Dairy Queen to Get New President and CEO

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Dairy Queen CEO John Gainor has announced his retirement effective Dec. 31, 2017. Current Chief Operating Officer (COO), Troy Bader succeed him as President and CEO beginning Jan. 1, 2018.

Gainor originally joined IDQ in 2003 as Chief Supply Chain Officer. He was promoted to President and CEO in 2008.

In his nearly 10 years as IDQ President and CEO, Gainor continued to modernize the iconic 77- year-old brand. Under his leadership, the company has focused on improving the Dairy Queen fan experience in order to drive system sales and profitability resulting in record reinvestment in facilities, as well as continued world-wide new store development. Berkshire Hathaway Chief Executive Officer and Chairman,

Warren Buffett stated, “John has done everything I hoped for – and more – in accelerating IDQ’s growth in the U.S. and internationally. I thank him for both that and for the development of an outstanding successor, Troy Bader.”

IDQ places significant value on the active process of talent development and succession planning. With this in mind, Gainor recommended Bader to assume the role of IDQ President and CEO to Warren Buffett. Gainor stated, “I have worked with Troy for most of his time at IDQ. His love of the brand, commitment to franchisee success, knowledge of the vendor community and concern for all IDQ employees is evident every day. I am confident he will continue to lead the system toward positive growth and ongoing success.”

Bader currently serves as COO for IDQ in the U.S. and Canada. He is responsible for leading all IDQ core functions for the U.S. and Canadian businesses, including marketing, operations, franchise development and supply chain as well as our various concept evolution initiatives. Bader joined the company in 2001. Prior to accepting the role of COO in 2011, he served in various executive leadership positions with the company.

“IDQ is a strong company with a history of great leadership,” said Bader. “I am honored to be entrusted to lead IDQ and to continue to represent the iconic Dairy Queen brand. I look forward to working with our world-wide team of dedicated employees, franchisees and vendors to grow the brand even further through the delivery of exceptional products, great service and memorable experiences for our fans throughout the world.”

For more information on Dairy Queen’s world-wide plans, read a Mazor’sEdge special report on Dairy Queen.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell

BHIIL & MedPro Group Acquire Leading UK Provider of Contractual Medical Indemnity Insurance

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Berkshire Hathaway International Insurance Limited (BHIIL) and MedPro Group Inc. (MedPro) have announced the addition of Premium Medical Protection Ltd. (PMP) to the Berkshire Hathaway group of healthcare liability companies.

BHIIL, MedPro and PMP have been working together since 2014 to deliver industry-leading contractual medical indemnity insurance and patient safety & risk management solutions to UK private practice consultants and surgeons. Subject to regulatory approvals, this transaction is expected to close by year-end.

“PMP was created nearly a decade ago to provide UK consultants and surgeons with the best contractual medical indemnity insurance and patient safety solutions available,” said Juliet Bentley, PMP’s founder & CEO. “Our combination of top customer service, winning defence and leading contractual insurance protections have resulted in delighted customers and sustained PMP growth. Joining BHIIL/MedPro Group in the Berkshire Hathaway group of companies offering healthcare liability solutions continues our mission and allows us to further expand our capabilities and services to even more healthcare providers throughout the UK.”

With offices in Leamington Spa, Glasgow and London, PMP and its BHIIL/MedPro partners serve nearly 2000 private practice consultants and surgeons throughout the UK. Ms. Bentley will remain as president, and its employees and operations will continue as is, and PMP and BHIIL/MedPro will work together to ensure all customers continue to receive the best service and solutions.

“We are delighted to be able to work even more closely with PMP, and – with this acquisition – further highlight and strengthen the Group’s commitment to the UK medical malpractice market,” commented BHIIL/MedPro International Vice President John Bartlett. “The Group will be a great home for PMP and its dedicated employees.”

MedPro Group CEO Tim Kenesey added: “For over a century, MedPro has been the leading defender of the reputations and assets of USA healthcare providers. The collaboration with our BHIIL affiliate and others has resulted in new and improved insurance options for Europe’s healthcare providers. With PMP joining BHIIL/MedPro, we expect to grow our over $US 90 million international business and – most importantly – continue to expand our offerings and solutions to more healthcare providers.”

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Lubrizol Opens State-of-the-Art Drumming Facility

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The Lubrizol Corporation has opened a state-of-the-art drumming facility and warehouse at its Painesville Township, Ohio manufacturing facility, both of which are part of the company’s previously announced phased investment at the site.

