Arkansas Trucking Report profiles new Arkansas Best CEO

Editor’s note: Following is probably one of the best introductions — written from a lengthy interview — of Judy McReynolds, the relatively new president and CEO of Fort Smith-based Arkansas Best Corp. The story was first published in the Arkansas Trucking Report, and the Arkansas Trucking Association has graciously allowed The City Wire to repost the story.

story by Lane Kidd, executive editor of the Arkansas Trucking Report and executive director of the Arkansas Trucking Association

At this writing Judy McReynolds has been president and CEO of Arkansas Best Corporation (Arkansas Best) for less than eight weeks. That’s hardly time to make an indelible mark on a company. However, McReynolds’ personal story, how she arrived here, and the impact she has already made at Arkansas Best are stories in themselves.

But even before you can look at McReynolds’ story, you have to step back and look at this company. Arkansas Best is a story steeped in industry lore – its corporate history, culture, people, and especially its tradition. Only then can you fully appreciate the job McReynolds finds herself holding at the age of 47.

FLAGSHIP STATUS
Anyone with just a little bit of knowledge of the trucking industry knows about Arkansas Best in Fort Smith, or certainly its major subsidiary, ABF Freight System (ABF).

Tracing its corporate roots to the early 1920s, ABF is one of the nation’s oldest general freight truck lines. Last year, ABF generated revenues of almost $1.4 billion. Listed among the 20 largest U.S. trucking companies, the less-than-truckload (LTL) carrier is actually the third largest in Arkansas. FedEx Freight, the successor to American Freightways with its corporate operations in Harrison, is actually quite a bit larger, reporting $4.4 billion in annual revenues last year. And J.B. Hunt Transport in Lowell, with its ever expanding intermodal, truck and logistics divisions, is also larger on $3.2 billion in 2009 revenue.

But ask a gathering of trucking company executives about ABF and you will quickly find out that the company holds a special place among its corporate peers – an almost flagship status. But why that respect?

First of all, ABF is a corporate veteran. Most companies simply don’t last this long. It was in business for almost 30 years when the first interstate highways were built. The interstate highways are now worn out and ABF is going strong.

Most trucking company owners can count on one hand the number of economic recessions they have survived. ABF executives need a couple hands.

In 1980 Congress deregulated the trucking industry. Almost overnight, thousands of entrepreneurs jumped in the business, competing willy-nilly at low prices never before seen. Of the 50 largest U.S. trucking firms operating when it happened, only four have survived – UPS, Yellow Roadway Corporation, Central Freight Lines in Waco, Texas, and ABF.

To top that off, in the late 1980s an investor group attempted to raid Arkansas Best in a hostile takeover bid. Rather than roll over and take the money, stockholders and executives scrambled and joined forces. They borrowed and competed with the bidders. They beat them, kept the company, and paid off the debt.

And finally, and perhaps the most surprising to its industry peers, consider that the great bugaboo fear of most trucking company owners — organized labor — has been an integral part of the ABF driver force for more than 60 years. ABF executives do not fear the Teamsters.

Through all these challenges, for more than 80 years, ABF and its senior executives have continually thrived, making money for stockholders, paying its employees and drivers well, increasing its customer base, expanding services and operating one of the safest truck lines in the nation, as evidenced by the number of “best in class” safety awards it has received from the American Trucking Associations.

TEAM DEPTH
Not many businesses can claim the wealth of knowledge, loyalty or executive experience that Arkansas Best has historically enjoyed. Under the early guidance of the late Robert Young Jr., and since the 1980s, Robert A. Young III, they delegated authority and nurtured their management team. The result was that almost nobody ever left Arkansas Best.

However, transitions of leadership inevitably occur in all companies and in 2004 Young announced his intention to step away from his role as chairman and CEO, after more than 40 years of employment. His choice to succeed him was Robert Davidson, a 30-year plus veteran who joined ABF soon after graduating from college in 1972.

In January 2006, Young officially retired and was named Arkansas Best’s chairman of the board, a position he still holds. Davidson assumed Young’s responsibilities and Wes Kemp, a 40-year corporate veteran, was named president of ABF. That’s the way it remained until late 2009 when Davidson caught a few people by surprise and announced his retirement, effective Dec. 31.

