hire us to coordinate the movement of their products from their supplies to their assembly plants. We pick up the parts, we bring them to a warehouse that we run, and then we get them to the assembly plants when they’re needed. That’s the core part of our business, and we’re really very good at it.

The way I describe what Ryder does is, we work behind the scenes at a lot of great companies. The cereal you ate today was probably packaged and distributed by Ryder by our supply-chain operation. The doughnuts you ate were probably delivered on a Ryder-leased and -maintained truck. The toothpaste and soap you used were probably driven on a Ryder truck by a Ryder driver. We’re behind the scenes, running it.

Q. How did you go from being an IT guy to CEO?

A. I’m kind of an oddball in that I was a techie computer guy who became the CEO. I definitely didn’t come to Ryder thinking I would ever in a million years be CEO. My background is in computer engineering, and then I went to business school and thought I wanted to be a consultant. [Sanchez earned an undergraduate degree from University of Miami and worked as an engineer at Florida Power & Light before getting his MBA.] What I found at Ryder was that, even on the IT side, you really are being a consultant, because you work with so many great companies and help them to streamline and run their operations.

The transition then from IT to management, to the business side, was somewhat difficult until I realized it’s all about solving problems. From IT to finance to operations, you’re trying to solve problems either for the company or for customers. And you also need to attract a great team, then motivate and develop that team. I’ve been very fortunate that I came into this role after Greg had done a really great job of leading the company for 13 years. He had a leadership team in place that is full of great people who can really help me lead this company into the future.

Q. What were some highlights of the past year?

A. My first year as CEO I really spent trying to get out and visit our field locations. We have over 1,000 locations in the countries we operate in, and I think it’s important for me to talk with our front-line employees and hear what they think we could be doing better and how we can help them do their jobs better. That was a really worthwhile and rewarding process. I want to make that a part of my tenure here, spending more time in the field and meeting with our employees.

Q. Sort of like ‘Undercover Boss’?

A. Yes, but not really undercover. It’s true, though, once you build a little rapport with employees, they’re willing to tell you what they think. And I heard from them that we need to do make sure we’re providing the resources they need and make sure we have enough employees. So we have some work to do in those areas. We actually went out and hired an additional 300 mechanics last year, because we found places where we were short some folks and we thought that was an important gap to fill. We’re also hearing about technology, and we’re working to give our employees the resources they need to take care of our customers the best way possible.

Q. How is Ryder poised for continued growth?

A. Look, we have a great business model. We’re very good at what we’re supposed to be good at: We know how to fix trucks, and we know how to run supply chains. To really grow this business and make it even bigger and better, there are four things we need to focus on:

First, we need to take care of our people, because ultimately, we are a people business. The local flower shop that we’re maintaining three or four trucks for, those employees will know the names of the mechanics who work on their trucks, and they’ll know the service manager at their location. So, we really need to be sure that we have trustworthy, loyal people on our side and that we give them every tool to do their jobs well.

Second, we need to deliver on the promises that we make. We have to be reliable. Our customers have to trust us, and the way you gain trust is to be reliable. That means hammering home the basics of our operation, making sure everything is running smoothly and that products are getting to where they need to go and on time.

The third thing we need to do is innovate. A lot of the products that we sell are products that Jim Ryder came up with 80 years ago. I’d like to find ways to be innovative so that our solutions to the customer can be broader. We may need to make modifications to some things, and we may need to come up with all new products and services. For example, we’ve recently introduced natural-gas trucks to some of our customers, and we have a new product offering called on-demand maintenance. That’s very attractive to companies with large vehicle fleets that may have their own maintenance facilities in some parts of the country, but in the areas where they don’t, they can come to Ryder and have us perform the work like a local maintenance shop. So we’re looking into expanding services like that.

Fourth is technology. We’ve made some investments in technology, and we’ve got to keep making more. The world has changed, and customers expect to be able to access information whenever they want it, whether it’s on their computer or phone or iPad. We just announced our new customer web portal, where they can go and get all the information on their truck fleet, from billing updates to tracking their trucks. We’re really working hard to give customers the information they want and in the ways they want to get it.

Q. What challenges lie ahead?

A. Across the marketplace, there is a real shortage of both technicians and commercial truck drivers. That is a challenge to us because those are the bulk of our employee base. We have over 5,000 truck maintenance professionals and over 6,000 commercial truck drivers who are Ryder employees. So while it poses a challenge in that we’re struggling somewhat to find and attract and develop these employees, it’s also a huge opportunity for us. Companies that are trying to hire their own mechanics and drivers are having a tough time finding them, so they come to Ryder to provide those services for them.

I think it’s always a challenge finding creative ways to recruit good people. A big source for us has been the military. We’ve had good success at hiring folks from the military not just as commercial drivers but in other parts of our business, and we’re really proud of that. We made a commitment in 2011 to hire 1,000 veterans in our company through the Hiring Our Heroes program, and we far exceeded that. We ended up hiring just under 1,700 veterans from 2011 through the end of 2013. They’re qualified, responsible, high-integrity people.

Q. What is a typical day like for you?

A. I’ll wake up about 5:30 and work out. One of the nice things about being CEO of a company in my hometown is that I have a friend who I’ve known since high school, and we work out together in the mornings. Once I get to the office, my days are very scheduled. I’m like a poster child for those Franklin Covey Planners. In my drawer I have every planning book with every day’s schedule going back to 1993. Maybe it’ll be used in a court of law against me one day. [Laughs.] A big part of this job is dealing with investors, helping them understand the Ryder story and the opportunities we’re pursuing. I was the CFO of the company back during the financial crisis. That was like a boot camp for CFOs. I really got familiar with the investment community then, which definitely has helped me in this role.

I always make time each day to try to work on forward-looking projects. What is our next on-demand product going to be? What things do we need to be doing to help secure the future of this company?

My day ends typically between 6 and 7. If I’m in town, I’ll have dinner at home. We have three sons, and they all play baseball, so I spend a lot of time at baseball fields. I think every night this week there is a game.

Follow @EvanBenn on Twitter.

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