Nationwide managing director Hugh Cole talks depots and new kit with Phil Bishop, while Kevin Appleton, boss of parent company Lavendon, explains the strategy for regional growth
WHEN you head the UK's largest aerial work platform hire company, it is always wise to lift your gaze above the business and take in the scene from a different perspective. And just as his platforms offer builders a new perspective on the job in hand, Nationwide managing director Hugh Cole has kept his view f irm ly on the horizon to stay one step ahead of the competition.
Mr Cole, 45, joined the company in July 2004, a time when the sector was just beginning to return to sanity after undergoing a brutal period of culling.
The 1990s had been a golden period as hirers across the European Union realised the specialist hire market for mobile elevated access platforms was suffering from undersupply. Those who dived in feasted on plump margins. But manufacturers were not slow to catch on, seducing fleet buyers with tempting financing deals. By the turn of the century there was significant excess capacity.
Between 1999 and 2002 the number of powered access platforms in EU rental fleets grew from 66,000 units to 112,000 units. The inevitable soon followed.
Platform manufacturers and fleet owners were forced to confront the oversupply and many businesses either disappeared or changed ownership. The UK was hit as hard as anywhere.
While Nationwide was not immune from market difficulties, it has emerged in one piece. It is, by quite some distance, the UK's largest aerial work platform company. Its 6,000 mobile elevating work platforms account for roughly 16 per cent of the country's total hire fleet and make it twice the size of its nearest competitor, The Platform Company.
Mr Cole joined Nationwide from the car hire business, and he notices interesting similarities and differences between the two industries. The major similarity, he says, is that the key interface is between customer and supplier.
'That's all that matters, getting that right, ' he says.
By contrast, a major difference is the huge number of local relationships that Nationwide has to manage in numerous market segments. Over the past two years it has served 20,000 different customers.
'I was surprised at the size of the customer database, ' he says, 'how wide the industries were spread, with a huge number of different customers.'
Another difference is in asset management: 'In car hire the asset is held for just six months. In this industry, maintenance and keeping on top of your engineering is key.'
Nationwide currently loses 1.4 per cent of rental days to breakdowns and Mr Cole's target is to reduce that to 1 per cent by the end of the first quarter of 2007. He has little idea how good or bad this ratio might be since there is a distinct lack of benchmarking in the industry, but he knows how important reliability of hire equipment is to customers.
'I can't think of anything more frustrating [to customers] because a lot of our equipment is used on the cr it ical path of projects, ' he says. 'I am acutely aware of that responsibility.'
He recounts his own recent experience of hiring a cement mixer to lay a patio at home one sunny weekend. 'After 10 revolutions it broke down. It puts you in a bad mood for the rest of the day, ' he says.
The importance of reliability was reinforced by a customer survey Nationwide conducted last December. The 500 respondents put reliability and timely delivery/collection of equipment as their top priorities. 'Rates came fourth of fifth, ' he says.
Nationwide has implemented several measures to step up its customer service. First, it has introduced a new pre-delivery inspection programme. Previously, there was a generic PDI for all machines. Now it is tailored to be machine-specific, so that any known vulnerabilities of certain models get special attention.
Secondly, it is investing in new equipment of all shapes and sizes, as well as new delivery trucks.
Mr Cole also keeps an eagle eye out to make sure regional coverage is all it should be.
Nationwide Access operates out of 45 depots across the UK. There are eight hubs and 33 satellite depots, as well as f ive depots for Skylif t, the t ruck-mounted platform subsidiary with 175 vehicles. One depot houses both Nationwide and Skylift.
'I think we are fairly well represented, ' says Mr Cole. ' We constantly study our depot network to make sure we have the right coverage. We are not in Inverness, but we are in Aberdeen.'
Nationwide's strength is in serving national accounts - major contractors who may want a platform anywhere in the country but prefer a single supplier.
'No one else has the depth of fleet of breadth of network Nationwide has, ' says Kevin Appleton, chief executive of parent company Lavendon. Mr Appleton estimates that Nationwide has 'probably close to 50 per cent' of the national accounts business in the UK.
