RUBB

chaz4As the UK forklift market recovers, now would be a good time to lock in exceptional deals, for the terms of trade have rarely been so favourable for buyers. One niche truck supplier, for example, reports that sales are not only almost back to normal levels but have seen a resurgence in new truck sales, reversing the recent trend towards second hand trucks. Given this move back to normality, these tempting deals, both in purchase and rental, may have little time left to run.

That is not to say, however, that buyers should overlook the practices that have forced truck suppliers to recoup cash lost on slim truck sale margins, itself a reflection of oversupplied markets. These include the high cost of spare parts and the thorny issue of user damage to rented trucks.

High spare part costs are not exclusive to the forklift market but unlike other markets, forklift buyers have some leeway to counteract them. Buyers could seek some protection from this by extracting price details of most commonly demanded spare parts and then compare them with competitors’ quotes. This is rarely done between OEMs/dealers and the end user, though dealers and OEMs will ask these questions when proposing to sell other makes of trucks not in their own manufacturing stable. There are also independent spare parts providers, like TVH, who will supply OEM parts directly to dealers or end users at lower prices than OEMs. This is a service dealers heavily use.

There is one trend, however, that end users cannot counteract easily – the general move towards more complicated electronics, making trucks more difficult to repair except by the manufacturer. Many forklift users still prefer to do their own servicing as they feel this is cheaper than having a full service contract with the OEM or a dealer. As the saying goes: “Sales put the cows into the field and service milks them.”

But if they cannot repair their own trucks easily then they will become locked into OEM service supplier deals. A partial solution to this is to strike a firm but fair deal with the OEM over servicing costs within comprehensive acquisition deals.

There is another, longstanding wheeze that truck suppliers will use, especially in recessionary times, – the thorny issue of damage costs for rented trucks. Buyers should grill suppliers over their policies on truck damage charges. Many damage defects, like a nick on a driver’s seat, are cosmetic yet the user could be astonished at what he might have to pay. There is currently one household name logistics company being asked for a six-figure sum for damage repairs allegedly of a very minor nature. This is hardly the kind of behaviour that would lead to repeat business.

Despite these problems, there is a trend to employ  OEMs and/or dealers to take over the whole servicing deal. Apart  form the more complicated nature of electronic parts, there are also health and safety aspects driving the trend. Most new trucks supplied come with warning stickers, for example, saying that the trucks should be serviced/repaired by a properly trained engineer. This warning, alas, is often neglected, leading to unacceptable truck down time.

One niche truck supplier has tried to counter this by offering dealers training on their own special trucks but often that offer is spurned and so when the dealers come to service or repair the trucks, they foul up and even use the wrong, or inferior, spare parts, leading to extremely high rectification or down time and an unfair opinion of the OEM, whose own service engineers, if they had been in charge, would have avoided all the problems. Buyers, therefore, if using dealers should ensure that they have been properly trained by the OEM or some other approved body.

Industry needs a strong forklift supplier base. Over decades, OEMs, have reinvested huge sums in truck design, making them far more efficient, safer and ergonomic. Buyers on their part should recognise that such improvements are not cheap and that screwing suppliers down on price would ultimately be counter productive. Far fewer suppliers in the market would reduce competition, though some cull is likely soon. The recent announcement by Briggs Equipment to take over the UK franchise for Yale, while phasing out Caterpillar, could prove a catalyst for major market changes. But what buyers should fix on more than anything is the service quality and acknowledge that suppliers must make an adequate profit somewhere in their deals.

Warehouse & Logistics News

1 Comment

  1. What a Wheeze!

    Like many of your readers, I was disappointed by the Comment from Warehouse & Logistics News on 18th July – Forklift users watch those wheezes. Far too much of it was ill-informed and implied a level of dishonesty within the fork lift truck industry that is totally unjustified. The vast majority of fork lift truck dealers are decent, hard-working people, who frankly deserve better.

    Taking one specific point from the article, the inference within the piece that damage costs are somehow invented as a means of increasing profitability is plain wrong.

    I do accept that such matters will always be controversial but there is a solution that will suit all concerned: don’t let the damage to a truck build up over 5 years. There are two good reasons for this.

    1. If damage is allowed to build up over 5 years then the repair bill can add up and come as a shock at the end of the contract.

    2. If operators damage equipment, and they go unchecked and the damage is not repaired, they are more likely to treat the equipment like dodgem cars and not worry about further damage – and so the bill at the end of the contract will add up even more.

    The way around this is to have at least one inspection each year where damage, if any, is assessed and agreed. The dealer and the hirer should both sign the inspection report. Damaged items that are likely to deteriorate further should be replaced, or repaired to an agreed standard, and a record kept of that agreement. A “value” should be placed on damage that will not be repaired at this time. This way the repair bill will not build up; or if it does it will be clear, year on year, what is happening.

    An open and honest relationship between all concerned is by far the best way to deal with such matters. There is no room for wheezes in good business relationships. Fork lift truck dealers know that as well as anyone.

    David Ellison
    Chief Executive
    Fork Lift Truck Association

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