The New Ingram

When congratulated on his new appointment, and true to his laid-back style, new chief Kerry Baillie responds with a laugh. 'I might have drawn the short straw I think.'

The former Tech Pac Australia boss has his work cut out for him. Today, he is charged with the job of steering a huge distribution outfit with 850 staff in this country and maintaining its profitability for years to come.

If you ask Baillie, the time was ripe for market consolidation. 'In this country having a lot of big distributors doesn't make sense. They only have three in the States and they've got 300 million [people], so why would you have three here when you've only got 20 million,' he says.

Since arriving in this country in 1999 via the acquisition of Electronic Resources Australia (ERA) and Melbourne-based distributor ITG, Ingram Micro Inc has had a chequered past and struggled to make a profit.

Its past acquisitions resulted in staff exits, and the ensuing dotcom boom and bust in 2000-2001 placed intense pressure on its sales in Australia and New Zealand.

According to a company document, for the 2003 financial year, Ingram Micro Asia-Pacific reported US$2.3 billion in sales revenue and a massive US$10.3 million operating loss.

The acquisition will see Ingram Micro staff at Homebush transferred over to the $9 million Tech Pacific office and warehouse in Rosebery, Sydney. 'The [Ingram] office we won't keep - we'll rent it out,' Baillie says, adding that the company, however, will keep Ingram's Sydney warehouse.

Tech Pacific has a new office in Burwood, Melbourne, which will be used, but an Ingram warehouse in Mulgrave will be shut as it is a distance out from the Melbourne CBD. The company is looking a new premises in Perth to accommodate the Ingram and Tech Pacific staff and warehousing as the current individual premises are too small.

The Adelaide operation will 'stay the same' and the Brisbane situation is being reviewed, he says.

As with any merger or acquisition there will be job losses, Baillie says. 'Have you seen a merger where that doesn't happen? I'll try and let people know where they stand in February. Everyone should know where they stand by the end of February and integration will be completed by the end of March.

'We have to have a fair process of selection that will take some time and then we have to have a fit-out of this [Rosebery] building to accommodate more people.'

Duplication in the product management ranks will be the hardest nut to crack. 'Product managers are the hardest one and the duplication is only in Sydney.

'In Queensland, Melbourne and Perth, you join both places together - it's simple. But in Sydney there's duplication in product managers where you've got for example two teams doing Lexmark, two teams doing HP, two teams doing IBM. Do you need to double up the teams? I don't know - we're looking at that right now. In some cases in the finance area there is [also] some duplication.'

However, the company will be looking to hire more staff. 'How many more we don't know so what we're doing is looking at what we have to do and then where there's duplication, we'll just interview both parties for the job.'

The biggest difference between this acquisition and when Ingram first arrived in this country is that Tech Pac is rock solid today and 'none of the staff want to go anywhere unless they're asked to', Baillie continues.

'I don't know any Tech Pac staff that want to leave as part of the acquisition, which causes a problem because the Ingram people now feel disadvantaged by the buyout and there's nothing I can do about it because I didn't buy the company.'

He says his challenge is to retain the value that Ingram bought and include Ingram on a fair and equitable basis. 'Last time [with the ERA acquisition in 1999], they didn't retain the value of the staff that they bought.

'The problem I've got is how to be fair to the Ingram people because frankly they're in disarray right now. The challenge will be how to maintain the sales of both companies going forward.'

Both companies have had staff leave due to the merger, he says. 'I do know of specific examples from both companies - it hasn't been a lot though.'