08.10.2007

Seminar with a difference

In September, IPAF organised its first ‘summit ‘ type conference in continental Europe.

With the Brussels-like tag of ‘Europlatform’ it was held in Basel, home to IPAF’s continental HQ. Around 90 delegates heard a variety of speakers cover a wide range of management and safety subjects with some provocative and stimulating presentations.
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Europlatform attracted a good turnout

The conference was opened by Kevin Appleton, CEO of the Lavendon Group, taking a look at the different strategies that access rental companies follow and making some useful suggestions on yield management. Appleton claims to have gained a first hand insight into the success and failure of a wide range of different strategies from having looked at dozens of companies as part of the acquisition programme that he has led at Lavendon.

He contrasted the rapid growth high leverage, low overhead, young fleet approach of companies focused on short term ‘profit and loss’ success with those following a slower steadier growth, mixed age fleet, longer term strategy of others. His experience suggests that the happiest owners are those who have built their businesses steadily with an eye on service and long term growth. According to Appleton they generally have a good deal more equity and a better business with a higher value.
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Kevin Appleton

His view is that while depreciating the fleet more rapidly and selling lifts off at three to five years can seem more profitable and certainly be tax efficient, this is only true when markets are strong and used lift prices are high.

Appleton maintains that depreciating lifts over a longer period and retaining them in the fleet for most of their economic life will produce a better return over the long haul while building a higher ‘enterprise value’ as well as creating a business that can sustain market downturns.

Lavendon’s experience with Gardemann,- the German company that it acquired last year - has certainly coloured Appleton’s view on this. Gardemann operates a very structured, almost lavish, maintenance programme keeping its machines in tip-top condition with frequent inspections and rectification together with annual refurbishments.

The pay-off comes from lower downtime, better customer service response and significantly longer economic life for the equipment.

His final comments to other rental companies were: “There is no short cut to creating value. A long term future is likely to belong to businesses run on a cautious and consistent basis.” He added: “Keep your machines for longer and spend more on maintenance.” Probably not the message manufacturers want to hear?


Markus Schnyder, safety engineer at Suva, the Swiss health & safety authority and insurance company, asked the question ‘Do you know what happens to your mobile elevating work platform after you have handed it over to your customers?’
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Markus Schnyder

The ‘drift’ of his presentation was that too many users are simply not trained properly. As an illustration he posed the question ‘how many users know how to operate the emergency descent on the lifts they use?’ and ‘How many lifts go out with an operators manual, so that at least the user can find the information?’

He firmly puts the responsibility for this in the rental companies court, on the basis of:
a) Moral and ethical reasons
b) Commercial motivation and
c) Legal duty.

Some suggestions he makes include:
- Offer your customers operator training
- Define a minimum standard for the handover and familiarisation of the MEWP. Instruct your personnel, and support them in the event of a problem during handover.
- Create a written agreement with the customer for safe work practices, clearly stating the safety policies that must be followed, such as cordoning off the machine, using safety harnesses if it is boom etc.
- Make sure your customers and employees know how to operate the emergency descent system.
- Inform the customer about specific risks on the machine they are renting, possibly including them on a laminated check list with pictures, that is handed out and left with the equipment.
- Include a rental offer for extra safety items such as cones and safety harnesses etc.

His parting comment was: “It is better you do something beforehand, than wait and hope not to get involved in any investigations after a serious accident!”

Frank Klessens of mast climber and hoist manufacturer Alimak-Hek, talked about the economic outlook and prospects for the markets in which the powered access industry works. In his view they are positive, but he stressed that the industry can outperform the general market by stressing the efficiency benefits of powered access.
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Frank Klessens

His suggestions to the industry as a whole included:
- Push locally and internationally for clear and increased safety regulations
- Combine strengths in training and education. He claims that the statement “refer to the operators manual” in order to transfer liability to the end-user no longer works and is no longer an acceptable practice.
- Make sure that contractors look beyond the basic equipment rental cost. Encourage them to focus on the total cost of the project, taking benefits such as productivity, safety and efficiency into account.
- Establish a forum were manufacturers, rental companies and end-users can
meet and discuss what each expects from each other?

Esa Peltola of Bronto Finland covered the prospects and trends for the European truck mounted aerial lift market. He said that market prospects were positive with truck mounted lifts growing steadily.

