1917: The Agent's Year Article VIII.
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Maintenance and Running Contracts as Sources of Revenue.
By the Editor.
It is hoped to bring this series to a conclusion next week. It began in our issue of the_28th December. The object has been to awaken that due measure of interest in .agent and agency-organization matters which war-innated output at commercial-motor factories has rendered a factor of essential importance to the industry at large, and even to the country. The U-boat course of destruction has gradually cut down the prospects of early overseas developments. when peace comes. Manufacturers must prepare to live on home trade, as toe perhaps, 85 per cent, of their wartermination outputs, for many months after peace comes. They cannot hope to do this in the absence of broadly-conceived and boldly-planned changes from their pre-war methods of selling.
Articles III to VII have dealt in detail with the outline of which was indicated in Nos. I and IL A correlated article on "Spares" was published separately, but it will hereafter be included in certain reprints for which arrangements are being made.
The Depot of 1919.
Governmental restrictions on building operations' will of necessity render impracticable the immediate carrying-out of any full programme of agency or branch extensions by makers of commercial motors, be their cash resources what they may. Orders on the books, so far as these will prove to remain good hereafter, coupled with the prompt new results of selliilg energies when re-applied, Can only be expected to protect the vehicle-producer against taking his finished chassis into stock for periods varying between 10 and 15 weeks. We repeat our belief that State purchases will be shut down, at very short notice,. by the direct process of countermanded delivery instructions accompanied by intimations that compensation for non-acceptance will be considered afterwards. There may be gradations. We doubt it. We expect this blow to fall on the industry with the same suddenness that the Central Powers will one day collapse. It is after the first three months of reversion to civilian deliveries that the real pinch of the factory position will be felt. The makers 'with most points of dispersal will get rid of their output loads best. No points of dispersal can be superior to depots up and down the country which ate characterized by (1) wellchosen location, (2) adequate size, (3) appropriate staff, (4) nucleus stocks of spares, (5) repair facilities.
The successful commercial-motor depot of 1919 may by force of circumstances, be often nothing more than a conception at the moment—a circle or a cross on one of those maps of Great Britain which are already the subject of close consultation between sales managers and managing directors. We agree that this stage is the most common as yet. The important Feature, within our knowledge, is that the number of such conferences has grown week by week, of late. Serious business is intended by all parties, and earnestness of purpose is present. The policy of the agency depot is now a settled one in numerous dime. tions, though choice between agent and branch may still waver. The germ of the depot of 1919 exists.
• Certain Profits for the Expert Out of the Uncertainties of Others.
Thousands of cartage contractors in our ports and manufacturing cities will not buy one horse more than they must. The war, the weather, labour conditions and competition have, since August, 1914, imposed lessons in favour of mechanical transport which will e26
never be forgotten. Several years more, in any event, and much of their plant and stock must be renewed. A similar record is found, on inquiry, amongst coalmerchants, builders, gas companies, timber traders, heavy provision men, railway companies,makers, the meat trades, and not a few more. All are ready to become motorized, some entirely, others to varying extents. There is, however, a condition precedent in the cases of the smaller buyers—of those who require one or two wagons or vans each and not fleets. They want guarantees of cost and performance. It is not their avocation to run motors, but they are ready to pay a fair price by way of "uninsurable insurance" to the men who can—to the men with depots, knowledge and resources.
The incidence of "running under maintenance" contracts to total commercial-motor running has been low in the past. The manufacturers did not seek it : the " agent " was either incompetent or without means. Facilities will now, slowly at first but with ever-increasing certainty, create trade along the lines of "so much per mile, and we take all risks."
It is a self-evident fact, that the same commercialmotor badly run by an inexperienced owner will cost more than if it be housed, turned out, run and maintained under expert supervision. The economies are in part due to the better purchasing that can be effected by the larger buyer (the depot), and in part to the higher average and better utilization of applied skill at his hands. When the L.G.O.C. was running its motorbuses at 7d. per mite "all in,' certain small proprietors in London were finding the cost more than lid. That is a parallel in most respects. Yet the L.G.O.C. was earning handsome dividends, while the small owners were losing.. If the depot can give 97 per cent, of maximum, service at, say, Is. 2d. a mile for a three-tonner to-day, it is better for the owner to pay i it than, on attemptang to control work to which he s a stranger, to find out after two or three years that his cost is only Is. °id. -but his performance not more than 80 per cent. Conversely, some owners may get the 97 per cent., but at a total disclosed cost in the end of—for such a case—is. 4d, per mile.
The successful trader is usually the man who places the—to him—uncertainties elsewhere. He pays to get rid of them. He knows, then, at what cost he is working—knows exactly. Ho is thus enabled to concentrate upon his own job, at which he can make as much money in a, given time as—or more than—the expert depot manager can out of him. There are, of course, large numbers of users of commercial motors whose businesses are big enough for them to pay their own motor-transport managers. Their occurrence is higher to-day than it will ever be in the future, and that because of the effects which will flow from the extension of the depot plan, conjunctively with local maintenance. We have the greatest confidence in this forecast ; all the portents are in the direction of greater co-operation. Makers, agents and users must pull together. Each for himself is too wasteful. Centralized local repairs, supplies and supervision will provide a key to open a flood of new business and connections.
There is money in it, we repeat, for everybody. The manufacturer adds to his reputation and lowers his sales expenditure ; the depot man can show, over a range of vehicles, a clear average profit of £100 per machine per annum ; the user may pay from fd_ to lid. per mile moreo on the face of things, according to size of vehicle, but he saves that apparent " extra " at least twice over in other directions.