The total $70 million investment better positions the company to meet the changing demands of customers and ensures the integrity and quality of its products while reinforcing personal and environmental safety.

Construction on the 180,000 square feet combined buildings began in April 2015. With a focus on enhancing safety and business processes, the new buildings will be instrumental in reducing risk and achieving the company’s business objectives of improving effectiveness, efficiency and consistency.

“Historically, the Painesville Township site has been of great importance to our business, operating for more than 60 of the company’s nearly 90 years,” said Tom Curtis, incoming president of Lubrizol Additives. “This latest investment reinforces our commitment to the community by further ensuring the site as a key source in Lubrizol Additives’ global supply chain.”

With more than half of all Lubrizol Additives products worldwide containing at least one component manufactured at the Painesville Township site, adding new manufacturing capacity and updated automated packaging capabilities was a necessity. Furthermore, these efforts are important to ensure product integrity and to improve the overall safety and efficiency of handling product drums and totes.

“With our new drum filling facility, we will be able to improve safety by minimizing the manual packaging of drums, reducing packaging time for a single batch by more than 50% and minimizing the number of times a drum is handled by more than 70%,” commented Craig Hupp, Lubrizol Painesville Township plant manager. “And, with 100% indoor storage provided by our new warehouse, we will improve the quality and appearance of packaged products delivered to our customers. All of these improvements will be a tremendous value to our overall organization.”

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Forest River Heads Down the Road to Solve Labor Shortage

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While much has been written in the national press about the Midwest having been left behind by the economic recovery, Berkshire Hathaway’s Forest River Inc. is actually struggling to come up with enough employees in Elkhart, Indiana, and is moving some of the production of its XLR Boost toy hauler 73 miles down the road to Butler, Indiana.

Elkhart, which is Forest River’s headquarters, has an unemployment rate that is under 3.3 percent.

“We want to continue to keep our quality level high and increase the amount of production. But we can’t do that with the amount of workforce that we have here (in Elkhart). We need a separate facility for the Boost that can bring in good quality workers. All the good quality people are already working here in Elkhart right now,” Brent Stevens, Forest River’s general manager overseeing the XLR models, said in an article in RV Business magazine.

The company will build a 100,000-square-foot facility in Butler, and will employ 150 workers when it is completed.

The XLR Boost toy hauler comes as a 102” wide body travel trailer or fifth wheel that combines traditional trailer living space and cargo areas that have plenty of space as well as a zero gravity loading ramp door for hauling ATV’s, dirt bikes, snowmobiles, bicycles or any other outdoor toys.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Berkshire Hathaway Takes Major Stake in Pilot Flying J Travel Centers

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Berkshire Hathaway has made a significant minority investment in Pilot Travel Centers.

The Haslam family will continue to own a majority of Pilot Flying J and Jimmy Haslam will remain as chief executive officer. Pilot Flying J President Ken Parent and the Company’s management team will also remain in place. The Company will continue to be headquartered in Knoxville, Tennessee.

Under the terms of the agreement, Berkshire will become the majority owner in five years.

Pilot Flying J is the largest operator of travel centers in North America, with more than 27,000 team members, 750 locations across the U.S. and Canada, and more than $20 billion in revenues.

The investment will expand Pilot Flying J’s opportunities for growth, as the Company remains committed to delivering outstanding service for the trucking industry, professional drivers, local communities and interstate travelers across North America.

Berkshire will initially acquire a 38.6 percent equity stake in Pilot Flying J. The Haslam family will continue to hold a majority interest with 50.1 percent ownership in the Company and FJ Management, Inc., owned by the Maggelet family, will retain 11.3 percent ownership until 2023.

In 2023, Berkshire will become the majority shareholder by acquiring an additional 41.4 percent equity stake and the Haslam family will retain 20 percent ownership in the Company and remain involved with Pilot Flying J.

“Pilot Flying J is built on a longstanding tradition of excellence and an unrivaled commitment to serving North America’s drivers,” said Warren Buffett, chairman, president and CEO of Berkshire Hathaway. “Jimmy Haslam and his team have created an industry leader and a key enabler of the nation’s economy. The Company has a smart growth strategy in place and we look forward to a partnership that supports the trucking industry for years to come.”

“Given the impeccable reputation of Warren Buffett’s Berkshire Hathaway, and our shared vision and values, we decided this was an ideal opportunity,” said Jimmy Haslam, CEO of Pilot Flying J. “As a family business that has evolved and prospered over the last six decades, we knew that any potential partner would need to share our commitment and have a proven track record as a long-term investor. We have that in Berkshire Hathaway – they believe in our strategy, support our team and are excited to see Pilot Flying J grow. We are honored and humbled to partner with them.”

