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by John Darker
Page 58
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Sell repairs, to outsiders
Making Co-op workshops viable
THE SALE of surplus workshop capacity is not new in the Co-operative movement, or in road haulage generally but it has now become a topic of major interest. Success in this can enhance the status of transport manager and generate much-needed cash flow.
Mergers and reorganisations may lead to drastic reductions in vehicle fleets. When a Co-op Society's maintenance facilities are under-used it makes sense to diversify the business by undertaking vehicle repairs for outside customers.
This was the theme of Mr W. D. Deeley, transport manager, South Suburban Cooperative Society Ltd, at the 50th conference of the National Association of Co-operative Transport Officials, His talk was complemented by a paper on "Training needs for marketing and costing," by Mr R. Stead of the RTITB's operational services group.
Mr Deeley said that many Societies were faced with a choice: Scaling down their transport operation or diversifying their operations. With the backing of his directors, Mr Deeley had sold Transport Maintenance Services in South London to road haulage and car fleet operators. The service was now well accepted by the trade.
Mr Deeley posed eight points for consideration.
I. Servicing: what range of vehicles can we cope with?
2. Major repairs: does existing equipment suffice or will further equipment have to be bought?
3. Minor repairs: Will "run-in" repairs needing immediate attention be dealt with?
4. Breakdowns: Is a breakdown service to be provided, and if so over what radius?
5. MoT testing: Are facilities adequate for testing light yehiciles and cars in addition to heavy goods vehicles?
6. Mechanical Handling, Equipment: Is this adequate for the service envisaged? 7. Documentation: As full records must be kept for vehicle repairs, can staff cope with this?
8. Any other problems: Is there enough expertise to help customers, eg with legal or guarantee problems?
Mr Deeley's experience was that work-flow rate varied seasonally and marketing thrust needed to be adjusted to even this out as much as possible.
Every effort should be made to retain a secure work force for work would have to be guaranteed; mistakes by mechanics could be costly.
What advantages ?
There would be a chain-reaction of administration problems in the wake of work coming in and staff must be trained to cope with this. Their task would be eased if a few sizeable customer's fleets were maintained; to attempt to serve all corners was inadvisable. Mr Deeley stressed that fleet operators would want a credit account and some were ruthless in stretching credit time unreasonably.
What were the advantages of selling surplus capacity?
1. To retain valuable staff, equipment and property thus keeping your own transport operation intact, or maybe expanding it.
2. You might be able to subsidise your own fleet costs by the allocation of overheads.
3. Your profits help to pay for new tools and equipment and these will help in your own fleet servicing.
4. Your staff performance will be improved by working to a time and a price.
Four panels of delegates discussed Mr Deeley's paper and later reported back to their respective chairman.
Mr D. Fortune (Greenock) said his panel thought marketing could begin with employees of the Society. After that, spare maintenance and repair services could be offered to other Co-ops in the area and, finally, the independent road haulage sector could be canvassed for work. It would make sense to confine commercial vehicle repairs to the makes of vehicle operated by the local Society as this would minimise spares holdings. Spares that did not "turnover" four times a year were not worth holding.
The panel considered that contract maintenance services would have to specify a maximum radius within which service—or breakdown facilities—could be provided.
It was recommended that a Society involved in repair work for "outsiders" should join one of the trade associations such as the MAA. It was felt that a well trained reception foreman who could detect faults and make out job cards for incoming vehicles would increase efficiency.
Mr R. Sudell (Enfield Highway) said his panel noted the need to charge spares and materials at current prices. This meant prompt invoicing and the rapid processing of paperwork so that some repair jobs could be paid for in cash the same day. It was important, the panel said to obtain the customer's telephone number so that additional work found during inspection could be authorised.
Where possible customers should be asked to accept the Direct Debit System. Careful credit inquiries were essential when customers were not known.
Mr F. B. Ford (Leicester) said his panel included two food trades officers who were critical of the diversification concept. They felt that they would have to subsidise losses! They had been assured that their present transport costs within the co-operative movement were about 50 per cent of competitive outside charges for similar services. The panel believed that the use of vacant garage space for outside repair work would help to contain transport cost increases for the Co-op.
With more than 2,500 Co-op employees in the Leicester area, Mr Ford said that 90 per cent of them wanted their cars serviced by the Co-operative maintenance service. His experience showed that car and lorry repairs for outsiders could be profitable; indeed the Leicester Society worked for the Spillers/French Group after loosing Co-op Bakery Business; similarly, work was now done for the National Coal Board to replace the declining co-op coal delivery services.
Mr J. L. Binnie (Royal Arsenal) said his panel had drawn up a formidable list of disadvantages. They felt diversification could absorb much scarce capital; it could lead to staff problems if too wide a range of vehicles were serviced; it could affect quality of own-vehicle maintenance.
Would the DoE inspectors look kindly on a Co-op involvement in car and lorry maintenance on a commercial scale, asked Mr Binnie. Invoicing could prove troublesome and much staff training in workshop and offices would be called for. Perhaps fitters working on cars and lorries would want more pay! Summing up, Mr Deeley said that credit risks could be exaggerated. Most societies could arrange for their existing debt collecting staff to help on the vehicle repair side if slow payers were a problem.
The "flow line" system car testing, to be introduced in 1979, would not apply everywhere and the DoE engineers were well satisfied with his Societies' arrangements and with their maintenance standards for cars and lorries.
Societies concerned about accurate spares pricing at retail levels should subscribe to the Master Price Index regularly updated by vehicle manufacturers.