We spoke with Vipar Heavy Duty's Chris Baer, who recently took over as head of the truck-parts marketing group, about the restructured organization and how it is now well-positioned for the future.
HDT: Tell us a little about the road you took to get to where you are today.
Baer: My road was almost by chance. I started in an auto parts store in Chicago driving an exploding Pinto with floorboards of plywood. It was a store my uncle owned that I worked at while going to college.
Along the way, I ran into our friendly neighborhood Chicago Rawhide rep and did some field work with him. Within a couple of months, they had a job opening for a position called the automotive specialist. I interviewed for the job, graduated from college and went to work for Chicago Rawhide as an automotive specialist. By the way, I was the guy who would write up defects and make boxes — doing lots of grunt work.
I was making $8.00 an hour and had a new company car so life was great. I worked at Chicago Rawhide for 17 years, primarily on the automotive side. When I left there, I was director of sales for the U.S. and was about to take over the Canadian aftermarket as well.
I had never really planned on leaving CR. I was going to do it the old school way, work there 30 or 40 years and retire. Then Vipar moved its offices to the Chicago area in 2002, and I went to work for Steve [Crowley, former president and CEO] who I had worked with on and off at Chicago Rawhide.
I started out in the program management area with oversight for program management and marketing communications. One of the things that was really valuable for me was I had a standing invitation to Vipar’s board of director meetings. Since the day I got here, I attended every board meeting. I did not realize back then how valuable that would be for my career and for what transpired here with Steve’s retirement and our transition.
I also became active in some other initiatives that developed along the way. When Vipar first started it was just Vipar Heavy Duty and now we operate five companies. I got to be a part of the development, creation, operating agreements — all of the subsidiary companies. It has been a great experience for me, a teaching experience.
HDT: At a press conference during Heavy Duty Aftermarket Week, you talked about structural changes you made. Can you go into detail on those and the thinking behind them?
Baer: One of the things that has made Vipar strong is the people we have here. We are real fortunate that we developed a strong leadership team; it helped when we flattened the organization. We had been operating in the traditional model with everybody kind of lining up underneath the top executive. Today we are way too complex of an organization to think any one person can be an expert on all these areas where we need to be strong.
One of the things that I was worried about coming into this position was I thought I needed to have all these skills. I thought I needed to be a world-class marketing person, or I needed to totally understand all of the customer-facing technologies. What makes this team really strong is that each person in place really is an expert in their area.
For me, it was a great opportunity to say, “I have some skills to guide this and run it but I don’t have to be a master of all these different areas.” Flattening the organization actually allowed us to achieve two of our main goals: speed and execution.
When you look at Vipar through the years, we have been pretty innovative. But like a lot of companies we could be much more streamlined and effective.
We had our first leadership team meeting in January and it went over very well. There was a lot of energy in the room, a lot of sharing of information.
One of the things we identified — which we hadn’t been aware of — was these little silos in certain areas. In the process of putting the team together we have actually taken those down. That was an unexpected deliverable out of developing this team. Those silos are naturally built by people’s focus and where they spend their time, but nonetheless they are not helpful or productive.
The team is much more fluid horizontally. Consistency is one of the responsibilities that I am going to have to help everybody stay focused and not change the message on a monthly or quarterly basis. Everybody knows the plan, everybody knows the areas we need to focus on and now they are going back to their departments and aligning them to help accomplish these goals or to improve their own operational efficiencies internally. It is a work in progress, but we’ve made a good start.
HDT: Can you talk some more about those silos?
Baer: It was a natural development of communication walls that kind of pop up. No one intends for them to be there, but they just kind of develop. If you are in the accounting group, you are not in the sales group. Everything going on in the sales group, or 90% of it, may not be applicable, but that other 10% would be good for accounting to know.
When I was a young sales guy, I was waiting for a meeting at a major developing automotive account and the receptionist there was telling me about the company’s goals and objectives, how many stores they had and how they were going to go public. This was a part-time receptionist. From that point on, I have always thought it would be neat to have a company be that connected so all areas understand the tasks at hand and understand the goals so well that a 20-hour-a-week receptionist can recite the game plan for growth.
HDT: How will the structural changes affect the organization and its stockholders?
Baer: It is definitely not the company it is was 27 years ago. It is actually a more complex company. I don’t want to say we took our eye off the ball because there have been deliverables back to the stockholders, but Vipar [became] more complex and changed our focus from time to time. What we really need to remember is that, at the core, we are a buying group for heavy-duty truck parts distributors.