In an interview on CNBC, Jimmy Haslam cited Warren Buffett’s focus on being “long term investors,” and its “hands-off approach,” as the reason they were attracted to doing the deal with Berkshire.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

PacifiCorp to Add to Wind Power Capacity

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Berkshire Hathaway’s PacifiCorp, which serves approximately 1.8 million customers in six states, is looking to add 1,270 MW of wind energy to its system by 2020.

PacifiCorp, which has issued a Request for Proposals for renewable resources (2017R RFP) is seeking cost-competitive bids for up to 1,270 MW of new or repowered wind energy interconnecting with or delivering to PacifiCorp’s Wyoming system with the use of third-party firm transmission service and any additional wind energy located outside of Wyoming capable of delivering energy to PacifiCorp’s transmission system that will reduce system costs and provide net benefits for customers.

Proposals for new or repowered wind resources claiming PTC eligibility must demonstrate that projects will qualify for the federal PTC, if applicable and can achieve commercial operation on or before December 31, 2020. The minimum project size is 10.0 MW and the maximum size limit is not fixed, however the project must not compromise system reliability.

Bid Types: PacifiCorp will consider proposals for; a “Build-Transfer” transaction whereby the bidder develops the project, assumes responsibility for construction and ultimately transfers the operating asset to PacifiCorp, all in accordance with the terms of a build-transfer agreement (BTA) or, a power-purchase agreement (PPA) for up to a thirty (30) year term with exclusive ownership by PacifiCorp of any and all environmental attributes associated with all energy generated.

PacifiCorp, through its Pacific Power and Rocky Mountain Power companies, covers 143,000 square miles in California, Oregon, Washington, Idaho, Utah and Wyoming.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Special Report: Russell Athletic Gets Out of the Athletic Uniform Business

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In a major move, Fruit of the Loom’s Russell Athletic brand will cease making athletic uniforms. The move marks the end of a long history in a product line that in the last decade has seen skyrocketing marketing costs.

“For over 115 years, Russell Athletic has provided quality apparel for athletes both on and off the field of play,” Scott Greene, Russell Athletic and Activewear Senior Vice-President for Brand Management, said in a statement. “We are proud of our heritage, but to build lasting relationships with a new generation of athletes, we will need to focus our efforts and play to our strengths.

“Today, we will begin to transition away from the team uniform business to allow greater emphasis on the consumer retail market. With this shift, we will continue to offer high quality athletic lifestyle and performance apparel for distribution through multiple retail and wholesale channels, including continued distribution of collegiate licensed products along with non-uniform apparel through the team dealer network.”

The Big Money Business of Uniform Deals

The move by the shoe companies Nike and Adidas to expand their product lines into the team apparel market eroded Russell Athletic’s share of the market. Major universities, including Alabama and Auburn, switched their contracts to the shoe companies, or to brands such as Under Armour.

Georgia Tech, which was one of the last major universities to have a contract with Russell Athletic, announced this summer that it would be changing companies to Adidas.

In the case of Georgia Tech, Russell Athletic signed a ten-year deal in 2008 that had it paying the university $8.4 million to be the exclusive uniform provider for all its teams. It also provided over $1 million a year in uniforms for players, and $100,000 a year in branded apparel per year for coaches and administrators. The company also paid additional money based on incentives tied to conference and national championships.

In exchange, Russell Athletic got a host of marketing opportunities, including signage in stadiums, announcements during games, and coaches participating in promotions.

No End in Sight

As large as those number are, they pale before sponsorships that are truly astronomical. In 2017, the University of Louisville signed a 10-year $160 million sponsorship with extension with Adidas.

In 2016, Business Journal found that the cost of signing a university had increased approximately 33 percent over the past five years, and that Nike, Adidas and Under Armour combined were paying over $300 million a year to university athletic departments.

Russell Athletic’s new strategy is to grow its direct to consumer business.

“Our new business strategy focuses on the growing athletic and lifestyle apparel market and developing products that will open new doors for retail distribution of our iconic brand,” Greene said in his statement. “An example of this will be the introduction of a new heritage-inspired product line available in spring of 2018. The new line will feature carefully crafted fleece, tees and other apparel. We are confident you’ll be seeing Russell Athletic on more and more consumers soon.”

