Leading the charge is JEVIC NZ managing director Euan Philpot. Well known in the used import supply chain, but perhaps not known so widely in the wider trade, Philpot is likely to play a significant role in commercially reshaping the trade post-reform. AutoTalk spoke to Philpot post Christmas about his history and the birth of the takeover bid.
AutoTalk: You entered the vehicle trade through Turners. Tell us about that.
Euan Philpot: I started with Turners on budget auctions. Then moved on to the damaged vehicle market and spent 10 years managing that particular part of the business as an auctioneer, a business relationship manager – and I was responsible for making sure the national contracts were sustained with Turners, with the insurance industry, and used my leadership skills in growing the business.
AT: The auction industry is known for wheeling and dealing – was it a good grounding for working with the trade?
EP: Turners is a great starting point. There are a number of people who have gone on to other things in the industry that started at Turners. it’s very good for building knowledge of the industry, particularly as Turners was then very dealer focused.
It had a fairly strong dealer following, so it was a very good start towards understanding the types of issues that come up in the industry – and some of the challenges within the industry.
AT: Following a period travelling you returned to New Zealand and took up the role at JEVIC?
EP: Yes, I started as director on Jan 1, 2003. I was (the sole) representative down here – understanding the market, understanding what the market opportunities were and understanding what some of the challenges were and pretty much from the outset getting involved with building business relationships that would enable the business to grow.
AT: While you have been a director of the firm since day one, you only recently took up the title of managing director. What was the catalyst for that?
EP: I was involved representing the company on an international basis and the title needed to be strengthened when you start dealing in the UK and Europe arena. It also strengthened the brand image in New Zealand as well.
AT: You say representing the company internationally – what other aspects of the JEVIC group are managed from New Zealand?
EP: I’m a director for the UK operation as well. I have a strong interest in overseeing what happens for that market – at an advisory level as a director. Internationally I am part of the senior management group.
AT: That New Zealand perspective you bring to the UK market, would it be fair to say the UK supply chain, like the Japanese, has been built around the Kiwi trade?
EP: Absolutely. I think there is an acceptance that the New Zealand market is a very mature market and the pathway – and the things that go into that pathway – and the processes, are well developed and well understood.
When Flag Worldwide were in New Zealand recently, one of the comments from their CEO was how easy it was to engage with New Zealand dealers because they have such a good understanding of process and systems.
AT: With a supply chain market now dominated by inclusive logistics packages, does the average trader understand what JEVIC does?
EP: I think the brand has significantly grown in the last number of months, and we notice there certainly is recognition. A lot of traders would not necessarily understand the intricacies of what we do, but certainly there is an understanding that we do the Biosecurity border security inspection, odometer verification and NZTA Border inspection.
AT: While you have been providing inspection services to government agencies for some time, it has now been a little over a year since you took over services under the new border inspection system. How has that process gone?
EP: It’s gone extremely well. Certainly there was a bedding-in period, particularly in relation to the information-technology side of it, but that is running extremely well now. The reports that we’ve had (from NZTA) is that the core performance is very high for JEVIC, the error rate has reduced significantly from what it was under the previous MAF regime and they are very happy with the speed of data supplied by JEVIC.
AT: What triggered JEVIC’s interest in taking more of a stake in the New Zealand market?
EP: We’ve looked at acquisition opportunities and ways to grow the New Zealand business for quite some time – including a number not related to the TSDA market.
The VINZ model fits us best in terms of a business – we wanted national coverage which the purchase of VINZ definitely gives us.
Growing organically in this environment proved to be particularly difficult and we are into evolution not revolution. We want to see a business grow, but we don’t want to revolutionise it – we want to evolve it and be part of the evolution of the industry.
AT: Is that your way of saying you won’t make any particularly heavy changes to VINZ, if and when you do acquire it?
EP: Certainly we’ve got some ideas but everybody has ideas. It’s too early to speculate – particularly with the VLR still out there.
AT: Did you consider applying to become a TSDA rather than make an acquisition?
EP: We have looked at a range of options.
AT: How much of a factor in the timing is the VLR?
EP: Not very high. We want to own VINZ as a company irrespective of any outcome of the VLR.
AT: But does the current situation make it an advantageous time to make a move?
EP: We’ve been looking at the opportunity for quite some time. We want to own VINZ as a company where VLR has very little impact on our initial decisions.
AT: Is the value of VINZ affected by the potential VLR changes?
EP: We’ve reflected what we believe is a fair and firm price, at the moment, and without knowing the outcome of the VLR.
AT: If you succeed in the acquisition you will have a role in the supply chain at both ends – border inspection and final compliance. What advantages will this bring and what changes do you want to make to the current process?
EP: Initially it will be business as usual while we look at what the options are and what the possibilities are. Clearly by being the first people touching the vehicle post-auction in Japan there should be some significant ways we can streamline processes, particularly in respect to data sharing and information available – both possibly to traders, but particularly to regulators.
AT: Do you think a one-stop border inspection and compliance service could be on the table?
EP: I think having a tracked process under one umbrella – and being able to share the data and ensure that the data isn’t then entered incorrectly a second time and/or double handled – it’s such efficiencies that we are looking for.
We’re really going to have to be guided by the regulator who’s quite clearly said compliance is an activity that happens on shore.
AT: Why is it so important to JEVIC that the current management of VINZ remains in place.
EP: Continuity. It’s the management team (VINZ general manager Frank Willett) has working with him, commonsense. And it’s a condition that is commonly applied in such takeovers. He and his team have an intimate knowledge of that business which we absolutely respect.
AT: What do you have to say to the market as they consider your offer?
EP: The thing from our perspective is that we have put a clear and concise document to the shareholders to consider. The offer closes in less than a month (13th February) so the shareholders need to consider this offer and make their decision once the VINZ board and independent report are issued.
We believe the offer represents a good, clear, firm offer with very few conditions attached making it an easy decision for shareholder to make and sell their shares.
