Rod Chapman•14 Aug 2014

FEATURE

Q&A: Justin Whitford, Mercedes-Benz Truck & Bus

The General Manager of Mercedes-Benz Truck & Bus says the restructured company is going back to basics to meet the industry's needs

There’s a renewed sense of momentum at Mercedes-Benz Truck & Bus in Australia, with a major company restructure and the philosophies of a new General Manager, Justin Whitford, transforming the way the firm goes about its business.

It's fair to say Mercedes-Benz Truck & Bus has languished over the past decade, its products somewhat hampered by less-than-sparkling aftersales support. To the end of July 2014, T-Mark data indicates Mercedes-Benz held a 3.3 per cent slice of the overall Australian truck market and a three per cent share of the heavy-duty market segment, with market share in the medium- and light-duty segments of 2.4 per cent and 6.1 per cent respectively.

The start of the company's transformation began in early 2013 with the appointment of Mr Whitford to the role of General Manager, Mercedes-Benz Buses. After a full business and industry analysis, Mr Whitford applied many of the lessons he'd learned in the private equity sphere to turn around the bus division's fortunes, the changes wrought by him and his team resulting in a substantial increase in sales.

Off the back of that success, Mr Whitford's role soon expanded – the 41-year-old assumed the post of General Manager, Mercedes-Benz Truck & Bus, from the start of 2014.

While Mr Whitford has brought his own expertise to Mercedes-Benz Truck & Bus, at the start of 2014 global parent Daimler AG ordered a full corporate restructure under the banner of 'Customer Dedication'. This has seen each of Daimler's brands – comprising Mercedes-Benz, Freightliner and Fuso here in Australia – assume full responsibility for all aspects of their business, including aftersales.

As detailed in trucksales.com.au's recent interview with the new Managing Director of Daimler Truck & Bus Australia/Pacific, Daniel Whitehead, the restructure is giving each division a holistic view of its operations and a greater focus on satisfying their customers' needs.

Trucksales.com.au recently headed back to Mercedes-Benz Truck & Bus headquarters in Melbourne to catch up with Mr Whitford and learn more about the ongoing 'renaissance' of the brand…

trucksales.com.au: How did your career path lead you to Mercedes-Benz Truck & Bus?

Justin Whitford: I graduated from industrial design at Monash University in Melbourne and my first job was with RACV [Royal Automobile Club of Victoria] under a cadet-style program. I moved around within the organisation and learned the business, and then I moved into running a branch – the sales and marketing division.

After seven years there I went to a fleet management organisation, AFM Group, which ended up being involved with a private equity group with investors putting money into it. That gave me an introduction to private equity, and through that I became involved with an organisation by the name of Sigma Coachair, an engineering and manufacturing company for heavy-duty air-conditioning and ventilation systems for trucks, buses, rail and a range of other heavy commercial industries.

I was head-hunted to the role of General Manager Global Sales and Marketing at Sigma Coachair by a gentleman by the name of Mark Parow, who had his own [private equity] group and who was a private investor. Mark head-hunted me to help them rebuild Sigma Coachair.

We did a lot of work with Mercedes-Benz while rebuilding that business, and the sales and marketing program I put in place was something the former Managing Director of Daimler Truck & Bus Australia/Pacific, Kolja Rebstock, picked up on.

Kolja was keen to get me over given the organisation here in commercial was performing below where it should have been, and that's how I came about joining Mercedes-Benz Buses.

TS: You started as General Manager for Mercedes-Benz Buses in February 2013. What happened next?

JW: After six or so months Kolja was keen to expand my role to incorporate the truck division because he saw a lot of value in what we were doing in buses. He saw it could be easily adapted to trucks because it's not a commercial vehicle model I was bringing in; it's a business model. And it's not my model – it's about what the industry wants.

It's simple: you talk to industry, you understand the needs and requirements of the industry, and then you deliver.

