Innovative FedEx head still pursuing dream of perfection

  • Tuesday, November 27, 2001 9:00pm
  • Business

Associated Press

MEMPHIS, Tenn. — Thirty years after creating a package delivery service that became the phenomenon known as FedEx, Fred Smith isn’t looking back.

And he’s certainly not ready to step down.

The 57-year-old chairman, president and chief executive of FedEx Corp. is still chasing perfection and looking to expand the $20 billion Memphis-based company as he contemplates what he calls his next "Buck Rogers ideas."

Smith often is cited as among the first to use the Internet as a business tool, allowing customers to track packages and saving the company millions of dollars that otherwise would be spent on phone operators.

But Smith’s most radical idea was probably his incorporation in 1971 of a fledgling airline to solve a logistics problem he first explored in a research paper while a student at Yale.

In that paper, for which he received an average grade, Smith foresaw that as companies relied more on computers and technology, they would want to keep their equipment working without creating a huge inventory of parts.

After graduating with a degree in economics and a four-year stint in the U.S. Marines, the 27-year-old Smith concluded he could solve the problem by moving parts to companies overnight via airplane. He incorporated Federal Express in June 1971.

It was a logical move for Smith, who learned to fly at age 15 and came from a transportation family — his father helped found the Greyhound bus line.

Smith, who was living in Little Rock, Ark., at the time and running a corporate jet dealership, used his $4 million inheritance as seed money and started recruiting investors.

By March 1973, FedEx had 33 Dassault Falcon jets and 389 employees. On the company’s first test flight, it moved only seven packages; on a second flight, a month later, FedEx moved 186 packages through Memphis to 25 cities.

FedEx has since grown into a global company that employs some 215,000 workers and moves 5 million shipments a day through hubs scattered across the globe.

"Fred Smith is the only man I have ever known who has created an entire industry," wrote Howard Baker, the U.S. ambassador to Japan and former U.S. senator from Tennessee, in the foreword to a book about the company.

Edward Carnes, who signed on as a pilot in 1972 and retired two years ago, said "from the very beginning, I had no doubt whatsoever that Fred Smith would make it. Of course, we could not fully realize how big it would become."

He and Al Dziuba, who retires next month after 29 years flying for FedEx, said things were so tight in the early days they occasionally had to delay cashing their paychecks.

Over the years, the relationship between FedEx managers and some of its 4,000 pilots has soured, in part because of Smith’s opposition to unionization.

"We started with the dream that if the company rose to Fred’s vision we’d be at the top as well," said 28-year company veteran Don Wilson, who helped organize the FedEx Pilots Union in 1992.

"The company has exceeded beyond what anyone expected, but our pay and benefits have not," he said.

Wilson praises Smith for turning FedEx into a household name, but said his tendency to focus on the future causes him to "miss a few things going on right under his feet."

Overall, the company has had a reputation as a great place to work, with employees claiming they "bleed purple and orange" — the company’s colors — and living by the Smith mantra: "people, service, profit." FedEx has repeatedly been on Fortune magazine’s list of the "100 Best Companies to Work For" and its lists of best places for minorities and women to work.

Although the Sept. 11 terrorist attacks forced FedEx to shut down its air network for two days, it didn’t really hurt the bottom line. But the ongoing impact of the attacks on the economy is affecting FedEx.

Businesses that usually move packages by air are using cheaper ground deliveries, although FedEx is able to handle the shift because of a new trucking network.

Company officials also expect that FedEx’s busiest time, the holiday season, will be slower than usual because consumer spending is down.

Copyright ©2001 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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