Russell Corporation was acquired by Berkshire Hathaway in 2006 for $600 million and became a division of Fruit of the Loom. Its business had peaked a decade earlier when in 1992 it landed a five-year contract with Major League Baseball as the exclusive provider of uniforms. By 1995, the company was generating $1.25 billion in annual sales, and had 18,000 employees.

For Berkshire, which likes to acquire companies that have a strong moat protecting their market share, the athletic uniform business was increasingly an alligator filled moat with no castle behind it.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Allan Dalton’s Road from Basketball to COO of Real Living Real Estate

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When Allan Dalton played basketball back in 1971 at Suffolk University he hoped it would lead to bigger things. It almost led to an NBA career when he was drafted by the Boston Celtics, but where that journey fell short, his real estate career kept rising.

HSF Affiliates LLC, which is majority owned by Berkshire Hathaway, and operates the real estate brokerage franchise networks Real Living Real Estate, Berkshire Hathaway HomeServices and Prudential Real Estate, has appointed Dalton as chief operating officer at Real Living Real Estate.

Dalton is the former president and CEO of Realtor.com, and has 30+ years of leadership experience, including serving as the co-owner of a 32-office firm, the EVP of Coldwell Banker New England and EVP of NRT National.

Dalton said he’s excited to join HSF Affiliates and the Real Living brand. “Real Living has attracted a legion of fiercely loyal brokers and associates who possess a deep connection to the brand and to one another,” he explained. “Their integrity, independence and optimism make it inspiring to work with them and for them.”

Speaking of his basketball career, Dalton may not have played with the Celtics, but he did play professionally overseas. In Greece, he went by the name Alexos Daltos, and on a touring Lithuanian team he used Janus Ambrosius. Anything to keep the ball bouncing.

Today, Dalton is rising to the top, and this time he even gets to use his own name!

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

General Star Announces New Primary Casualty Specialist Team

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Berkshire Hathaway’s General Star Management Company today announced the creation of the Primary Casualty Specialist Team within the Casualty Brokerage Division.

The new team will consist of Maria Manuli (Primary Practice Leader), Ed Felcyn, Michelle Yoshida and Brianna Gatto.

“We have assembled an experienced and committed team with the knowledge and energy to grow our primary casualty business,” said Cole Palmer, Senior Vice President and Casualty and Professional Brokerage Division Manager for General Star. “We are energized about building primary business with our wholesale brokers.’

“The Primary Casualty Specialist Team will work with all of our casualty brokerage underwriters to deliver innovative solutions.” General Star President and CEO Marty Hacala added, “General Star is continuing to expand its multi-line offerings. The Primary Casualty Specialist Team is another example of our ongoing commitment to being a leader in serving the needs of the E & S marketplace.”

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

BYD Delivers First E-Buses of Turin Fleet

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BYD has delivered the first three pure electric e-buses for the public transportation in Turin, Italy.

The three BYD e-buses are the first of a fleet of 23 which are being delivered after BYD won Italy’s first big tender for 12 metre pure electric buses which was awarded in September last year.

Twenty of the buses will serve routes in Turin with a further three going to nearby Novaro.

The long range, full size e-buses will operate on Piedmont Region’s urban transport networks connecting the city centers with suburban areas. BYD will also supply full service support for 10 years.

“We are proud to manage, in Turin, the first 12 metre electric bus fleet in an Italian city”, said President and CEO of GTT, Walter Ceresa. “This is an important environmental contribution, that confirms GTT as a cutting-edge company in innovative solutions for Public Transportation”.

“Italy, together with the UK, France and countries in Benelux and Scandinavia, is now truly a top market for BYD in Europe thanks to the vision of GTT to make Turin green”, said Isbrand Ho, Managing Director of BYD Europe in Turin today. “We are delighted to win this order in the face of strong international competition”.

The tender announced by GTT (Gruppo Torinese Trasporti) in the Autumn of 2015 was the first and most important modular tender for the purchase of large electric buses in Italy.

GTT, owned by the City of Turin, serves a metropolitan area with 2 million citizens and operates a fleet of more than 1,100 buses. The BYD e-buses are the first new buses to be ordered for almost 5 years.

Across Europe bus operators are showing an increasing interest in pure electric technology: a technology that is the natural, inevitable evolution of urban public transportation in the medium term.

BYD is the world-wide market leader with over 20,000 buses delivered, as of the end of 2016.

BYD and Berkshire Hathaway

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares. It’s an investment that has paid off handsomely. Berkshire’s original investment of $230 million is now worth roughly $1.8 billion.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.