It is a growing market, he says, but for Nationwide to increase its market share further is difficult, such is its dominance.
So when planning growth strategy, Lavendon has a challenge on its hands.
Its focus is on increasing its share of local business, from local contractors who maybe see no benefit in going to the market leader for platforms and prefer a local company to a national one.
While all Nationwide depots also have their local customers, accounting for close to 50 per cent of their turnover, they are competing for this business with a host of smaller players, who exclusively service local accounts.
Recognising the difficulties of presenting Nationwide as a friendly neighbourhood access supplier as well as a big national corporate machine, Lavendon has adopted a two-pronged approach to the market.
Through acquisitions, Lavendon is establishing a local business network to sit alongside Nationwide.
Already this year it has acquired Dunstable-based Panther Work Platforms (1,300 machines out of six depots), Bristol-based Kestrel (350 machines out of one dept) and Taunton-based AMP Access (525 machines out of four depots).
An alternative and potentially cheaper way to grow the business might have just been to buy more machines, but Mr Appleton counters: 'We have taken the view that it is better to consolidate the market than to add capacity.'
The strategy also gives Lavendon a degree of protect ion to a downtu rn in const ruct ion. Indust r ial and commercial construction accounts for 50 to 60 per cent of Nationwide's business, Mr Appleton says, while the regional and local businesses tend to be more active in the repair and maintenance sector.
Nationwide depots will continue to serve their local customers as well as the national accounts. The acquired companies are sister companies to Nationwide, not subsidiaries. Although they will be able to exploit cross-hiring opportunities, they will retain their own identity and branding, at least for the time being.
'We don't foresee any change in the branding of those businesses for at least a couple of years, ' Mr Appleton says.
Further ahead, it may be appropriate to explore some rationalisation of identity, but they will not come under the Nationwide umbrella nor will they be called Lavendon, since the Lavendon name is not well known in the marketplace, says Mr Appleton .
More acquisitions can be expected. 'We are not going to acquire at any price, but we will be - and are - keeping our eyes open for regional or local businesses that are a good scale, well managed and well established , ' Mr Appleton says.
Hugh Cole's £12.5m shopping spree
NATIONWIDE is investing £4.5 million on a fleet of 60 new Daf trucks. The three-month replacement programme will be complete at the end of August.
Each truck has the driver's name on it to give a sense of ownership, and there is a newsletter just for the drivers.
The rationale, Mr Cole explains, is that while hire desk staff are the first interface with the customer, it is the drivers who actually get out there at meet them.
'Our drivers are absolutely crucial in the customer interface, ' he says.
'That's the face of Nationwide Access on site, the truck.'
He says recognising their importance has also helped to reduce the tu rnover of d r ivers, and is now looking to develop the concept further, providing customer service training.
After all, it is the drivers who have to know how to handle the wrath of customers when the equipment is late or faulty, and they have to be able to address customers when equipment is found to be damaged on collection.
Nationwide is also investing £1 m illion in engineers' vans and £7 million in its access f leet.
This includes a refurbishment programme for all its 45 ft Genie boom lifts, the workhorse of the f leet - 'the Vauxhall Vectra' as Mr Cole puts it. It is a three- to four-year programme, putting three units a week through Genie's facility in Grantham at a cost of about £8,000 per unit.
Managing a hire business is a tricky juggling job of low-rate, longterm hires and high-rate, short-term hires.
The business requires 'a lot of analysis and thought between best customer service and managing the asset base sensibly to get a good return, ' Mr Cole says.
Although short-term hires bring a higher margin, it is 'more onerous, needs more precise delivery and collection and better service, ' he explains.
Larger machines also achieve h igher margins, so Nat ionwide has recently added four 135 ft boom lifts, the Genie S135.
But smaller machines are also needed by customers, particularly in fit-out stages of projects and for M&E work.
Demand for smaller machines, in particular, has been boosted by last year's introduction of the Work at Height Regulations.
Nationwide has added some 350 19 ft electric scissor lifts in the past 12 months, a good number of which have been at work on the Heathrow Terminal 5 project.