Public Companies: Heartland Express Inc.
Friday, January 17, 2014 7:00 AM
Whether traveling east or west, chances are you will see one of Heartland Express Inc.’s 5,000 semitrailer rigs on our nation’s interstate system.
Education: Business management degree from Luther College
Hometown: Solon, Iowa
Family: Gerdin and his wife, Nicole, have four boys: Clay, 13; Grant, 10; Nick, 6; and Adam, 1
Heartland late last year announced the acquisition of Gordon Trucking, based in Pacific, Wash., for $300 million. The acquisition created the fifth-largest asset-based truckload carrier in America, and opened up the west for Heartland.
“We’ve got the eastern half of the United States covered,” said CEO Michael Gerdin, whose late father, Russ Gerdin, started the company. “You bring them together, and it’s really a powerhouse of trucks and great drivers and two great companies coming together to cover the whole United States.”
For a company that started in 1978 with 16 semis, Heartland had come a long way. It now counts Wal-Mart, McDonald’s, Procter & Gamble, Georgia Pacific, FedEx, Quaker Oats, Kellogg’s and General Mills as clients. With the Gordon Trucking acquisition, Gerdin plans for Heartland to grow across the country without sacrificing the values the company has held dear for so many years.
Q & A with Michael Gerdin, CEO of Heartland Express Inc.
What do you think has made the company successful long term?
It’s just been the attention to service and safety, our two core principles. We have hired only experienced drivers over the time period we’ve been a company. We don’t have any student drivers. We don’t hire drivers who don’t have a very good driving record. You’ve got to work one year over the road with a reputable company and have a clean driving record before we’ll hire anybody. We’re very picky about the drivers we put behind the wheel. We want experienced guys. Our average experience of drivers in our whole fleet is nine-plus years driving experience.
How did the acquisition of Gordon come about?
We’re always looking at trucking companies to buy. Including Gordon now, we’ve bought six companies since we went public here in 1986, so we’re always looking for good acquisitions. And we’d known the Gordon family for over 20 years and been good friends with them and good competitors. I had approached the Gordons some time ago, and we had started talking and strategizing on what we could do together. Everything finally came to fruition on Nov. 11.
Should we look for more acquisitions in the future?
Yeah, that’s always something that’s helped us grow. There are a lot of trucking companies out there. All you’ve got to do is look up and down the highway. But the key is finding the right one that fits with your culture, the right one that fits into your geographic nest so to speak, and putting those things together are really the important things about acquisitions. We were able to find that in Gordon. We’ll certainly be looking, going forward as well, to acquire some more. So we’re not done there, but it’s not something that we do every day either. It had been 10 years since our last acquisition, so we were very patient to find this one and find the right one. And it could be quite awhile before we do another one, but if the right one comes along in a couple of years, we may do another one then.
How much did the recession affect Heartland?
A couple of things happened. First of all, we got a lot better on a lot of our processes. We took advantage of the time we had during the recession to improve things such as our fuel program and our toll program. We looked at ways to get our company better and to do things in a more efficient manner. We went down a little bit on our revenue, but that was because we made the choice to keep our rates where we believed that they needed to be. During that time period when freight wasn’t moving as well, some of the shippers had an opportunity to move their freight at a lower rate and they chose that, so we lost a little business there, but it’s come back. And we haven’t had to fight the rate battle as the freight has come back here. We were happy – certainly not happy that our revenues went down during that time period, but we used the time wisely, I believe, to improve our processes.
How do you feel you’ve recovered from the recession?
It’s been fine. One of the great things about Heartland is because of our strong balance sheet, we do good in both good times and bad times. We’re able to weather the storm, so to speak, better than most because of our operating ratio and our cash balance, so the recession was both a positive and a negative. Because we didn’t like losing the revenues, but at the same time it made us more profitable, I believe.
What are some of your goals for the next five years?
The immediate goal is to get the Gordon transaction combined. This is not a small acquisition. This is almost doubling the size of our company overnight. There’s a lot of work to do on the Gordon transaction to get the whole thing running correctly. So that’s going to take us a couple of years to do that, but you should be seeing us getting more profitable and better each and every year as we bring these things together. So that’s going to be our focus in the near term. As we go into the long term, more acquisitions could be on the horizon. I think we’ve got a really nice platform now to grow organically across the whole nation. So we’ll just keep growing organically, and if we find more acquisitions we can do, we’ll take a look at each of those.
What is the biggest challenge facing Heartland?
The biggest challenge facing all truckload carriers at this point, I’d say, is the government regulations that keep getting piled and piled and piled on all of us. That and drivers. Drivers is probably the biggest, and government regulations is probably the second. But the very good drivers that we’re after are valued commodities in the trucking industry. Every carrier out there is looking for drivers every single day, and there’s just not enough of them to go around. ... The thought of (driving a semi) to most people, driving something that big with that much weight and that much power, is kind of a scary thought. It’s a lifestyle that leaves you on the road for a couple of weeks at a time. You may be away from your family for a long time.
How do you attract drivers?
How we try to attract them is we pay the most. We pay more than anyone else in the industry, and we give them the newest equipment that we can possibly give them for their work environment.
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