F sale leaves all change
Page 17
If you've noticed an error in this article please click here to report it so we can fix it.
le by Brian WeatheHey
As news stories go, the sale of ERF to MAN was in the "Small earthquake in Peru—not many killed" category. The announcement barely rated more than a passing mention in the financial pages of the broadsheets. And, with the possible exception of Western Star's shareholders, there wasn't much for anyone to get excited about.
Spreading
After all, the sale had been predicted (and vigorously denied) for months. Yet the ripples created by MAN's takeover of ERF will keep spreading for some time to come.
The bare facts are as follows: having bought ERF in 1996 for £27.4m, Western Star has sold it to MAN for around £65m. It's also taking on some £40m of debt, so overall ERF is now valued at 1110m. In return, Western Star has paid £8.5m to MAN for the latter's Australian and New Zealand importer operations. What does that add up to for UK ERF operators—or, for that matter, British MAN buyers? In the short term, not a lot.
ERF has lost a North American parent and gained a European one. Its plans to build a new £25m production plant remain, as does its contract to assemble Isuzu trucks.
It continues to import its EP range from Turkish manufacturer BMC, and to build cabover tractors for Western Star for sale Down Under. And last but not least, managing director John Bryant stays in charge at Sandbach.
So no change there, then? Not quite. In its official press release MAN states: "As a result of the acquisitions there will be a natural integration of components from the MAN Series production. This will lead to substantial synergies."
Hardly earth-shattering news: after all, ERF already uses MAN cabs on its ES range. So what's next? Bigger MAN cabs for bi er ERF trucks? MAN engines in ERF tractors?
Bryant offers an enigmatic response to questions about where that "synergy" might lead: "It doesn't necessarily mean new power units, but doesn't necessarily mean Cummins engines either. There are two ways of doing things, but we've no intention of having only a badge difference."
For the moment, Cummins advocates can stop holding their breath. There's unlikely to be any shift away from ERF's traditional Cummins/Eaton/ Mentor driveline philosophy—a point underlined at the recent Amsterdam Truck Show by MAN board director for sales and marketing Gunther Dietz: 'We don't want to change those engines, because we feel that the engines have special customers and we don't want to change that. We have to keep ERF as an independent brand."
However, greater component sharing is surely inevitable, even if it doesn't extend to engines. ERF is expected to unveil a new product shortly and, according to Bryant, it will have components supplied by MAN. "But how many. and what, have yet to be finalised," he adds.
By far the most significant fact arising out of the takeover is that ERF will extend its product range below its current 14tonne GVW limit: good news for ERF distributors keen to break into the bigger volume 7.5-tonne market. But how that will happen remains unclear.
When quizzed at the RAI show as to whether MAN might offer its current L2000 rigid to ERF dealers, but with a Cummins B Series and ERF grille, Dietz replied: "Of course it will be based on the L2000 range, but I don't think we will install Cummins engines. That's not yet defined." But he continued: "Everything is pos if it makes sense." Howevel off-the-cuff remark does reflect company policy for I Truck & Bus UK boss JU Knorpp, who says "definitely to the idea of ERF dealers si L2000, adding: "We will have i ferent product and organisat It's anyone's guess as to MAN dealers will feel about ing to face yet another corm tor in the already overcroe 7.5-tonne market—never r one from the same family.
Intriguing
A more intriguing questio whether one and one ri does make two. ERF and ti both have similar stakes oh of the 15-tonne-plus mar Add them up and, accordin Dietz: "Together we will 16%, and our intention is move this market share."
Knorpp is equally bul "We will take more," he s "This move is good for t brands, and will increase confidence of UK buyers both. And with what we t with our new product we increase that market share.'
Whatever the final tigi Knorpp is adamant that t the MAN and ERF brands organisations in the UK ' continue to remain distin separate. The MAN and I dealer networks will remain unaffected".