MARK RICHMOND & PAUL HODGKISS
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MD and operations director, Rhys Davies Freight Logistics
Baptism of fire
A management buyout just before the recession might seem the worst possible timing, but it has stood Rhys Davies Freight Logistics in good stead
Words: Laura Hailstone / Images: Nigel Spreadbury
A CYNIC MIGHT question if former Rhys Davies owner and chairman Gwyn Davies had a crystal ball when he sold the business back in 2008 to his operations director Paul Hodgkiss and MD Mark Richmond.
The deal went through in April of that year, just as the economy started to nosedive. But Richmond and Hodgkiss both agree that the tough climate did them a favour. “It only gave us one way to look,” says Richmond. “It forced us to understand the business more clearly.” Hodgkiss says: “We honed down on the costs, which set us up for the proceeding couple of years and I think we’ve come out stronger.” A ‘battening down of the hatches’ is how the pair describe the initial period post-buyout. This included putting on hold a trailer replacement programme for 12 months and scaling down a couple of depots, resulting in only a handful of redundancies during the heart of the recession. These lost jobs have since been added back into the business. “Our headcount now is ahead of where we were pre-buyout,” Hodgkiss adds.
Quietly confident
Surviving the recession and managing to stay proitable gave the pair conidence in their management of the 60-year-old business. “It makes us more forwardthinking for what’s coming now,” says Hodgkiss. “Times are hard, but we’re still doing well.” Richmond is equally cautious: “We’re performing steadily, but there is still a dificult economic background. Competition is going to remain ierce.” One of Richmond’s key concerns is the “crazy pricing” going on in the industry. He cites an example of a larger competitor that continually dropped its price during a recent tender process.
“It started out a big double-digit cheaper than us, but we still kept the job. We were able to retain the job based on our service and approach. As an industry we should be conident in the service we provide, rather than always allowing the prices to be talked down as the irst and only option to improve competitiveness.” Richmond says that sometimes they have to walk away from a job because someone is doing something silly on fuel. “A local customer recently told us to take off the fuel surcharge because someone round the corner was offering him a price without fuel. They either hadn’t costed the fuel properly or were just taking the risk. As an operator, why would you take the risk on such a big proportion of your costs that you cannot control?” asks Richmond.
Rhys Davies does a lot of work to understand its competition and their pricing. “There must be some people that just can’t add up,” he muses.
Looking after the pennies...
Keeping a tight rein on costs is something that seems to have rubbed off on the pair from their time spent under Gwyn’s management.
“Gwyn was a trained accountant so always had a focus on the money and performance of the business,” says Richmond. Hodgkiss says the key thing he picked up from Gwyn was that with margins so slim you have to watch every penny. “And also react quickly because you can’t let things drag on. We get the margins every Tuesday morning for the previous week, by vehicle, and see where we go.” Richmond adds: “With weekly reporting, if something is going out of kilter you’re on it straight away. That’s why we’re more responsive than some of the bigger guys. We know exactly where every penny on every vehicle is accounted for, so we know the lorry in Wolverhampton had a good week, and the lorry in Wakeield had a bad week, etc.” Asked which sectors are core to Rhys Davies, Richmond pauses. “We’ve always said that we don’t want to be pigeon holed into particular areas. And, yes, the countermand to that is ‘how can you be good at everything?’ But we feel that if we’re carrying foodstuff or a chemical, we’re applying the same sort of controls and standards; some of the most dangerous stuff we do is food concentrates.
“If we say our core strengths are food, industrials and chemicals and someone comes along and asks us to do health care, we’re not afraid to turn our hand to anything. We’re good at understanding what the customer wants, whatever they do,” he adds.
Growth
An expanding area for the irm is its carpet distribution network. “We’re the leading independent distributor in this area, with a shared user system, fastest service, and best prices,” says Richmond, in a rare moment of immodesty.
“But in terms of growth, we have to look at what we can add to that model. We’ve become seen as a irm that understands that sector and that’s spilling over into palletised jobs for loor tiles, delivering to independent retailers.” Sticking with the subject of growth, it is certainly something the south Wales irm is striving for but only what it terms “proitable growth”.
“You’re not going to get a headline out of us saying ‘we want to double turnover’ or anything. We could double it in a year if we really wanted but it’s about being proitable,” says Richmond.
Turnover for 2011 will come in at about £36m (up on 2010’s £34.8m). “We know the network’s capable of £40mplus but it’s about having sustainable, proitable growth.
“If we’re saying we’ve got nine sites, well where are the areas of the country we could develop into? Where could we do more in? It’s about building on what we’ve got already,” he adds.
“Sometimes we’re not that well understood as a national carrier with a network, so we’re looking to recruit people in the South East and the North to go out and canvas for new business. It’s a cost to the business but an investment in the long-term.”
With an evident strong handle on the irm’s costs, it’s safe to say Richmond and Hodgkiss are not going to lead Rhys Davies to become one of the many casualties in the industry. n
CAREER HISTORY
Mark Richmond: started life working for a regional haulier before joining Christian Salvesen’s graduate scheme, working on a Marks & Spencer contract. Moved to Alliance Unichem, a pharmaceutical wholesaler, where he ran the central operation in the Midlands and also handled the fleet management. Joined Rhys Davies in 2003 as general manager at Cardiff.
Paul Hodgkiss: commercial trainee for Redland Group’s pipe division, ended up in distribution. Moved to Rennick Freight, which was a casualty of the previous recession. In 1991, joined Rhys Davies as general manager when it opened its second depot in the Midlands. As the firm opened more sites, Hodgkiss moved up to operations manager and then operations director.
Rhys Davies
Founded: 1952 by Rhys Davies, father of current chairman Gwyn Davies HQ: Taffs Well, Cardiff Depots: Andover, Hampshire; Birmingham, Haydock, Merseyside; London, Newton Aycliffe, Durham; Rainham, Essex; Whitburn, West Lothian; and Wakefield, West Yorkshire Staff: 460 Drivers: 220 Fleet: 180 (artics and rigids), predominantly Daf, Mercedes-Benz and Volvo Recent investment: £3m two-year fleet renewal programme