SIRVA, Inc. - Corporate Relocation - Category Directory

700 Oakmont Lane
Westmont, Illinois 60559
(630) 570-3000
www.sirva.com

Business Description 

We are a world leader in the global relocation industry, providing our solutions to a well-established and diverse customer base, including transferring corporate and government employees and moving individual consumers. We operate in more than 40 countries under well-recognized brand names including Allied®, northAmerican®, Global® and SIRVA Relocation in North America, Pickfords® in the United Kingdom, Maison Huet® in France, Kungsholms in Sweden, ADAM in Denmark, Majortrans Flytteservice in Norway and Allied Pickfords in the Asia Pacific region. We are redefining the global relocation market by combining our relocation service offerings with our proprietary moving services network on a global basis. This unique combination is driving our growth by addressing our corporate and government customers' needs for a comprehensive service offering with global reach from a single supplier. In addition, we offer a variety of services targeted at meeting the needs of truck drivers, fleet owners and agents, both inside and outside our proprietary agent network.

Business Segments

Our business operates in four segments: Relocation Solutions—North America, Relocation Solutions—Europe and Asia Pacific, Network Services and Transportation Solutions. We sometimes refer to our Relocation Solutions—North America and Relocation Solutions—Europe and Asia Pacific segments together as Global Relocation Solutions.

Global Relocation Solutions

We offer a comprehensive suite of relocation solutions to our more than 2,500 corporate and government customers around the world, providing a wide variety of services including the sale of employees' homes, movement of their household goods, purchase of their new homes and provision of destination services. In addition, we provide our corporate customers with moving services for products that require special handling and constant monitoring due to their high value. Our relocation solutions services are provided by a team of over 6,000 employees around the world and a network of agents and other service providers.

While most of the corporate relocations originate from the United States and the United Kingdom, our relocation services are provided through our operating centers throughout the world to meet the global relocation needs of our corporate customers: five in the United States, four in the United Kingdom, two in Australia and one in Hong Kong. In each of these locations, our customer service and account management personnel interact with our corporate clients and their transferring employees on a regular basis.

Moving services for our corporate, military/government and consumer markets are provided through our worldwide proprietary agent network. In North America, we provide our moving services through our proprietary branded network of 760 agents who own the trucks and trailers used in moves and are responsible for packing, hauling and storage and distribution of household goods. We act as a network manager for our agents, providing, among other things, brand management, load optimization, billing, collection and claims handling. Outside of North America, we provide moving services through a network of company-owned and agent-owned locations in Europe and the Asia Pacific region.

Relocation Services

We meet the needs of transferees with a full suite of customer-focused, innovative service offerings coupled with a proprietary global fulfillment network. These services include:

Home Sale. On behalf of our corporate customers, we will value and arrange for the sale of a transferring employee's home. In some cases, we will provide an advance on the equity in the home enabling the employee to purchase a new home before the existing one is sold. In addition, under some programs if an employee's house is not sold within a specified timeframe, we purchase the existing house and continue to market the property until it is sold. Traditionally, relocation services companies have offered this service on a cost-plus basis. In exchange for a fee plus a margin on costs incurred, they agree to purchase and resell an employee's home. Any loss on the home sale and all holding costs incurred while the house is "in inventory," including a cost of funds on the equity advance and the mortgage servicing costs, are borne by the corporate customer.

While we offer this traditional pricing model to customers, we also offer a differentiated product providing all these services to our U.S. corporate customers for a fixed fee, set as a percentage of the transferee's home value. In these cases, we take responsibility for all costs in the home sale process and under some programs agree to purchase the home for our own account if it is not sold within a time frame agreed upon with the corporate customer. If we take a home into inventory, which, in our experience, has occurred in less than 10% of cases, we either continue to service the mortgage until the home is sold or, in the case of government service agencies and some corporate clients, we immediately pay off the mortgage. We have a comprehensive and sophisticated process for minimizing our risk and cost of running the fixed fee offering and have experienced minimal losses over the history of the program. We believe this model better aligns our interests with those of our customer, as it is in our mutual interests to avoid holding houses in inventory for long periods of time and incurring losses on resale. Our fixed fee product has grown at a significant rate, and now represents approximately 53% of our corporate relocations.

Home Purchase. Through our network of affiliated independent real estate brokers, we assist corporate transferees in locating a new home at the destination location. We provide this service at no cost to the corporation, but receive a referral fee from the real estate broker for any home purchase. We actively monitor and rate our real estate brokers to ensure cost-effective high-quality service.

Mortgage Origination. We provide mortgage services to our customers' transferees, underwriting the mortgage for a transferee's home purchase. Before a mortgage is underwritten, we obtain the agreement of one of various third-party financial institutions to purchase the mortgage from us. There is a processing lag of 20-30 days between the time we write the mortgages and complete the sale. During this time, the mortgages are carried as current assets and are financed through our mortgage warehouse facility. For the year ended December 31, 2003, we closed approximately $835.0 million of mortgages.

Destination Services. We assist corporations in making relocations more successful for the transferee by providing a range of services that reduces the inconvenience of assignments to transferees and facilitates their integration into the new locale. These services include city orientation, school selection, visa and immigration management, language and cultural training and other services. In most cases, we contract with third-party providers to deliver these services and receive a referral fee.

Relocation Program Administration. We offer our corporate customers complete outsourcing of the administration of employee relocation programs, providing expense tracking, compliance reporting, tax reporting and payroll interface services. We can aggregate data across all of a corporation's relocations, providing clients a valuable overview of their relocation programs and expenses and suggest ways to cut costs and improve services.

Move Management. We provide move management services to corporate transferees, coordinating the packing, storage and moving of a transferee's household goods, and providing complaint handling and claims assistance. We either provide these services through our own fulfillment network, described below under "—Household Goods Moving Services," or, at a corporate customer's election, through a non-SIRVA moving company.

