York weathers the storm
Page 14
If you've noticed an error in this article please click here to report it so we can fix it.
THERE has been so much talk of businesses emerging leaner, trimmer, and more efficient from the recession that one could be tempted to regard it as more of a cliche than a fact. But, according to York Trailer deputy managing director Jim Davies, it is certainly true about his company, which is achieving 70 per cent of its 1979 business with only one third of its former labour force, writes ALAN MILLAR.
Two-and-a-half years ago, York had over 2,000 employees, and notched up sales worth £39.4m in an overall market of around 18,000 trailers. The market is now down to about 7,000 trailers this year, and York only employs just over 650 staff. Yet that number is growing slowly as conditions permit, and last year sales totalled £26m, helping to cut a E4m loss in 1980 to a £0.8m loss last year, and Davies says the company is back in profit. He is cagey about York's current market share, saying only that it is "in excess of 25 per cent", but says this is higher than it was in 1979.
He believes the company will go on growing, but doubts whether its trailer business can get much further than it is at present. "Honestly, I don't think the market will ever get back to where it was in 1979," he says, and adds that it is not costeffective to try to go for a greater share of the present market.
Indeed, new trailer prices are still depressed and as an example, Davies says that a 40ft platform trailer sold for £4,700 in 1979. "The price is better now than it was in 1980 or 1981, but we have still to return to the 1979 level."
To survive, York has slaughtered its overhead costs. Not only has the labour force been pruned, but the company has steamlined itself. Four sales forces have been combined into one which will talk to any customer about any product, and which is on hand to deal with potential inquiries on such subjects as new regulations, vehicle specifications, and market predictions. Inventory levels have been reduced by £1 .6m to match current manufacturing activity, and all trailer manufacturing has been concentrated on one factory at Northallerton.
The new home market efforts (see p19) to be unleashed later this year will help consolidate the gains made so far, and come on the back of an impressive assault on export markets. Much of the credit for this lies with Davies who recognised that York, which manufactures most of its axles, suspensions, hydraulic hoists, landing gear, and fifth wheels, was ideally placed to meet overseas demand for completely knocked down trailer kits. It is probably fair to say that York would not be around today if it had ignored this market, for exports accounted for 34 per cent of last year's turnover.
According to Davies, trailers are difficult to export, as the cost of getting them to their customers exceeds their value. "There is no way we can sell a low-technology trailer to a man in Rangoon, where the transport costs are as high as the purchase price."
But it is another story exporting components which are worth about 10 times their transport costs, and York has suc ceeded in establishing itself in otherwise impenetrable markets where it can sell a complete package including knowhow.
Nigeria's restrictions on imports have hit a market which, last year, was worth E3m to York, but the company is especially proud of its efforts to increase sales in Saudi Arabia, where tipping trailers are being assembled in partnership with a Hino importer. The first semitrailer has been supplied to Saudi, and production, using York axles, suspensions, and leg gear will start towards the end of this year.
A similar, but smaller arrangement has been working in Dubai for some time, and from early next year, trailer assembly starts in Qatar. There are assembly operations in Nigeria and Kenya, and over 3,000 axles are sold to a South African distributor every year.
York recently took a 30 per cent equity stake in York Trailers (India) Ltd, the largest trailer company in the sub-continent. -The Indian trailer market is very small at present, but 32.5 tonners will soon be legalised there, and York is confident that demand will take off, and make the company an attractive one to sell in around 10 years.
The export effort nearer home is also of importance to York, which continues to exhibit at the Frankfurt and Paris motor shows. It will be at Paris this year, but is continuing to steer clear of the British show at NEC in October. Davies still believes the company was right to get out of the combined show at Birmingham, as neither the venue nor the combination of cars and commercials suits its purpose, even although it costs more to attend the foreign shows.
The immediate future of tt British trailer market is still haz although the constant delays reaching a decision on increel gross weight limits are making necessary for many operators 1 place orders regardless of a future. Davies says it is wrong,1 any case, to believe that traili manufacturers will earn a IN nanza when weights are ii creased, although he does su: pect that an increase will hel inject a little life into ttie appa lingly depressed trail, r rent. market.
York has begun to II mor tri-axle trailers to o ,rator which are either prE ;red t
bank on a future ghts ir crease or are antic ,ating th switch to gross we,jht taxatio in October, when there will be £470 saving in vehicle excis duty paid by operators runnin three axle trailers with 32.5 tor ners, rather than two-axle units.
On the other hand, a plan t start fitting sideguards to a trailers built from the beginnin of last month was abandoned the last minute, when it becam clear that Government policy o the final sideguard specificatio was far from finalised. Th proposal for a one ton static loa strength requirement would ad half a ton to the unladen weigt of a trailer, according to Yorl and in Davies's view would b sufficient to withstand the inpact of an Exocet missile, neve mind a bicycle. Not only is thE unnecessary, but he says might even kill the cyclist, an York now plans to wait until final decision is taken by the De partment of Transport.