Little more than 12 months into the job as Penske Australia Managing Director, Hamish Christie-Johnston became the Managing Director of New Zealand effective 1 June following the departure of Executive Vice President John DiSalvo, an American, who returned to Penske Automotive Group in Detroit.
The vote of confidence points to some exciting developments both underway and on the horizon at the organisation, including new trucks from MAN and Western Star.
Prime Mover: With a new generation MAN launching locally next year the brand is enjoying noticeable activity in the market. How has the MAN Choice Program been viewed internally?
Hamish Christie-Johnston: It’s got us more engaged with the marketplace. Making a commitment to the Brisbane Truck Show this year when not everybody did, all of these decisions, including the MAN Choice Program, are really about us engaging and re-engaging with the marketplace. It demonstrates our commitment to the brand and laying the foundations for the launch of the new products so that when we launch the new product we are not launching into a vacuum. We’ll be launching into a market that is more familiar with the brand. We’ve gained a little bit of market share and we can continue to build on that.
PM: Where else are you looking to be more competitive?
HCJ: We’ve done a lot of work on our maintenance programs. I think we’ve got a lot more competitive there. Total cost of ownership is really where it’s at and everyone is talking about that. During the tender process, if you look at how the deals unfold you’ve got to qualify first and there’s some basic fundamentals that you’ve got to reach and then there’s a selection process. We’ve disappointingly run second or third on some big deals where we knew we were close, but we didn’t quite get over the line. Then at least you know where you stand, what you need to work on and what you need to do in the future. I think with the MAN brand in particular that’s a product we are targeting at some of the mid-tier fleets and total cost of ownership is crucial. Western Star is, generally speaking, a different discussion. So I think we’ve got a much better grip now on where the product is relative to the competition – a better understanding of what customers are really looking for and that’s informing us about how to get better.
PM: Last year you identified your responsiveness would be an area of critical focus within the business. Is part of that response creating synergies between head office and the dealers linking directly with the customers?
HCJ: I think we can do a lot more to support our dealers, both company owned and independent. Having some retail branches of our own is good in that we understand the dealer perspective because we’re in the same business. I have a particular passion for the health and wellbeing of our dealer network so that’s where I have tried to engage a bit more closely. I want to understand the owner’s perspective and to get that appraisal in how we’re doing in supporting them and that’s not always easy listening. They will tell it how it is and they’re pretty direct people but that’s what you need to hear. We need to know what we need to do to improve and get better. Going forward the health, wellbeing and long term viability of our dealer network is a big focus for us. It’s not just about responding it’s also about anticipating. So we’re not always waiting for the breakdown phone call. Certainly, in my 15 months since the Penske Australia integration I’ve got more involved directly, particularly with some of the fleet deals where I’ll take a personal interest and I think a lot of those business owners and senior managers want to have a personal relationship with the leaders of our business as well. So for me to hear some of that first hand gives me a better understanding and I can then assist our team to respond.
PM: The throttling of global supply chains has exposed the shortcomings of the just-in-time model of which it largely relies. How have operations been impacted by supply shortages? Is there opportunity for your business as a result?
HCJ: I think it’s probably affected us the most with new trucks. The OEM supply chains have affected the production lines. I think we’ve done a great job in terms of managing the aftersales. We run our own parts distribution. We’ve got a very mature, effectively in-house 3PL in our parts distribution centre at Wacol in Brisbane. That team has been fantastic in terms of anticipating these issues and increasing our parts supply to offset that lengthening supply chain. We’ve largely been unaffected on the aftersales side in terms of the ability to keep trucks on the road and have parts on the shelf. But that’s only because of the great work that team has done to anticipate that and manage that. We’ve seen a lot of shipping that might have previously come direct to Australia coming into Singapore first and lengthening the supply chain. It’s really been the supply of new trucks that’s been most affected.
PM: How have you better integrated the commercial vehicle business with the power systems business?
HCJ: Because these two divisions had their own purpose, and their own values, we spent the second half of last year engaging with the employees and forming teams to work on updating our purpose and values. When we brought them together, we wanted to do some work on identity and have a common purpose and set of values. We had our employees vote on the values that meant the most to them. We then looked at the Penske DNA including Roger Penske’s own personal values and we weaved them in as well and eventually came out with a set of five values that we felt reflected where we were as a unified business in Australia and New Zealand that still had that Penske DNA. Ownership. Passion. Teamwork. Integrity. Care. OPTIC is the acronym. It helps us strike a balance in which we are part of Penske globally, but we are an independent business in Australia and New Zealand.
PM: What follows on from this?
HCJ: That’s created a platform for what’s next, which is a five-year plan. Our ambition is to double the size of the business by 2025. We’ve got a number of projects running in parallel to help us to achieve that. That involves projecting forward to where we want to be in 2025 and describing what we think the business would look like and then working backwards from there to join the dots. We’ve laid out a roadmap to get there and the truck side of the business is a big part of that. That five-year plan is the thing that we’re focusing on right now to grow the business and to do that by meeting customer needs. Our employees have responded well. No one gets excited if you cut the budget for 2022 and you say, ‘super exciting, we’re going to grow by 3.5 per cent.’ Everybody is going to yawn. Whereas if you can put that ambition out there and then explain to people how we’re going to do it and show the part that they play then I think it’s a bit more real and they can sink their teeth into it. The centre of our purpose statement is about making a difference. Road transport, mining, energy and defence are our four key segments. They’re all really important things for us to work on. The team is incredibly proud to be doing work that is so clearly making a difference to the lives of Australians.
PM: Those segments you speak of are cornerstones of sovereign nationhood.
HCJ: It’s something of a general theme with Penske. As this business gets bigger we become more capable. I think the other legs of the stool, if I can call them that, defence, energy and mining, really benefit our road transport customers because we’ve got the ability to continue to invest from one month to another from one year to the next. The business is going to be on a really strong foundation. We’re not really concerned about cycles within one industry or another because we’ve got those four legs to the stool. I think that’s a great differentiator for us compared to some of our competitors. If all you do is truck than you do suffer that risk from some of the cycles really affecting you whereas we don’t really see that as a risk for our business.
PM: In addition to launching a remanufacturing initiative for the Detroit DD15 engine this year [see page 12], Penske Australia became a defence channel partner with Allison. What will that entail?
HCJ: Allison currently produces the X1100 transmission for the Abrams M1A1 Main Battle Tank family of vehicles. Up until recently overhauling the large cross-drive X1100 transmission, which is powered by a Honeywell gas turbine which in turn propels a 75 tonne M1 Abrams and was acquired and sustained under a Foreign Military Sale program, required shipping back to the United States for repair and overhaul. Penske and select key partners are working to establish an in-country support capability for the X1100. Getting back to your comments about sovereign capabilities, the Australian Defence Force requires that its equipment can be operated for two years without any external assistance. Basically, from Australian supply lines we should be able to operate a frigate or a tank without having to call on outside help. We’ve got a great remanufacturing capability for our large MTU engines in addition to remanufacturing the truck driveline components. The beauty of that, and where it’s relevant to our on-highway road transport customers, is that deepens our relationship with Allison, extends our capabilities further and the good news is that all of our customers will benefit from that. So we’re trying to bring a lot of that back into Australia.
PM: Having new platforms slated for 2022 must be exciting.
HCJ: It’s super exciting but also challenging having our two key brands launch at the same time. It’s going to be a big year and a big period for us going forward. We are here to be double digit market share across our brands. I’m not frightened to say that. We want to get there and stay there. That’s our commitment — to get to those double-digit numbers and stay there.
