It’s a tough job but...
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... someone has to do it. And if you do, do it smartly. That’s the advice from those in the know in the tipper world
Words: Louise Cole The lure of having your own truck and running your own show is a powerful one. However, there are two sets of traps for the unwary. One is the huge burden of business responsibility – however good a driver you are, the regulatory pressure, accountancy and strategy needed to run your own firm is an entirely new skill set. And the other is the sector you choose – we’ve been talking to the tipper sector, traditionally a hard business for hard men.
The tipper sector is associated with quarries and construction, bulk aggregates, scrap, coal and agriculture. Any driver coming to the sector fresh needs to choose carefully based on local job sites and the range of available employers – some of these loads can be used as secondary incomes or backloads, but by no means all of them, and most clients will have restrictions in place.
Keep it local
Whatever you choose, this is a job where local work to local drops is essential. If you already know that your nearest quarry is 70 miles away, forget it – the fuel bill will make it unviable.
The major problem for anyone entering the sector now is the lack of margin. Ray Engley, head of technical services at the Road Haulage Association, says: “As an owner-driver starting from scratch, you may find it OK if you see it as a lifestyle rather than a business. But aggregates are a very low-value product, which cost more to move than it is worth – coal is a dying industry. The cereals industry is a little better, but you must be part of an assurance scheme and even that isn’t well paid.” Engley adds: “My advice to someone wanting to start in tipping now? Try it in five years’ time instead.” We spoke to owner-drivers who work for various outfits and the advice varied. There are those, like the subbies featured in this article, who made a living and found the advantages balanced against the risk. Then there were others whose only advice was: “Don’t do it.” “I wouldn’t recommend it to anyone,” said one, who wished to remain anonymous. “It’s hard to make a living.” Another said that it was easier to survive as a one-man band without premises or workshop – the rates from the work would not sustain such overheads, even if you only ran a handful of trucks.
With the scars of recession fresh in everyone’s memory – and often bank balance – we heard stories of business failures; of long runs that made no money but felt better than idleness; of being owed money; and of the endless waterfall of regulation, which seems to pour on the top of these guys’ cabs.
To be fair, we also heard of employers who showed great loyalty to their subbies; who worked hard to keep them afloat; who pay on time and at a fair rate.
The reasons behind driver shortages
The logistics industry as a whole faces an acute driver shortage, but this could be felt most keenly within the tipper sector. A Skills for Logistics (SfL) report, ‘A Looming Driver Shortage? The Evidence Behind the Concerns’, published in April, outlines several reasons the logistics industry has more vacancies than candidates for driving positions: global growth, demographics, work attractiveness (or the lack of it), qualification levels and EU regulations.
Research into the driver shortage tends not to be sector-specific, but for the tipper industry we could add two major concerns to this list: the narrow geographic profile for subbies, who need local runs to make the work economic; and the exceptionally high investment levels needed to get started.
On top of this young drivers coming into the industry will find the costs of training, an O-licence reserve and the £100,000 usually quoted for a vehicle, unmanageable unless they have exceptionally strong personal or family finances. Banks are probably at their least receptive for new businesses in high-capital, low-value sectors.
The age profile of tipper drivers is high. Building supplies giant Hanson says: “Upwards of 20% [of subcontractors] are over 55 and there is a real shortage of young men coming into the sector.” In logistics as a whole 48,000 or 16% of LGV drivers are 60 or above, according to SfL.
Tarmac’s transport manager (West) Brian Lomas says: “The average age of contract hauliers as of December 2011 was 51. We have more hauliers in the West over 65 than under 30. It’s more difficult to recruit younger hauliers unless they have family financial support – as with the housing ladder, they struggle to have the deposit funds available to obtain a vehicle.
“With the additional costs and steps involved in obtaining an LGV licence, there are fewer people training themselves than happened in the past.” Moreover, there has been a decline of 31% in LGV tests passed over the last four years. The Driver CPC may also cause problems – SfL says that only 8.2% of drivers across the industry had qualified and received their card by April. Anecdotally, the tipper industry says that many older drivers intend to retire rather than train.
“There is going to be an LGV driver watershed in 2014 with the requirement for all drivers to hold the Driver CPC. Hauliers tell me some older drivers are not willing to qualify,” says Lomas.
Taken together, this may mean that the tipper industry needs to plan for running more in-house fleets in the future. Our current owner-drivers could, as Hanson’s Dave Hembery suggests (see box), be the last generation to work in this way. ■
TOP TIPS IF YOU WANT TO BE A TIPPER OWNER-DRIVER
Many would say: if you have a good job now, don’t leave it.
• If possible, have three months’ money behind you on top of your O-licence reserve. It can take a few weeks to get your first money. You need to live and provide for contingencies. Remember, as a business, you can run out of profit and survive; run out of cash, you die.
• Get a good second-hand vehicle. Some loads rip up the metalwork, so pay great attention to maintenance.
