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Higher standards
Page 26
Page 27
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Prohire has grown to bring in £12.3m a year, but in this sector you can never rest on your laurels. Dominic
Perry talks to chairman
David Barlow.
David Barlow, it seems, is an angry man. In the past he's frequently railed against the level of service offered by workshops belonging to the major vehicle manufacturers and once again the truck makers are in his sights. This time it's the issue of Euro-4 trucks that's vexing him:-How can you advise a client when there's no pricing structure yet and there are no running costs because there are no accurate figures? Not one single manufacturer is giving prices on Euro-4. Each one is clearly frightened to set its prices because it knows the others will undercut it.
"It's an absolute farce," he adds. "We're having to go to our customers and say 'well that's the price, hut that's for Euro-3, which we can't get any more, and we haven't got any figures for Euro-4 and we can't tell you the difference between the two solutions'.
Overall, Barlow thinks new truck sales will take a dive this year, on the back of the Euro-4 issue and the introduction of digital tachographs. "It will be a slow year,he predicts.
Prohire has existed as a limited company since l 997 when it was formed by Barlow and his business partner Colin Walton, now Prohire's CEO. Prior to that Barlow had been involved in buying vehicles from leasing companies, remarketing them and disposing of them. However, when they realised the business had only a limited lifespan, Barlow did, as he puts it, "the whole poacher turned gamekeeper thing" and set up Prohire.
Years of healthy growth have followed—at an astonishing 56-57% for the past four years.This has been achieved mainly through acquisitions: it led to the firm's inclusion in the prestigious Sunday Times Fast Track 100 last year. In the process Prohire has built up an impressive portfolio of clients, which includes brewer Greene King,Alliance Flooring,The Pier and MFI.
Among the acquisitions was Securicor Vehicle Management; Prohire's interest came just at the right time as it was looking to divest itself of non-core assets prior to its takeover by DHL. Barlow explains: "It gave us huge scale and buying opportunities and opened the market up for us.
Success leads to success
"That's why we were successful with the Reliance Securitas contract," he adds. "We were led into that one by Iveco."
The deal, which involves supplying vehicles for prisoner transport, involved a £25m investment for Prohire in terms of capital equipment and it's a contract that presents a unique set of problems,as Barlow explains:"When a Reliance vehicle breaks down there's a whole host of issues to deal with.We can't just send a tow truck out if there are three murderers on board. If you have to have a transhipment situation on the side of the road you'll need guards and possibly police as well —we have to liaise with both."
At the moment Barlow puts Prohire third in the UK contract-hire market, just behind Fraikin and Ryder.
Although the vehicle manufacturers are offering apparently similar products, Barlow says he doesn't count them as direct competition: "It's about added services — that's what we try to give to the customer. We see it as a strategic partnership.We are someone that the customers turn to for advice when they are renewing or extending their fleet.We are impartial in that we deal with all the truck manufacturers and we try and find solutions as well."
As an example of this. Barlow puts Prohire's contract win with MFI down to the company's willingness to innovate; in this case by developing a means of carrying kitchen worktops separately from the rest of the load to avoid damage.
"Everybody who went to see them said 'it can't be done, but here's a price for a standard box', says Barlow. We knew the only way we would succeed was to come up with our own design." So Prohire came up with a product called the Homepod: a box that holds the worktops separately, just as WI wanted.
"On the back of that we won." says Barlow. "That's an example of how we work with customers to think outside the box and offer them something different. It's the main thing that we can do to get ahead of the competition. You have to offer them add-ons otherwise you are just providing a truck:' On the back of this attitude Barlow claims a level of customer retention currently running at around 91%.
With the appointment this month of a new MD in the form of Diane Nixon (see panel, right), both Barlow and Walton are promising to take more of a back seat at the firm. Barlow explains: "We will step outside the business and look at how we can develop it in the future. We will he trying to get to see some of the people that our sales staff can't."
Inevitably in a highly competitive market — both in terms of vehicle leasing and the wider economy — there will always be price pressure. But customers still expect high levels of service. Barlow takes these demands seriously:"We are very keen on agreed service levels so both parties know where they stand. Sometimes customers are very extreme in their requirements and we can't sign up to those: we only make promises that we can deliver on. If you do agree to them its easy to get caught out and end up with a very angry customer."
You get what you pay for
Barlow puts this in simple terms, in a refrain that will be all too familiar to road transport operators. "Rates are tricky. With some customers it's all about price, price, price and we have to explain to them that if they want a certain level of service then they have to pay that price." he concludes. •