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At last there's a healthier look
THE EXTENT to which the road transport industry is affected by politics and legislators is being firmly underlined by financial results from both the manufacturing and operating sectors of the industry.
Looking back to 1980 it is now very apparent that political vacillation over the move to higher legal weight limits caused road transport to be hit far worse by the recession than industry as a whole. Only now, after five years of famine, is the current crop of financial results starting to look healthy.
Operators switched off the order tap at the beginning of 1980 and manufacturing companies without much of an export market immediately felt the impact, the collapse of Foden in April 1980 being the first marker in the vehicle manufacturing sector with vehicle operation then going into steep decline.
For some the recovery is proving equally steep and nowhere is this more apparent in the manufacturing sector than at York Trailer Co.
With Crane Fruehauf's results now buried in those of its American parent and Craven Tasker's in those of John Brown — although that company did disclose in the course of the Boalloy sale that Craven's turnover is £30m — York is now the only trailer manufacturer of the UK big three to bare its breast to the market.
The market for trailers seesaws with the fortunes of the operating industry and the fortunes of York have risen and fallen in parallel with it. It is very apparent, looking at the results of York in recent years, that it has had a tough job surviving and if it hadn't been for resourceful management the story might have been very different.
Faced with a catastrophic drop in orders at the start of the recession, York got on its bike and pedalled its wares overseas. The result was large orders from the Middle East and elsewhere which, one suspects, kept the company afloat.
Then the overseas markets fell away — as the powered chassis makers know to their cost — and York held on for the 38-tonnelinked. revival of the home market. And now the results can be seen — a swing from a £30,800 loss in 1982 to a profit of £506,800. What's more important, however, for any company these days, is that total borrowings fell from £3.43m to £2.08m, reducing interest charges to £306,500 from £587,700.
It is not too difficult to see what the indecisveness of politicians and the fumbling qualities of the legislators have cost this one company let alone others in the industry. Had the legislation been implemented just one year before, recovery would have come much faster.
The signs are that the better times at York are symptomatic of the industry as a whole. Dun and Bradstreet in its latest report on the motor trade reports that business failures in the motor trade "appear to be slowing down".
Company liquidations in England and Wales during the first quarter of 1984 totalled 420 — a 6.45 per cent decrease over the equivalent period of 1983. Not much, but the first positive sign of recovery for some time.
When it comes to the operating side of the business, the leading companies seem to be doing quite well. United Parcels (formerly United Carriers) turned in net profits of £4.57m on a turnover of £60.72m.
This was not quite so good as in 1982 when £4.65m profits accrued from a turnover of £53.6m but was not bad in the light of the heavy run of rate cutting experienced in this sector (and referred to in the United Parcels' report) which characterised parcels carrying in 1983.
One of United Parcels' main competitors, Lex improved its pc rformance. Pre-tax profit of Lex's transport and distribution activities (that's Lex Wilkinson, Bees Transport, Carpet Express and Albany Freight) moved up from £2.8m in 1982 to £3.2m in 1983 on a turnover which was very similar to that of United Parcels; Lex's was £67.4m in 1983 compared with £62.6m in 1982.
As a whole, the parent, Lex Service, made a cracking pre-tax profit of £38.3m in 1983 — that's practically double the 1982 figure of £20m on a turnover which jumped to £887.5m from £664.1m. The bulk of its pre-tax profits came from its car and commercial vehicle distribution activities — £38.8m in 1983 compared with £26.3m in 1982.
There are signs that the fierce competition in parcels carrying is by no means over yet. It is seen by many as a profitable field of operation, not least by Transport Development Group which has been putting a bit of beef into this side of its operations. Here is what it said about one of its specialist companies: "Another business which has grown and developed beyond recognition in the last year or so is that of Tuffnells of Sheffield which has been hard at work establishing a national parcels service. It has extended its network by acquiring small distributors and by the end of the year was working to the limits of its capacity.
"Plans are in hand to replace three existing depots with new purpose-built facilities. All should be in full operation by the autumn which is the start of the company's peak season."
And of another interest in parcels it says: "In October, TDG took a 50 per cent interest in a new enterprise, Independent Express Corporation. It was an arrangement unusual for TDG which normally holds a majority interest.
"In this case, the business, which provides overnight express freight services throughout the United Kingdom and to Northern Ireland, the Isle of Man and the Channel Islands, was being established by four highly entrepreneurial express freight experts, each of whom has had long experience of similar businesses in Australia and in Europe."
TDG has thrived on providing specialist transport facilities through neat self-contained companies. Few eggs have been left in the general haulage basket.
This is just as well because the general haulage market has steadily contracted and this is where the casualties in road transport have been heaviest.
Again TDG noted the situation in its report. It said: "A rising demand for freight, once it put pressure on available resources, would shift the balance of advantage and enable haulage rates to move closer to .what they should be. Many hauliers thought that would happen in 1983, but, although there has been evidence of a slow and steady pick up in demand, particularly in the second half of the year, the critical point has not yet been reached."
There are pointers to improvements on other fronts. P and 0 in its annual report indicated that P and 0 European Transport Services increased their profits significantly in a competitive market and Pandor operated in a very difficult sector and their advance was particularly commendable. Conclusion: the going is not easy, competition is fierce in all sectors but the rewards are there for the enterprising.