Today, the industrial market looks quite different. Lloyds British has been sold to construction equipment rental company Speedy Hire, and Speedy’s competition from the construction market are setting up shop too.
Now LGH founder Bill Parkinson has retired, and his son Ian has stepped into his role as executive chairman. Bill has earned a seat on the board, but has no specific brief. Ian says that he may be distracted by his other businesses, such as Morehouses Brewery, or Standish Court Golf Club.
Says Ian: “A lot of people thought it would be a big blow – the retirement of Mr. LGH, who is loved and respected in the company and the industry.” Not so, he adds – Bill has been gradually handing over to the senior management, headed by Simon Butterworth as managing director, Paul Fulcher as operations director and Gordon Worswick as overseas operations director.
And now Ian heads up the company. He has plenty of experience. As the boss’s son, Ian has worked in LGH as a driver, hire desk controller, sales rep and branch manager, and, in the past few years, running the London service business.
Ian trained as a computer programmer, and he considers IT to be one of his primary responsibilities. He helped develop the company’s online rigging gear certification system, now used by 500 companies for the six-month checks required by law. He says he hopes to launch self-service internet-based customer accounts before the end of the year.
He says he is focusing on reworking in the business rather than diversifying it. LGH has borne the failure of two engineering-led businesses that it started up in the mid-1990s. One, a winch manufacturing business that came with the NIM Group, acquired in 1992, was recently sold; the other, a suspended-access installation business from the 1997 acquisition of Kobi Maintenance, was closed.
The two companies were forays into building revenue in a time when the company was looking to make money in a mature market, he says. “These businesses were not a very good strategic fit. I hold them responsible for the losses the company posted in the last two years to 2003 and 2004.” He says he expects the company to have made a £1.1m ($2m) profit in the year to April 2005 on a sales revenue of £31m ($56.6m).
“Now we are far happier working in the core business of lifting tackle,” Parkinson says – high volume, fairly low value transactions.
The business is composed of about 60% hire, 30% sales, 10% service. Parkinson claims its different activities, and its coverage in different industries, allows it to spread the risks of a client leaving or an industry downturn. The company employs about 350 people in 35 locations across the UK, as well as another 100 in offices in the USA, the Netherlands and Germany.
Despite the inexpensive prices of particularly manual hoists from the far East, Parkinson says he is not seeing customers turning from hire to purchase. “We are maintaining revenue streams.” But he adds that the company is seeing some price erosion. “We are having to do more activity to maintain revenues. There does seem to be a downward pressure on unit hire prices. We have to increase volume to maintain sales,” he says.
Parkinson says he is not worried about his new competitors from the construction sector, even if they are far richer. “Capital is not the be-all and end-all of this business. We have had relationships with customers for decades. We have a strong grip on that part of market. Where the hire companies have had some success is with those customers that are more peripatetic,” he says, such as those installing heating or ventilation. “But that is the soft part of the market; an area where anyone can get in easily.”
Despite all of the market consolidation, Ian Parkinson says that he has no plans to sell the company. He says the idea had not even occurred to him in the three weeks since he took the job in early May, he says. Although LGH is a PLC, or Public Liability Company, which means it could be publicly traded, all of the company’s equity is owned by the family.
In fact, as of mid-May Ian Parkinson was in the process of an acquisition, which, if completed, would be the company’s first since the ill-fated KOBI Maintenance acquisition in 1997. But it will not be the last. “It is a fragmented market. There are lots of family owned, single-site businesses throughout the UK where we don’t have a presence,” he says.