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Worldwide municipah exporting in top gem
Page 50
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Britain's big three lorry manufacturers will have their hands too full facing Japanese competition to challenge Hestair Dennis in this field, Graham Montgomerie is told
ITH all the short-time working, :tended holidays and redunmoles currently affecting the < motor industry, it is often rgotten that down in Guildrd, Hestair Dennis has been loiering on with its work force )t only on full time but clocking ) regular overtime as well.
Dennis has not been without problems, however, as I und when I talked to the corn'fly's chairman and chief ecutive, David Hargreaves.
In May 1972 when Hestair took er Dennis,the Guildford.based mpany was losing money avily. At that time it was oducing an obsolete glass re cabbed 151/2-tonner, refuse Ilection vehicles, fire engines, a Mercury towing tug and of urse the lawn mowers. As vid Hargreaves put it "instant 3t aid was needed to stop the mpany bleeding to death." The first moves to save the tient were to halve the exist
site area of the factory and to I down the product range. corclingly, Hestair Dennis thdrew from the commercial ulage chassis business, sold towing tug to Marshalls of lifax and sold off the lawn mer business (thus losing the ya I Warrant).
This left the company in the inicipal market only. The next p was to take a good, hard ik at the future and the resulit strategy was to encompass main market thrusts: to update the existing chassis range leading to a new chassis with a steel tilt cab; to re-enter the double-deck bus market; to rebuild the Dennis export market which had dropped to 10 per cent (from a record 40 per cent); to get out from manufacturing a refuse vehicle under licence and have a Dennis designed unit; to re-enter the haulage chassis market.
kt about that time Dennis bene an enormous beneficiary Middle East money with the )ply of water tankers and fire engines which gave the company the profit cover to undertake further product development. Over a three-year period Dennis progressed readily with the company planning to launch the bus in'77 to be followed the next year by the new lorry chassis range.
Although the bus came out on time -the first sale was made in August 1977 — Dennis ran into problems in 1978 and lost all its export markets. Nigeria had over-bought and just stopped buying, in Iran there was a revolution, in Iraq there was a boycott of UK produced goods while in Libya there was a major reorganisation of the municipal authorities which resulted in a complete cessation of orders (in 1977 Libya had ordered 300 chassis).
This happened before the new product range was ready with the result that "Dennis staggered for a couple of years," as David recalled. The company is now increasingly profitable, however, with all the export effort going into what he refers to as "second-line developed economies" — Australia, New Zealand, Hong Kong, Malaysia, Singapore and Nigeria.
Hestair Dennis has no intention of being dependent again on volatile oil-based economies but in spite of this the company is still getting orders from the Middle East — "but that's jam," said David Hargreaves.
At the time of the Middle East boom, exports rose to 50 per cent of turnover and then slumped to 17 per cent. They are now up to 35 per cent but the Dennis aim is to reach 40 per cent and to hold on to that figure. So far there has been no noticeable falling off in export orders owing to the strong pound in contrast to other UK companies, but then it is possible that the orders would be even higher without such a strong currency?
So far the export strategy is developing well with Dennis getting refuse vehicles into markets where they hadn't been before — Hong Kong, Singapore, Malaysia and Libya are examples. The Hestair Dennis Phoenix refuse vehicle is being licensed for manufacture in Australia; it's a country which has seen Dennis go from zero to 20 per cent of the market in two years.
In June of last year the new road sweeper was launched via Eagle (another Hestair company) which David Hargreaves believes "is the most technically advanced in Europe." This will be exported direct to be followed by manufacture under licence in certain countries.
In the UK Hestair Dennis and Hestair Eagle have gone from 20 per cent of the municipal market to 60 per cent in just over two years.
Japanese threat
Hestair Dennis has carved for itself a useful niche in the commercial vehicle market, especially in the municipal sector as just discussed. I asked David Hargreaves, however, if he was worried that the big guns of Leyland, Ford and Bedford would be directed at the municipal market and what effect this would have on Hestair Dennis. He was not particularly worried about this possiblility and thought it unlikely, with his reason being the Japanese.
"The European based manufacturers are going to feel an immense draught," he said. "The Japanese threat is still only dimly understood."
David feels that the UK manufacturers must concentrate on volume to be able to compete with the Japanese on price and as such will not be particularly interested in moving into the small municipal sector. Indeed the big manufacturers will have enough on their plates as they strive for greater product rationalisation in the future.
"As providers of variety, there will always be a market for us," claimed Mr Hargreaves, who i very conscious of the role h sees Hestair Dennis fulfilling h the future.
"I say that we are makers c limited production runs rathe than a specific manufacturer one-offs," he said. In thi context, the definition o "limited production run" is a least 100 over a three or four year period. To this end, thi company has now eliminated