In spite of a sharp downturn in world trade, CEO Pete Rose
has managed his Seattle-based freight and logistics company to avoid layoffs
and long-term debt, and to accumulate $800 million in cash.
On his early days: In 1981, my partner and I were drinking
beer in Hong Kong. We drew plans for a business on a cocktail napkin. It’s easy
to be bold when you’ve had a few drinks. But when we got back home, we pooled
our money with four other investors, about $300,000, and we simultaneously
opened [offices in] Hong Kong, Taiwan, Singapore, Chicago, Seattle and San
Francisco with 20 people. Today, we have 212 offices, 12,500 people and $5.6
billion
in revenues. Most of the companies we wanted to emulate are gone.
On Expeditors’ performance: Things are soft everywhere.
There have been tremendous layoffs at our competition. But we won’t cut costs
just to please Wall Street. To hell with Wall Street.
We are running our own company here. We haven’t had a single layoff. We also
haven’t lost any clients.
On future growth: We are looking at 40 to 50 new offices
worldwide in the next five to 10 years. Five years ago, we broke the Fortune
2000. Last year, we broke the Fortune 500. In China, we have 53 offices. In
three to five years, we’ll have 70. We have been in [the former]
Czechoslovakia, Hungary and Poland for eight years. Now, [businesses] are
outsourcing to Romania and Bulgaria, so we’re opening offices there. We’re
looking at west and central Africa, the Balkans and Russia. Now that we are
[transporting] peripheral equipment for drilling gas and oil, we are looking at
Nigeria and Libya.
On competitive strengths: It’s all about your IT capability,
your geographic coverage and your financial viability. We have 650 people in
IT. We hire people young and train them.
On corporate culture: We don’t have casual wear days. When I
started, customs offices looked like shitholes with girlie calendars on the
walls and files all over the place. If you are going to look professional, you
have to dress professional. Anywhere in the world, you can always tell if it’s an
Expeditors office. We keep everything neat and clean.
On recent trends in executive compensation: What’s happening
on Wall Street is disgusting. If everybody copied our executive compensation
system there would be no problem. My salary is $110,000. The rest is based on
performance. Our managers in the field have low base salaries, but they get 20
percent of the pretax bottom line whether they are in Dacca, Detroit or
Dusseldorf. It’s everybody’s job to do sales. If I go somewhere for a
conference, I’ll spend the afternoon doing sales calls.
On the secret to success: My job is simple: don’t
do anything stupid. It’s the egomaniacal CEO whose idle hands do the devil’s
work. They [CEOs] figure they’ve managed one job so they can run another
company. Once they’ve screwed it up, they always talk about going back to
basics. We don’t do acquisitions. We could buy General Motors, but what would
that get us? A bunch of shitty cars. We are not for sale. This is our baby and
you don’t sell your baby.