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The past few years have been a roller-coaster ride for the UK powered access industry and Nationwide Access, the largest access equipment rental company in the UK, has had to ride the ups and downs along with the rest.
Still a relatively immature market throughout Europe, powered access rental is prone to growing pains, and the acute over-capacity that started to choke the UK market three or four years ago is a symptom of this.
Luckily, Nationwide's position in the market has meant that it is far less vulnerable to these thrills and spills than smaller, less established firms. Nevertheless, Nationwide has undergone a far-reaching re-appraisal of its corporate structure and made significant changes to the way in which it does business.
The typical rental company - and this is as true in the US and mainland Europe as it is in the UK - comprises a network of depots, each with a high degree of autonomy and operating more or less as a stand-alone business unit. This has many advantages: local knowledge is exploited to the maximum; the people are in tune with their geographical market and branch managers are able to make quick on-the-spot decisions.
This is fine if your customers are all local. But Nationwide Access operates nationally and increasingly serves customers who also operate nationally. These customers don't want to deal with 45 different centres and struggle to accept the idea that inventory, delivery costs and even hire rates can vary from branch to branch within the same company.
Many national rental companies have attempted to reconcile the traditional branch structure with the expectations of a national customer base, but few have really succeeded. Centralised operations, whereby all customer enquiries are routed through a single call-centre, have lost the regional knowledge and alienated the company from its customers. Other systems have simply been too unwieldy to work efficiently.
Nationwide's solution has been to condense the customer service structure into a matrix of regional centres - 19 in the UK compared with the previous network of 40-odd stand-alone branches. The 40-odd premises have of course been retained and the local presence for maintenance and transport of equipment safeguarded, but pricing and customer service is now co-ordinated at these new regional centres.
As mentioned earlier, traditional rental branches tailor themselves to their locality. This can often mean regional disparities in pricing. Hire rates in London are inevitably higher than, say, in the North-East. How does this work within a unified structure? The Nationwide response is a consistent pricing structure across the country.
Realistic costing is remarkably elusive in the equipment rental industry, but it is essential for a viable business. Once you know your fixed costs, you can calculate the optimum hire rate and because Nationwide does not scrimp on service engineers, equipment maintenance and health and safety we know there is a price to pay.
Given this, you might assume that Nationwide has had to sacrifice its small-to-medium sized, essentially local customers in order to satisfy the big national customers. Perhaps surprisingly, though, our biggest area of growth is among small local customers whose contribution to group turnover is growing at more than 20 per cent a year.
Lavendon trade in Germany under the name of Zooom. Similar developments have been going on in Germany where Zooom is also the leading powered access rental company. Here we have condensed the business so that there is a regional centre in each of the eight Lander. Germany is still a very depressed market but nevertheless essential to Lavendon's future plans. It is the biggest single European economy and as such we cannot afford to neglect it.
At present we have approximately 3,700 machines in the German market; in France and Spain we have between 600 - 650 whereas our UK inventory is about 6,000. As the largest access rental company in Germany by some margin, Zooom is poised for massive growth here when the economy finally picks up.
This re-appraisal of the Nationwide Access structure has come as the access industry begins to emerge from a very traumatic period in its history. Less than 10 years ago, the market for powered access equipment looked poised for rapid expansion as new end uses emerged and safety legislation threatened traditional methods of working at height. Our still-youthful industry has a lot of growing up to do, and this looks like a growth spurt about to happen.
But although the European market for powered access equipment is actively expanding into new industry markets, construction remains the biggest single user - we estimate that the market 65 - 70 per cent exposure to new build construction in the UK, (although ours is rather less than this) and much of this is in the modular steel-frame sector. This part of the industry has been through a rough time in the past few years and with the inflated capacity in the access supply it quickly became evident that demand was not going to meet supply.
The past three or four years have been difficult, not just in the UK, but in the European access industry and there's no doubt that rental rates have come under huge pressure with double-digit percentage deflation in some areas. This was enough to put a number of large rental fleets out of business.
However, the market for powered access equipment is still growing and the prospects are good. I believe we have bottomed-out; rates are unlikely to fall much further and demand is on the increase. Now, the only way is up.
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