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A change of fortune

24th January 2008
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Which of the following most accurately describes the problem?

TLS was once a problem child for parent company GE. But the rental firm may now be coming of age, as well as

coming into profit. Louise Cole speaks to

chief executive Carl D'Ammassa.

It's cold, grey and... well, Stoke-on-Trent. And then TLS marketing director Duncan Frame utters a phrase seldom spoken in :.arnest: "Stoke is a really exciting place to be.3ut all the TLS Vehicle Rental guys are excited you can see them brimming with it. because hey have reached a key point in the company's inancial rebirth. A new strategy. new depots including this one in Stoke — and the new ensation of making a profit.

Much of this turnaround in TLS's fortunes s down to the efforts of chief executive officer -farl D'Ammassa.Although he has been in this )ost only since October 2007,he was previously hief operating officer, and clearly knows the company inside out. TLS was bought by US giant General Electric (GE) in 1998 and, in 2001, its new parent charged the firm with a £50m loss when its discounts didn't meet internal accounting standards. Although nothing illegal had occurred, it was a scandal that reached the mainstream press.Ami so TLS was doubly cursed — not only failing financially, but doing so in the public eye.

Back into profit

This year the firm expects to post £5m prolit on an I:80m turnover and D'Ammassa has decided on a 'back to basics' approach, now its five-year turnaround is complete. The rental fleet will comprise cars through to 3.5-tonne vans and then jump to 7.5-tonners, tippers, dry freight boxes and 18-tonners.

He anticipates plugging the middle ground with 5-tonne and 6-tonne vans: "We find customers want either to move up the weight range to 18 tonnes, or to carry as much as possible without having to train their people for LGV licences," he explains.

So how is this back to basics? "Previously. TLS grew very fast and we were all things to all people — we offered ambulances, waste collection vehicles, lots of things that are better offered by specialists. Not any more," says D'Ammassa. In addition, sister company GE Plant Hire, which D'Ammassa also heads up, invested badly and indiscriminately in expensive bespoke kit which couldn't provide a return on investment, leading to a E2m loss.

While vehicle rental will remain the biggest revenue source for TLS, it will no longer necessarily be the biggest customer draw. As is the current trend, TLS is repositioning itself as `a fleet management company'. This translates as offering a full service — third-party maintenance, mobile fitters, telematics and contract hire.

-Our offering is now joined up'. Customers have lots of entry points— they can come in and cherry-pick exactly which bits of our services they want," says marketing director Frame.

The contract-hire fleet D' A mmassa expects that by the end of 2009 telema ties will be contributing Elm to turnover, maintenance £4m and rental £85m. Its contracthire side has been slightly neglected in favour of rental, but he is determined to increase the current fleet of 1,500 contract-hire vehicles to 6,000-plus by the end of 2009. -Our customers want contract hire and, as part of GE, we can offer it," he reveals.

Each of the 28 TLS locations has its own workshop. plus there are four sites for its Broadway Motor Company which will retail us used vehicles. "Doing our own maintenance and retail keeps our overall lifecycle costs low. We'll have eight Broadway locations by 2008, spread throughout the UK," says D'Ammassa.

GE Plant Hire will also play its part. D'Ammassa intends to exploit the 72 locations which the plant-hire business has throughout the UK in order to expand TLS without incurring extra cost. "There is significant overlap between the customer base for GE Plant Hire and TLS in terms of construction. But they will remain separate cost centres because, while the plant hire is 80% construction, TLS services a wide community outside that market." That includes local authorities, facilities managers and SMEs (small to medium enterprises).

Stoke is the third new depot opened recently, and the second that will share its facility with plant hire. D'Ammassa intends to open eight more along the same lines. The Stoke-on-Trent depot has 135 vehicles on opening, but will run 250 by the end of 2009.

Site sharing is about 'cost avoidance', says D'Ammassa. After a chequered history, GE now has exceptionally high standards of corporate governance and D'Ammassa is aware he cannot therefore open a new site nearly as cheaply as his rivals. "It would cost us £150.000 to open a site with a portable office," he says ruefully. "That's just for the tests and searches, such as deep core soi. samples. which GE demands. Its approacl to health and safety is extremely laudable hut a drag commercially.

Learning curve "There are two things that will get yot fired outright from GE," he continues "A breach of integrity and a breach o health and safety. It's that important."

TLS has undergone a fairly steel learning curve in the last live years; it: regional teams had good local roots bu little sense of unity, and the two regiona managers (covering North and South were overstretched.The head office tean has now been overhauled and the numbe of regional managers raised to five; th. local teams are now being reintroduced ti the benefits of being one big organisation.

"Local roots and relationships are importan and all of our depots are expected to giv something back to the communities they ar operating in. But we're also having initiative which emphasise the sense of teamwork acres the board.On example is last year's Childre In Need appeal, for which TLS depots togethe raised £5,000 through various initiatives — on driver even had the GE symbol shaved into th back of his head.

Vehicle utilisation has also been a priority."

was far too low; we're now pushing 80%. Bi GE's standards for corporate responsibility at very high so, with our in-house main tenanc we should be able to get our fleet uptime t 90"/0," says D'Ammassa.

"I don't believe anyone else in the rent. market offers the range of services we do no he says."We'll still be number two to Northga in fleet size, hut number one for service." •