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MD Tim Smith believes that the timing of

Wolseley’s acquisition gave Brandon a head start in the network rationalisation that was forced on all major hirers.

Making the best

of difficult times

Catherine Stratton talks with Brandon MD Tim Smith, who argues that, as part of Wolseley, the company has been better positioned to withstand the recession than its two larger competitors.

In the four years since Brandon was acquired by Wolseley, the Bristol-based hirer has seen substantial changes both internally and externally through structural alterations to the market in which it operates and, of course, through the rapid deterioration in the overall UK economy. The agreement of Brandon’s shareholders to Wolseley’s £72m cash offer and the subsequent merger with Wolseley’s Hire Center business gave Brandon the truly national coverage it had been endeavouring to achieve for several years. The deal also took Brandon to No.3 in the UK Tool Hire Top Ten, behind Speedy and HSS, and ahead of the then Hewden Tool Hire.

This deal was also the first for some years that marked a substantial step in the consolidation of the tool hire industry. 15 months later, while Brandon was busily integrating Hire Center and rationalising its expanded network, there came an even bigger consolidation move as Speedy acquired Hewden Tools. At the same time the market was also digesting the news that 3i was selling its stake in HSS to a consortium of Archie Norman’s Aurigo and hedge fund Och-Ziff.

New MD appointed

By then, Brandon’s management team had changed with the departure of long-serving Chief Executive Charles Skinner and the subsequent appointment of Tim Smith as Managing Director in March 2007. He believes that the timing of the Wolseley acquisition gave Brandon a head start in the network rationalisation that was forced on all the major players in the market as the recession began to bite.

With hindsight, it seems that Brandon was rather more protected from the direct blast of the banking crisis than its larger competitors,


both of which had protracted negotiations with their respective bankers to re-negotiate borrowing terms and, in Speedy’s case, a deeply discounted rights issue. Of course, parent company Wolseley had its own well-publicised financial problems that also led to a very hefty rights issue and to an on-going disposal programme.

Brandon stresses that the last 18 months have not been just about depot closures, as it has opened a number of new strategically-placed outlets.

Nevertheless, Tim Smith is almost certainly right to say that Brandon was better positioned to withstand the recession as a part of a very large public company than as either the comparatively small public company it had been prior to the acquisition, or as a venture capital-backed MBO, which had been proposed by its previous management. This shelter from direct exposure to the bank lending crisis may also have given the Brandon management rather more space just to focus on the immediate day-to-day problems of running the business, while their major competitors were having to concentrate on hard negotiations with their bankers and investors.

Tim Smith is also convinced that Wolseley’s ownership meant Brandon was alerted earlier than most in the hire industry to the abrupt decline in construction demand; a drop in sales at Wolseley’s Builder Centers had been identified and Brandon realised quickly the implications for its own market. In November 2008, Brandon announced restructuring plans that would involve 170 redundancies - just over 10% of its workforce. This inevitably meant depot closures and re-locations, with overlapping Brandon and former Hire Center branches being especially targeted.

The implementation of the closure programme began in December 2008 with just two locations. The opening two months of 2009 saw 37 Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56
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