All of which brings us back to Judy McReynolds. Named quickly by the board of directors to succeed Davidson, McReynolds was not a household name in the trucking industry or the Arkansas business community. While employed by Arkansas Best for 13 years, she had not held corporate positions that put her in the public eye. And she was not one of those 30-year company veterans.

Young offered some perspective. While the industry might not be familiar with McReynolds, he and his colleagues were and that’s what mattered.

“The Board had noticed early on in Judy’s tenure a wealth of competence, judgment, intelligence and the ability to communicate her ideas to others,” Young said.

He confided that while McReynolds “was being groomed to replace her predecessor in another three or four years,” there was no anxiety when Davidson announced his retirement.

“She already had the respect of her peers, the board and the confidence in her own ability and her selection was a foregone conclusion,” said Young. “There was no other choice in my mind.”

THE INTERVIEW
McReynolds occupies a corner office at the end of a wide hallway on the fifth floor of corporate headquarters in Fort Smith. Windows line one wall and look out onto a wooded hillside, which on this day had the added appeal, or not depending on your perspective, of five inches of snow. No other buildings are in sight — just woods.

Her furniture is oversized, heavy, and solid, the pieces Davidson used. We sat down at a rather formal round table. McReynolds has an unassuming conversational style, at once at ease and engaged. She started the interview with a smile and it rarely left. There was also no mistaking that she was “on the record” even though ATR is obviously not one of those “gotcha” type magazines.

She gave me her undivided attention — a refreshing quality in an era when it’s not uncommon to be in conversation, only to have the person glance down at their Blackberry or iPhone for the latest text message. McReynolds’ cell phone was nowhere in sight. When speaking, she looked me squarely in the eye. And when I spoke, she actually listened, or seemed to at least.

“Well, yes, we’d like to do that,” she offered quickly when asked if the company would entertain the idea of acquiring another business. “If you look at the future opportunities,” she said, “as we have in our strategy process then there’s a space called domestic transportation management that we believe our company’s core strength would lend itself well to pursuing. It’s an area that we want to explore more deeply.”

McReynolds explained that the company offers more value than may have been realized.

“We pursue commercial excellence around here, which is to know how to add value for a customer. Not being able to charge for that value is something that often happens in companies. We need to learn how to not be afraid to charge for it,” she said.

One way to achieve that goal is a basic rule of communication — to listen.

“A core confident feed from the ABF sales group as it approaches a customer is to be a listener, not a dictator. Listen to what our customers need,” she explained.

And McReynolds is determined to aggressively push this new marketing approach now rather than hold back and wait for better times. To that end, she says ABF has added more sales people recently, unlike its competitors.

“Well, we know that we’re going to be a survivor in this recession and we know that we can plant the seeds and lay the ground work for being very successful when the turn comes.”

She also believes that the LTL sector does things differently than its truckload counterpart. Having worked in both sectors, there is no mistaking which she prefers.

“I would distinguish the truckload industry and the LTL industry this way,” she said. “The LTL industry is where there are many, many more opportunities to add value to the customer experience than in the truckload space. Truckload in my view is more commodity driven and winds up being price driven.

“Now I will say this,” she reflected, to elaborate. “You do see a lot of relationship building in truckload and that’s why it lends itself to entrepreneurs who have a lot of personality and they like to be with people. In the LTL world we approach it in a way where there’s a lack of customer concentration,” explaining that ABF has no customer with more than 3% of the total business. “You have many more transactions and that equates to thousands of decisions every month.

“We also have the unique opportunity because of our balance sheet,” she said, explaining that being good stewards of the company’s cash over the years has paid off. “We are able to go out and do some of these things now, while other companies are constrained and can’t.” McReynolds confidently added, “We will manipulate our place in the market to a better position.”

The strategy could already be working. McReynolds confides that ABF has actually picked up market share at a time when competitors are more internally focused on surviving than looking at their customers’ needs. “That will serve us well for a long time in the future.”

ABF employs Teamsters drivers. But McReynolds maintains that aside from the periodic wage and benefits negotiations with the union, ABF is blessed with the best drivers in the industry.

“We actually call them our ‘driver salesmen’ because they really are,” she said. For example, when the company initiated its expedited regional service, she said that drivers were some of the best salespeople. “They were so excited and they were the first to go out to those customers who were long-haul customers and ask for that regional freight. That reminds you of their importance.”

