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Dan Cushman Sales Job Helps Turn Around PAM Transport

6 min read

Dan Cushman no longer has to ask his accountants if PAM Transport Inc. of Tontitown has made money this month.

Now, he said, he gets to ask the much more fun question of how much money the company made. The trucking company’s current financial health stands in stark contrast to those dark months that made up 2008-09.

Cushman was named the company’s president and CEO in July 2009 as the company’s plunge was in full descent. PAM had lost $18.8 million in 2008 and was on its way to posting a nearly $12 million loss in 2009.

Cushman’s turnaround efforts have taken hold. PAM posted profitable years of $2.86 million in earnings in 2011, $2.18 million in 2012 and $5.91 million in 2013. With a quarter left in this year, PAM is ahead more than $11 million.

Cushman said he wasn’t sure how long it would take to turn PAM around or what levels would be reachable in the short and long term.

“We had a very strong strategic plan about who we were and what we were going to do, and we never wavered,” said Cushman, 59. “We took pride in the fact we were a strong automotive supplier, but we built on that. We gave extraordinary service, and we had to sell that to other customers. We did that.”

‘The Well Was Dry’

Cushman came to PAM with 32 years of experience in the trucking industry and with a strong background in sales. He knew immediately that sales would be where PAM started its turnaround.

At the time, PAM relied almost solely on General Motors for business, hauling the car company’s automobiles, so the sales department had to be overhauled to match the company’s new business initiative.

It had to be done and quickly because when the economy began to collapse, so did GM’s business, which meant PAM was in dire straits too. GM declared bankruptcy in June 2009, a month before Cushman took over at PAM.

“The bottom line is when they went bankrupt, the well was dry and we weren’t in a position to respond to that,” Cushman said. “The first thing I did was call in the sales team and say, ‘What are you doing, what are you focused on?’ When I started with this company, I think it’s fair to say I had more knowledge and experience with that customer base that we wanted to go after than anybody else here. I don’t mean to sound egotistical, but from day one I was the company’s most knowledgeable, best sales rep.”

He encountered another problem: Customers were unsure who PAM was. The company had made some acquisitions in different regions of the United States but instead of incorporating them under the PAM umbrella, each continued to operate as an independent entity.

When Cushman was on a sales call in the Northeast, his salesman handed his potential customer a business card from one of the subsidiaries PAM had acquired. So Cushman began the process of shedding the confusion and centralizing all operations in Tontitown under the PAM brand name.

Cushman said the crux of his vision was that PAM needed to know who it was and what it did well. If something didn’t fit the program, move on to something that did and profits would follow.

“I have to focus on what we do and do it well,” Cushman said. “There is so much opportunity to do what we’re doing. There is so much more we can do within the parameters of what we do.”

The confusion abated and customers increased — Cushman said PAM added 300 new businesses in his first year — and the return to profitability was just around the corner. In the first quarter of 2010, PAM still lost money — $315,000 — but saw revenue increase to $81.8 million from $65.8 million in the same quarter of 2009.

“That’s one of the things that Dan did, was not put so many eggs in one basket,” said PAM CFO Allen West, who has been with the company since 1997. “It provided us with a lot of cushion.”

Cushman rebuilt PAM’s sales team, and it now continually chases new business as long as it makes good sense for the company. West said Cushman has proved to be more than just a salesman CEO with his day-to-day oversight of the company’s operations.

“Sales is what we needed at the time, and he definitely had that kind of experience,” West said. “He knows every facet of the industry. He might not be able to change a transmission on a truck, but he’s familiar with every piece of the business.”

A Tough Call

2010 still ended in the red partially because of another tough call Cushman and PAM made. When the company was in the midst of its titanic struggles, it was apparent that the tractors PAM was using were well past their prime.

Unfortunately, PAM was going broke and tractors are very expensive, so the company tried to make do the best it could. That led, as one might expect, to poor efficiency and unhappy drivers, who like few things less than unreliable equipment.

“In mid-2010, I felt like we had our hands full combining all the companies into one and kick-starting the sales and marketing teams,” Cushman said. “One of our strategies when we were losing money was we aged our fleet like most companies. [We] quickly looked at that and said that isn’t a long-term solution. We immediately invested a whole lot of money in 2010 and 2011, so we took a small step back because of that capital expenditure, but that quickly paid dividends.

“Costs went down, downtime on equipment went down, and the drivers loved it. It was the right thing to do, but it costs us money to do it.”

Now, of course, PAM seems to be chugging along with the newer equipment, plenty of business and profits piling up in the bank. The company announced Dec. 2 it would hold another Dutch auction to buy back 640,000 shares, just as it had bought back 675,000 shares in January 2013.

Last week, the stock price pushed above $49 for the first time ever; Cushman remembers it was less than $5 when he was named CEO.

Cushman said he stresses to his team members to attack their current prosperity the same way PAM attacked during the down times. Cushman pushed for an expansion into Mexico shortly after he took over, and late this past summer, he expanded the Mexico operations with a new terminal in Nogales after getting assurances that critical mass would be there to ship consistently.

One customer asked if PAM could open in Tijuana, but Cushman said he declined because the consistent long-term growth wasn’t there. Yet.

Expansion is also tricky, Cushman said, because of industrywide driver shortages. Raising pay and training and equipment costs has to be balanced with how much revenue such expenditures would bring in, and it’s not an easy matrix for anyone in the trucking industry.

“We have a sustainable model right now,” West said. “We want to grow and become more efficient. We want a model that doesn’t have to have its hand held every day.”

The trucking industry then butts heads with companies that are trying to minimize their shipping costs. It’s why a CEO such as Cushman is always on the sale.

“We’re talking about 2015 right now and what is our growth opportunity,” Cushman said. “It’s not based on a shortage of opportunity with customers. We have a customer base that really likes us. They talk to us about wanting us to do more.”

Growth depends on drivers, he said. “We’re working very hard to figure out what are the pressure points.”

Staying Connected

Cushman continues to be an active CEO. He tries to visit customers three days every other week. He holds monthly pizza get-togethers at the Tontitown headquarters, and he likes to have a few hot dogs and beers with shop guys when he visits a PAM terminal.

“I’ve always felt to really get an understanding of what’s going on out there, you have to get out there,” Cushman said. “It’s still important for me to get out there and talk to customers about good things and bad things and stay connected. If you don’t have a relationship with your driver, he’ll just leave you without telling you. If you have a customer and you don’t have a relationship with him and something goes wrong, he’ll just replace you.”

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