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HI RE AND

ft MA/ARDS

• Britain's biggest CV rental company is entering a new era. BRS Truck Rental has boomed in the eighties — during the past two years it has grown at 10% a year. Now the company is setting its sights on the 1990s with a huge research project which will have a major bearing on the future development of the British truck rental market as a whole.

Managing director Ron Irons says: "Our success has come from concentrating our minds on selling the product, backed by good local management." Irons is co-ordinating a 210 million investment in computers which will improve BRS's service and increase the control it has over its business.

Before the computer is installed, however, BRS has to determine the directions it wants to take; hence the research project. Marketing director George Inch says: "What the research brings out in the next three or four months is very important. From the results we will be able to decide upon future projects. "BRS changed pretty dramatically from the 1960s to the 1980s but we have been fairly static in terms of new product in the 1980s apart from contract hire. We can't rely on that for much longer.

"The biggest threat to BRS comes from sizeable companies like TNT. I'm sure it won't be long till they go for contract hire. They will be a threat. So far they're not because they're in different markets," says Inch. "The other threat comes from manufacturers backing dealers on contract hire at the smaller end of the scale. We can see a potential pincer movement, but we pride ourselves in terms of providing added value and better facilities. That's not enough, however, so we have to look at future projects.

"BRS had a very good first quarter, and we are forecasting a turnover of 050 million this year. We are still a major provider of profits for NFC — we're the banker of the NFC — and we intend to keep it that way," says Inch.

To some extent the future direction of BRS is easy to predict. The company aims to develop its rental business with premium equipment, including reefers. There are ambitious plans for trailer rental and for the 12-month Contract 12 rental package which bridges the gap between rental and contract hire.

NEW AREAS

BRS also hopes to win contract hire business in new areas, such as the municipal and PSV markets, while the company's vehicle maintenance operations are being reorganised and repackaged to win more external work.

Truck rental remains its mainstay. "The concept of our rental fleet was born out of excess capacity on our contract fleet," says Inch, "then we started renting out and grew very quickly." Today BRS has a fleet of over 2,500 rental vehicles, and this should grow to 3,000 this year.

In the past two years growth in vehicle rental has mirrored the buoyancy of the economy — but it has also reflected a change in the attitude of transport managers. Inch explains: "In years gone by rental was considered a distress purchase. It was considered an indication that the transport manager had failed, The attitude now, particularly with contract hire, is to plan rental vehicles into your operations to meet peaks. It is fashionable and it is good management practice."

He reports that the average rental period has increased, typically to three months. BRS keeps its rental vehicles for an average of two years and this, says Inch, helps the company to respond to any downturn in the market.

"We took a kick in 1980 when the market turned down. Now we legislate for a downturn through the regularity with which we buy vehicles," he says. Vehicle buying is organised centrally to maximise the company's buying power, but the vehicles at each rental depot are chosen by the depot manager. "Rental is very democratic," says Inch. "It is centrally resourced but run on a decentralised basis. The local depot managers decide what sort of vehicles they would like to have. They should know: they're the guys who do the business.

They will decide whether their local market suits premium vehicles or whatever, and we will negotiate with manufacturers, dealers and suppliers."

The rental market is becoming more sophisticated as transport managers come to appreciate the value of rental vehicles for meeting peaks in demand, says Inch, and BRS is continually upgrading its fleet to satisfy customers' requirements.

More and more vehicles are fitted with tail-lifts or load handling devices such as Hiab cranes. At BRS Northern's Bolton depot the company is launching a £3.5 million refrigerated vehicle rental scheme. There are 16 reefers at the depot, but if the trial proves successful another 54 will be acquired over the next two years.

"BRS Trailer Rental has a fleet of 3,000 trailers and as such is 'fifth in the market," says Irons, "but if you asked people to list people renting trailers BRS would not be there." He feels there is plenty of opportunity for BRS to build its image in the trailer rental market and to that end Colin Barr, formerly marketing director at TIR, has been recruited to lead BRS's trailer rental operation.

"We needed to recruit an expert," says Irons. "Colin is one of the top trailer guys in the marketplace. His brief is to take the product and contribute to the bottom line."

NUMBER ONE

BRS is not yet aiming for the number-one spot in the trailer rental market: "We have such a wide base we can offer additional service," says Inch. "We are not necessarily there to attack the other guys in the marketplace. We want to be more efficient and that might mean a change in identification, though the BRS image would be retained."

Because of the degree of decentralisation of BRS's rental operations the local depot managers are given a great deal of responsibility and Inch readily admits that recruiting the right local depot managers can be a problem: "Rental is all about the people who run it locally. Their knowledge of the local market is crucial: you can only grow so many people. Meantime you've still got to eat."

A fair proportion of rental managers are graduates recruited direct from universities. They are all given the chance to develop their managerial skills: "The guys who come in as graduates tend to find themselves in positions a lot younger," says Inch.

