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Profile: Smiths Equipment Hire Towering independent Robert Aplin talks with David and Thomas Smith about the continued expansion of Smiths Equipment Hire into a key regional player in the north west of England. It was in November 2001 that I last visited family-owned Smiths Equipment Hire at its Blackpool Head Office. Based in The Old Tramsheds, formerly the site of the town’s tram workshops, this facility highlights the company’s long-established reputation in this famous Victorian seaside town. Whilst, however, the Smith family has been in business in Blackpool for over 150 years – having started out as coal merchants – they show no sign of basking in former glories. Rather,
the
company
is
a
shining
light
in
our
industry
and
is
continuing
to
develop
into
a
key
regional
player
in
the
north
west.
When
the
Executive
Hire
Show
team
visited
the
company
in
the
At the time of my last visit, Smiths Equipment had, in addition to its Blackpool power base, developed a network of smaller 'satellite' branches along the Fylde coast, operating in St Annes, Kirkham and Cleveleys - all within seven miles of its Head Office. In 1998, Smiths opened in Preston, 25 miles away and, in 2001, opened its sixth depot in Blackburn. According to Directors David and Thomas Smith, representing the latest generation of the family, “we opened the two latter depots because customers wanted us to cover a larger area and serve them better when they were working further away from Blackpool. These represent our first moves in opening up the north west of England to become a regional, rather than a local, player.” Updating me on developments since, the Directors start “we re-located our Preston depot in 2004 from an industrial estate, where turnover was poor and we couldn’t improve it. We moved into a larger 6,000ft2 facility on the main A6 and, without any significant investment in new equipment, turnover doubled from this fantastic location. All our sites are in prominent locations, with adequate parking, ensuring that we pick up good passing trade. Location and good managers are the two key ingredients that our industry must have.” Natural progression In August 2006, Smiths opened in Bolton, its furthest location from its home base. “It was a natural progression for us and opens up the motorway network. Within 10 minutes, we are on the M60 Manchester ring road and the M62 into Liverpool. This makes these two major cities accessible for us – thus enabling us to cover a larger geographic area. The opening of this depot was a key step for us in securing our regional coverage.” The 10,000ft2 facility, with a further 10,000ft2 yard, is a former car dealership, near the centre of Bolton. It offers the company’s full range of plant, tools and powered access equipment. The Bolton outlet also provides Blackburn and Preston with its plant and access requirements. Complete with its own workshops, enabling it to undertake major repairs, Bolton is also the service centre for Blackburn and Preston. Having paid close on £500,000 to acquire and fit out the premises, David and Thomas Smith invested a further £500,000 in new equipment for the depot. The brothers report “the depot was profitable after six months, but it takes two to three years for it to become established and accepted in an area. We are now realising the potential in Bolton, particularly after Tonge Plant, a local hirer, closed recently and its customers are now coming to us. With a staff of nine, which could rise to 12, we are achieving £70,000/month turnover from the Bolton facility. Within the next two years, we believe we can achieve £150,000/month from this depot. We are now building up core momentum and we may even need a separate facility in the town for our larger plant, which has its own separate transport and maintenance requirements.” Separating plant and tools in Blackpool It was three years ago that David and Thomas Smith recognised the need to separate its plant and tool hire facilities in Blackpool. “We reached capacity at Tramsheds. As our growth continued, we were overflowing – we couldn’t get vehicles in or out and the situation became inhibiting, if not dangerous. We estimated that we were, conservatively, losing £5,000/month in sales alone to the passing trade, which, simply, was no longer calling in because of our restrictions at Tramsheds. Having bought the site of an old ATS tyre depot that had been empty for three years, the brothers did nothing with it during 2006, preferring to concentrate on opening in Bolton. At the start of last year, they decided to implement the long-held plan. In August, the company’s new small plant and tool hire branch opened in Clifton Road, a mile away from The Old Tramsheds. The facility has been designed specifically for our needs and now houses all the small equipment – like power tools, scaffolding equipment and ladders, as well as compaction kit - that was formerly offered from Tramsheds. We have also established a retail operation in the branch. It has its own dedicated staff of eight, comprising four on the hire desk, including the Manager, two fitters and two drivers, who are new to the company. The other staff transferred from Tramsheds, which retains its role as our central repair facility and holds our fleet of plant and access platforms. The transition went like a dream and, as a result, turnover at Tramsheds, went up 20% overnight as we were able to deal properly with customers again. We were cautious about splitting the activities, concerned that it may upset our customers. However, it has been the best move we have ever made.” Significant investment Last year, the brothers invested £1.5m in new equipment, including kitting out the new Blackpool branch. They have already spent an additional £750,000 since January this year. “Our traditional market was tools like engine cranes, car spraying equipment and wallpaper strippers, but this has changed. Our policy is to buy in response to customer demand and our latest purchases have been Kubota 1.5 tonne mini excavators, Terex tandem rollers and JLG booms and scissor lifts, together with Niftylift HR12 booms, which are a good British product. Our tool hire fleet comprises, typically, breakers from various brands, and disc cutters from Stihl, which provides a consistent high standard of product. Today, if a tool costs less than £200, a tradesman will buy one and throw it away when finished with. As a result, the average cost of a breaker in our fleet is now £1,000.” Looking
ahead,
the
brothers
believe
the
issues
they
face
are
more
to
do
with
our
own
business,
rather
than
from
competitors.
“The
competition
does
affect
us
because
they
drive
prices
down.
Whilst clearly aware of the current economic uncertainty, and admitting that the company is struggling to get money in at the moment, David and Thomas believe “people are nervous because of what they are reading and hearing about, but there is no downturn in business at this time. If contractors run out of work in six to 12 months because banks may not finance projects, this will hit us next year. We hope this is just a blip. The underlying general economy is strong. The uncertainty is causing people to talk things down.” Having achieved a turnover of £4.3m in its latest financial year to this February, the Smiths Directors are confident that they can achieve £5m from its current outlets in current market conditions. As for future outlets, the company may extend further north into Lancaster or south into Liverpool. However, in the short term, expect to see Smiths Equipment Hire improve and further develop its existing structure to consolidate its position as a key regional player in the north west of England. The company is clearly now a towering independent in the Blackpool area, as distinct from just an illuminating company back in 2001. This power base continues to make it difficult for any national hirer to establish a presence in this area. • Executive Hire News › Archives › May 2008 › Profile: Smiths Equipment Hire › Towering independent
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