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Sweeping up exports

27th June 1981, Page 44
27th June 1981
Page 44
Page 45
Page 44, 27th June 1981 — Sweeping up exports
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Which of the following most accurately describes the problem?

Hestair Dennis has learned many lessons about selling abroad. John Durant has been talking to David Hargreaves

TAIR DENNIS has improved xport performance in recent s; it's a comparative minas a vehicle manufacturer, ex manufacturer of lawn vers, but has not cut its staff ng the recession. What are hances for growth?

any manufacturer can find ixport market in a number of ntries — USA excepted — it le specialist; if any particular ducer needs to find a number -iarkets in order to produce in volume, it's the specialist. owever, it should always be

icult to export any commod into a country where there is trong home industry making t product, though the Jape ;e have accomplished this i with a vengeance.

k) where should a British ;cialist vehicle producer look? ?. man in the street would )bably suggest: The Third )rld, developing countries, d the old white Commwealth.

Our nearest neighbour, ;nee, on the other hand, is a :h market: poised econoically, economists say, to ertake even Germany. These o countries are tough, chauvi nistic markets. Nevertheless, many exports from other industries have escalated there since we joined the European Economic Community. However, the French and Germans have strong vehicle manufacturing industries.

Belgium and Holland? To export there, traditionally parts of the world supplied with heavy equipment from other Continental countries, is an accolade for a UK firm, hopefully providing a springboard.

So it must be praiseworthy for Hestair Dennis to sell its Phoenix refuse vehicle in Belgium and Holland now. How has it done it?

"The Phoenix is the best refuse vehicle in Europe," David Hargreaves, chairman of Hestair Ltd holding company and chairman of Dennis, told me. "It has the largest capacity hopper of any European refuse vehicle; it has modular packaged electrics to speed maintenance; and works at very high compaction ratio of 41/2 to 1.

"We are demonstrating this vehicle in Denmark at the moment and hope to penetrate into other European markets. We are pleased that Greece has joined the EEC and look forward to Spain and Portugal joining, too."

Since I spoke to Mr Hargreaves the strength of the pound has dropped, and this may help the firm's export prospects. So far, except in Europe, the pound's strength had not seemed to affect the company adversely, he told me.

In reply to a question he did say that our Board of Trade is not as aggressive as the equivalents of some competitor countries over export credit guarantees. Long-term credits are particularly important for some markets — Africa and South America, to take two huge examples.

However, nearly every week foreign visitors make their way to the company's headquarters in Guildford in Surrey. And in the past 12 months Mr Hargreaves has visited Hong Kong, Singapore, South Africa, Malaysia, Libya, Germany and Taiwan.

He sees his role in this field as twofold. The first is to assess the general climate and see whether money should be invested, say, to send a demonstrator and representatives out, and secondly where there is a developing market he sees key customers once a year. The first role concerns market research, and the second customer liaison.

"Now we are looking at North America — to see whether a suitable licensee should manufacture the Phoenix there.

"And the United States bus market is intriguing," he continued. "There's been a major revival in public services in America. A regular trickle of double-deckers is sent there by our competi. tors; German double-decker( are in Los Angeles.

"We are watching this marke , very closely."

All this sounds encouraging While most British manufactur ers and the rest of the transpor industry are hit by redundancie and short-time working, Hestai Dennis has kept its workforci not only on full time, but els' regular overtime (CM May 9) i worked.

Besides the Guildford plan there are two other factories those belonging to its SiStE company, Eagle, in Warwick an Leeds. Hestair Dennis and Eagl are virtually one firm now, h said. Total employees numb( around 1,100.

So could it cope with mot orders? "We could increas capacity by 60 per cent," said r+, Hargreaves. "With the aid of n bats?'' I asked. "Curious' enough, we are investigatir just that," he replied. One up • Hestair Dennis. And if it do( buy, I gather it won't be from tt Japanese. Quite right. Th( never buy anything from us.

One point in particular whii Mr Hargreaves asked me to g over about production, and I a glad to, is to dispel any idea HD is a one-off producer. But it does handle limited runs — at least 100 vehicles over three or four years.

When, with the aid of a merchant banker Hestair gained control of Dennis, now a public company with shares widely held, in 1972, exports amounted only to ten per cent of turnover; sales revenue was £5.2m. The Eagle figures were: sales £700,000 including £200,000 from exports.