• Do your book-keeping regularly, and write down every cost, however small. Not only will it reduce your tax bill, but the only figure that matters is profit.
• Compliance is everything. From the word go, commit to legality, keep a record of your walk-around checks, etc, as if you were still employed. Proving compliance is only slightly less important than doing it.
• You have no control over rates in the tipper sector, so watch your costs like a hawk – minimising fuel is the difference between making money and making a loss.
• Some entrepreneurs deal in their own loads (for instance, becoming a distributor of sand to the construction industry) so they can make a margin on both goods and transport.
JOHN QUINN
Durham-based John Quinn was an employed tipper driver with Young’s for five years, but when the company was bought by Hargreaves 17 years ago he bought a vehicle off his father-in-law and set up as a subcontractor – and he’s been doing it ever since.
“It will never make you a millionaire,” he says. “But it’s a decent living; I can pay my bills and answer to no one but myself.” He says Hargreaves has worked hard to try to keep them in work, even during the depths of the 2009 recession, although that meant long trips all over the country where fuel costs ate through profit. “There are set rates for the job, and it was often third-hand by the time it got to us. There were days I went out and covered my costs.” The past two years have seen much more profitable work, however, taking several loads of coal daily from an open face in County Durham to Walsingham (roughly a 10-mile trip).
Quinn has a CPC qualification and has now done three parts of his Driver CPC. He is stoical about the regulatory side. “I just roll with it. My only grievance is that it’s guys like me who stuck to the old law who will stick to the new one, and the guys who have always broken it will take no notice of new laws either,” he says.
Quinn always drives a good second-hand Volvo, replacing it every four or five years. “Not the most economical marque, but the most reliable,” he says. “Having no downtime is important. But with the price of fuel now I may need to change just for fuel efficiency.
Would he recommend being a tipper owner-driver? “My advice would be if you can get a job where you clear £500-£600 a week with your tax and NI sorted, and you can close the door on it at 5pm and go home – don’t leave it.”
DAVE HEMBERY
Dave Hembery works for Hanson out of the Batts Combe quarry in Cheddar, Somerset. He’s been a tipper owner-driver for 31 years and says Hanson is a good company for an owner-driver to work for. “However, as with most of the quarrying companies, we get little say on rates,” he says. He would not recommend his job to anyone.
“When we started out, our employer, ARC, helped us – they sold us the lorries, paid our insurance. You don’t get help any more and you do not earn enough for a young man to pay a mortgage and support his family,” says Hembery.
The major barrier to entry, he says, is the cost of the vehicle – approximately £100,000. He says Hanson has a clear spec for health and safety, and brand reasons, and prefers fairly new vehicles. “The problem is you buy one vehicle, pay it off over five years, have a year’s grace and then start again. But there’s not enough money to save a deposit against the next, so you are never better off,” he says. “Added to that, between one-third and half of our income goes on fuel.” Hembery benefits from Hanson’s procurement power on fuel and pays for it direct from earnings, but says many drivers use a commercial card and have to pay every 10 days.
He can’t see young drivers having the money or backing to come into the industry. “I believe we will be the last generation to do this work,” he says. “I’m 60. Everyone working the quarries is my age. In a few years I think firms will have to decide whether to buy their own fleets because the subbies won’t be available.” Dedicated drivers get the first shout on work and Hembery says his location is fortunate. “The Hinkley Point Power Station [build] will give work for another 10 years I think,” he says.
CHRIS ANDREWS, C&N COMMERCIALS
Chris Andrews is MD of C&N Commercials. He started out as an owner-driver in 1982, and built up to 12 vehicles, working out of the Mendips, principally Halcombe Quarry. He says there is still a living to be made running a small fleet in the tipper sector, but profits have declined over recent years. “Rates for the jobs haven’t kept pace with rises in diesel,” he says. “We could do with a good rate increase.” The only way this could happen, he says, is for all quarries to raise their rates at once in order to maintain the competitive balance.
Five of his vehicles run for Tarmac, and holding a franchise gives him a distinct advantage in terms of getting work. He also says Tarmac tries hard to support its owner-drivers with a reserve fund to help them pay for repairs if they hit cashflow difficulties. “It’s also just negotiated with some of the vehicle manufacturers so that we can buy vehicles at a good discounted price, in order to encourage people to reinvest,” he says.
The sector faces a chicken-and-egg situation; he feels there is an urgent need for young drivers to enter the sector, but the barriers to investment are substantial and none of the client companies can afford to raise the rates for moving aggregate without losing their own competitive edge.
“I wouldn’t advise entry to the market unless you already have contacts in transport,” he says.
“You need regular hours and work. Anyone coming in should choose a company like Tarmac that will provide practical back-up. But you still need luck – with bad luck you can end up in trouble very quickly.” C&N runs its own workshops to prevent heavy repair bills eating through its profit margin.