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Exhibitor Profile: Hilti Hilti’s “110% commitment” to hire Hilti (Gt. Britain)’s new strategy is aimed at strengthening its partnership with hire. Robert Aplin attempts to get to grips with the details and understand the implications. As one of only a handful of truly integrated suppliers to our industry, Hilti (Gt. Britain) Ltd celebrates its 50th anniversary of trading in the UK and Ireland this year. Since Martin Hilti founded the company in 1941 in Liechtenstein, he always believed that a direct sales operation was the best route to market. This allowed the company to learn from its customers and their applications, as well giving it greater control over the distribution of its products. With a directly employed sales team of 250 – 14 of which are dedicated to our tool and equipment hire industry – Hilti GB has maintained this philosophy and has now announced a further significant development of this business model. According to National Tool Hire Manager Martin Emery, “our product range is more innovative than any of our competitors and our research and development is geared to producing tools that last longer and are more productive. These technical products need the greater expertise offered by a direct sales team that understands the end user’s application chain. As Hilti innovative products are used throughout a construction project, we show a more economical way to carry out each application and get the project completed more productively. We deliver solutions.” In order to maintain these advantages, Hilti wants the freedom to continue to choose with whom it trades throughout Europe. It wants to maintain direct relationships with its customers and not to sell indirectly through dealers and other third party distributors. Selective Distribution System contract As a result, Hilti’s sales team has undertaken an extensive consultation process during the second half of last year to fully explain the reasons behind this new strategy. The team has then persuaded hirers, of all shapes and sizes, to sign a Selective Distribution System contract under which each hirer, having met five criteria set by Hilti, can trade by agreeing to buy products only for use in its own hire fleet and not to re-sell any tool or consumable that remains in the structure after its completion – anchors, for example. Drill bits and chisels, diamond cores and blades can still be sold-on by hire companies. Despite
the
fact
that
all
hirers
undertake
a
proportion
of
on-selling,
Hilti’s
Marketing
Director
Roberto
Papini
reports,
“by
the
end
of
2007,
400
hirers
have
signed
up
to
this
agreement
and
we
believe
that
this
represents
the
vast
majority
of
the
tool
and
equipment
market.
This
is
the
first
time
in
our
50
year
history
in
the
UK
and
Ireland
that
we
have
asked
hirers
to
sign
a
contract
with
us.
From
On one level, then, Hilti is now telling hirers what they can and can’t do – and you can imagine the initial reaction that this must have caused throughout our industry during the closing months of last year. However, Hilti has managed this process skilfully because, we are told, the vast majority of hirers have signed up to the agreement. To make this pill more palatable to swallow, Hilti must, surely, have added some sweeteners? In order to make hirers feel that they still have a genuine partnership with such a key industry supplier, Hilti must now deliver increased value. Range of benefits and services The company does seem to have delivered. Martin Emery starts to outline the programme of new benefits and services available to hirers that have signed the Selective Distribution System contract. “We have, annually, over 500,000 calls into our Customer Services Centre. The majority are from contractors, which may prefer or need to hire, rather than buy, tools. We are developing an on-line locator, which we will be able to demonstrate at the Executive Hire Show, that will direct these contractors to the closest hire partner in their Post Code area. This business referral system will drive end user enquiries to hire companies. Hilti has always been able to add significant value to hirers through our relationship with end user customers and this can only improve through this service. “We are also offering specialist application-based training to enable hire depot personnel to better advise customers on tool selection. As discussed earlier, Hilti understands end user application better than most companies because we are on-site every day. Counter staff are at the ‘touch point’ with customers and we can train them beyond the usual technical features of each Hilti product, so that they, in turn, can understand their customer’s application and have more confidence to offer the most suitable machine for each task. “If hire staff are more confident that they can show customers a better way of doing the job, they can increase the number of hires of not just Hilti products, but other equipment in their fleet. This training is an extension of our internal training programme made available to our hire partners and can take place in the hirer’s own outlet, through our network of 26 Trade Centres, or at our Training Centre in Bredbury, near Stockport.” Fleet Management The central component of Hilti’s value-added package is the Fleet Management programme, available as either the Usage or Upfront plan. According to Nick Townsend, Fleet Management Manager, this initiative has been in place in Europe for the last six years and was launched in North America five years ago. Having been with Hilti for the last 10 years, Nick ran the programme in America for the last three years. “Having brought innovation to the market for the last 50 years, we believe that Fleet Management is another innovative service. It extends up to five years our original Two Year No Cost initiative introduced in 2006. This provides a comprehensive warranty and repair