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In today's testing economic climate, most family-owned hauliers are just

2nd April 2009, Page 32
2nd April 2009
Page 32
Page 33
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Page 32, 2nd April 2009 — In today's testing economic climate, most family-owned hauliers are just
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Which of the following most accurately describes the problem?

trying to survive — but McCulla Ireland believes it has a formula that will help it thrive.

Words: Ian Griffin / Images: Craig Eccieston & Ian Griffin Famity-owned hauliers often seem to have the worst of both worlds. They get criticism from their customers for not being able to handle all their requirements 'under one roof' — and because they are usually small to medium-sized businesses, they can find it difficult to get the best deal from their suppliers.

But not all family-owned hauliers are the same. Costs, cash flow and customer service are the three areas successful family-owned operators such as McCulla Ireland are focusing on now more than ever.

Despite today's unusually difficult business environment, it's a strategy that appears to be paying off for the Lisburn, Northern Ireland-based company. Since 2001, turnover for the firm, which celebrates its 40th anniversary this year, has grown by 800% to £10.5m, yet had debts in 2008 totalled less than £400.

Profitability is not a dirty word here, and the company has used the fruits of its success wisely. According to managing director Ashley McCulla: "All profits have been invested back into the business."

Building work has started this year at Lisburn on a 20-pallet 'microwave' defrosting chamber in the cold store: also under construction arc an additional bay in the workshop and a new office block complete with showers and a gym for drivers and staff.

The McCulla directors claim to enjoy modest lifestyles and even buy second-hand cars for their company use. Company purchasing policy for the 56-truck fleet, which is dominated by Volvo FHs and DAF XFI05s, is to buy outright. While new Volvos and DAFs are used on Continental work and tend to be away for three weeks at a time, older trucks work closer to home in the UK and Ireland transporting for the food manufacturers that form the bulk of McCulla's business.

Financial foresight

"Failing to plan is a recipe for planning to fail for any transport business in times like these," insists director Brian Beattie.The company takes financial planning just as seriously as it takes customer service, he adds.

New customer accounts are strictly credit-checked before work for them begins. As a result, bad debts are kept at very low levels.

Although the company works hard to keep customers happy, the basic business practices of good financial management and cost control are fundamental to McCulla's success, says Beattie. This includes the scrupulous use of management accounts. Finance director Carol Thompson, Ashley McCulla's sister, reports that, by the 15th of each month, the firm has a full set of accounts and analysis for scrutiny by the hoard. These are presented in a user-friendly format with emphasis given to key ratios of leading costs expressed as a percentage of turnover and compared to monthly budgets.This allows them to spot exceptions and trends so they can take corrective action before it becomes an exercise in damage limitation.

There is no doubt that the McCulla directors are intensely proud of what they and their employees have achieved since the company was founded by farmer David Andrew McCulla four decades ago in the village of Drumbo, and understandably so.

In addition to effective cost control and cash flow management. the company's business model focuses on quality, personal service and investing for the long term — something which seems to run counter to the ethos in the ultra-competitive sector in which they operate.

The secret, they say, is their solid moral approach to business and their strong belief in the company. "Our word is our bond," says Ashley. "That's why customers stay with us for the long term." There seems little doubt that customers remain with McCulla Ireland largely because the firm cherishes the relationships it has built up over many years. It is a matter of trust and perhaps the kind of thing that family firms are very good at. However, no one at McCulla is complacent.

Tougher policing 0-licence compliance is strictly supervised-, Beattie has strong views on rogue operators and advocates tougher policing. However, he says Northern Irish operators

sometimes get a raw deal from VOSA,"Some weeks, every truck we own gets pulled by VOSA just because we are a Northern Irish operator. We should be treated the same as English, Scottish and Welsh operators," he pleads.

The first-time annual vehicle test pass rate for the whole fleet is 95%, and Beattie points to a W registration Volvo FM12-380 4x2 tractor unit, saying it has not had a single day of unplanned maintenance in its 800,000km life. Likewise a 2001-registered MAN TGA 410 XXL is the most reliable truck on the fleet, he says. Vehicle maintenance is handled by local truck dealers for the first two or three years via repair and maintenance (R&M) contracts. "TBF Thompson, the DAF dealer, is very good, as is Dennisons, the Volvo dealer at Ballyclare, The Ivccos are new and we don't have any experience of their backup yet," he admits. Volvo provides the best support on the Continent, says Beattie: "Volvo Action Service is as good as it gets, it's second to none, although DAF is very good, too. It's Volvo's reliability that scores for Continental work. That's why we generally prefer the FHs for use in Europe.

"We can't afford to have any problems with carrying timed deliveries to and from Germany, for example, where the retailer might only give us a one-hour window to hit in Ireland, including ferry crossings, before rejecting the load."

After the R&M contract finishes, the trucks are looked after by McCulla's four in-house mechanics led by Rocky McCandless. Finally, after seven years, they go on to 'all Ireland' duties as they work south and north of the island.

With McCulla vehicles making 9,500 ferry crossings each year between Irish, UK mainland and Continental ports. there is a pressing need to scrutinise and control costs. In fact. says Beattie, ferries are McCulla's biggest expense.To get a handle on the costs, sailinp are broken down into peak and off-peak as some off-peak services offer discounts of around 12%. Illustrating the importance of keeping on top of the figures, Brian Beattie tells CM that a 1% increase in ferry prices can add £300,000 a year to McCulla's costs. In addition, pound-to-euro exchange rate fluctuations have made some ferries too expensive to use.

Ferry big savings

Traffic Planner Karl Smith has been appointed to manage the day-to-day control of ferry costs, says Beattie. "We load all the crossings into our Mandata Manpack system to make sure we are not being charged for someone else's movements. The appointment of Karl has helped identify areas where ferry costs could be cut.

"We cannot ask our customers to pay more so we have to be as efficient as possible. Karl identified one particular boat that was £150 more than another from the same port. His analysis helps avoid these unnecessary costs. We are also sharing the information with the traffic team. It's a way of sharing info about best practice with everyone."

McCulla's traffic office is open 364 days a year and works three shifts. Customers can view their own loads, PODs, Customer Discrepancy Reports (CDRs) and accounts through an online secure portal on McCulla's website. "It's a way we can be proactive in communicating with customers and saves them having to phone us to find out where a load is and when it will be delivered."

Key to this is the R:COM telcmatics system used by McCulla (see panel above). •


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