I heard a phrase a while ago that I like and that is, “We are not bigger than our customers.” We have to remember our stockholders and our members and we need to be focused on delivering for them. That does not give you a bunch of deliverables, but what it shows is our attitude going forward and how we need to focus the business.
HDT: So how will the change affect fleets?
Baer: I think fleets will appreciate the Vipar model because it is resilient. It is about being able to evolve and stay in the market and our distributors understanding their customers’ needs. Fleet customers will see a difference because part of our game plan for growth is to double our national accounts. The fleet customer is going to see a different value proposition from Vipar than what we are currently offering in order for us to be able to double our business, which is our goal.
HDT: One of the things you talked about at HDAW was the fact that this is the third generation of change. Can you walk me through what that means?
Baer: The first generation was 17 guys getting together and saying, “We could probably get a better deal if we banded together,” and so they started the second heavy-duty buying group. They did a nice job and reached a critical mass. Then Steve [Crowley] took over around 2001 and it was just growth. Every time you turned around there was some kind of growth opportunity in front of us. We started several of our subsidiary companies in the 16 plus years Steve was at the helm. There was a lot of innovation. The Technology Group started, the national fleet program started, Global Parts Network started, TruckForce started. A lot of new initiatives started during that second generation.
We are in G3 now — our third generation — and we are focused on running the business through operational efficiencies and growth. Growth is going to come a little tougher than it has in the past. I would refer to the past as blowing and going, we had double-digit years consecutively. Now that you are looking at three countries, 650 points of sale in Vipar and 850 collectively with Power HD. Growth by our measuring stick is not as easy to find as it has been. We need to be good stewards and grow the business very methodically and consider operational efficiencies along the way. That is a big driver here right now to try to balance our cost to the value proposition we are developing.
HDT: What does that mean in terms of the types of action you will be taking?
Baer: The way we measure our business is through purchases by approved supplier programs. We have it out there at final point of sale, labor everything loaded in at $2.3 billion. On the purchase side, where we get measured by suppliers, we are targeting $1 billion of Vipar approved program purchases — Vipar and Power Heavy Duty purchases. That is about a 50% growth curve from where we were in 2016. At the same time, we have five initiatives that are going to help give us focus and make us a more profitable and stronger entity.
We are revamping our technology road map completely so we have a new three-year technology roadmap that just got approved by the board. We are making a lot of changes at Global Parts Network, consolidating our plants down to one. We are aware of the direction of the S cam brake, the air disc brake. There is no reason to bail on remanufacturing, but it is definitely a good time to do a reconfiguration of our facility so we are prepared for the future.
The part that I am most excited about is the globalization potential that we are starting to realize through Nexus and the Nexus community. A lot of what we are working on now has to do with same stockholder sales. Our theory is that we are not going to have a lot of growth in new stockholders; we will probably maintain the number of stockholder companies. The ones we have are going to continue to grow and add more stores to the network. To focus on doing that there is a revamped TruckForce program and an increased focus on national fleet programs.
HDT: You acquired Power Heavy Duty in January 2014. How does it fit into Vipar?
Baer: Power has grown significantly since we purchased it. We intentionally did not merge Power Heavy Duty into Vipar. The Vipar network is more of a traditional fulfill distribution network and Vipar distributors are identified in the market as wholesale distributors. This is true even though some of them may have service.
The Power Heavy Duty channel is identified as the service, maintenance, repair and distribution channel to market. We want to keep the Vipar and the Power channel separate and we think we can grow them independently. We have a different focus on Power than we do on Vipar and I think it is going to give us a really strong advantage down the road because we are trying to get closer to that final point of sale. Power is much more service- and repair-focused so we are going to keep them separate and we are going to try to grow them as separate entities with their own missions in life.
We have had more percentage growth with Power in the last three years than we did in the Vipar group, but the Vipar numbers are bigger so growth in dollars for Vipar is still greater. Power is a great fit for Vipar, and we think that it has a strong place in the market going forward.
HDT: Can you talk more specifically about how you are going to grow Vipar?
Baer: We went into the market and really got to understand our stockholders’ long-term needs and what they want to do. We had some people step forward saying, “We are planning on opening up more stores” or “Let me know if one of our distributors in the network is going to sell the business because I am looking to expand.”
Some of it is basic blocking and tackling through Truck Force, fleet programs and other new programming, but we are also going to try to create a program where we can officially tie the Vipar distributor to the Power member and be the first choice of call. If we can bring that back in-house that is big win for out combined networks.
