When iGPS Logistics LLC purchased the bankrupt Intelligent Global Pooling Systems (iGPS) in 2013, it was the beginning of a new chapter for the company. After a public battle with the wood pallet industry, loss of major clients and the ouster of founder Bob Moore, the company was in a nose dive. The man now driving the plastic pallet pooler, CEO Jeff Liebesman was determined to take the company in a new direction.
The story of the new iGPS (Version 2) has some positive implications for wood pallet providers – at least as opposed to Version 1. One positive, the new iGPS has been emphasizing better asset control and more careful selection of new growth opportunities. And this would be an absolute necessity for the company to turn things around.
Court documents at the time of the 2013 takeover indicated that the company had lost up to two million of the 10.2 million pallets it had purchased, and that only about half of that total remained operational due to damage or other issues. Better asset control should translate into fewer stray iGPS pallets ending up problematically in pallet recycler yards, and a slower, albeit more sustainable growth rate.
In this regard, iGPS contends it is respectful of the role recyclers play in stray pallet recovery and views them as a partner. At the same time, it remains bullish about the future of its evolving plastic pallet as it becomes lighter, stronger and cheaper. iGPS leadership sees trends towards automation, for example, as a key advantage for future growth.
When Jeff Liebesman launched a reusable packaging pooling company in South Africa back in 2004, few would have guessed it to be a springboard to the helm of the new iGPS. His experience with that company, Palogix, first in South Africa and then in the United States, would instill an approach to asset management that was decidedly more measured than the swashbuckling, roll the dice feel of the pre-bankruptcy iGPS, one which wrongly bet the business on the strength of its asset tracking technology.
Liebesman’s small business approach to asset management turned out to be a quantum leap forward from the corporate spin of the Bob Moore era. Liebesman looked to manage the iGPS pallets as if they were his own. “Guys, if you cannot control the asset,” he cautioned his team in the dash to fix the company after acquisition, “the quicker you can close the shop, the less money you will lose.”
Sobering advice, but it shows the new owner’s commitment to better asset utilization and control. Around 2006, Liebesman became aware of iGPS and was invited to a presentation. “I enjoyed it,” he recalled, “because obviously I am a believer in the (plastic pallet) space, and I see the need. However, I didn’t take the invitation (to participate) at that time for various reasons.” He told me he wasn’t sold on the execution, for starters, and secondly, he was not confident that the presentation of the financials was correct. He was concerned about the product categories and markets iGPS was pursuing.
Having said that, Liebesman believed that the founders of the first iGPS had some things right, including the pallet, the space (market position) and the timing. While he passed on any direct involvement, he continued to follow the company. “Through this time I watched it, saw their market share grow, and in a way validating the concerns I had with respect to their buckshot approach to marketing,” Liebesman said. “That concerned me, particularly in regard to an asset like this.”
But there would be another opportunity to invest in iGPS after its very public bankruptcy and financial troubles. The connection in this meeting was Robert Liebesman, Jeff’s son, who attended business school in the United States (MBA from Columbia Business School), and worked as a financial professional with some notable firms. Fast forward to 2013, and the senior Liebesman received a call from his son Robert, who is now Co-CEO of iGPS, to see if he would be interested in another meeting. He said he would be, with the right partners, but it needed to be a “clean deal.” Otherwise, there would be too much risk.
On August 1, 2013, Intelligent Global Pooling Systems (iGPS) announced that it had finalized the sale to iGPS Logistics LLC, a joint venture formed by Balmoral Funds, One Equity Partners, certain of
their affiliates, and Jeff and Robert Liebesman. “The Balmoral Group turned out to be great partners,” Liebesman stated. “It turned out to be a terrific relationship and we got on with fixing the business.”
There was enormous pressure to right the ship quickly. With iGPS having gone into bankruptcy in June, and the new iGPS not taking control until September 1, Liebesman said at that point the business was very vulnerable, operating without a clean path of management.
“We came in officially on September 1, and we had to move quickly, to re-establish relationships with carriers to move our product, and with customers.” Liebesman recalled. “Everything you can imagine had to be re-thought. And at the same time we had to fix the business. And what did fix the business mean? It meant that we had to substantially restructure the business from a bloated hierarchical structure, and we had to bring down the overhead significantly.”
“We cut deep,” Liebesman said, “but we never cut muscle, and we never cut bone. I don’t believe in hierarchical management structures where people watch people watch people, I like a very flat structure where everybody is productive, accountable and efficient.”
According to Liebesman, the litmus test for overhead reduction was that the new iGPS was able to actually improve service levels in terms of on-time, every time delivery and quality, in spite of the staff cuts.
Aside from restructuring, one of the company’s first moves was to bring in-house the warehousing and transportation component of the business, which had previously been outsourced. “We as Palogix had our own Palogix supply chain services company, and we could inject that expertise day one into iGPS,” Liebesman explained. “It was very successful, which led to other successes in terms of delivery and service, and which gave us confidence.”
Through all of the changes, service levels continued to improve, “We manage the business on data,” Liebesman stated, and the data was telling them that the business was responding positively to the changes.
“I came from Palogix, where they were my own assets,” Liebesman continued. “And when it is your own money, you tend to manage it a little more closely than possibly other people’s money. And that is the culture I have fostered in iGPS. Asset management is central to everything.”
“To go back to Version 1,” Liebesman said, “they took on some wonderful accounts, but these were going wherever and not necessarily where the recipient had protocols in place for recovery,” he said. “I recognized the need to expand our ship-to list and improve our relationships with retailers while not losing track of our assets.”
And when it comes to working with recyclers in regard to the recovery of stray pallets, Liebesman replied that he understands the importance of their role. “iGPS appreciates the role recyclers play in the recovery of our pallets, hence we regard them as partners in our ecosystem,” he said. “iGPS respects these relationships, and we demonstrate this by being responsive, flexible, paying on-time and following through on our agreements.”
Getting back to marketing considerations, Liebesman emphasized the importance of correctly positioning the iGPS pallet. In particular, he is excited about the trend towards automated systems for warehousing and order fulfillment, which he believes is an ideal fit for the iGPS pallet.
“When you see the investment happening in automation for manufacturing and logistics facilities, this product (iGPS pallet) lends itself perfectly to this situation. This is our nexus,” stated Liebesman. “When you are taking these enormous investments designed for ultimate efficiencies down to the nanosecond, and suddenly you are running through antiquated technology in the form of a pallet that might not be to spec, that is a tremendous compromise on that investment.”
The iGPS pallet, Liebesman emphasizes benefits from uniformity and reliability, which enables it to flow through automated systems.
Asked about the future of the iGPS pallet, Liebesman emphasized that there will be continued evolution as they look to offer a pallet that is lighter, stronger and cheaper. And he emphasizes that cheaper is an important consideration, as they look to close the gap in cost per use with other materials without compromising performance.
iGPS is currently having a new injection molded plastic pallet produced in response to significant growth in its volume. Liebesman reported this business is now profitable. The new pallet design is fire rated and uses approved non-brominated flame retardants. Another point of interest, the new design no longer has the thermoformed plastic top deck. “It is 100% recyclable, and is cradle to grave from a sustainability point of view,” he said. “It is a huge plus and compatible with the sustainability objectives of customers.”
“We are understanding where to position our business from both a customer and product point of view, and then wrap it around wonderfully improved relationships with retailers, while improving operating cost, efficiencies and asset management,” Liebesman concluded.
While the company may be growing slower than Version 1, Liebesman believes it is taking the right steps to control assets and ensure long-term business success.