We provide all of these relocation services through operating centers located around the world: five in the U.S. (Chicago, Denver, Connecticut, Minneapolis and Cleveland), four in the United Kingdom, two in Australia and one in Hong Kong. We have a staff of over 350 key account managers and relocation managers who deal with our clients and their transferees continuously. Speaking more than 30 languages and representing many nationalities, this staff coordinates our extended network of service providers, including moving services companies, real estate brokers, appraisers and destination service providers.

Most corporate clients prefer a streamlined communication process between ourselves and their human resource managers who handle employee relocations. We have account managers who provide this single point of contact with our clients. For individual transferring employees, we provide the full range of relocation services through a lead relocation counselor who draws on other specialists as needed during the relocation process.

Household Goods Moving Services

Through our Allied, North American and Global branded networks in the United States, Pickfords and Maison Huet in Europe, Kungsholms in Sweden, ADAM in Denmark, Majortrans Flytteservice in Norway and Allied Pickfords in Asia Pacific, we provide domestic and international household goods, packing, storage and moving services. We have a leadership position in the moving services industry around the world. Our Allied® and northAmerican® trademarks are considered two of the most valuable brand names in the moving services industry and have been ranked by the Gallup polls among the top moving companies in terms of brand recognition and customer satisfaction.

In North America, our household goods moving services are primarily provided through our network of branded agents. Agents are independently owned local moving companies that provide customers with the local packing, warehousing and the majority of the hauling required to support household moves anywhere in the world. Most of the equipment used in our moving operations is owned by our network of agents and their drivers. We, in turn, provide our agents with a broad range of services including identification and coordination of hauling capacity, coordination of shipments, optimization of capacity, sophisticated transportation and logistics technology, brand management and a variety of other marketing services. Our agents generally conduct intrastate moves under their own names and licenses, except in certain states such as Texas and California where we hold intrastate licenses because of their relative size or the intrastate activities conducted by our specialized transportation business. We are therefore not a party to most intrastate transactions and do not recognize operating revenues and associated costs in connection with such transactions. In contrast, we hold licensing authority for all interstate moves and have entered into contracts with local agents with respect to their interstate moves and recognize revenues accordingly.

In Europe and Asia Pacific, we provide household goods relocation services, office and industrial moving, records management and storage through a combination of our company-owned locations, our proprietary agent network and our network of affiliated preferred providers. We own a majority of the fulfillment assets in the United Kingdom, France, the Benelux countries, Australia and New Zealand and utilize an agent network in the rest of Continental Europe, Scandinavia and Asia.

Agent Network. In North America and Continental Europe (except France and the Benelux countries), the agents own most of the assets associated with operating their local moving and storage business (warehouses, tractors, trailers and associated other packing and moving equipment) and in many instances have contracts with owner operators or have hired employee drivers to bring hauling capacity to the network.

We have established, long-term relationships with our branded agent network, which on an individual basis have often extended to a multi-generation affiliation with us. The relationship with the agent network is governed by an agency contract which defines the terms and conditions of their exclusive representation of us on all interstate household goods shipments, as well as the compensation structure for services provided. While we enter into certain short-term contracts, we will often enter into long-term contracts, which typically extend from 3 to 12 years in length, with selected agents. In certain situations, we may make up-front payments to the agent as an incentive for entering into a long-term arrangement. In these cases, the agreement will include certain performance criteria, which if not met or if the agent terminates the agreement prior to its expiration date, which will result in a pro rata portion of the upfront payment becoming repayable to us. Our long-term contracts provide security to both parties, and also ensure us long-term representation and operating revenues in key markets. We have long-term contracts in place with agents who represent approximately 81% of the 2003 operating revenues for our moving services business in the United States. As a result of these arrangements, we have historically experienced relatively low agent turnover. No one agent accounted for more than 6% of our operating revenues for our moving services business in the United States in 2003.

Owner Operators. Owner operators are independent contractors who work with us and agents and provide household goods and specialty transportation fulfillment services. They own the trucks and provide the labor needed to service customer moves. Across our North America network, there are approximately 1,900 owner operators contracted, almost exclusively by agents, in household goods relocation, and 920 owner operators contracted by us primarily in specialized transportation.

Customers

We serve a diverse range of customers around the world, including small, medium and large corporations, military and government agencies and individual consumers. This diverse client base lowers our exposure to downturns or volatility in any one industry or region.

Corporate Customers. We have more than 2,500 corporate customers, ranging from small businesses to large multinationals. Many of our contracts with corporate customers are terminable by the customer on short notice, and generally do not specify a minimum transaction volume. Our customers cut across a variety of industries, including consumer packaged goods, automotive, manufacturing, business and financial services, retail, technology and pharmaceuticals. They are based throughout the United States, Europe and Asia Pacific.

Military/Government Agencies. We provide household goods moving services to State and Federal government agencies in the United States, including the U.S. Department of Agriculture, the Drug Enforcement Administration and the Federal Bureau of Investigation, all branches of the U.S. military and government agencies of other countries around the world. This has traditionally represented a stable source of demand for our services, less subject to economic cycles than the corporate markets. We have historically served the U.S. military with moving services. We have recently been added to a select group of providers who are authorized to supply the U.S. Government service agencies with outsourced relocation services and are in the early stages of evaluating how to address this opportunity.

Consumer Market. We provide domestic and international household goods moving services to consumers around the world. The individual household market has traditionally been stable in terms of both volume and price. Selection of a moving company is generally driven by brand, quality, price and capacity. We have recently begun to offer consumers a range of relocation services via employee programs through corporate customers. These services currently include mortgage brokerage and moving services. We intend to expand this effort across a greater number of services and corporate clients.