It's something that I built through my experience with Mark Parow but it probably also goes back to my background with RACV.

It's actually about bringing a membership organisation methodology to a commercial business. Under a membership association if you don't have value-add programs and a strong customer focus or methodology you fail. But if you apply the same principles in business it's a really good blend.

TS: How has Mercedes-Benz Truck & Bus changed since you started?

JW: We've more than doubled the head office staff structure – we now have 40 staff here.

When I took over the bus business we pulled the business apart and did a full analysis. That process clearly highlighted the need for significant changes to the structure in terms of bus, and once I found out late last year that I was going to be moving into my current role we started the program for truck.

We've been mediocre for a long time. We talk internally here about us being the 'sleeping giants' of the industry, because with our enormous resources and our products we should be doing far better than we are.

TS: How do you feel the restructure of Daimler under 'Customer Dedication' has impacted the business?

JW: I think it was long overdue and I think the benefits come at a number of different levels. It's enabled us to deliver a more customer-orientated organisation. I think in the past we were a little too focused on the engineering side of the business and our front-line management of our customer interaction was poor.

We didn't have the resources we needed, and something else creating difficulties over some years was having an influx of expats from overseas, so there was very little long-term planning. People were looking at a 12-, 24- or 36-month period at the most, because that's typically the contracted term for expats.

Now with me in this role and with Daniel Whitehead in the MD's role, we have and we're building what is really a 10-year vision for the business.

That's a very big change for the organisation. Having people who know not just the industry and the market but also the Australian culture is playing a big part in our change, because culturally the differences between us and overseas are enormous.

TS: Where have Mercedes-Benz's efforts been lacking?

JW: I think our knowledge of the market we're operating in – of our customers and their needs – is something we haven't understood well enough. I think to an extent we've had an expectation that, 'We are Mercedes-Benz, we just know', but we haven't been talking to the industry and most importantly to our customers.

I think we've had the belief that we've had a very good product and that that was almost enough, whereas the model now is a holistic one – it's talking about the whole-of-life operation of the truck and the whole-of-life interaction with our customers.

TS: If the Mercedes-Benz product is comparable to that offered by, say, Volvo, why is it struggling here like it is?

JW: We have significant baggage and that won't be removed overnight. A key issue from the past has been the access to and pricing of spare parts and the training of drivers – areas at the back-end of the business.

So we were able to sell the truck, we could deliver the truck, but we weren't supporting the truck. It was the back-end technical resources we couldn't provide and so when customers needed us most we couldn't support them.

That's something that won't be fixed in three, four or six months; that's a long-term program.

We've formed a product committee that is building and specifying our new range of trucks and we've got a number of other committees that are focused on customer interaction.

It's competitor analysis, too. We're not just looking at the specification of the product, we're looking at where we sit versus every one of our competitors – especially our European competitors – to ensure that what we provide is the equivalent or better.

TS: How did this situation come about?

JW: If you look back over the last 10 years our sales have been capped in the 500s, which is well below where they should be. I just think that at no stage during that period has the organisation challenged the status quo and taken the viewpoint from the outside looking in – we've always looked from inside out.

That's something Daniel Whitehead is very keen to challenge, as I am. With the team we've been building we've been hand-selecting people from outside the organisation for that very reason, because you need a blend and you need fresh ideas.

TS: How happy are you with the dealer network?

JW: We've got some great partners but again I think it's something we haven't really maximised in the past because we've been operating at arm's length.

But we're working a lot more closely with our dealer networks now; they are now actively involved in a lot of the discussions about the pathway we're taking moving forward. That's not just the pathway in how we sell to and service the market; it's also looking at how we spec our products and what the market actually needs and wants.

We have to remember we're a wholesaler, so getting the experience from the guys who've been in the retail segment for years is critically important.

Now they [the dealers] are excited to be actively involved in building a business model that is almost a blend between wholesale and retail.

