Talking Points: Pete Rose

In spite of a sharp downturn in world trade, CEO Pete Rose has managed his Seattle-based freight and logistics company to avoid layoffs and long-term debt, and to accumulate $800 million in cash.

On his early days: In 1981, my partner and I were drinking beer in Hong Kong. We drew plans for a business on a cocktail napkin. It’s easy to be bold when you’ve had a few drinks. But when we got back home, we pooled our money with four other investors, about $300,000, and we simultaneously opened [offices in] Hong Kong, Taiwan, Singapore, Chicago, Seattle and San Francisco with 20 people. Today, we have 212 offices, 12,500 people and $5.6 billion
in revenues. Most of the companies we wanted to emulate are gone.

On Expeditors’ performance: Things are soft everywhere. There have been tremendous layoffs at our competition. But we won’t cut costs just to please Wall Street. To hell with Wall Street.
We are running our own company here. We haven’t had a single layoff. We also haven’t lost any clients.

On future growth: We are looking at 40 to 50 new offices worldwide in the next five to 10 years. Five years ago, we broke the Fortune 2000. Last year, we broke the Fortune 500. In China, we have 53 offices. In three to five years, we’ll have 70. We have been in [the former] Czechoslovakia, Hungary and Poland for eight years. Now, [businesses] are outsourcing to Romania and Bulgaria, so we’re opening offices there. We’re looking at west and central Africa, the Balkans and Russia. Now that we are [transporting] peripheral equipment for drilling gas and oil, we are looking at Nigeria and Libya.

On competitive strengths: It’s all about your IT capability, your geographic coverage and your financial viability. We have 650 people in IT. We hire people young and train them.

On corporate culture: We don’t have casual wear days. When I started, customs offices looked like shitholes with girlie calendars on the walls and files all over the place. If you are going to look professional, you have to dress professional. Anywhere in the world, you can always tell if it’s an Expeditors office. We keep everything neat and clean.

On recent trends in executive compensation: What’s happening on Wall Street is disgusting. If everybody copied our executive compensation system there would be no problem. My salary is $110,000. The rest is based on performance. Our managers in the field have low base salaries, but they get 20 percent of the pretax bottom line whether they are in Dacca, Detroit or Dusseldorf. It’s everybody’s job to do sales. If I go somewhere for a conference, I’ll spend the afternoon doing sales calls.

On the secret to success: My job is simple: don’t do anything stupid. It’s the egomaniacal CEO whose idle hands do the devil’s work. They [CEOs] figure they’ve managed one job so they can run another company. Once they’ve screwed it up, they always talk about going back to basics. We don’t do acquisitions. We could buy General Motors, but what would that get us? A bunch of shitty cars. We are not for sale. This is our baby and you don’t sell your baby.

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