Introducing GE Capital Fleet Management Services

On December 17, 1987, General Electric Capital Corp. completed its acquisition of the Gelco Corp. when the shareholders of Gelco approved its merger with a subsidiary of GECC. Through the transaction, GECC acquired the following Gelco businesses: Gelco Fleet Management Services, Gelco Truck Services, Gelco Building and Trailer Services, Gelco Container Services, Gelco Travel Management Services, and Gelco Payment Systems.

Shortly thereafter, GECC unveiled a plan to integrate Gelco Fleet Management Services with Kerr Leasing and D&K Financial Corp. in order to form General Electric Capital Fleet Management Services, the nation's largest fleet management services company. The newly-formed company will operate from Gelco's headquarters facilities in Eden Prairie, MN.

Named to run GEC Fleet Management Services is Jim Rogers, a 15-year veteran of GECC. As president and general manager of GEC Fleet Management Services, Rogers has overnight become one of the key players in the vehicle leasing and fleet management services marketplace. In the following interview with AF's Mike Antich, Rogers discusses the future strategy of GEC Fleet Management Services and the ongoing integration of Gelco, D&K, and Kerr Leasing into a single company.

Prior to his current position, Rogers was vice president and general manager of GECC's Home & Recreation Finance and Services Department (HRFSD). In 1987, HRFSD had 400 employees nationwide and reported earning assets in excess of $1.4 billion. At HRFSD Rogers was responsible for its business strategy and the investment management of retail and wholesale loans for the manufactured housing, recreational vehicle, and recreational boating industries. Rogers joined GECC in 1972, after earning an economics degree at Rutgers College and has held a number of financial analysis, cost accounting, and management positions in the Generator Products, Marine Turbine and Gear and Drive Systems departments until 1983, when he was appointed general manager of the Aircraft Instrument Department. In 1986, he was assigned to GECC as vice president and general manager of the Manufactured Housing Finance Department, which was renamed HRFSD in 1987.

 

AF: Describe your responsibilities as president and general manager of General Electric Capital Fleet Management Services.

Rogers: My primary responsibilities include setting strategic direction and achieving the business growth that results in earnings acceptable to GE. More broadly, I am responsible for autonomous leadership and management of the newly-created GE Capital Fleet Management Services business, which has $2 billion in assets and $600 million in revenues.

AF: What do you see as your immediate goals as president and general manager?

Rogers: I have four immediate goals. Number one: the building of the best management team in the industry. Number two: the integration of the products/services and operating systems without any falloff in the level of customer service. Number three: the retention of existing customer accounts, while supporting business growth in both current account penetration and new customers. Number four: the strategic positioning of the business to lower the cost of operations.

AF: When GECC was the third-largest lessor, its strategy was to grow above the market average to become the nation's number one lessor. Now that GEC Fleet Management Services is number one, what will be your new strategy?

Rogers: Despite now being the nation's largest fleet management services company, with over 420,000 vehicles being leased and/or managed, our market share is relatively small. We have considerable opportunity for growth. Our strategy is to become the most competitive business in our industry; being the leader in market share, the best in customer service, the lowest in servicing costs, and the leader in earnings.

AF: Prior to the Gelco acquisition, GECC said it was targeting 10- to 15-percent growth in its vehicle leasing business. Short of additional acquisitions, can this level of growth be sustained without rate increases? What level of growth do you anticipate for GEC Fleet Management Services following the Gelco merger?

Rogers: Achieving double-digit growth is not a top priority for 1988, but our current business plan does assume modest growth.

AF: Our understanding is that Kerr Leasing, D&K Financial, and Gelco will be integrated into a single entity known as General Electric Capital Fleet Management Services which will be headquartered in Eden Prairie, MN. What are the advantages and rationale behind this move?

Rogers: Our rationale is to combine the best of each of the prior businesses: the best people, the best facilities, the best product/services, and the best operating practices and routines. Leveraging these combinations, plus our size, under one management structure will give us tremendous advantages in cost-effectiveness, resulting in greater value of our product/services to our customers.

AF: Can you outline what steps you have taken, or are planning on implementing, to organizationally integrate the three vehicle leasing companies? When will this integration be completed?

Rogers: With the exception of our Canadian and our municipal leasing business segments, we will be organized functionally. That's eliminating any resemblance of prior business profit centers. I am very fortunate to have recruited/retained an excellent team that blends personnel from all the prior businesses: Gelco, D&K, and Kerr, as well as new team members from GECC. The integration of these businesses will be completed in the 1988 year.

AF: Why will the municipal leasing business segment be organized separately?

