BUYING NOT SELLING

It’s Thursday, and in two days time Initial GWS is carrying out the cranage to erect the largest piece of public art certainly in the UK and possibly in Europe. The Angel of the North is a 20m-high sculpture made of 200 tonnes of copper-treated steel, with wings as big as those on a jumbo jet. It is one of the most dramatic dividends to date of the UK’s National Lottery, which provides funding for a wide array of “good causes”.

Andrew Makepeace, managing director of Initial GWS, could be a worried man. There will be television cameras and hoards of spectators at the site alongside the A1 motorway near Gateshead in the North East. If the job goes wrong in any way, there will be no disguising it. But Makepeace is relatively relaxed, stressed only by the vagaries of the air traffic controllers who conspire to delay his travels between GWS depots.

In the event, the lift goes smoothly, further justifying what Makepeace claims is his company’s forte: “Our attitude to safety, our safety training and our safety record is what sets us apart,” says Makepeace.

Initial GWS, formerly Grayston White & Sparrow, remains Britain’s biggest crane hire company, Makepeace asserts, however one cares to measure it: whether by turnover, which last year was around £40m ($65m) last year, profits, or numbers of cranes (around 400), depots or employees. However, the company’s image has taken a bit of a battering in recent years and the likes of Hewden Stuart, Baldwins and Ainscough have challenged hard.

Makepeace is quite open about the problems suffered. GWS was effectively created in the 1980s by parent company BET which then embarked on an acquisition spree buying lots of smaller players. In the UK construction boom of the late 1980s, GWS’s fleet peaked at about 1400 cranes. But BET ran into trouble as boom turned to recession and in the early 1990s became technically insolvent. Cranes were sold to raise cash. By late 1995 it was realised the sales had been taken too far and 40 Tadano cranes were bought. But come May 1996 BET was taken over by Rentokil Initial.

The attraction for Rentokil was not GWS but BET’s range of facilities management or “man and a van” operations. But the new parent’s attitude can be described as: “If the plant hire side grows, we are happy to let it.” GWS is part of Initial Plant Services, which also includes the access platform business PTP, portable accommodation provider Redispace & Johnson, scaffolding services company Deborah, and Sparrows Offshore. The Edison fork-lift and Domindo tool hire businesses were sold.

To reflect the new ownership, GWS formally became Initial GWS Crane Hire earlier this year (New machines and another name change for GWS Feb98, p11).

Makepeace joined BET in July 1995 from household products manufacturer Proctor & Gamble as a divisional finance director and was assigned to GWS. In January 1997, after the Rentokil takeover, GWS boss David Barrass was promoted to managing director of Initial Plant Services and Makepeace succeeded him in the crane hire hot-seat.

Given the shape and size of the Rentokil Initial conglomerate, the option of selling or floating the plant services business is always an option that will doubtless be under permanent review, as all parts of such businesses must be.

But Makepeace appears happy with the support he is getting from the new parent, which is funding the purchase of 40 new cranes, the first of which were delivered last month. Primarily, these machines are from Liebherr and Tadano. “They are our suppliers of choice,” he says. “We have good relationships with their design departments and so on. Once you have got the cranes, their service is good too.” The new cranes are part fleet expansion and part renewal, as GWS has been left with an older than average fleet after the corporate upheavals of recent years. The fleet will have grown to about 420 by the end of this year, he says. Makepeace understands what Rentokil expects in return for this support.

“ I am going to grow the profits significantly this year, or Rentokil are going to be upset with me,” he says. “I want to grow all of our business by 20% a year.” This will be achieved subtley, he explains, through a combination of new kit, and “tinkering with the infrastructure” by moving cranes around the depots.

How does this picture of a company planning expansion square with the fact that last year GWS sold its Contracts Europe business, the heavy-lift part of the company? Do not mistake that disposal as a sign of weakness, Makepeace suggests. The BET sell-off days are past.

The Contracts Europe sale, to Sarens of Belgium, involved just four cranes: a Demag PC 9600, a Gottwald AK 680, and a Demag TC 3200 and a TC 2000. GWS still has access to these cranes which, for the time being, remain based in a GWS depot in space sub-let by Sarens Sparrow, as the division is now called.

Makepeace has no interest to develop a new heavy-lift business and is somewhat dismissive of what he terms “the current love affair with 1,000t cranes” in the UK. Competitors Hewden Stuart and Baldwins each have a 1,000t Liebherr LTM all-terrain, and Ainscough has one on order for delivery in May.

“We are not getting drawn into a competition for who’s got the biggest crane,” he says. “By the end of this year there will be seven 1,000t cranes in the UK,” Makepeace reckons. “There’s work for about three or four, so I will certainly not be going in for them.

“When our customers need that sort of cranage we link up with Sarens Sparrow,” he adds, and explains that GWS and Sarens formed a good relationship working on the Stade de France in Paris.

Though the 30t to 300t range is GWS’s “heartland”, it has also a fleet of about 70 crawlers on top of the 400+ mobiles, including nine cranes in Thailand. The biggest of these is the Gottwald MK 1500, which is now on its way to the Philippines.

In spite of the Contracts Europe sale, we should expect to see Initial GWS making acquisitions and buying more cranes this year, Makepeace says. “I have got more work than cranes to do it,” he says, and is confident that this is not only because the market has picked up, but also because GWS is winning market share.

But the UK remains a crazy place to be in the crane rental business, where the price of hiring a 20t crane can be lower than the cost of a taxi-cab for the equivalent period.

So Makepeace will be an even more relaxed man if and when construction finally begins on the multi-billion pound project to build a new high-speed railway between London and the Channel Tunnel. The project has spent much of the last 10 years stalled over planning disputes. This year, with preferred contractors selected and work all ready to start, it has hit eleventh hour financing problems.

“We had an order for 20 crawler cranes for the rest of their natural life,” Makepeace says of the Rail Link project. “Then it was all back in abeyance.

“We could use that project. It would give the crane market a real boost.”