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Executive View

REXTON, N.B. - Following the announced merger of Warren Transport and D.D. Transport, Truck News executive editor James Menzies caught up with the principals of the newly-formed Atlantica Diversified ...

REXTON, N.B. –Following the announced merger of Warren Transport and D.D. Transport, Truck News executive editor James Menzies caught up with the principals of the newly-formed Atlantica Diversified Transportation Systems. Warren’s Vaughn Sturgeon will serve as Atlantica’s president and D.D. Transport’s Gordon Peddle will serve as vice-president and chief operating officer. The like-minded executives are giddy over the prospects of their new venture…

TN: How did this merger take form? Was it something that was in the works for a long time, or did it come together relatively quickly?

VS: It’s been a while in the making. Gord and I have known each other for a long time through the industry and the association and we’ve been talking for a lot of years about ways we could work together. We seem to have common approaches to business and thoughts on how we could improve things. Last year, about halfway through the year, we began talking about this concept a little more seriously and by November, we decided to go forward with it and started getting all the structure around it in place. Of all the ways we looked at (working together), this seemed the best way to do it -anything else would’ve been working around the edges.

TN: I’m always curious with a deal of this magnitude, how were you able to keep it quiet? Especially in Atlantic Canada which is a pretty close-knit community?

GP: I’m not sure, but at the end of the day I guess we did a good job of it! We did select a few colleagues within the industry and consulted with some colleagues that we trusted, so there were a few people that knew. One of our colleagues in the association said we’re either getting to be pretty good friends or something was up between us! But we did keep it pretty quiet.

VS: I agree with that and I think we did a better job of that than even we appreciated, because you’re not the first person to ask that question, a number of people have asked how we managed to do it. One of the reasons is, we’ve been kicking this idea around informally but quietly, for a few years, so we were fairly used to talking to each other about this both with the understanding that it had to be kept confidential until it was time to go.

GP: Because of our close affiliation within the association, we were talking so much for that reason that nobody had reason to believe we were doing something other than (association business).

TN: How do your skill sets complement each other’s? From a management perspective, what do you each bring to the table going forward?

VS: I think that’s one of the reasons that made this attractive to us. We believe our skill sets complement each other’s exceptionally well -maybe uniquely so. Gord grew up in this business and has a tremendous operational background and has a wealth of experience that’s hard to duplicate, but I also noticed within his own organization a requirement for more expertise on the financial management side and vice-versa.

In my organization, I had noticed a need to continuously be improving the operational side of things. When we would talk, often we would get to talking about what we would like to see improved in our own organizations and it would never take long to get around to saying ‘You seem to be good at this, but you could use some more of this’ and it was almost a hand-and-glove thing, the way it fit together.

That has made the start of this process work fairly well, because we’re not stepping on each other’s toes in any way, it’s very clear and we’re very happy with the way our duties are being divided up.

TN: I’ve heard some grumblings from eastern Canada that the big central Canadian fleets have been muscling their way east as freight has dried up in other parts of the country. Is there any truth to that and did that help motivate the decision to merge?

VS: No, I don’t think so. The whole industry has been in a freight recession now for several years and freight has been drying up north, south, east and west -you name it. Competition and industry will flow in the direction it’s going to flow. When we looked at this, we were thinking about coming out of this deep recession and looking at some of the opportunities we see coming at us.

The timing of doing this now has more to do with looking six, 12, 18 months from now when the economy as a whole and our industry is trending up, we’ll be very well-positioned to take advantage of that.

TN: When you announced the merger, you said no layoffs were planned -how important was that?

GP: Very important. Neither one of us is in a financial situation where we’re trying to streamline or anything of that nature. We’ve already done that the last two years, we’ve both streamlined to reflect the freight recession.

VS:We’re already pretty lean.

GP: At the end of the day, what it helps us to do is be able to bring people in. You have some areas you sort of neglect when you’re going into a lean state, this allows us to work on those items a little bit more. To get our people to buy into this whole process, we knew we couldn’t go into this without committing to no layoffs.

