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EXECUTIVE REPORT continued


“If we don’t value what we do, no-one else will.We have allowed hire to become commoditised because we don’t value it enough.We need to do things smarter and sharper.We need a new hire industry.


“If you don’t understand the balance between your customer base and your asset base, you’ll never understand yield. To truly understand it, you need to measure the change in the product and customer mix and measure the unit rate of what’s left.We are actively delivering an improving yield and are achieving it by improving pricing, targeting under-utilised assets and achieving an overall greater volume.”


Speedy is also looking to grow its retail sales offering to further support its customers. “Sometimes customers hire when they should buy. As part of our value added approach, we want to be able to offer advice on equipment selection and part of that advice will be to sell appropriate items to them.We will start with consumable sales and capital sales will follow. We could also produce and source equipment ourselves. Consumers do their monthly shop at Tesco - there is no reason why we can’t do this for our customers.”


A key slide presented at the analysts’ meeting was entitled Targeting Value Markets and this clearly shows Speedy’s


re-positioning in the hire market. Its ‘Zone of Interest’ is to focus on those major contractors undertaking large investment in infrastructure in support of energy/environment, transport, water and waste. “There is clear long term value in this upper quadrant and our move, over the last 18 months, to major customers has gained us volume share.


“Hire is important to them. They use equipment in more volume, and use it more regularly. These new markets are areas of big spend and will help to further consolidate the market. The five key markets that we are targeting are construction, infrastructure comprising energy, water and telecoms, retail and leisure, specialist activity trades and industrial.”


These major contractors are paying 23% less than Speedy’s average hire rate, but Steve Corcoran insists that they represent added value.


“The majors keep equipment longer, typically 11 weeks, rather than the five weeks for smaller contractors. Our operating costs to serve the majors are also lower as there are fewer ‘drop offs’ and collections, fewer maintenance checks and less test and repair. There is also less admin as we simply raise one invoice. Business with major contractors is more secure, more stable, and offers better long term prospects.


“Promiscuous smaller trades”


“The smaller trades, positioned at the bottom left quadrant, are promiscuous. They hire infrequently and their decisions are based on price, availability and location.We will actively market to these customers through a different proposition that we will launch early in April.We are confident that we will realise our market share in this quadrant because of our network, range and purchasing power.”


Speedy has also revamped its depot structure to meet these changed market conditions. During 2010, Speedy opened three ‘superstores’ in major conurbations that brought together its tools, lifting and survey operations in one outlet, each run by their own specialist teams under one single site manager. The average size of these ‘superstores’ is 20,000ft2


.


It also currently operates one Multi Service Centre (MSC) in Warrington, which houses all the ‘superstore’ activities, together with Speedy Space and Power, major workshops and specialist equipment like plant and heavy welding. This site is being extended to become a distribution and logistics centre, open 24 hours a day, supporting the ‘superstores’ by distributing to major projects in their areas.


See us on stand A58 at the Executive Hire Show


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