Rogers: The municipal leasing segment deals primarily with government accounts and was set up separately at Gelco. Since there are many specific routines required by the government, I wanted to keep it as a separate cost center and a separate P&L.

AF: Why was it decided to base GEC Fleet Management Services in Eden Prairie? Secondly, what is the future of D&K's Lincolnshire office and Kerr's Englewood office? Will they remain open or will they be closed?

Rogers: The Eden Prairie choice was based on four principal factors, all favoring that choice. One: Which system-base had the best combination of capacity and functionality to integrate all three existing portfolios? Two: Which location offered the broadest range of management services? Three: Which location services the largest customer base? Four: Which location has the largest trained and experienced work force?

The Englewood office will be closed except for David R. Kerr and locally-needed sales and client service personnel. Lincolnshire will be significantly downsized, but will remain open during the integration progress to support certain key accounts and other large customers seeking private label servicing of the "Value System." Much was invested in the D&K IBM-based "Value System," and we are now evaluating the best use of that investment.

AF: Will D&K Financial and Kerr Leasing maintain separate organizational identities within CFG Fleet Management Services?

Rogers: No, the Denver-based Ken-Leasing business will be transplanted to Eden Prairie during the first quarter of 1988. The majority of the Chicago-based D&K licet leasing business will be integrated into Eden Prairie over the next six to nine months.

AF: What affect will this integration have on the clients of Kerr, D&K, and Gelco?

Rogers: It is our first priority to ensure that all customers, regardless of prior business origin, receive as a minimum service, levels equal to past performance. I am personally committed to making our customer service levels the best in the industry.

AF: Our understanding is that Bob Ward is no longer president and chief executive officer of Gelco Fleet Management Services. What were the reasons behind Bob Ward's departure?

Rogers: Unfortunately, we were not able to come to an agreement on the future role for him in GEC Fleet Management Services.

AF: With the creation of GEC Fleet Management Services, what will be the positions and responsibilities of the following individuals: David R. Kerr, Bill Fleming, Bob Miesen, and Don Gorman?

Rogers: Both David R. Kerr and Bill Fleming are executive vice presidents, with the primary responsibilities of key client relationships and supporting the overall integration process from their respective prior offices. Bob Miesen is our senior vice president of marketing with responsibilities that include product planning, pricing, advertising and sales promotion, and market and competitive analysis. Don Gorman is our executive vice president of integration. Don has the challenging assignment of transitioning D&K portfolios from Lincolnshire to Eden Prairie.

AF: Can you outline the new corporate hierarchy at General Electric Capital Fleet Management Services?

Rogers: In addition to those already mentioned, Frank Churchill is our EVP (executive vice president) of business development, Jose Moya is our EVP of operations, Bill Clements is our senior vice president of management information services, Tom Blankaert is our senior vice president of finance, Chuck Devine is our senior vice president of human resources, Brock Austin is our senior vice president of legal, Jerry Gormley is a vice president and general manager of municipal and commercial leasing, and Don Cooke is a vice president and general manager of our Canadian fleet management services business.

AF: We have heard that the district sales managers for the three lessors will be reassigned to Eden Prairie? If this is the case, what is the rationale behind this reassignment? Will GEC Fleet Management Services maintain any regional offices?

Rogers: The newly-combined sales force organization, including office locations, is being reviewed and will be announced by month-end January. I anticipate some combination of both Eden Prairie-based and regional area locations will be utilized.

AF: Have the study teams evaluating the Gelco acquisition submitted their recommendations? If so, what were the recommendations of the marketing, operations, and accounting study teams?

Rogers: The principal recommendations from the study teams were: that the business headquarters be located in Eden Prairie, that the Gelco-utilized Honeywell DPS88 computers be the primary system base for future products/services for fleet sizes of 25 vehicles and more, and that system improvements for cost-effectiveness are required for very small fleets of less than 25 vehicles.

AF: What are your plans for D&K's computerized fleet management system?

Rogers: The Gelco (Honeywell DSP88-based) system will be the primary system. However, we believe that the D&K (IBM-based) "Value System" may offer some product line possibilities which we arc now exploring.

AF: Have you implemented, or are you in the process of implementing, any of the recommendations made by the study teams?

Rogers: The business headquarters are being located in Eden Prairie, MN. Integration teams are now in the process of preparing the system's databases, application software, operation routines and procedures, and training personnel required to smoothly transition the majority of the current portfolio to Eden Prairie. The appropriate product and system changes are required for very small fleets, less than 25 vehicles, and are under evaluation.