Learning to Think Beyond the Box

Modern Terminals


Weakening Container Giant Returns to its Former Glory

12%

Increase in Operational Margin

8.7%

Market Share Increase

120%

Increase in Shareholder Dividends

Client

Modern Terminals


Industry

Transportation


Background

In 1997, Modern Terminals Limited, located in Hong Kong, China, and industry leader for a quarter of a century in container production, hit a rapid downward spiral in an attempt to respond to changing market forces. The company moved to alleviate their problems through layoffs. While their measure was necessary at the time, there were serious consequences to its proud culture. However, by 2001 Modern Terminals had made a turnaround that was as dramatic as their initial downfall.

Starting in 2001 employee efficiency skyrocketed, operating costs were under control, business volume doubled, profit increased by nearly 50% and, again, Modern Terminals dominated China’s container industry. Modern Terminals attributed its success to a will to better itself and a constructive cultural shift with help from The Pacific Institute.

“It was a huge effort,” stated John Lee, Modern Terminal’s Director of Operations and form Chief Nuclear Officer for Millstone Nuclear Station (a successful client of The Pacific Institute) “Has it been worth it? Yes. The numbers speak for themselves.”

In late 1997, left unprepared for industrial changes from a financial crisis and increasing competition, Modern Terminals forcibly restructured without considering its internal culture. Management was cut by 30 percent and staff by 21 percent – 400 out of nearly 1800 employees. The restructuring produced confusion, leaving remaining employees with a lack of guidance and the company losing productivity with disconnected workers. Modern Terminals’ competition continued to grow while employees reported a loss of trust as the company’s market power diminished.

“In the spring of 2000, business conditions took a downward turn,” Lee said. “Internally, we observed increased nervousness among the staff [about] their future in the organization…Poor business conditions of the past three years seemed to have had an adverse effect on trust within the organization.”

According to Modern Terminals management, the company would not survive with its current culture. “We decided to turn our attention to cultural change within the organization,” Lee said. “Consequently, our first objective was to develop and implement a cultural change program.” Starting on their road to recovery, Modern Terminals was attracted to The Pacific Institute’s approach to confronting individual and leadership effectiveness.

Solution

The Pacific Institute brought into focus the cultural barriers Lee and his administrators knew existed but couldn’t resolve. To recreate their culture, Modern Terminals engaged The Pacific Institute’s Australia office to tailor programs specifically attacking the mental barriers dividing the company’s vision from its current reality.

“I like the statement, ‘As I think, I am,’” Lee said. “It is our belief about ourselves, what we expect of ourselves, and what we believe about our ability to accomplish our goals that is important. The Pacific Institute’s Investment In Excellence® program is excellent for this important personal and organizational development. It is the king of tools that delivered the cultural shift that made the strategy changes possible.”

The Investment in Excellence program was administered to 75 managers and 550 supervisory staff members. Simultaneously Modern Terminals’ employees learned about self-efficacy, leadership effectiveness and how to work within the Mission, Vision and Values of their organization. According to Modern Terminal’s management, The Pacific Institute’s Investment In Excellence program and Leadership Alignment® exercises (in addition to training 50 internal facilitators) allowed Modern Terminals to start and continue the necessary recovery.

 

Outcome

The quick turnaround of 2001 was sustained in the 2002 and again in 2003. After eighteen months of training and culture building with The Pacific Institute, Modern Terminals Hong Kong has experienced:

  • 8.7% Increase in Market Share
  • 12% Increase in Operational Margin
  • 17% Increase in Equity Return
  • 18% Increase in Asset Return
  • 21% Decrease in Soft Costs
  • 36% Decrease in Variable Costs
  • 62% Decrease in Fixed Costs
  • 120% Increase in Shareholder Dividends