Brambles was the first company in Australia to develop a strong national presence in crane hire, in both the capital cities and strategic locations serving the burgeoning mining industry. Although it acquired its first mobile crane in the 1920s, it did not develop a significant presence in this area until it acquired a part of the crane fleet brought to Australia during World War II by the US forces. These cranes were larger and more sophisticated than those generally used in Australia at the time.
Further growth through the 1960s and 1970s came through acquisitions of small family crane hire companies around Australia, so that Brambles had a presence in the capital cities, some major provincial centres and centres associated with the mining industry. In particular, it worked with the coal and related industries in Victoria, New South Wales and Queensland, and the iron ore sector in Western Australia and South Australia.
The size and decentralisation of its fleet, consistency and professionalism of its service, and its appreciation of safety and human resources issues, proved attractive to the large companies in the mining and resources sector, at a time when the general crane hire industry was fragmented, had variable standards and, in most instances, did not have the size of machines or fleet to adequately serve the needs of a large company.
Brambles generally did not undertake major construction projects, but concentrated on providing cranes to serve the ongoing maintenance requirements at mines and major industrial facilities. Such work was generally for a fixed term at agreed rates, and was service rather than price-related.
Brambles’ priorities changed as it moved offshore and developed ties with GKN plc in activities unrelated to crane hire, and its cranes and depots were sold progressively in the last decade, leaving a gap at the top of the market.
BOOM Logistics
Rod Harman, outgoing CEO of Boom Logistics
BOOM Logistics was formed in December 2000 as a vehicle to acquire three mid-size Perth, Western Australia, mobile crane hirers (Uniway, Alpha Crane Hire and Midland Crane Hire) and Melbourne-based tower and offshore crane hirer Sutville. It completed this first round of acquisitions in February 2002.
It followed up with acquisitions of Brambles cranes operations in Perth, Geraldton (a mining port) and the Goldfields region (all in Western Australia), before listing publicly on 14 October 2003, with the immediate intent of purchasing five more firms.
These gave BOOM a strong boost in its bid to become a leading national supplier of lifting solutions. Amongst the plans outlined in BOOM’s prospectus for its float were geographic and market diversity and contracted revenues; building a national brand; moving from a regional to a national supplier with key industrial clients; and focusing on safety and quality. Many of the senior management team had previously held positions with leading public companies such as BHP Billiton, Bovis Lend Lease and BGC.
The growth has continued unabated since then.
BOOM has followed in the Brambles footsteps, purchasing many former Brambles businesses, either directly or indirectly, and serving many of the same clients with craneage requirements for contract maintenance.
The share value has reflected approval of the BOOM strategy and strong financial performance, and has consistently outperformed the stock market, though it recently has dropped slightly from its peak of more than four times its listing price in 2003.
BOOM CEO Rod Harmon states that around 70% of current earnings now comes from industrial and resources maintenance, and this is a figure that he is comfortable with and seeks to maintain.
The acquisition of crane hirers in key industrial areas, together with organic growth, has delivered this business mix, with core sectors served include industry, resources, energy and utilities. The spread of industries is a further element of BOOM’s risk management strategy.
General mobile and tower crane hire remain a part of the business. These are heavily dependent on construction activity, with fleet utilisation and hire rates subject to significant fluctuation. The core business sectors served by BOOM have less sensitivity to the general economy than the construction sector.
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BOOM CEO Rod Harmon states that around 70% of current earnings now comes from industrial and resources maintenance. |
A further BOOM strategy for risk management is diversification by equipment type, and two recent acquisitions reflect this. It purchased Sherrin Hire, a market leader in travel tower and access equipment hire, in 2005, and purchased James Equipment, which encompasses dry hire and new and used crane sales, in 2006. Sherrin Hire had 24 branches and now has over 4,000 units of equipment, covering travel towers, under-bridge inspection units, various types and capacities of access equipment, telescopic handlers, generators, compressors, lighting, signboards and mobile pressure cleaners.
With these two acquisitions, BOOM’s mix by equipment type is now cranes 49%, crane sales 12%, travel towers 11%, access equipment 10%, heavy haulage and transport 9%, rigging 6% and other 3%. The new activities also give BOOM the opportunity to grow the business by selling new services to existing clients, as well as to rationalise branches and equipment support.
Harmon joined BOOM at the start, and will be retiring on 30 June, with current finance director Mark Lawrence lined up to take his place. Harmon says that there is at least another two or three years of strength remaining in the currently buoyant resources sector in Australia.
While BOOM Logistics bears the greatest similarity to Brambles in its size and branch coverage in major cities and mining and industrial regions, and its appreciation of the value of long-term contracts with mining and industrial clients, it is not alone in this, although it is the only public company in the sector.
The spread of Boom Logistics, Freo and LCR Lindores in Australia
LCR Lindores Group
LCR Lindores Group is a family company of more than twenty years standing in the tower and mobile crane sectors on the east coast of Australia. The Lindores brothers (Peter, Greg and Edward) have hands-on backgrounds, and the business grew to a substantial size under their management.
However, they recognised that it was necessary to structure the business differently to manage future growth, appointing a non-executive chairman for the first time in 2004 and recruiting Col Partington as MD and CEO in 2005. Partington previously held senior management positions with Brambles Industrial Services, Thiess (a major civil contractor) and Mack Trucks Australia.
Since then external appointees have been taken on in service areas such as finance and occupational health and safety, and in management roles in the business units. The company has opened branches in the Central Queensland coalfields, and has won term contracts to provide crane services there.
It has also diversified outside the crane and lifting area into bulk haulage, and holds term contracts for this service. New strengths have been developed in transport, project management, labour hire and maintenance services.
Partington describes his immediate priorities as improving management of business costs, and having the structures to train and develop people resources to support future growth. With this in place, further growth is expected through acquisition, organic growth, and geographic spread. A significant step in this geographic diversification has been the supply of two large Favco tower cranes and supervisory staff to a large power project in the US.
Freo Machinery
Freo Machinery is another family company with an eye for servicing industrial and mining companies. It now has over 100 cranes servicing branches in the regional Western Australia mining/industrial centres as well as Perth and the Kwinana industrial port to the south. Freo cranes division general manager Nic Celenza states that industrial maintenance would comprise between 40%-50% of work, with some of this being based on term contracts and some resulting from ongoing relationships, without the need for formalisation. It also does construction work for these clients.
Freo Machinery is unique in Australia in having a large crane hire fleet as well as strengths in such diverse areas as concrete drilling and sawing, heavy transport, labour hire, plant hire and construction. This mirrors Brambles, which had extensive business interests outside crane hire, though often with commonality in the client base.
Expansion has commenced into the east coast of Australia, where many of Freo’s industrial clients have operations, and it is looking for companies to buy to continue this expansion.
Rod Harman, outgoing CEO of Boom Logistics Rod Harman, outgoing CEO of Boom Logistics The spread of Boom Logistics, Freo and LCR Lindores in Australia The spread of Boom Logistics, Freo and LCR Lindores in Australia BOOM CEO Rod Harmon states that around 70% of current earnings now comes from industrial and resources maintenance. The importance of industrial services