BRS organises contract hire as a separate operation: "Contract hire is a product in its own right," says Inch. "We feel rental and contract hire are two different products, and to be effective they can't be offered in the same way. Our contract hire business is done by our regional companies." That said, BRS does offer an extended form of rental from its rental depots. Under Contract 12, hirers contract to hire a vehicle for 12-months. The price is pitched below rental and above contract hire. Inch says up to 50% of customers renew after a year or sign full contract hire deals, The average contract hire agreement lasts for between three-and-a-half and four years, says Inch, but some agreements last for up to six years, depending on the customer's requirements. In recent months BRS has had one or two coups, clinching contract hire agreements in new market areas. These include the big contract to supply vehicles to British Coal in South Wales and a recent contract to supply draw-bar equipment to the Consortium for Purchasing and Distribution, which buys goods in bulk for local authorities.

"We are looking very carefully at the public sector," says Inch. "We have won one or two pieces of business there. The market is potentially huge, but a lot depends on how you get in there and whether you make any money out of it."

ARMY EXPERT

BRS has also taken on a former army expert who is charged with developing relationships with the Ministry of Defence. So far the army's interest in contract hire has been largely limited to cars, although Ryder Truck Rental has a contract to supply Mercedes-Benz tank transporters to the British Army on the Rhine. Inch hopes the armed forces will take the same route as the public sector and look more closely at contract hire.

He is convinced that there are also openings in the PSV market: "We would be very interested in talking to anyone about acquiring buses through bus contract hire and the like."

BRS has been speaking to a number of PSV operators, many of which use BRS workshops for the servicing of their Metro Cammell Weymann buses. BRS and MCW clinched a deal 18 months ago under which BRS was appointed to service and maintain MCW vehicles from each of its 160 engineering depots. "From here it's a natural extension into contract hire," says Inch.

The sheer size of BRS's network of engineering depots provides it with great opportunities to provide contract hire with maintenance and contract maintenance, but it also creates its own marketing problems. The National Freight Consortium's former fleet maintenance arm, Fleetcare, which was closed after losing its contract with British Rail, is now part of BRS.

There are plans to relaunch the entire maintenance operation, possibly under the name Servicentre, but neither Inch nor Irons is convinced they have got the package right yet. The launch date has already been postponed twice, and Inch is concerned that the name "suggests to clients we repair washing machines".

Much of the investment in computing will be aimed at improving service levels on the maintenance side of BRS's business: "We will be needing very advanced information technology," says Inch. "What needs it most, and where the customer wants it most, is in engineering. The system will provide accurate, up-todate contracts and raise service levels. Engineering is the nucleus of our business — when a vehicle comes into be repaired we will be able to cost and compare jobs and test efficiency as well." Inch hopes that the introduction of computing to the maintenance operations will provide almost instant costings on the BRS fleet. The company's maintenance operations currently account for a turnover of around 255 million (one seventh of BRS's total turnover). Half of the work is on the BRS fleet, the remainder on external contracts.

Many people would assume that haulage forms the basis of BRS's operations, but this is not the case. In fact Irons and Inch are doing their best to lose the haulage image: "Our haulage work has been renamed and restructured — we don't have a product named haulage anymore," says Inch. "Haulage is highly susceptible to downturns in the economy and it's not the sort of business we want."

Instead he feels that BRS is involved in "freight management". This, he explains, is "where we have our own resources and we move goods on behalf of clients . virtually dedicated to clients' products.

"We are trying to give a non-haulage image to BRS — we are making every effort to get away from the haulage image," he says.

Part of BRS's current research programme will be dedicated to evaluating the company's image in the marketplace, both with its own and competitors' customers. The research will also examine opportunities in Europe.

"I have no compunction at all," says Inch. "If we can get into Europe before 1992 then we will do well. . in certain ways we are already exposed to European competition from other contract hire companies who have come into the UK from Europe."

BRS is also investigating the legal and fiscal rules surrounding vehicle rental in each European country: "We will go into Europe through the least line of resistence," says Inch. "France is France, Germany is Germany — it would be a bit arrogant to suggest that we could go in there and do it better than they are already doing it. We need to go in with the BRS products and management and to utilise the local people's understanding of their market. Our philosophy is correct in the UK — the depots know their local market and expand accordingly. That same philosophy has got to be at least 50% right in any country."

Back in Britain Inch is concerned by suggestions that the HGV driving limit will be brought down to 3.5 tonnes. "The image of BRS in terms of our range is for heavy vehicles," he says, "but the majority of the fleet is 7.5 tonnes and below. If the HGV limit were dropped it would have a braking effect on our business. I can understand the motives for the change. . . but I would hope to be in aposition to lobby against it."

LJ by Richard Scrase