Most people on Guam know LSG Catering Guam for its beautiful cakes which is odd considering the small proportion of the company’s revenue brought in by its baked goods.
The high-flying cake business will become even less of a factor this year as the world’s largest airline caterer moves into school-lunch business on Guam.
“When I first arrived on island it became clear to me that people only knew LSG as the people who do cakes ” said Neil Davy general manager “which is quite funny because it’s really only a small portion of our business. But we’re looking to grow by expanding our retail sales outlet and looking for an appropriate sales partner.”
The majority of the company’s revenue comes from its airline catering. LSG’s major customers are Continental Micronesia and Japan Airlines and it also services China Air Philippine Airlines All Nippon Airways and Northwest Airlines. LSG reported annual revenues of $10.6 million for 2003 in the Guam Business-Deloitte & Touche Top 50 companies in Micronesia survey.
Davy came to Guam about a year ago with the clear mission of restoring LSG to a certain level of profitability. He now is looking to further develop the company’s 150- employee base and expand the business into new areas in 2005.
“We’re a people business predominantly low-tech ” Davy said. “One of the things we’re focused on is reinvesting back into our work group. We’re working with the Guam Community College and using internal resources to put a renewed emphasis on training not only to drive productivity improvement and quality goals but also to demonstrate to our employees that we’re interested in their careers through the organization.”
For the company’s core business plans for the next year include a completely new menu design for Continental Micronesia that starts Feb. 1.
The new menu is designed to meet the changing needs of the airline industry.
“Principally in these challenging economic times the airline customers are looking to offer two things: quality improvement as well as process improvement leading to a reduction in cost of the delivery of services ” Davy said.
But the company plans to expand beyond its core business in the next year as well.
“ As everybody realizes diversification is important in a world now that is so sensitive and changes so dramatically and so quickly ” he said. “We’re looking at other opportunities in catering to help broaden our revenue base and reduce our risk.”
The company is looking into the field of school catering already in discussions with a private school and in “broad highlevel” discussions with government officials to try to understand the needs of the school-catering market.
In Saipan the company has a 40% share of school catering Davy said offering the same high food safety and quality standards that are so important in the airline catering industry.
“We deliver a superior product in Saipan and we’re very interested in offering that model in large institutions here ” he said. “I would hope to overcome any barriers between now and the next school year.”
He said the area of privatization on Guam is challenging right now.
“There’s a couple of vendors here in the market that have borne the brunt of the changes ” Davy said “and I think the time is ripe for us to go in and have a discussion with the appropriate government officials about what their needs are.”
In its best-known area baked goods he said he’s exploring ways to distribute the company’s cakes and other baked goods through new outlets. For example LSG on Jan. 17 made an arrangement to start supplying King’s Restaurants with fresh baked goods and is in discussions with two other “high-profile” restaurants on island Davy said. He’s also looking at the possibility of a third-party vendor to be the retail outlet for the company’s cakes.
In the next year Davy is also offering LSG’s vast network of contacts in China to try to help Guam’s visitor industry expand its China market.
LSG is the largest airline caterer and one of the largest global food manufacturers in China with nine operations he said. He said within a two-hour drive of those nine operations live about 800 million of the country’s population. All the China operations have been formed through joint ventures with local partners in China.
“This has put us in contact with some very influential players within the global travel industry ” Davy said adding that he’s talked to Madeleine Z. Bordallo Guam’s delegate to Congress and Congressman Dan Burton senior member of the House Committee on International Relations extending LSG’s business networks to help Guam raise its profile in China.
“Obviously what’s good for Guam in the travel industry is good for LSG Guam ” Davy said. “We’re looking to expand rapidly in China and I’m hoping we can facilitate contact with the airlines and any appropriate government officials that the Guam authorities or business groups are looking to reach out to.”
Davy has worked in the United States Canada Southeast Asia Australia New Zealand and Europe and said he has enjoyed working on Guam since he’s been here.
“I really want to say that the fundamental human resources here on Guam are truly outstanding ” he said. “When I came here there were five expatriates in LSG Guam. I am the last expatriate in this facility and this facility has never performed better than it does now. I’m just so excited about the opportunity to work with such an outstanding group of people.” MBJ