Give business room to grow
September 1st 2010

Small distribution firms need better support from banks, who are stifling entrepreneurship, says Palletforce CEO Michael Conroy

Palletforce CEO Michael Conroy wears the pressures of running a successful modern business lightly on his shoulders but there is one thing that gets his goat. He contends that the reluctance of banks to lend to small and medium sized businesses is not only unfair but endangers the economy's recovery from recession.

"Big businesses with very heavy debts are being supported because it would be too much pain for the bank not to but I've seen small to medium-sized transport organisations going out of business because the bank doesn't pay attention, doesn't care and and doesn't understand.

"I'm not saying throw good money after bad and of course the budget must be balanced but winning new business costs money and entrepreneurs aren't getting the support. Banks have lost the ability to communicate with their customers." While the banks have seemingly lost faith in entrepreneurship, it is very much at the heart of Conroy's ethos.

He joined the industry by default, going to an interview for practice and taking a sales job with TNT after developing a rapport with the interviewer. Fast forward twenty odd years, and Conroy has an impressive track record.Most notably, he formed part of the MBO team that turned overnight parcels firm ANC Group from making a loss of £14 million to making a £9m profit in five years. In 2006 the business was sold to FedEx for £120m.

Many would have been content with that but Conroy then took over at Palletforce two years ago. Now he manages a large network of entrepreneurs.

"Palletforce relies on entrepreneurship, over 90% of our volume comes from our members.

"We have mission to be number one in the marketplace and we will do that through quality.We're number three now, but at nine years old, we're still a young business." The structure of the business is a privately traded PLC. The shares are owned by the members - the depots and haulage companies that form the network. It is not on the market so does not have the pressures that come with that.

"We have three year and five year outlooks on the business.

There is no point being short term, especially in transport and logistics. Nobody makes a fortune out of distribution and warehousing in the short term, you have got to work hard and be very efficient and innovate for customers over a sustained period because competition is so fierce." The company moved to its £30m Burton-on-Trent facility slap bang in the middle of the recession, in January 2009. Conroy says business was affected but bounced back this year with volumes up 20%.

"The site has capacity to handle 15,000 pallets. Last night we handled 9,500 but our average for the year is nearer 8,200.We've got significant capacity in the centre and we do need to add to our network." Palletforce aims to add 10-20 members in the next three years with London and the South East a key focus.

"There are lots of companies that would like to join but we want to make sure we add quality.We are looking generally but are focusing on London and the South East.We're very lucky we have some very strong members there but we need to complement that. As well as possessing quality, new members must have the desire to develop and be financially sound." In a further bid to facilitate growth, Palletforce has upgraded its forklift fleet and is now running a fleet of 40+ trucks, with upgraded IT and weighing equipment to manage information regarding loads.

"We've secured Caterpillar trucks from Briggs Equipment, we believe they are the best so we've stuck with them.

"The IT side is interesting. They are not passive scanners, they deal with exceptions and that's the key, that's what you need flagging up. Outside of the Burton facility itself, it is the biggest capital investment we've made." As Palletforce gears up for the future, Conroy stresses above all a desire to work hard and a passion for the industry. There is 'no magic rabbit to pull out of the hat', he says. It is hard work and patience, as well as more leeway from the banks, that will get the economy on the way to strong growth.

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