Frank discussions with the rent man
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Before truck manufacturers start complaining about how the big rental companies are unsettling the market, TLS chief executive Peter Roberts reckons they should look in the mirror. TLS's outspoken boss insists that the answer to all their problems lies in their own hands...
• by Brian Weatherley Peter Roberts, boss of rapidly expanding rental and contracthire company TLS, has a message for any CV manufacturer bemoaning the effect that truck rental companies are having on the market; Save your breath.
He's not losing sleep over it—and he's not going to take the blame for the departure of any senior executives who have their fingers burnt by any big rental deals. "Most definitely not! Everybody screams murder when the market goes down, but they don't scream when the market's up," he says. "And when they scream in Munich or Turin, well, we'll say the market's down pet! Wait until next year. They're all attracted by the volume and by the business—we'll keep their production lines going."
Not that he's unsympathetic to the plight of his suppliers: "We believe our relationship with the manufacturers is that of a partnership. If they're suffering pain then we all suffer pain, whether it's undue pain or not."
Manufacturers
But Roberts has little patience with any manufacturers who can't handle all those ex-rental trucks that return on buy-backs. "The remedies are there in place if they want to deal with the remedy," he says.
But if the manufacturers can't deal with them, wouldn't rental companies be better off retailing their own used trucks? "Most definitely nod" says Roberts. "You've got to ask who has the best ability to retail their three or four-year-old vehicles back into the market. The ability to re-market their products has to be their responsibility" So how does TLS view the manufacturers' attempts to muscle in on its turf with their own rental and contract hire operations? "Ws a logical development for truck manufacturers to control their product," Roberts admits. "And while some may have said 'we won't go in to Et', save for Leyland Oaf they're all touching it. Volvo is very much committed to it...we don't buy very many Volvos.
"One of the things manufacturers are NOT good at is utilisation of trucks," he adds. "They want to move metal and utilise dealers. They have difficulty absorbing it; that's to say, we have 1,000 people, where are they going to find those?"
Last year TLS's business grew by 17%; this year Roberts is looking for a 15% increase in turnover. Despite operating some 1,700 neavies, the bulk of TLS's fleet is still at the lighter end of the market—and that's where Roberts sees the greatest opportunities for growth. "The big issue is to drive full usage," he explains. "The core business is in the 3.5-7.5-tonne range. We've driven prices down predominantly for growth; now we have to get prices up."
As well as paying more, customers are also going to have to cover the cost of any damage they do. "Damage and mileage are immensely important," he says. "People who have been supplying vehicles to courier companies who have not been looking at mileage or lettings are in for a caning. We've got to price the job up...we can't write it off any more."
In terms of efficiency, TLS's fleet utilisation is running at 9293%. "That's about as tight as you'll get," says Roberts.
Opportunities
While rival contract-hire and rental companies have attacked the own-account sector, TLS sees more opportunities among big-fleet hauliers, especially those handling their own maintenance. *Our biggest job in the rental industry is to convert people from ownership to use," he says. "Too many operators still have too many costs, including things like workshops. What we'd like to do is put a team into those kinds of operators and drag those costs out. We can look very hard at workshop productviV Roberts believes that hauliers who own their trucks will come under increasing pressure to look at rental and con tract hire: "Business demands are placing an even greater strain on the people that are making a return, and the JIT delivery cycle is going to put even more pressure on that."
However, he's not looking for spot rental work: "It's not appropriate for our business and the equipment we run."
TLS is part of GE Capital, and so is TIP. Are there any plans to merge the company's truck and trailer businesses to offer a one-stop shop?
For the moment TLS's parent isn't saying much, but don't be too surprised if the magic word "synergy" hasn't already surfaced at a GE board meeting. TIP and TLS are already working closely together on "boundary-less selling"; the opportunity to look for further savings on a combined infrastructure must be very tempting. Very tempting indeed.
FACTFILE
• US's fleet comprises 30,000 vehicles including, cars, light CVs and HGVs.
• TIS operates some 1,700 HGVs.
▪ TLS has seven delivery points for truck rental in the UK.
E TLS enjoyed a 17% growth in its business during 1998.
▪ TiS plans to hike its
turnover by 15% this year. IN RS plans to set up a "Super Site" at Leicester with more than 1,000 vehicles on offer.