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CROSSHIRE: WHAT PRICE WINTER FUEL? Is it really a time of good cheer? I have just read the riot act to our driver, Rocket Raymond, for his cold weather habit of starting his lorry engine each morning and leaving it running whilst he loads up, just to keep his cab cosy! I have the same battle with Fred and Samantha who leave items of plant with engines ticking over while undertaking other tasks. Unattended running has implications for safety, but as I have just seen our fuel costs for last month, it is the impact on the wallet that looms largest. As I write this, Derv is around 90p/litre, with gas oil heading upwards to 45p/litre (before VAT). It is no wonder that customers are paying more attention to fuel charges than ever before. So with this on-going escalation of a vital commodity, what have more than one of our competitors done? They have decided to give away a full tank of fuel with each hire. It will come as no surprise to learn that these same competitors regularly offer free or heavily subsidised transport. There appears to be a good case for teaching some basic economics to more than a few people in our industry. We are often asked to submit data and views to our trade associations, with results being analysed and made available to members. The results can be interesting but, in common with TV reporters interviewing slippery politicians, they never seem to ask the questions we would all like answered. We all pay about the same price for basic commodities, so how can some outfits afford to give so much of them away? We all know what the approximate fair return is that we need on the net hire rate for a certain machine, so how about a survey showing how many of us can, apparently, afford to lower rates to seemingly suicidal levels? I am sure many of you would find an analysis of hire and transport rates useful. With a little time and the co-operation of some friendly customers, I have done local surveys of actually invoiced rates and the differences in charges for similar kit are amazing. Is this, perhaps, because the discount boys save cost by not being fully compliant on all regulatory and HSE requirements? Am I over-insured or are they under-insured? Where do they save costs in order to be able to offer such rates? I do not believe that any small advantage on initial purchase price can affect costing to any great extent. Some of the financial commentators who compile reports on our industry, in the hope of selling them to us at vast sums, are saying that there are now some under-performing hire companies, although in general hire remains profitable and buoyant. Many of us will be buying new kit after examining it at the Executive Hire Show in February. The sophistication and cost of the latest technology are worthy of a fair return, but I have no doubt that a lot of this equipment will end up under-priced in the market place. The recent fuel price rises represent a chance to get the haulage charges up, and any investment in new kit offers a similar opportunity that we should not pass by. Christmas is traditionally a time for staff bonuses and salary reviews and I believe that the majority of our foot soldiers are worthy of fair reward. In recent years some of us have reduced staff levels in order to absorb increased costs but this trick cannot be repeated unless service is to suffer. I propose to start the New Year with an increase in both hire and transport charges, and I trust that many readers will also be considering their position on this fundamental aspect of their business. Season’s Greetings to you all, and may next year see you make the profit that your efforts genuinely deserve. Executive Hire News › Archives › December 2007 › Crosshire › What price winter fuel?
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