MANAGEMENT APPROACH
McReynolds is cognizant of the role her new job requires. Unlike a change in leadership because the company is on the brink of disaster and needing a turnaround, Arkansas Best is financially sound. It has a solid management team. Yet stockholders and employees will inevitably look to her for new ideas and strategies.

She discussed how she is approaching that challenge. She believes that stockholders will expect what they always do — a solid return on their investment and increased stock prices are always appreciated.

“With employees it’s a little different,” she explained, “and Robert (Young), being the man he is and our chairman of the board and the history and leadership he brings to this company, it’s both an opportunity and a challenge.

“I think employees want to know that we will maintain our high ethical standards, that we are going to continue to do things the right way, and that we will trust our management team. Those are things that take so very long to build and it’s my hope that one of these years whenever I retire, all those characteristics will be intact.

“I try to observe what our regional vice presidents are doing. Our success boils down to individual decisions that are good for the company. I listen to what the regional vice presidents have to say and the branch managers who report to them and so on. Success boils down to the collection of all those good decisions.”

Those vice presidents report to ABF President and Chief Operating Officer Wes Kemp. He marked his 40th year of employment with the company last year. When asked to offer some perspective on McReynolds, Kemp is candid. “Thirteen years of employment would make you a real veteran in many organizations but with Arkansas Best and ABF, you’re normally just getting started,” he joked.

That’s why McReynolds relatively rapid progression to CEO is all the more noteworthy.

“That could only be accomplished by someone who is truly exceptional,” he said, “and Judy is just such a person. It didn’t take me long to recognize and value her formidable skills and sound judgment.”

But what can a seasoned veteran like Kemp expect under McReynolds’ leadership?

“It sounds a little self-serving but the most immediate support Judy can afford me is patience,” he said. “The current recession represents the most challenging business environment that I have faced in more than 40 years with the company and it’s not going to turnaround overnight. Longer term, Judy’s guidance and backing as we better position ABF in the market will be invaluable. We are going to become the compelling choice for customers.”

“We have so many of the right people in place and the great thing for me is I don’t have to worry about that part of it that much,” McReynolds explained.

OKLAHOMA RAISED
“I was drawn to math,” she responded when asked what she liked in school. “That’s the way you understand. In a business you must understand the analytical side. In college, I thought about chemical engineering, but was drawn to accounting because they both have lots of math.”

McReynolds grew up in Norman, Okla. Her father, Gene Moser, worked in sales for a printing business that specialized in team sports. “He was heavily involved with the University of Oklahoma and did a lot of the printing for the football, basketball, and baseball programs.”

Her mother, Gwen, stayed at home when McReynolds was young but later worked at the University.

I asked her about her parents — what they meant to her growing up. For the first time in the interview, McReynolds pauses, smiles and her eyes glance away for a moment. “My parents, even more deeply my family, were big Christian people who still always do what they say they are going to do,” she said with obvious pride. “I tell people that they are the best at taking care of their friends, visiting people in need and concerned about every aspect of their family and friends.”

McReynolds laughed and said she wasn’t voted any of those “most likely” and “best” awards that appear in the high school yearbook. She was a cheerleader and a good gymnast, saying that she in fact perfected the “back summit” which she said is something like the back flip. But she refused to demonstrate when asked.

“My grandfather, Elwood Moser, was always my biggest fan,” she said, getting up to retrieve his framed photo which she keeps on her desk. It shows a beaming man holding two huge sweet potatoes the size of cantaloupes.

“I look at that picture and I have so many fond childhood memories of him,” she said, smiling. “He lived on a farm and I’d go out and spend time with him. My parents would go down on the weekends. That’s what we did for fun. He lived in Seville, a little bitty town down near Lawton, a refinery town. He worked at the refinery usually at night and he was a farmer during the day. He was just a good man, handled people well, and loved his family more than anything. He had nine brothers and one sister. I think back and wonder why I’m so comfortable working around men and it’s because I was comfortable with all those uncles and cousins because they would love you to death and tease you to death.”

She pauses for a moment and looks back at the photo.

“Fond memories,” she said.

McReynolds enrolled at the University of Oklahoma after graduating high school. Going away to another college was not really an option. “My parents couldn’t necessarily afford for me to go to college somewhere else. So I worked at a law firm and paid a lot of my own expenses and lived at home and went to school.”

She signed up to major in chemical engineering, a field that was big in Oklahoma with the oil and gas industry but later switched to accounting.

