ERF wishes on a Star
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by Brian Weatherley • Keeping ERF alive, let alone independent, hasn't been easy. Ask chairman Peter Foden about the recession and he's likely to say: "Which one?" At the last count he's been through four. "We've had a few hair.raising moments," he says. "Each time we've scraped through. In the eighties everybody expected us to go bust," It's clearly had an effect on Foden. "You can't go on forever going from boom to bust—it wears you out. You get home at night and say 'what the bloody hell am I doing?'" However, the fight for survival has now ended. Last
month the Canadian heavy truck maker Western Star ended months of speculation by announcing its takeover of ERF (CM 23-29 May).
So how does Foden feel now? "Relief and sadness." he says. "We're no longer a so-called British independent, but we're still a British manufacturer."
On paper the two companies go together well. Both are relatively small assemblers of "component" trucks (see tint boxes) with the same suppliers and both need to grow beyond their traditional markets.
They obviously have a lot in common. But exactly how was the marriage arranged? Last September Western Star executives travelled to Cheshire with a proposition. It needed a cabover tractor to sell alongside its existing range of bonneted trucks in Australia and SE Asia. And it wanted ERF to build it. "They talked about cooperation on a vehicle sold through their own organisation, badged as a Western Star," says Foden. The deal was struck and work on a prototype began soon after.
The Western Star calxwer is effectively a South African-spec ERF EC 6x4 standard-height sleeper cab but with its front axle moved forward 330min to meet Australia's local weight regs. Power is provided by a Euro-2 14-litre Cummins rated at either 465 or 525hp. The rest of the driveline consists of a Fuller gearbox and Rockwell back bogie on Hendrickson steel or air suspension. The first three pre-production models roll off the line this month.
As work on the prototype progressed, the relationship between ERF and Western Star entered a new phase as Western Star's boss Terry Peabody saw an opportunity to gain more than just a truck.
"He was quite surprised how sophisticated we were," says Foden. He recalls Peabody asking: "Do you think we ought to talk commercially?" So Foden went to Australia to see the operation. It was during that visit that Peabody popped the question "Can we get involved financially?"
However, it wasn't until May this year that a deal was finally struck: "We clicked at the time of the RHA dinner at the Grosvenor House. He rang me in the hotel and I said providing we get a decent deal we'll go with it," says Foden.
ERF's senior managers, well aware of the talks, were unanimous in their support. "There were no dissenters," says Foden. Part of that "decent deal" was looking after the future of the company's 700 employees; Foden retains an unashamedly paternalistic attitude towards the shop floor: "You've got to think about employees as well as shareholders. It may be a bit old-fashioned, or naive, but I see some sense in it." Peabody has promised no job losses as a result of the deal.
So what exactly has ERF achieved? Foden has no doubt that it's a merger of "continuity as opposed to a hostile takeover where they'll kick us around". Given that both companies buy from the same suppliers there are clear economies to be gained: "It's been interesting to compare prices," notes Foden, "in some cases we've been buying very well!"
Shared R&D is another area of benefit as ERF managing director John Bryant explains: "There's tremendous synergy there including electronic solutions, vehicle control and instrumentation." Could that synergy include offering Caterpillar or Detroit Diesel engines alongside Cummins and Perkins in UK models? "It's always a possibility," reckons Bryant, "it's no secret that we've got a Detroit Diesel-powered tractor running around in the UK."
However, he insists talk of major changes is premature: "ERF is still here as before but with a stronger financial background, and we believe both companies are going to benefit."