TNT loses 15m deal as Rover cuts costs
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• by Guy Sheppard A huge shake-up of logistics contracts is underway as part of a drive to stem continuing losses at Rover car plants.
TNT has already lost a £5m-a-year contract to run the distribution centre at Longbridge, Birmingham, after claiming it was asked to make up to 30% savings by BMW which acquired Rover tour years ago. About 200 people are employed on the contract, including 30 drivers.
From 31 January the work will be handled by a joint venture between Lichfield-based Hellman Worldwide Logistics and Rudolph Logistics, a German-based automotive sector specialist.
TNT also holds a contract worth around £10m a year to run the Land Rover distribution centre at Bickenh ill. near Land Rover's plant in Solihull, as well as a parts collection contract shared with Exel Logistics which in turn runs the distribution centre for Rover's Cowley plant in Oxford, These three contracts are also being put out to tender and the joint venture company, called Rudolph & Hellman Logistics, could take them over too. Hellman sales and marketing managing director Paul Goldbrough says: ''Rudolph has experience of working with BMW in Germany and has credibility with them. Because they have no infrastructure in this country, we decided to support them."
Terry Richards. divisional director of TNT Automotive Logistics UK, expects the future of its two remaining contracts to be decided within two months. He says TNT did not even come close to renewing the Longbridge contract: "We are extremely disappointed -that's why we spent as long as we did trying to wrestle with finding the correct cost base to move forward on this business. We could not see how we could make money."
A BMW Group spokesman denies that every contractor has been asked to make savings of up to 30%. but says: "Every one of our suppliers has been asked to meet fairly tight briefs, but that's business isn't it? We are having to look very, very closely at how we carry out our logistics exercises."
He adds that BMW plans to open a £40m rail link with the Land Rover plant within the next two years which will largely remove the need for transporting Continental exports byroad.