The Arcomet franchise

The Theyskens twins are still only 40 and after 16 years running Arcomet they seem to have developed the confidence and experience to make their mark on the world stage. They are making acquisitions and adopting what might almost be described as a franchise approach in the rent-to-rent market.

Dirk and Leo were just 24 years old when they took over the family business from their father in 1985. At that time, Arcomet was a Belgian manufacturing company with 80 employees producing self-erecting tower cranes. Today it has about 300 employees and a turnover of BEF2.4bn ($50m). It has expanded beyond manufacturing self-erectors to having one of the largest rental fleets of tower cranes, of all kinds, in the world. Last year, to accelerate expansion through acquisition, the twins raised $22m by selling equity. Riding on the back of massive growth in the tower crane rental market, Arcomet and the Theyskens twins are making quite a name for themselves.

Dirk is general manager and Leo is sales and marketing manager. Their elder brother Luc is technical manager.

There are two other Theyskens brothers: Jan the eldest, and Paul the youngest. They used to work for Arcomet also, but Paul left in 1992 and Jan in 1996, and now they both work in the software industry.

Their father Karel Theyskens founded Arcomet in 1956 in Beringen, Belgium as a subcontractor in the coalmining industry. In the 1960s the business refocused on the construction industry and developed firstly a lift and then in 1969 a crane. In the early 1970s Arcomet exported cranes to the Netherlands, Germany and Switzerland but for much of the decade the German building industry was in decline.

Leo and Dirk joined the company in 1983 and two years later bought out their father. The next five years was a period of transition. Employees were laid off as production was outsourced. Arcomet became an assembly plant, as well as a distributor for Raimondi’s top slewing tower cranes and for Tadano Faun’s mobile cranes. In 1989 it entered the rental market and in 1990 began a trading and service operation.

During the 1990s the tower crane market went through important changes. Country by country, building contractors increasingly chose to rent equipment rather than purchase it. Tower cranes have been among the last items of equipment to be outsourced, and the rental market is still growing. Arcomet began its international expansion in the rental market in 1994 and by the end of the decade it had branches in Germany (Berlin and Frankfurt), the Netherlands, Poland and France.

The greater part of this expansion, including the acquisition of Montpellier-based French rental company Lafont & Cie which had a fleet of 70 towers, took place in 1999 and early 2000. The result was that while the twins had established a growing empire, they were financially exposed and looked around for participation companies to provide financial backing.

In August last year they sold a minority stake of the business to three investment companies: GIMV and Sofinim of Belgium and NPM Capital of the Netherlands. Leo and Dirk also put a further $2.7m of their own into the business.

The money raised was to be used solely for international acquisitions, it was decided. There were no immediate acquisitions, but this year the deals have come rapidly.

Companies acquired this year include: Baukranlogistik (BKL) of Cologne, Germany; Erge Advies of Den Bosch, Holland; and the mobile crane rental company Datek of Genk, Belgium. Arcomet has also bought 51% of Carlo Raimondi’s rental operation in Italy, Eurogru. These deals added 85 and 80 cranes to Arcomet’s fleet, which now comprises more than 750 units.

The Raimondi relationship runs deep. ‘Eugene Torello is a very close and dear business associate,’ says Leo Theyskens. Arcomet has been a distributor since 1987. Over the years Arcomet has bought 400 cranes from the Italian manufacturer, half of which have been sold in the Benelux market and half of which are still in Arcomet’s rental fleet. Of the Eurogru tie-up, Leo Theyskens says: ‘Italy has the brightest prospects for long-term growth in tower crane rental, provided you offer through an Italian organisation with Italian people and Italian cranes. Growth is expected to be steady for the next 10 years.’ In a slight diversion from focusing on the rental market, Arcomet has also acquired the manufacturer of truck-mounted tower cranes Mobile Tower Cranes (formerly Gis Munsters).

Aside from spending the money injected last year on acquisitions, Arcomet has also been investing heavily on new branches and equipment purchases. This year has seen the establishment of branches in Toulouse (France), Stuttgart (Germany), Ireland and Switzerland. The company has also spent more than $30m on new cranes in the past 12 months, placing orders with Potain, Raimondi and Terex.

Arcomet also has many Liebherrs. In 1997 the Theyskens bought 40 virtually new Liebherr 280 EC-Hs from Korea. ‘That’s how we built up our Liebherr fleet,’ says Leo Theyskens.

Arcomet still earns 15% of its turnover from producing small to medium-sized self-erectors, and 10% of its turnover from its Faun dealership. It is the rental business, though, where the growth is, and where the real money is made. ‘Crane rental is getting more important every day,’ says Leo Theyskens, ‘and it will be 90% of our turnover in a couple of years.’ The tower crane rental market in Europe can be quite political. Your competitors can be your clients, and the support you get from suppliers can vary. With traditional customers, the building contractors, no longer buying new equipment, some distributors are becoming rental companies. There are hundreds of these distributors, though most are only small, local operations handling self-erectors. Some manufacturers, such as Terex, take the attitude that they will sell to anyone and are happy to sell direct. Other manufacturers, such as Liebherr, have a more rigid approach to distribution and seek to protect their distributors and not take sales away from them by selling direct. But the distributors are restricted to their own territories and so are not able to develop a geographically widespread rental business which limits their ability to compete with growing international businesses like Arcomet.

In addition to chasing the conventional business of renting tower cranes to building contractors, Arcomet has also adopted the strategy of pursuing other rental companies as customers, or partners. It has established strategic partnerships with various rental companies including Kier Plant in the UK, Sotraloc in France and Coker Equipment in Las Vegas, USA.

This month Arcomet is signing its latest joint venture, this time with with Peter Jehle’s P&J Cranes of Washington DC, USA, to rent tower cranes above the 200tm class. The plan is to appoint ‘rental dealers’ throughout the USA and Canada who will be able to have a rental business without actually owning cranes. Instead they can call on Arcomet’s equipment. Dirk Theyskens says that the aim of the JV is to build up a rental fleet of 60 to 80 tower cranes. And through Arcomet’s European network, it will also offer spare parts and second-hand tower cranes on the North American market.

To help manage this expansion, in September Arcomet is setting up a crane operator training centre at its premises in Paal, Belgium. It is anticipated that over three years, 72 crane drivers will be put through a six month programme to become tower crane operators and pass the Dutch ‘hijsbewijs’ examination.

And there is no stopping the deals in the pipeline, it seems. Says Dirk Theyskens: ‘We are looking at another rental company in France and another rental company in Germany, and we are starting a JV for tower crane rentals in Switzerland.’