He believes that while Eastern Europe and Asia are growing rapidly, Europe will remain the largest market for truck mounts. Peltola joined the previous speaker in stressing the need to focus on the total solution or package rather than the price quoted for a simple equipment rental.
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Esa Peltola

He maintains that although the truck mounted lift market is reaching maturity, with product differentiation becoming ever more difficult, there is still a significant job to do in educating potential users on the benefits of truck mounted lifts.

He encouraged rental companies to look at the full life cycle costs of a machine rather than just its purchase price, building on a point made earlier in the day by Kevin Appleton who claimed that Lavendon typically sees a downtime variance of between one and six percent between similar types of machines from different manufacturers.

Peltola also claimed that as larger companies consolidate the access rental market, small and financially less resourceful rental companies will be forced to exit. His parting comment was that there will be a general trend toward ‘a smaller number of companies and fewer cowboys, leading to a more serious market place’.

Darren Kell of the Tanfield Group, owner of UpRight and Snorkel, was due to speak next but a last minute visit to its new UK plant by a senior politician prevented it and sales and marketing director Richard Tindale stepped in.

Tindale talked about how Tanfield sees the prospects for the self propelled aerial lift market over the next two years. Overall the company expects strong growth over the foreseeable future, however this incorporates slower growth in some western European markets, counteracted by stronger growth in Germany and France following long periods of slow or no growth. It also predicts a rapid expansion in Eastern European markets, particularly Russia and some of the CIS states.
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Richard Tindale

UpRight expects the ongoing rental consolidation to spur demand from small to medium sized companies rather than depress it. Although it expects an over-supply in some markets to have a negative impact after 2008, it expects that this will be entirely offset by the growth in new markets.

In terms of manufacturer’s fortunes, UpRight feels that delivery times will ease. This will start with electric scissor lifts - a trend that has already begun followed next year with boom lifts. He claims that this is mainly from a softening in demand in the USA.

Tindale’s parting point was that UpRight expects competition between manufacturers to become a good deal more intense than it has been for some time, with opportunities arising for those that can work effectively with small to medium sized rental companies.

Tim Whiteman of IPAF updated delegates on the Clunk Click campaign to make the use of harnesses and short lanyards second nature in boom lifts, while discouraging their general use in scissor and other vertical type lifts.
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Tim Whiteman

The campaign has now gained a worldwide momentum with noticeable changes in behaviour. He cited the recent Platformers days event in Germany where in the space of 12 months, exhibitors had gone from minimal use to the point this year where around 80 percent were voluntarily donning a harness and clicking the lanyard in place before taking the boomlift controls.
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Teressa demonstrates how easy it is to put a harness on

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Et voila!

He urged everyone to join the campaign, to order the relevant stickers and posters and to spread the word.

Next up was Steve Shaughnessy of A-Plant who talked about what European Rental companies might learn from North America. Shaughnessy has the rare experience of having headed up both a major US rental company and the access division of a major European rental company and is thus uniquely qualified to compare the differences.

His presentation took a look back at the development of the North American market and how the rental industry was consolidated.

He reminded delegates that there had been an earlier attempt to consolidate the US rental market in the late 1980’s and early 1990’s when UK based companies such as BET and Vibroplant snapped up dozens of local companies. He discussed the reasons why this ‘roll up’ attempt failed while the more recent consolidators have had more success.

Shaughnessy highlighted the fact though that in spite of the recent consolidation process led by United Rentals, well-managed independent companies had continued to both prosper and grow.
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Steve Shaughnessy

He also noted that the American market for powered access is now by far the most important product family within the rental business and that unlike Europe, the powered access market has grown on the back of the productivity benefits that the equipment delivers, rather than on the back of regulation.

Pierrick Lourdain of Haulotte was considered by many to be the bravest presenter of the day, daring to tackle the thorny subject of manufacturers participating in the rental market in front of senior managers from some of Europe’s largest rental companies.
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Pierrick Lourdain

In spite of the sensitivity he tackled the dilemma head-on creating a notable hush in the room. He started out by stating what Haulotte consider to be some market facts:

- 80 percent of manufacturers sales are to rental companies.
- 75 percent of Mewps operate in the construction sector
- 70 percent of Mewps sold are either financed or guaranteed by manufacturer.
- 65 percent of Mewps delivered to end users are sold by rental companies.
- 70 percent of rental fleet book values are 20 percent above market values
- The funding capacity of the access rental industry is only sufficient to cover 15 percent of the investment level required over the next five years.