LURED TO TRUCKING
She landed a job with one of the big five public accounting firms, Arthur Andersen in Oklahoma City after graduating. But in the late 1980s the oil industry went bust. People began transferring to other cities “so I thought if I’m going to do that then I’m going to go somewhere where business is better.” She and her husband Lance decided to move to Fort Lauderdale, Fla.

“It was a huge change for us,” she remembers. “That was the first time I had lived away and Fort Lauderdale is a long way from Norman and much different. People are more transient there, much more diverse and there were more small businesses and an entrepreneurial spirit, all completely new from our Oklahoma client base, which was primarily oil and gas, or big banks.”

After a couple years though “we started thinking about having a family and we said ‘do we really want to have kids in this environment where you can drive down Fort Lauderdale beach and see just about anything you want to see, where we will leave our kids with babysitters we don’t really know’ and on and on. Yet we didn’t really want to move back to Norman. Lance is from Arkansas so we decided to move to Little Rock and I ended up at Ernst & Young, interviewing with Lavon Morton, who is now at Arkansas Best as the company’s senior vice president of tax and audit.”

After practicing public accounting, McReynolds was drawn to the trucking industry and after a year with P.A.M. Transport, she met with Lavon Morton again. Morton brought her onboard where she definitely found her niche.

BALANCE
Like many families, both she and her husband work. They have two boys: Johnny, age 17, and Brett, age 15. Succeeding in the corporate world at the pace she has didn’t just happen. She credits her husband for helping strike the right balance that families must have to make it all work.

“Lance is a unique individual in that way,” she observed. “Some women who have challenging careers don’t have the benefit of knowing that their husband is going to help them out. But Lance is always there to do that. The difference with him is that he has always felt that what I was doing was important, too, and that I needed to be able to do certain things to be successful.”

I offered that her career achievements could still be labeled as the exception to the rule that our culture still lags behind in women advancing up the corporate ranks. She’s quick to respond that she doesn’t believe companies are usually to blame, certainly not at Arkansas Best, where everyone is given an opportunity, even encouraged, to advance.

She said the person’s family has more to do with it.

“Many women get to a point in their career where they face this issue of choice,” she observed. “Is it going to be a family situation and the kids or a career? Regrettably, many simply don’t have the background support person, not that it can be blamed on another person, but it’s just that the mix you must have to make it work isn’t there so women end up holding back in favor of the family and that continues to be a challenge for women.”

She recounted her routine at Ernst & Young when her boys were young. She would work until about 6 p.m. “I would go home and have dinner with the family, and spend time with them until they went to bed and then work until about midnight at home. I did that for years because the work had to get done but I also wanted to make sure that I didn’t miss anything.”

McReynolds is quick to admit she’s not one of those individuals who was raised a trucker. She didn’t start out with one truck like so many stories in the industry. Times change and she offered that in today’s business environment, successful companies must draw on people with expertise in all areas, noting that ABF is known as much for having people with engineering degrees as having degrees in transportation and logistics.

But she does think there are things to learn about the industry. One is to understand why customers do what they do.

“I would like to know more about the sales side, such as what causes the customers to make the choices they make,” she said. “I’ve seen the company from the analytical side. I want to learn more about the pricing so that I can understand why an important account makes the choice they do.”

And when it’s all said and done, has she looked out there to what she really wants to achieve, what would mark a personal success for her? She pondered that one for a moment.

“For me it would be for people to look at what I’m doing and believe that I’m moving this company forward,” she offered. “And that could mean a lot of things. It was interesting to me to listen to the remarks that Bob Davidson made when he retired and I remember the remarks Robert made when he retired. And I think about that.

“Personal success would be to know that people believed in you, that they felt like you made lives much better, that the company was a place where people want to work. It’s going to be a big challenge even after this recession is over to get back to the successful levels where we were, say in the most recent prosperous period in 2004-2005.”

She realizes that everyone is ultimately judged based on performance. “But what I’ve learned is you have to trust your instincts and the rest of it works itself out.”

Judy McReynolds should continue to trust her instincts. She also offered what remains important to her — to count your blessings.

“When I think about my upbringing and my background, I’ve been very blessed with some great opportunities,” she reflected as we finished. “You never know what’s coming, so you better work hard and do your best everyday and be ready when it does.”