Under Scott Thomson, Finning has ushered the trucks, power systems and other heavy equipment it sells into the digital age—and taken steps to reduce its environmental impact
It sounds old-fashioned, but Finning International got to be the world’s largest dealer of Caterpillar equipment by building relationships. The company kicked off its global expansion in the 1990s, after moving into Alberta to supply the oil and gas industry. In Chile, president and CEO Scott Thomson notes, Vancouver-based Finning saw an opportunity to follows its customers in mining.
To drive growth there and in Europe, where it’s now the Caterpillar dealer for the U.K. and the Republic of Ireland, Finning relied on locals rather than expats, Thomson says. What can Canadian companies with international ambitions learn from that experience? For Thomson, it’s about being “willing to take the risk and then also growing the talent in those geographies you’re in to expand the business.”
California transplant Earl Finning took a risk back in 1933, when he launched his heavy-equipment sales and service company during the Great Depression, in then-obscure Vancouver. Publicly traded Finning International, which turned 85 last year, now has some 13,000 employees in Canada, Europe and South America. It also returns to No. 4 in the Top 100, with $6.9 billion in revenue for 2018, a gain of almost 12 percent.
Thomson himself is a local, but you wouldn’t know it from his resumé. The Kelowna native earned an MBA at the University of Chicago, becoming a New York– and Toronto-based VP for Goldman, Sachs & Co. before leaving investment banking to spend five years with Bell Canada Enterprises, where his roles included executive VP, corporate development. From 2008 until he took charge of Finning in 2013, he was CFO of Calgary’s Talisman Energy.
Since he arrived, Finning has focused on three things, Thomson says: improving its relationships with customers; building a diverse, talented team; and boosting operating performance. “Every metric has improved in this business,” he adds, citing customer loyalty, employee morale and the Finning-Caterpillar bond. “The talent base that we’ve attracted, retained and developed is as diverse as it’s ever been.”
Thomson also oversaw the launch of the Finning Digital division in 2016. Building that side of the business has meant hiring talent such as data analysts, engineers and PhDs to work with Finning’s traditional employees. The company has already digitally connected 70 percent of its machines, with a goal to reach 80 this year.
“My view is, where the value is going to be is in the data that comes off the iron and the insights that you can provide,” Thomson says. “If we can combine our equipment knowledge, our knowledge of the customers’ operations and digital analytical abilities to provide insights, we’re going to provide a better outcome for the customers, and that will mean a win-win.”
Looking ahead, Finning is investing in technology to improve the employee and customer experiences and create a sustainable cost structure, Thomson says. It’s also deeply involved in the Site C dam and the LNG Canada liquefied natural gas project. The latter could be worth $500 million to $700 million for Finning, which will supply engines for fracking and gas compression, plus equipment for earth moving and pipeline construction.
Cost structure is one thing, but how environmentally sustainable is the heavy-equipment business? Finning has begun confronting that question with its annual sustainability report, whose second edition appeared in April. “What we’re trying to do here is take a long-term sustainable growth view,” Thomson says. “If we’re going to do that, we have to address some of these issues around climate change, around sustainability in general.”
To that end, the newest Caterpillar equipment is much more fuel-efficient, Thomson explains. Finning has an Edmonton facility that last year remanufactured some 10,000 parts for customers, reducing waste by making their machines last longer. Thomson says the company is also cutting its greenhouse gas emissions, which fell 4 percent in 2018. “When we talk to our employees, one of the things they’re most proud of working at Finning is the approach we’re taking to sustainability.”