system to keep tools in optimum condition and reduces the burden on the hirer’s own workshop staff. Our experience of tool hire in the US told us that 30-40% of hirers’ overall spend on power tools was on administration. This took the form of sourcing tools in the first place, any downtime, on-site collection and replacement, repairs, spares management, fitters’ productivity and paying invoices. If we could help reduce these ‘soft costs’, then it would offer hirers a huge cost saving. “Fleet Management makes hirers’ fleets more productive because it reduces downtime, takes away the issue of repairs and spares management from the hirer and helps make fitters more efficient. Our research also told us that other equipment in the fleet needing maintenance was taking priority, with power tool repairs often ending up at the bottom of the list.” Tools rotated on regular basis Hilti believes that its Fleet Management Usage plan solves all these problems. Under the Usage plan, Hilti retains ownership of the equipment supplied to hirers and these tools are rotated on a regular basis, based on the economic life of the machine. Typically, for tools like the TE76-ATC combi-hammer and medium and heavy-duty breakers, the period is 48 months. Woodworking tools and angle grinders is 24 months and diamond drilling equipment is 60 months. Throughout these periods, any technical upgrades to the tools are automatically included. At the end of the contract, Hilti simply replaces the kit with the latest models and the plan starts again. In return, hirers pay a monthly usage fee for these tools. Hilti estimates this to equate to approximately the weekly hire rate, leading Nick Townsend to contend “hirers will make money on the Fleet Management Usage plan each month, provided their utilisation exceeds one week in each month. Other obvious benefits are that hirers have no large cash outlay and they can increase their fleet portfolio with other, previously more specialist, equipment on which they can achieve a premium hire rate. As the tools are regularly rotated, hirers will always receive the latest Health & Safety, technological and productivity advances already built into our equipment.” Each tool available under the Fleet Management Usage plan is fitted with its own customised label, which shows the hirer’s branding, fleet number and branch phone number. This label is linked to Hilti’s on-line tracking software, allowing hirers to see the complete history of each tool. Theft cover is also provided under the Usage plan. If, for example, a tool is stolen during the contract period, Hilti will limit the hirer’s financial exposure by writing-off 80% of the remaining value. In effect, hirers pay 20% excess. In addition, hirers can trade-in any tool, irrespective of age, condition or manufacturer, and get a trade-in allowance – typically, £75 for a combi-hammer – towards new Hilti tools purchased under Fleet Management. The only stipulation is that the tool has to be in a similar weight class. The final benefit is that tools bought under Hilti’s original two year Lifetime Service initiative can be ‘adopted’ into the Usage Plan for a “small fee” for the remaining period. Whilst Hilti is confident that its Fleet Management Usage plan will be welcomed here in a similar way that rental companies in the rest of the world are said to have enthusiastically adopted the plan, the manufacturer recognises the emotional, as well practical, difficulties that it must overcome in order to appeal to the ‘unique’ UK hire industry. In an attempt to make the widest-possible appeal, Hilti is adding the option of the Upfront plan. This plan offers the same benefits as the Usage plan, except for theft cover, and allows hirers to own the asset by paying for the tool when the plan is set up. Hilti (GB) Managing Director, Adrian Murphy contends, “the introduction of the Selective Distribution System contract clarifies our position as to where we stand in the market. We are clearly stating that we won’t deal with on-sellers and are 110% behind the hire industry. We have made a decision as to which hirers we want to partner and we will fully support our hire partners and use our end user ‘pull’ to help grow their businesses. Having worked on these issues for the last six months, it has crystallised our views. This process has certainly both brought us closer to our customers and set us apart from our competitors. Rather than lowering the value of power tools to such a point that they become commodity items, Hilti’s research and development programme will ensure that our tools last longer and are more productive. This is our commitment to the hire industry.” The big picture against which Adrian Murphy and his team’s actions need to be judged is that Hilti (GB)’s parent, based in Liechtenstein, has decreed that the Selective Distribution System contract and the Fleet Management programmes are the way forward for this manufacturing giant. In my opinion, you have to admire Hilti (GB)’s innovative strategy in response to its parent’s strategy. Industry-leading suppliers need to make industry-leading decisions about its future direction and Hilti (GB) has made a clear commitment to our industry. However, only you can decide whether Hilti has sufficiently demonstrated its desire to partner you in the development of your business. To find out more about its Selective Distribution System contract and Fleet Management programmes for yourself, you must visit the Hilti stand at the Executive Hire Show in early February and express your opinions. I would certainly expect its stand to be one of the busiest at the Show and I know that the Hilti team is looking forward to hearing from you. • T
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100 Executive Hire News › Archives › January/February 2008 › Exhibitor Profile › Hilti’s “110% commitment” to hire
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