Two years later came the oil crisis and they began to sell in large numbers to the Middle East; that trade peaked in 1978 when total sales reached £25m — but what a turn round: of that figure £141/2m came from exports.

In those early years Hestair Dennis had halved the site area of the Guildford company, which had been losing money, and had cut down the product range (and sold the lawn mower business complete with Royal Warrant). It was left in the municipal market only. Its strategy was to update the existing chassis range; reenter the double-deck bus market; build up the Dennis export market; get out from manufacturing a refuse vehicle under licence and have a Dennis designed unit; and re-enter the haulage chassis market. The first bus was made in 1977.

Difficulties came in 1978/79 and five major markets were lost. Iraq boycotted British goods; Iran had a revolution; the small states of The Gulf, and Nigeria, had over bought; and Libya re-organised its municipal services, resulting in a halt to buying. Hestair Dennis turnover was down to £20m — exports plunged to £41/2m.

So the company redirected its strategy away from the Middle East towards more developed ind less volatile economies like hose of Australia, New Zealand, -long Kong, Singapore, Malay;ia and the Caribbean, but also lung on to Nigeria and Libya.

As a result of this redirection if policy, exports should mount to £14m again this year vith the total turnover of the two rms reaching £42m, assisted by a-entry into the single and ouble-deck bus markets oupled with the success of the ew ranges of fire appliances nd refuse vehicles.

It was now also realised that 3ere is an enormous difference etween export selling and Jilding an overseas market, he tid. In the past they had worked 3rd to sell abroad without de3loping markets on a long-term isis, something that cannot be )ne without putting one's own people into the territories. Hestair Dennis has now three men in Africa, one in Hong Kong and one in Singapore, he said, with plans to double that number in a couple of years. Next year representatives would be resident in Australia and New Zealand.

"I am totally devoted to the view that we must have a continuous presence," he said. "It is no use just visiting — and good agents are essential, too. A major lesson learned is that we must be prepared to finance sending demonstrators abroad; we have a bus on demonstration in Singapore now. The total cost, with a service engineer and so on, is an investment of around £80,000. But a buyer won't spend £60,000 on equipment without trying it."

So far, he said, 450 vehicles had been sold in Hong Kong in the past five years of which 400 are buses; approaching 350 vehicles had been sold to Libya in the same period, all municipal vehicles — skip loaders, refuse vehicles and road sweepers. In Trinidad, the fire service had been virtually re-equipped with 45 vehicles. Nigeria had taken 100 vehicles.

At the moment, he said, they are free to put almost any engine or gearbox in vehicles exported, but he is concerned in case more legislation abroad should be introduced similar to that of South Africa where heavy duty is placed on these components if they are not made there. That could make life very difficult, he said.

Engines installed now, he said, are the Perkins 6354, T6354, V8 540 and V8 640; Leyland 402 and 698; DAF DK1160V (bus); Gardner 6LXB, 6LXC and HLXB (horizontal underfloor); Mercedes-Benz V6 0M421; In

ternational Harvester D358; Rolls-Royce Eagle; and a Fiat.

The company's competitors? In fire engines there are two companies smaller than Hestair Dennis. They are Rosenbauer (Austria) and Camiva (France); in America there is FMC; from Scandinavia, Volvo; and of course Magirus Deutz and Mercedes in Germany.

The Japanese are not yet very strong in special vehicles but their presence is being increasingly felt; Hino, for instance, is in the Caribbean — the Japanese sell fire engines in the Far East and a cesspool emptier in the Middle East.

"Like all in the motor industry we are very concerned about the Japanese," he said. "We do not accept the view that they are guilty of dumping; they are simply more efficient and have a high level of capital investment per man. We will have to work extremely hard to protect our Far Eastern markets. Already a Japanese fire engine manufacturer and bodybuilder assemble in Singapore."

Among municipals, he said, the main competition comes from France (Berliet), Italy (Fiat chassis and Calabresi body) and the USA (Neill Dempster and Peabody). In buses it's Leyland, MCW, Volvo, Scania, Mercedes and MAN.

Big names, most of them, that have been around a long time. So too, actually has Dennis: it's still selling quite a lot of spares around the world for vehicles up to 45 years old. They've certainty proved to be a manufacturer of reliable and long-lasting equipment. So many British firms of the 1930s are no longer in existence. Hestair Dennis intends to get ahead of the game. It's the best way to invest in survival. Next step will be selling buses for export in kit form. We'll keep you informed.


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