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The number crunch
Page 78
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CLEAR Consulting Consolidation is corning to the European trailer industry if not today then definitely tomorrow. That was the unequivocal message from respected market watcher Gary Beecroft of CLEAR Consulting who asserted: "Of all the UK and Irish manufacturers, only SDC fits into the European 'volume manufacturer category making 5,000 -10,000 trailers a year." And with nine European trailer makers producing between 2,000-5,000 units a year and 14 building 1,000-2,000 units Beecroft warned further restructuring of the trailer market is inevitable, including the UK, as there are simply too many contenders of an 'awkward size'. "People are still coming into this business on very small returns and while that will delay consolidation it won't stop it" His remarks clearly connected with Gary Bulley, of Bullwell Trailer Solutions. Following the recent statement from Chinese trailer maker CIMC that it intends to become the world's biggest trailer maker by 2008, he reckoned: "Among those 14 manufacturers making 1,000-2,000 there's got to be some 'targets' there."
Robin Dickeson of the SMMT was similarly blunt: "Consolidation will bite this industry just as it has other sectors, and it will bite commercial vehicle bodybuilders too even harder! The big will get bigger and the smaller ones will only survive by doing niche things very well. It's those in the middle who are really at risk because they're producing just a 'standard' trailer which people like Schmitz, Kogel or even CIMC can produce just as well and a lot cheaper."
ArvinMeritor's Dan Edwards thought: "There've been several changes already affecting the UK industry-one major rental fleet (Transrent) going out of business added circa 9,000 rental trailers back into the marketplace." He noted too that consolidation in the UK market had already started with the purchase of Vallely by the Newell &Wright Group (owners of Lakeland Tankers), Karl Davies for GE/TIP reckoned the domestic manufacturers' one 'defence mechanism' was the ability to build products specifically for UK operators. However, he cautioned: 'If you look at the balance sheet of the middle ground manufacturers they aren't that great. Consolidation has happened in a massive scale on the operator side with people like Exel and DHL and it's going to happen in the trailer industry."
POWERHOUSE PERFORMER Look at the latest trailer registration figures for Western Europe and it's easy to see who is the powerhouse performer. "Last year in Germany for the first time we saw over 50,000 trailers registered," reported Beecroft. "The German market is really dominating the scene in terms of transport equipment." The German trailer makers' firepower is certainly impressive. "Schmitz did about 46,000 last year, Krone about 30,000 and if you add in twelve or so thousand from Kogel those three companies between them make 40% of the trailers in Western Europe."
Right now the annual demand for new trailers in Western Europe is running at around 180,000 units a year of which some 150,000 are artic semi-trailers. "All of the growth in the market for the last 20 years has been semi-trailers," said Beecroft. While most economic forecasters won't predict more than 18 months ahead (no doubt preferring to claim they were right afterthe event) Beecroft believes that the traditional roller-coaster trend in the new trailer market will be "Exactly the same. We've had the dip down in 2002/3 and I expect the biggest growth in the transport market will be in 2008/9 again around the 180,000 mark followed by a downturn in 2011."
Jost GB's Roy Taylor reckoned: "We see it differently. Our business is planned in for 2011 when we see it still booming for our products. We see the END of 2011 when the downturn will come."
Beecroft admitted that the joker in the pack remains the German market: "It's difficult it to see it staying at that level in 2008/9, but what we don't know is what effect a slowdown in Germany might have in other European markets" Meanwhile, Haldex's Bernard Clancy felt: "Based on the continuing build rates we've had over the last 10-years, we've seen a reduction in the UK trailer parc. In the past our perception has been that it's around 250,000 trailers. Yet if you look at the last recorded VOSA figures only 240,000 trailers are being MoT'd which is a damn good idea of what's going on in the marketplace. The parc is getting younger and is actually reducing so what's happening?"
Beecroft wasn't convinced. "On average the parc increases by around 2% per year it very rarely goes down. But I'd agree with your figure of 240,000 although if you go back I think you'd find it was previously actually lower" GETTIP's regional sales leader Damian Wall had no doubt that: "What you don't see in the UK anymore is any major rental or leasing player buying massive volumes of UK-built trailers. We've come out of a depreciation policy which was holding us back from buying replacements-we were locked into a 12-year period. It's now 5-6 years depending on the asset. We do buy now but not in any degree to what we used to and! think the same is probably true for others."
FP&S Parts' boss Darren Weeks wanted to know: "Why have those replacement cycles shortened amongst the trailer rental giants?" Wall's response was illuminating. "People didn't want to have a 10-12 year-old-trailer and without putting lots of refurb work in you had a trailer you couldn't rent. Also components start going after 5-6 years and if you hold on to a trailer for too brig you have to start replacing it bit-by-bit anyway."
After forecasting that the new UK trailer market will rise again to around 20,000 units over the next couple of years, Beecroft also predicted: "Longer, heavier vehicles will definitely come, Germany is conducting trials with LHVs, they're already operating in the Netherlands and Scandinavia, Belgium will try them too. So if the UK sits on the fence we'll miss out on an opportunity to possibly run these vehicles right through Northern Europe."
Michelin's Paul Kendrick neatly summed up the current frustration over a lack of LHV trials. "A colleague of mine who works for Michelin in Holland where they've obviously been using this vehicle for quite a while can't understand why we're so slow in issuing some sort of licence that would allow this kind of vehicle to be run under controlled conditions in the UK and why we're taking so long in moving in this direction."