USA Truck's New Management Navigates a Learning Curve

by Marty Cook  on Monday, Feb. 24, 2014 12:00 am  

USA Truck CEO John Simone, an experienced turnaround artist, put together a 27-point plan that has helped the Van Buren company’s stock price almost triple in the past year. (Photos by Kat Wilson)

Beckham said that approach wouldn’t have worked because USA Truck and Van Buren have not responded well in the past to outsiders who upset the apple cart. Beckham said Simone has managed to revamp operations at USA Truck while gaining acceptance in the close-knit community.

“The position that John stepped into a year ago was a really, really difficult one,” Beckham said. “He walked into a company that had been losing and had a lot of long-term people who had been through a lot. John is not viewed as an outsider.”

Simone’s 27-Point Plan

Simone devised a 27-point plan to revitalize USA Truck. The points were linked with the others so that each course of action affected several areas, and Simone made sure that the plan wouldn’t be changed, other than some minor tweaks and adjustments, because he didn’t want short-term results affecting the overall strategy.

One example was Simone and his team’s reopening of the company’s maintenance shops, including a main terminal in Atlanta, so that repair work would be better scheduled around drivers’ down time and done cheaper by company workers. Less down time means happier, more productive drivers and better retention; driver turnover is a constant problem in the entire trucking industry.

USA Truck also flipped its emphasis on using student drivers and instead hired more experienced drivers, going from a 65-35 split in favor of students to one that was 65-35 the other way. Experienced drivers may earn more pay, but Simone said studies have shown they are more productive, cause fewer maintenance problems and carry less insurance risk.

More importantly, Simone said his research showed that many new drivers viewed USA Truck like an internship, a place to gain some experience before moving on. USA Truck hired a marketing firm not to woo customers but to spread the word among the drivers about the new USA Truck.

The theory is that creating a more stable workforce helps productivity and customer relations and that leads to better efficiency and eventually — the company’s executives hope — profitability. Simone said 2013 showed an increase in miles per truck productivity, a result of the across-the-board changes that were made.

When USA Truck announced it had narrowed its losses to $602,000 in the third quarter in October, Simone expressed optimism that the company would make it to the black in the fourth quarter. That didn’t happen. On Feb. 11 the company announced that it had had posted a $4.6 million loss for the quarter and a $9.1 million loss for the year.

Simone said the fourth-quarter numbers were misleading because the company had allotted $6 million to an insurance reserve and spent $1.5 million in legal fees related to a takeover attempt by Knight Transportation Inc. of Phoenix. Otherwise, Simone said, the company nearly broke even in the fourth quarter, losing $41,626 for the quarter and $4.5 million for the year.

The company had a 13.9 percent increase in revenue from $124.4 million in third-quarter 2012 to $141.8 million in third-quarter 2013, and a 4.9 percent increase from $134.8 million in fourth-quarter 2012 to $141.4 million in fourth- quarter 2013. The year-over-year results saw an increase of 8.3 percent from $512.4 million to $555 million.

“I feel good about that,” Simone said.

 

 

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