VS:The fact is, most operations in general are pretty lean coming into the last year or two. We’re making the assumption that the point in time we’re at now is not going to last forever, there will be an upward trend to the cycle at some point in time and one of the reasons we did this was looking forward to that upward trend.

Looking at our existing organizations, it was a no-brainer. We have good people, we want to keep those good people and over time we’ll probably need more good people, not less.

TN:How’d you arrive at the name Atlantica Diversified Transportation Systems?

VS:We went through a bit of an exercise and somebody in my organization came up with it. Atlantica generally refers to a region, Atlantic Canada, parts of Quebec and the northeastern US. Now we have a really nice regionality to our scope.

We have tremendous coverage in Atlantic Canada into Quebec and a lot of business in the northeast (US), so the Atlantica name was good for us.

GP: The Diversified part was exactly what we intend to do, we want to diversify our service offerings. I was more of a regional flatbed carrier where Vaughn was more of an international dry van, refrigerated carrier, so the term diversified meant a lot to us.

VS: I think it’s very accurate too, because in Atlantic Canada, working side by side with a couple of my other companies here, we’re going to be able to offer service in almost every mode: we have excellent flatbed, dry van, refrigerated and some bulk capacity so it’s a very diverse operation.

GP:As for Systems, we want to be able to expand our service offerings to more than just road transport in the coming years, hence the term Systems.

TN:I’m glad I asked, it sounds like a lot of thought went into it.

GP: Yes, the amount of thought would explain the length (of the name)!

VS: Yeah, if there wasn’t so much thought, we’d have a shorter name.

TN:What can we expect to see in terms of a paint scheme and logo? Has that been decided?

GP: Both Warren Transport and D.D. Transport are very well-known companies in their own right and very recognizable in terms of colour, so we’re not in any great rush to change that immediately. We do have a plan to be consistent, but it will be a phase-out process more than anything.

VS:We felt that sometime in the next two quarters of this year, we’ll put it out to a large group of our employees and build camaraderie that way. The nice thing about the trucking business is that there’s a natural turnover that comes as equipment is replaced, so you’ll see some of the replacement equipment come out with the new name, new logo and a consistent look to it.

TN: How has news of the merger been received by your customers and your employees?

VS: Exceptionally well. I have to say, I have been expecting that it would go well, but I’ve been exceptionally pleased with how well it’s been received. We have not heard anything negative from our customer base, or more importantly our employees.

They’ve all seen this as a positive thing. From the customer side, we’ve had some of them call us and ask already about the new services that are available. Newfoundland in particular, clients have asked ‘can we look for service into there?’ I’ve been really pleased with how positive it’s been.

GP: I’ll echo those comments. There’s been a lot of effort, thought and devotion that went into the communication of this process.

We felt it had to be done right and we did a good job communicating this to our customers and to our staff in a positive light.

I am very close to my clients, I’ve been working with some of my clients for 25 years and when you have challenges and good times, you share those with your clients, so it’s nice to be able to share a positive with our clients with this merger. They’re all for it.

TN: So what’s next? What will take up most of your time in the next six months or so? Are you going to be buying new equipment, increasing capacity?

GP:Vaughn has already made his first trip to Newfoundland (to visit clients) and we’ve travelled throughout Atlantic Canada.

The internal management and administrative merge is going to take the biggest part of our time, not to forget focusing on our clients.

VS:Unless something changes relatively drastically on the freight demand side (we won’t be adding capacity).

We’ve both been lean, but there’s some capacity there we could handle with the equipment we have now. We’re looking at new equipment, but the priority for the first three to six months will definitely be to get our people comfortable with us and with each other and our customers as well, to make sure our existing customers and prospective new customers know all the new things we can do for them.

And our employees as well, to make sure they know the opportunities that are there and all the people they can draw on as resources. I think that’ll probably take the next several months.

Also getting their suggestions. One thing I’ve noticed about Gord, and we’re fortunate here too, we have a lot of good, smart people working for us who will come up with suggestions.

With Gord and I, we have a common vision for where we want this to be and our people are seeing that and they all have tremendous buy-in to it.

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