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'Firms must get lean and fit to survive'

23rd May 1975, Page 18
23rd May 1975
Page 18
Page 18, 23rd May 1975 — 'Firms must get lean and fit to survive'
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Which of the following most accurately describes the problem?

John Darker reports the BAR conference in Jersey

kT JERSEY last week a panel liscussion on "Surviving inflaion" took place against the ;rim background of the British kssociation of Removers' defiit of some £10,000 last year. ['he new president, John Tar;ey (F, Mudd and Son), said the nanagement committee would re meeting urgently to coniider measures — including figher subscriptions — to imrove the finances of the Assoiation.

Opening the debate, Geoff 'ygall (Pickfords) said the ndustry was full of people 'ho blithely charged too little • recoup their costs, regard ess of the worsening effects of nflation. The public could not re blamed for the offer of lowx)st removal services. His felow panellists, Jack Harley Grace Bros, Australia), Frank Heywood (Evan Cook Ltd), and fen Berger (Alfred Bishop and o n Ltd) gave their views and mswered questions.

Mr Harley said Australian .:onditions were difficult, if not mite as bad as those in the UK. Removers down-under ivere involved with legislation :!overing prices, consumer tffairs and trade practices and with the added complication of 3tate and Federal action eating nto dollar revenues. Labour rates were likely to be ,ncreased automatically on a quarterly review basis and all this made it hard to keep abreast of costs. His firm's philosophy was to "put vehicles on grass" if they could not be profitably worked. 'Profitless volume" — work with marginal profitability — was ruthlessly pruned. There was a regular review of staff costs.

Mr Heywood said the only sensible attitude was a determination to survive the difficulties of inflation •and not waste energies bemoaning the economic climate. Firms must get lean and fit.

To the suggestion that BAR should set up a clearing house to arrange back loads for members, Mr Heywood pointed out that over 60 per cent of removals were of less than five miles. Hence backloading possibilities were strictly limited to perhaps 25 per cent of all movements. Possibly the shortdistance removals would be as cheap using horses!

Mr Berger suggested that a removals vehicle would soon cost £12,000 and the difficulty of generating revenue on this scale was obvious. It was possible to get loans now, but did it make sense to invest money to save labour?

Mr Max Godfrey, chairman of the Inland Group, asked Mr Heywood whether BAR could help in advising members on the taxation aspects of vehicle purchase. Mr Heywood said the Inland Revenue was wedded to Historical Accounting and various professional bodies were considering inflation accounting techniques. He understood the Chancellor would seek advice from the CBI and accountants on taxation policy before long. Meanwhile, any operator of vehicles who failed to set aside out of taxed profits enough money to renew vehicles was on a suicide course.

Replacement costs

Michael Scott said his firm wrote off one-fifth of replacement vehicle cost per year, but found this too costly, and a figure of one-seventh was now being used. On Mr HarIey's point on "profitless volume" he felt that many removers took on work at rates which covered variable costs but ignored the fixed-cost element. This was a throat-cutting exercise.

Mr Harley stressed his agreement. "We see no merit in carrying a load to pay for drivers' wages and fuel. You must include a proportion for overheads otherwise you get revenue but no profit. We say let others fight for this work."

Geoff Pygall, said that individual vehicle costing was complicated by the age of the vehicles, at least in theory, since the oldest vehicles were of less value in the books_ He wondered whether BAR's costing advisory scheme should be geared to reflect the traditional quiet and busy seasons in the removals trade.

In a discussion "FIDI and the International Remover" led by Fred Hoult, chairman of the Overseas Group of BAR, panel members Ted Philp, Michael Gerson, Michael Scott and Hugh Wilson (general secretary of BAR) covered points arising from a proposed FIDI tonnage list, the new FIDI statutes, a bank guarantee system, and the possible formation of further national groups within BAR for representation at FIDI.

The pros and cons of an FIDI tonnage list were explained by Michael Scott. The advantages included reciprocity—encouraging affiliates of FIDI to cooperate more constructively; performance measurement, enabling affiliates to measure their own performance against others; traffic and market information, data on traffic flows, revealing growth stagnation points; corporate strength, helping international removers to indicate their true strength in negotiation; staff motivation, stimulating improved performance; mutual protection, improving the commercial prospects of FIDI affiliates vis-a vis American van lines; better control, leading to improved quality of service and enhanced value of Flat increasing identification of affiliates with the organization.

Disadvantages listed included cost—more staff would be needed at the FIDI secretariat and hired computer time would be costly; administrative incon venience—n o t insuperable since the two European van lines found it possible to submit tonnage data; accuracy— there was the risk that exaggeration or dishonesty might discredit the list; initial credibility—time needed before the system was fully established; and disclosure—small affiliates might be reluctant to disclose how little goods they shipped for fear of injuring their business, Ken Berger was strongly critical of the labour charges made by member firms to one another. "I think it is immoral to charge above the rate you charge the public," he said, quoting rates as high as £3.25 an hour charged by a Liverpool member.

John Tarsey, the new president, gave a vigorous presentation of the facilities of the Association and the wealth of experience of officers and paid officials. He regretted that reports of council meetings were not always given at area meetings of the inland group he had visited. He wanted to see lively contact between members and area officers and headquarters.


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