TS: The new fourth-generation Actros was first unveiled in 2011. Why is it taking so long to reach Australia?

JW: There are a couple of reasons. Obviously Mercedes-Benz had to make sure it had the product right before it released it internationally. What I can tell you is that we will be one of the first international markets outside of the core European markets to see the new range of trucks.

This [the new approach] will revolutionise the way Mercedes-Benz actually releases trucks in Australia and the way we specify them. As I mentioned earlier I've introduced a product committee that includes a number of people from within the industry – we've got customers providing us with feedback, we've got our dealer network represented, and we've also got people internally.

We're looking at the industry and the market segments we want to sit within and we're actually specifying and building trucks to put into those market segments here in Australia. In the past we've been handed trucks and we've had to find where we'll put them.

On top of that we will have what will be up to a two-year testing program. We're going to be releasing 15 new trucks in the Australian market and they'll be here towards the end of this year. There will be quite a lot of press around those trucks because again it's a significant change in our mindset and approach. We're looking at our market as a stand-alone market, not just an add-on.

Those trucks will be running for up to two years in a range of market segments to ensure we're absolutely confident they suit the market. We expect them to land in December and I'd suggest they'd be on the road in January and then running for up to two years before we have a full release.

TS: Is there anything else on the new product front you can mention?

JW: Yes; next year we're releasing a new Black Edition range – it's a premium range of [existing model] trucks with a lot of value-add items and programs.

It'll be part of our transition to the new truck range. There will be some pretty exciting features in amongst it that I can't reveal right now, but inside of the next two to three months we'll have some news on those.

They'll be released in the first quarter of 2015 and they're going to be fitted out very nicely; from an appearance point of view they're going to have some additional body items, some safety items, and a range of additional features.

TS: How do you go about increasing market share in light- and medium-duty segments dominated by the same three or four brands, and especially when one is a sister company?

JW: That's a critically important one for us; we need to consider our sister company in any decision we make in these markets. When you pull apart the industry you can clearly see the points of difference – not just in the product but in their application – so we can differentiate how we target those markets.

I still think there are some pretty exciting opportunities for us in light duty but more so in the medium-duty market. The majority of our focus through the past five to 10 years has been the heavy-duty market but certainly our growth expectation in the medium-duty market is similar to that in heavy.

We've probably got the Atego specified a little too high currently so we're looking at building that next-level-down product that sits in between – an Atego entry-level model that won't actually be competing with Fuso.

TS: How has the bus division been performing in recent years?

JW: We'd been on a seven-year decline prior to me joining the organisation but the results last year following the full turnaround project were amazing. We delivered 38 per cent year-on-year growth, when really the changes had only been operating for about six months. We're tracking extremely well again this year.

We're in discussions now with all the major fleets and with government groups. The groups that had shunned us for our lack of service and back-up are embracing us like they haven't for many years.

TS: How is the new minibus program rolling out?

JW: We're just in the process of ordering our first full batch of product for both Australia and New Zealand. It [the release] is running slightly behind but they will be released at the end of 2014.

The product line is varied between a transfer style of bus, a city bus and a coach, so there are three different product segments we're targeting there.

TS: What do you hope to achieve in your time as General Manager of Mercedes-Benz Truck & Bus?

JW: Apart from the external results, probably the biggest point for me concerns the internal culture [at Mercedes-Benz Truck & Bus]. We recently had a two-day off-site staff event that was about planning but also about looking back – understanding where we've come from and ultimately where we're heading.

We're introducing a high-performance culture here and that's something I think many large commercial organisations lack. It's a way in which I believe we can differentiate ourselves.

There's a lot happening. A number of staff said at that recent event that it's the most exciting period they've seen at Mercedes-Benz in 20 years.

The change in the environment here is incredible and the results will come.

Q&amp;A: Justin Whitford, Mercedes-Benz Truck &amp; Bus

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Q&A: Justin Whitford, Mercedes-Benz Truck & Bus