Distribution shake-up
August 1st 2010

Richard Close, CEO of Briggs Equipment talks to Handling & Storage solutions editor Simon Duddy about its multimillion pound acquisition of Yale UK and its plans for the future

Simon Duddy:When do you expect the deal to buy Yale UK to close? Richard Close:We intend the acquisition of Yale's current distributor Yale UK to close by 1 August.We are not acquiring Yale UK properties, its people will integrate with us. There is some overlap in terms of job function and we'll have to manage that process.

From July 1, we're a non-exclusive Caterpillar dealer. If things go ahead, we'll terminate the deal with Caterpillar at the end of September. Sub-dealers will hopefully come over to us. I don't see any reason why that can't work for both sides.

SD:Tell us how the deal came about? RC:We bought Finning Materials Handling in 2006. The early years were about turning the business around. The recession cost us six months but we always planned to take the business to a new level.

The biggest difference between Finnings and us in our early years was Finnings was a Caterpillar distributor that had a long term rental business, whereas Briggs was a long term rental business that had a Caterpillar distributor. The long term rental business became the focus.

The opportunity to partner with a division 1 manufacturer was one we'd been discussing for quite a while.

SD:Why did you choose to partner with Yale? RC: Yale is a global manufacturer with scale, which was key for us. This is important because we're in this for the long term and we need a company that can fund the next generation of forklifts.

In terms of serious r&d facilities, Nacco is clearly one of the leaders. It produces a full line of products itself; from pallet trucks to VNA, manufactured in its own facilities, under its management control, to its design.

Yale products are designed with the long term rental market in mind, so we have very clear benefits for our customers. Also Yale UK is more of a regional player and Briggs a national business.

The Yale brand will benefit from our infrastructure.

In addition, Briggs is the largest Yale distributor globally and the deal will bring some synergies. This was a UK decision but culturally Yale and Briggs are aligned at the top. The senior people are on the same agenda, we want the same things - growth and long term customer survival.

SD:Will you continue to support existing Caterpillar customers? RC:We will service all of our customers. Finning was an amalgamation of Finning and Lex Harvey so we have a mixed fleet. Our engineers can work on any forklift.We will continue a relationship with Caterpillar on parts and warranties. It is an amicable break and Caterpillar has been very professional.

SD:What are your ambitions? RC:We're not relying on organic growth.We have to look at ways we can grow our fleet regardless of whether the economy is in our favour or not. The acquisition of Yale UK brings with it a long term rental fleet. These sort of moves will enable us to get scale.

Our parent company has cash resources to call on and we're debt free.We are not a public company, so there are no shareholders to answer to. If a competitor is looking to exit the business, we could move quickly to acquire if the price was right.

But more importantly, for those customers that are finding cash drying up and are looking for a purchase and hire back deal, we can buy their fleets off them very quickly.

SD:Will there be more consolidation? RC: It wouldn't surprise me. The industry is spilt into three divisions, excluding niche manufacturers. Division 1 comprises full-range manufacturers that design and build their own products and are distributed globally. Division 2 comprises typically counterbalance manufacturers who have partnered with a warehouse player. Division 3 comprises Chinese and Indian manufacturers that are coming through. I think division 3 will take out division 2. Division 2 players have got to move up to division 1 or exit the business.

SD: How are customers faring and what are they looking for? RC: Some end user groups are doing well - such as food, drink, agriculture, tobacco, pharmaceutical - but most customers are taking time to distill what's going on. There is a level of nervousness around. The phones are busier but people are slow to make a commitment. The customer is looking for value and we see our role as a materials handling expert that can come into their business and make their materials handling more productive and cost effective by say, changing the specification of the trucks or helping to modify the behaviour of drivers.

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