HDT: What would you say are Vipar’s core values?
Baer: Three years ago we went through this process to understand our core values and make sure they were consistent across the different departments. There are five of them. First and foremost we are stockholder-driven, [and the others are] accountability, integrity, innovation, and collaboration. All those make up the five core values for Vipar.
HDT: Can you talk about the Nexus partnership?
Baer: Nexus is a very exciting opportunity. There are two levels of immediate value that can be had through the overall Nexus umbrella. Regarding Nexus Automotive International, the company is only three years old and has attracted the attention of the largest global parts manufacturers out there. They have rapidly caught up on the truck side. About 10% of the Nexus volume aggregated across 123 countries, is truck volume. The opportunities there are going to be a trickledown of things that fleets will see as Vipar tries to stay out front with knowledge, information and training. The vehicle dynamics that people are concerned about in the face of change aren’t necessarily being developed here in the U.S., so when we look to Europe and companies like ZF and Knorr Bremse that are the leaders in innovation, our access to them is much greater through our Nexus relationship.
Indirectly, the fleet benefits because if Vipar and our distributors are out front we are going to more often than not have the answer or the product that is needed, the right training and the things that the fleet is looking for to continue to maintain their vehicles. It just spirals. It keeps coming around to the same stuff except now, Nexus enables us to get that stuff from global manufacturers that we may not have had access to prior.
On the North American side, there is a lot of opportunity, some of which we are already realizing. We are just getting ready to launch a new B2B solution in a couple months. It is 100% tied to platforms that were made by our Nexus North America partner — The Network and Parts Plus. There is a different level of ability to piggyback off of each other inside of our Nexus North America relationship. All three of us — Vipar, The Network and APA as Nexus North America — have purchased shares of Nexus Automotive International so we definitely have skin in the game. When you have skin in the game, collaboration is much more achievable.
We have identified a dozen opportunities. One of them is to be able to approach large fleets that run various sized equipment that neither one of us could service 100% on our own. If you get down to someone who is operating F150, 250s and Freightliners currently, no one entity can handle the fleet 100%. However, collectively we can address the fleet’s needs. I think fleets are like other entities in that they would like to reduce the number of people they are doing business with. We have the opportunity to create a recipe for a fleet that runs various sizes of equipment that we could not handle before but together we can handle them as one entity — as Nexus North America.
HDT: How about some of the other brands that are under the Vipar umbrella?
Baer: We decided to have this umbrella effect where Vipar Heavy Duty is the mother ship and at the same time Vipar is still a company that is operating in the market. We operate Vipar Heavy Duty separately, but it is also the parent.
We already talked about Power and its role in the market. I think when you take the two side by side it is an interesting potential to battle the success of the dealer side of the business.
The VHD Technology Group was created to host business systems for the Vipar stockholders. It currently hosts Auto Power and INFOR systems for a couple hundred users. As our technology road map develops, we will be investing considerably more in this area.
Global Parts Network has locations in South Bend and Salt Lake City. We are currently consolidating everything into the existing South Bend facility. We are going to run two production lines. One is a high-speed line that is going to focus on the very popular brake shoes. The other line will run the complexity of the other shoes plus we have room for PDC products. What we will have is products in South Bend that we will distribute to stockholders in Mexico, Canada and the U.S.
Vipar Holdings was created as an investment arm for Vipar Heavy Duty to invest in Nexus North America and Nexus Automotive International. We decided to create Vipar Holdings so we are really not limited to where we can go. We can invest and partner with anyone. Long term, if an opportunity arises we can react quickly to step in and make appropriate investments.
HDT: What are you most proud of in your career?
Baer: I have been fortunate to be involved with quite a few different aspects of Vipar as it has developed and changed. The two things I am most proud of right now are the Power Heavy Duty acquisition and also this vision of globalization and this quick and aggressive expansion into the Nexus community.
HDT: What do you want your legacy in the industry to be?
Baer: The G3 team we put together. We are going to get a lot of mileage out of this and I think it was the right move for the company. We are already hearing, “Hey I really liked what I read there” or “I like what you guys are doing, keep it up.” The G3 team and whatever this globalization brings, I can’t see it being a bad thing for Vipar.
Long term I think there will be more of this Nexus relationship than we have currently envisioned.
HDT: Any final thoughts, Chris?
Baer: I do think that for Vipar to be successful, we have to crack the code on the end users. For us, the two major focuses we have are our fleets and independent repair shops. If we can deliver the ultimate value proposition there and remember that we are not bigger than the customer, we are going to do okay.