FR: back from the brink
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By Brian Weatherley
FREIGHT ROVER'S return from the brink of bankruptcy in 1982 to profitability in 1984 has been nothing short of remarkable. Three years ago the company was making enormous losses. Its 1,200 workers were on a two-day week. The Common Lane plant was outdated and the old Sherpa van had a major rust problem.
Today FR is set to make a profit of over £5m for 1984 on sales of £90m, according to the Birmingham Evening News. A record 14,645 vans were sold last year. The trend is certainly continuing; February's sales of 1,389 vehicles means that for the seventh successive month FR has exceeded the sales and market share figures for the same month a year before.
Managing director George Simpson has a down-to-earth approach to his company's revival: "We're going to face an extremely tough time over the next two to three years, but we now have a strong base and we don't see any reason why we shouldn't keep going."
FR is finally reaping the rewards of the £30m investment plan set up in the early Eighties by former managing director Tony Gilroy. This reequipped the Common Lane plant with a new assembly line and paint shop which began producing the revised K2 Sherpa van in 1982. This was followed in late 1983 by the IV1T210 or wide-bodied Sherpa, which has taken FR into the 2.83.5 tonne gross vehicle weight or PV3 van sector for the first time.
It is the wide-bodied Sherpa range that has played the most significant part in FR's renaissance. Despite a static market in 1984, the MT210 has gained an 11 per cent share in the PV3 sector, reflecting the continued polarisation of buyers towards vehicles at the maximum 3.5 tonne 0-licence limit.
George Simpson commented: "We got our business mainly in 1984 from MT210. It was a completely new market sector for us and we were able to capitalise on that and make gains with it."
But, given the static market, where is FR's business coming from? According to George Simpson, it is British manufacturers who have lost out in the 3.5-tonne sector. "Ford and Bedford have both suffered by our entry into the market."
FR's continuing success in selling vans to fleet operators has been underlined recently by the £14m Telecom order for 2,350 Sherpa 255 chassis cabs and the £750,000 order for 52 Sherpa 350 vans from South West Gas. Between 60 and 65 per cent of FR van production now goes to operators with fleets of 20 vehicles or more.
In 1984 the company decided to play on this strength by setting up a special fleet sales division under Rory O'Connor. This, says George Simpson, has been "extremely successful in bringing new customers."
Early last year, Freight Rover introduced the revised 2.5 litre Land Rover diesel engine as an option in the wide-bodied Sherpa. This engine is proving popular with larger fleets and has done much to erase the bad memories associated with the old LR 2.25 litre diesel.
The 2.5 litre diesel wide-bodied Sherpa is currently leading the company's export drive. It is this drive "which will be a key part of our strategy", says George Simpson. "Over the last two to three years, we have been a totally dedicated UK company with five per cent or less going for export, but with the advent of the MT210 with the 2.5 litre diesel, we have gone into France, Belgium and Holland and will later be selling in Denmark and Spain."
Although the existing Sherpa van range, particularly the smaller K2 models, will remain in production for the time being, FR has "an aggressive set of proposals to improve the current range, both for drivers and owners, later this year with fairly significant revisions to both van ranges."
Autumn changes to the Sherpa van range will help FR take some of the sting out of the new Ford Transit launch expected early next year. George Simpson foresees this as being "the most important thing in the UK market during this decade." The timing of the Sherpa revisions, therefore, is "not totally accidental", he admits.
Although major inroads into the UK van market have been made by foreign manufacturers such as Renault, George Simpson rejects any idea of matching their "competitive pricing". He feels the losses made by some manufacturers selling lower-priced vehicles should be viewed against FR's own success.
"Renault lost over £160m this year. Their vans are priced lower than most British vehicles in the UK market. As long as the French Government can afford that situation, we have a very difficult situation to face up to. But there is no way that FR can afford to sell vehicles at a loss and we are not going to chase them on price. I believe the management changes at Renault will see a rise in Renault prices if financial sense prevails."
Common Lane is currently producing 450 vans a week on a single shift. Freight Rover is unusual among UK manufacturers in offering a wide variety of models with factory-fitted bodywork, such as Luton vans and dropsides. The advantage of this policy, according to George Simpson, is that operators have a single Freight Rover warranty covering both the chassis and bodywork.
To relieve its dealers of holding too many variants, FR supplies many of the specialised variants from its own buffer stock.
Several proposals to improve significantly the FR van plant are currently under consideration. So too are changes to the dealership set up to allow Freight Rover to develop its service organisation further and become independent from Austin Rover which currently carries out FR's warranty processing.
Freight Rover is also taking steps to improve its image and "is now at a stage where we have to get the company and its products better known". One method being used is football sponsorship.
Although currently the second best-selling van manufacturer in the UK, Freight Rover is still a long way behind Ford with its massive 38 per cent market share. But FR's steady growth during this year will be watched with keen interest by all manufacturers in the UK van market. And with good reason, for to quote George Simpson, "FR has come a long, long way".