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Despite the huge numbers of new trucks sold with R&M packages some operators still insist that in-house servicing
offers better value. Guy Sheppard reports.
There's a common belief that in-house workshops are costly to run, difficult to man and often no match for the servicing offered by truck dealers. That, say the pundits, is why the number of operators who still run their own workshops is declining.
However, GeoPost UK is a notable exception to this trend. It's just invested £2.1m in a seven-acre site in Smethwick, West Midlands so all repair and maintenance (R&M) on its 1,000-strong vehicle fleet can be done internally. How come?
Although the company already had a four-bay workshop employing 20 staff at its nearby hub, much of its servicing was previously outsourced. Charlie Shiels, director of risk and transport, says the decision to buy the purpose-built six-bay workshop was largely determined by the size of GeoPost's operation, having just expanded its fleet of double-deck, trunking trailers by nearly 100 to 280.
"We believe a large-scale operation of this nature can add more value in-house," he explains. "However, you need the critical mass to achieve this." According to Shiels the complexity of
GeoPost's trailers and the diversity of its truck marques would be difficult for the average mechanic to cope with. Added to that external suppliers are not particularly cheap anyway because, like everyone else, they need to compete for fitters who are in increasingly short supply.
"At the end of the day, a supplier makes a margin from this work," he points out. "The cost decision in favour of opting out is based upon your inefficiencies being greater than the on-cost of the dealer margin." Case by case Unfortunately, there are few clearly defined rules that make in-house workshops viable for one type of operation and not for another. Geoff Day, engineering policy manager at the Freight Transport Association, reckons: "What's right for one company is not necessar ily right for another. It's not so much down to the number of vehicles but rather what work
they're doing and how much they're doing." Crewe-based Chamberlain Transport proves his point. Its fleet is a fraction of the size of GeoPost's, but all bar two of its 25 tractor
units are maintained in-house.This general haulier employs three fitters who man the workshop for five-and-a-half days a week. This falls short of the 24/7 operation offered by some dealers, but staff are on call over the weekend for emergencies.
MD Simon Chamberlain says: "If I have to, I will go into the workshop myself and help. Engineering and maintenance hold no fears for me." Chamberlain, who is about to take over as chair of the Road Haulage Association's vehicle standards and maintenance committee, says another advantage of in-house servicing is the freedom to juggle work according to the operator's priorities; not the dealer's. Know your own kit
He adds: "Other companies may see it differently and say their business is transport, not engineering, but, personally, I like to know what's happening to my own kit." This is a telling argument in favour of inhouse servicing because operators still remain responsible for the legality of the vehicles they
run, no matter who looks after them.
Day says it's not unusual for an operators to be unaware that his vehicle has only passed its MoT test after rectification because the contracted service provider failed to report that it had initially failed:"A number of our members have received nasty letters from the Rd& Commissioner as a result! One was called to a public inquiry when he thought his maintenance record was superb."
But for many operators the advantage of budgeted monthly repair and maintenance costs offered by dealers far outweigh any potential concerns about the quality of service.
Steve Biddle, the RHA's head of technical services, says:"It's becoming increasingly important to know how much a vehicle is going to cost you each month. More and more people are putting the work outside because you can get quite attractive packages from the manufacturer. In most cases it's a very worthwhile benefit to the operator." Keith Sayfritz, who chairs the Retail Motor Industry Federation's truck committee,
estimates that up to half the trucks sold now have an R&M contract attached: "It's been a growing trend for the past five years. We're also seeing an increasing number of operators handing over servicing and MoT testing to dealers after they've actually bought a truck. They're saying to us they'd rather concentrate on their core activity."
But it is not just dealers who are exploiting the trend away from in-house servicing; some hauliers are developing their own workshops to meet the demand for outsourcing, taking on the dealers at their own game.
At the beginning of this year Wmteringham Haulage parted company from its workshop, which now trades as Leeds Fleet Services.
LFS MD Joanne Martin believes one of its biggest selling points is price, with hourly rates said to be at least 50% cheaper than those of franchised dealers. Wmteringham runs a fleet of 30 trucks and 60 trailers — it's been in the business for more than 20 years. "This has given us a keen insight into a vehicle operator's requirements," says Martin."When we take on a customer, we send service schedules reminding them when vehicles are due in.We keep all the data on their
vehicles and can produce a service and maintenance history on their vehicle just like they would on their own." A different view
AE Wilson Transport in Sandtoft, Lincolnshire, only runs 12 vehicles but employs five workshop staff who mostly work on outside jobs. Like LFS, the workshop has just become a separate business. Arthur Wilson, managing director of both operations, believes it prob ably makes more sense for hauliers with straight-forward vehicles to outsource their servicing: "Rates, property and keeping good staff is getting very, very expensive," he says. "But if you have specialist equipment such as lorry-mounted cranes and forklifts like us, then you have to start looking at things differently." •
10-points for keeping maintenance in-house
Answer these simple questions to see if you should outsource or DIY.
1 Are all your workshop costs fully transparent and not partly hidden in the overheads of the haulage side of the business?
2 Does the workshop need to be run as a completely separate business to properly calculate its costs?
3 Are workshop costs fairly predictable? If not, could they cause cashf low problems for the business?
4 How do monthly in-house servicing costs for individual vehicles compare with those of a monthly R&M contract?
5 Would it be more cost-effective to release land and buildings allocated for maintenance to generate more capital for the business?
6 What are the long-term capital expenditure requirements of the workshop — and could the money be better invested elsewhere?
7 Are there opportunities to make better use of workshop equipment and staff by taking on outside work?
8 Are there any specialist maintenance requirements which outside contractors would struggle to meet?
9 Would your business suffer significantly if the flexibility of the in-house workshop was replaced by the potentially more rigid schedules of a contractor who might be some distance away?
10 If servicing was outsourced, what safeguards would there be to ensure existing standards of maintenance were preserved?
New concept in HGV pits
If you're going to do your own servicing you'll need to get underneath the vehicle. Traditional brick-lined pits are often cramped, damp and smelly, giving today's highly sought after fitters plenty of incentive to look elsewhere for a job, never mind the Health & Safety implications.
However, a new product launched in the UK six months ago is said to eradicate all of these problems and save on both installation time and tax bills too.
The Balzer vehicle pit is pre-fabricated in Germany. The UK distributor, Nottinghamshire-based Straightset, says it only takes half a day to install sales manager Andrew Bates reckons that other ready-made pits need a lot more installation work: "Some people have had problems with them not being straight or buckling overtime. This pit is more rigid because it has a steel box all the way round the edge and you fill that with concrete."
Features include a raised floor so liquids drain away immediately, an extraction system to remove fumes and flooring that can be adjusted to three heights to suit individual preferences.
Bates says the price of a 15m-long pit is around £22,000 but that can be written off against tax because it is classed as capital equipment rather than building work.
Western Commercial, the Scottish-based Mercedes-Benz dealer, has had Balzer pits installed at the two sites it opened near Glasgow earlier this year. Dealer principal Alan Learmonth says one of the main attractions was ease of installation: "One of the sites had a very high water table so you would have had to spend a lot of time putting waterproofing around a normal pit. It's also very difficult to get the metal rails you run jacks on absolutely true with a brick-built pit."