Top ABF management change announced

Wes Kemp, president and CEO of Fort Smith-based ABF Freight System, will retire Dec. 31, ending an almost 43-year career with the less-than-truckload operator that has included significant company growth and tough economic times.

Arkansas Best Corp., the parent company of ABF, said in the Wednesday (Sept. 21) statement that Roy Slagle, now the ABF senior vice president of sales and marketing, will become the ABF CEO on Jan. 1, 2012.

Kemp, 65, was hired by ABF in 1969 as a management trainee. According to the statement, Kemp advanced in ABF leadership positions that included regional vice president of operations, vice president of terminal operations, senior vice president of operations, president and chief operating officer and president and CEO. Arkansas Best has a policy that execs must retire on Dec. 31 of the year they reach age 65.

“During his ABF career that has spanned more than four decades, Wes Kemp has been an integral part of ABF’s transformation from a small LTL carrier with revenues totaling $45 million and service centers in 12 states to a flexible, innovative, and full-service LTL carrier with $1.7 billion in revenues and 275 service centers across North America,” Judy McReynolds, Arkansas Best Corp. president and CEO, said in the statement.

BOTTOM LINE STRUGGLES
McReynolds acknowledged that Kemp has been at the ABF helm during “one of the most severe recessions in our company’s history,” and said his “patience and guidance during this very difficult time have enabled ABF to return to profitability.”

The company did return to the black during the second quarter of 2011. Income during the quarter hit $5.298 million, a significant improvement over the loss of $7.444 million in the 2010 quarter. The second quarter also ended 10 consecutive quarters in which the transportation holding company posted a loss.

The company, which employs about 9,500 nationwide, posted a 2010 net loss of $32.421 million, an improvement compared to a $127.522 million net loss in 2009. The 2009 income loss included a non-cash accounting charge of $64 million for the impairment of goodwill.

Total revenue in 2010 was $1.657 billion, a 12.55% gain over 2009 revenue of $1.472 billion, but still less than the $1.833 billion total revenue in 2008. In 2008, the company posted net income of $29.168 gain in 2008.

LEGAL FIGHT
Kemp also has been at the forefront in what has become a nasty legal fight with the International Brotherhood of Teamsters and principal competitor YRC.

The National Master Freight Agreement, implemented April 1, 2008, was designed to cause equal labor costs and other benefit payments among trucking companies with drivers represented by the Teamsters. However, YRC Worldwide, the largest less-than-truckload carrier in the U.S., received three rounds of wage and benefit concessions from the Teamsters, with the most recent announced Nov. 1 that includes up to $350 million annually through 2013. Previously, the Teamsters voted to approve a 15% pay cut among unionized YRC drivers.

ABF was unable to obtain similar concessions from the Teamsters.

On Nov. 1,  2010, Arkansas Best Corp. — the parent company of ABF Freight System — filed a lawsuit seeking the $750 million in financial damages from alleged violations of a National Master Freight Agreement (NMFA) by the International Brotherhood of Teamsters and others. On Dec. 16, U.S. District Court Judge Susan Webber Wright (Eastern District of Arkansas) dismissed the suit for lack of subject matter jurisdiction. The Eighth Circuit Court of Appeals ruled July 6 in favor of Arkansas Best Corp., which returns the company’s lawsuit against YRC and the Teamsters back to a federal district court in Little Rock.

But the economy, which remains mushy and inconsistent with respect to freight demand, and the recent Teamsters fight are just a few challenges Kemp has seen come and go. During his time moving up through the management ranks, the company survived a hostile takeover attempt, labor disruptions, periods of excessive debt loads, and the mid-1990s acquisition of WorldWay that almost broke the company.

SLAGLE
Slagle, 57, is a 35-year veteran with the company. During that time he has worked as vice president administration and treasurer, vice president and treasurer, and regional vice president of sales. According to the company, Slagle began his company career at the Dayton, Ohio, distribution center and was the branch manager of ABF’s Carlisle, Pa., distribution center for three years. Dayton and Carlisle are the two largest facilities in the ABF network.

“As a result of the operational, sales, pricing and administrative experiences that Roy Slagle has had during his ABF career, he possesses a comprehensive skill set that uniquely qualifies him to lead ABF into the future,” McReynolds noted in the statement. “Roy’s experience in almost every area of ABF, both in field operations and in our corporate headquarters, gives him a strong foundation from which to draw as CEO of ABF.”

James Keenan was promoted to the position of senior vice president sales and marketing, effective Jan. 1, 2012, to replace the promoted Slagle.

Keenan, who has been with the company for 30 years and now serves as ABF’s vice president of sales.

In his new job, Keenan will be responsible for ABF’s local and corporate sales, marketing and yield management. He will also oversee ABF’s advertising and public relations.