Weathering the storm
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It takes more than just pure luck to survive a prolonged downturn, as haulier Jim Welch knows only too well
Words: David Harris/ Images: Graham Richardson
WHAT MADE SOME hauliers survive the recession when others went under? Good management? Certainly. Luck? Probably. But there are other factors, and one of them is how much debt companies had going into the downturn.
When its business came under intense pressure in 2008, Cambridgeshire haulier Welch’s Transport had no borrowings, no mortgages, and a relatively new leet. It wasn’t unaffected by the recession, but it was in a better position than others to weather it.
As MD Jim Welch puts it: “When I needed money for a rainy day, I actually had it.” Nevertheless, there was pain because although cash reserves can avert the death of a company, they don’t necessarily stop it getting ill and this was relected in the Welch Group’s igures. Until 2008, Welch had always made a proit, but in 2009 it recorded a pre-tax loss of £463,817.
The strength that allowed Welch to survive such a hit was built up over nearly 80 years in business. The group is a long-established family haulier that is old-fashioned in the best possible sense. Among other things, the Cambridgeshire-based operation has always prided itself on its inancial prudence. This even extends to net proit margin expectations, which in good times are expected to be between 6% and 8%, a igure well ahead of the industry average.
This then, is a irm with sector-leading inancial standards, even if the past three years have given earnings more than a bit of a knock. Proits have turned into losses, staff have been let go and vehicles taken off the road, but there was never any danger of closure.
The vital cash reserves had been built up over decades of careful stewardship under the Welch family. Welch was founded by Gordon Welch, Jim’s grandfather, 77 years ago. He was joined two years later by his brother Jim.
Diversification
From the beginning, it was deinitely a group, in the sense that it operated different trading arms. At irst this was a combination of haulier and motor transport dealer, selling trucks and cars. This continues today, but with even wider diversiication.
Welch says different sections of the group still include motor trade and haulage, but there is now a plant hire division and a substantial property portfolio as well. The group owns the freehold of all its sites and has rarely sold them. If there is somewhere it no longer needs for its own operations it tends to rent it out, which has created another income stream.
Welch Group now has six sites in Cambridgeshire that it rents out. This gives the group a diversity that is one of its strengths, although Welch admits that in 2008 he did start to wonder whether it was a strength.
“Until two or three years ago I thought the diversity was deinitely a good thing, but in 2008 the bottom dropped out of everything and I did start to wonder,” he says.