Lourdain suggested that manufacturers enter the rental market for one of three reasons.
1. Short term gain by seizing on an opportunity: he said that manufacturers were ideally placed to step-in when a rental company fails and to turn it around, and then sell it for a profit.
2. Mid term defensive strategy, defined as taking control of the existing financial exposure with rental companies in order to ensure an acceptable return on their (the manufacturers) investment. This includes controlling the ultimate sales to end users, both of used machines from the fleet and new ones.

The point he was making is that the rental industry effectively controls the powered access market by its ownership of the delivery infrastructure.

In a situation where the industry is unable to fund the capital intensive process and insists on passing most of the risk on to the manufacturer, then the manufacturer might as well take control of that process.

Adding to his belief that the European rental industry was unable to independently fund the growing demand for access equipment, Lourdain warned that a number of companies were facing bankruptcy in the near future. He hinted that in such cases where Haulotte had exposure it would be likely to step in and take control.

He stressed that the reason that Rental companies run into difficulties is down to three points.
1. Poor asset management in other words a poor fleet mix and age profile
2. Poor customer management – usually excessive exposure to construction
3. Inefficient process management – including poor IT

However he also reminded everyone that there is only one reason a business fails – the absence of cash!
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Lourdain warms to his theme

Finally he turned to the third reason why a manufacturer might enter the rental business.
3. The long term strategic reason driven by:
-The desire to limit exposure to rental consolidators and the cyclical construction market
-To better develop the parts and service business, where the day to day activity and cash flow of a rental operation helps support a network that can then be used to provide a high level of support for end users
-To expand the end user sales business and
-To help develop new markets where the absence of a rental industry curbs the growth potential of powered access.

While the presentation appeared to suggest that Haulotte might just be on the verge of expanding its rental interests, in reality it restated the strategies that the Saubots (the majority shareholders in Haulotte) have long expoused when it comes to dipping their toes in the rental market - if the rental industry in a given market was not playing its proper role in the distribution process, then Haulotte was quite prepared to step in and take over.

Secondly in developing markets where the absence of a rental industry was holding up the adoption of powered access then once again Haulotte might be prepared to step in and fill the rental company role.

Lourdain’s parting comment was that the ideal ‘scheme’ was one where everyone, the manufacturer, the rental company and the funder played his own role, OR with growing rental consolidation all three parties form a joint venture to develop and profit from the market.

Finally Hubert Gardemann of Gardemann Germany, gave a hard hitting account of what happens when a rental company is faced with a fatal accident with one of its machines.

He stressed how even if all procedures have been followed correctly and where the rental company could have done nothing more, the effect on company morale and the time consumed by the various investigations can be highly traumatic.
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Hubert Gardemann

He warned that companies need to be prepared for such an eventuality and to have strong processes in place that ensure a consistent approach to documentation and good practices.

On the case of an accident happening he stressed the need to warn employees of what to expect and to set up a crisis management team to manage the situation.
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The big Wumag outside the conference hotel

In addition to the indoor presentations, Wumag and Eisele took the opportunity to give delegates their first glimpse at - and if they had the nerve - a ride in the world’s highest aerial work platform. The new Wumag is mounted on a five axle Faun all terrain crane carrier and has a working height of 102.5 metres.
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The 103m Wumag almost tops Basels highest building

The lift was almost tall enough to reach to the very top of Basel’s tallest building the 105 metre Ramada hotel, the venue for Europlatform 2007.

Vertikal verdict

The first Europlatform was an excellent event, well organised with some meaty presentations and plenty of networking time.

The only negative was a poor rental company turnout, although several major companies such as Lavendon, Riwal Easi-Uplifts, Allift-Michielsens and AFI were well represented. Manufacturers turned out in force, making up most of the delegate numbers.

However it was pointed out that in spite of a poorer attendance by rental companies than was hoped for, Europlatform still drew in more rental companies than the Berlin AGM of the European Rental Association.

Hopefully the event will be repeated and the number of rental delegates will increase. Perhaps next year’s Europlatform should be held during Apex in Maastricht?