13.12.2004

Riwal on the march

Earlier this month Dutch based rental company Riwal announced that it had ordered almost a 1,000 aerial lifts from JLG, bringing the total number of JLG units ordered by the company in 2004 to over 1,700 with a price tag of €50 million. Vertikal caught up with Doron Livnat and Dick Schalekamp, two of the three owners of the Riwal group, at their Dordrecht headquarters to learn a little more about the company and its plans..
(L-R) Jaap Schalekamp, Doron Livnat and Dick Schalekamp

Riwal is without doubt the largest access rental company in Holland, with a locally based fleet of around 1,200 units, a large portion of them bigger machines. However the group also operate one of the largest access fleets in Denmark with almost 600 units and operates a significant re-rent fleet, which trades as Ri Rent a company jointly held with JLG. In total the company manages a fleet in the region of 3,700 units. Placing it firmly among the top five rental fleets in Europe. The total fleet will rise to around 4,200 by mid 2005.

In addition to the aerial lift business Riwal still run a fleet of 45 mobile cranes, although today this sector represents only around 20 percent of the company’s revenues. Livnat and Schalekamp confirmed that the crane business in Holland is very hard and not particularly profitable, both men estimate the total active rental fleet in the country at around 2,500 units while demand was thought to only justify around 2,000 units. To put this into perspective, if these estimates are true the Dutch crane rental fleet is of a similar size to that of the UK fleet! In a country with only 15 million people and 16,000 square miles, it is hard to see how even 2,000 units would be kept busy!.

When asked why the two of them still want to stay in the crane business, Livnat says “good question!” but they both said “Our Hearts are still in the business” and after a little reflection the two of them agreed that “there are strategic benefits from providing both crane and access services and there are a number of synergies between the two”. The benefits are not however strong enough to prompt them into establishing a crane rental fleet in Denmark!

In order to keep the crane business as profitable as possible Riwal are moving away from the smaller cranes, both men agreed that turning a profit from 35 to 40 tonners or smaller was impossible, there are simply too many owner operators who are not looking at the replacement cost for their cranes. In spite of recent consolidations in the manufacturing sector, they consider that there is still too much capacity between the manufacturers.

When the conversation moves to the access business everything is clearly brighter and more optimistic, A recent visits to all three of JLG’s production plants has clearly inspired and impressed the two, not an easy task as both have seen more crane and access production plants than most, including facilities in Japan, Germany and the USA.. they are not easily impressed when it comes to production lines.. and yet it is very clear JLG’s efforts have blown them away to such an extent that they are firm believers in JLG’s potential to pull away from the other volume producers.

This inspiration appears to have rekindled their own ideas on expansion within the European sales and rental sector. In the press release that the company issued when it placed its large order, the specifics on where the units were going was notable by its vagueness, the Middle East and new EU members were cited as ultimate destinations, with only a few remaining in the Holland. With a direct Riwal fleet of over 2,500 units and a claimed average age of 26 months, it will take over a thousand new units a year simply to hold the status quo, Schalekamp says though that 36 months is closer to the average age the company will look to maintain. Most of the 700 units delivered in 2004 plus a few from the new order will serve as fleet replacements.

It is clear that the two owners consider that the maintenance of a young fleet is key part of the Riwal business philosophy, “above all we are in the safety business” says Livnat, All of our machines are subjected to a full and thorough inspection every year by SGS (A Notified body that has a speciality with Aerial lifts) no machine is allowed to continue to work for even a week over that 12 months, the only person in the company who can authorise even a days extension is Dick” “I don’t know haw you could live with yourself if an accident occurred due to sending out a six year old machine in poor condition or a unit that had not been properly inspected” What do you say to the dead mans family? We are sorry?”

We believe that Riwal has the highest quality systems and procedures in the aerial lift industry anywhere” for example we operate a fleet of over 20 large trucks in Holland so that we can deliver all of our own machines, yes it would be cheaper to use low cost subcontractors but our drivers are our ambassadors out there, they make sure that a proper handover occurs, they make sure that the machines will be properly checked and they look out for business opportunities”

With over 200 employees in the group, the company has a solid ratio of staff per machine, although the crane business distorts an meaningful comparison with a pure access specialist. The quality and safety issues kept coming up though, there is no doubt that this is a high priority at Riwal, mechanics and drivers can now log into the system and “red flag” a machine blocking it from going out on a new rental unit a mechanic has inspected it and passed it as safe and ready to rent. While the company’s current information system is relatively “state of the art” for the access rental industry, it has just spent a million euros on a new integrated system that will help improve logistics and integrate the various aspects of the business. “with lower rates there is no room for waste you need to work smarter now in order to make a decent profit” said Livnat.

We follow exactly the same quality and safety procedures no matter where we operate and use our name, for example the trucks in Denmark and the Middle East are exactly the same as the ones here, the procedures are the same and to make sure we train many of our overseas staff here, they come over and work in the relevant department in Holland to see how it is done the Riwal way”

So we asked where are these 8 or 900 units going to? The new EU countries cover a wide area, will you be setting up in Poland, Czech republic Hungary or where? “YES” was the one word answer, but when pushed, it appears that one or more states from the old Yugoslavia are on the top of the list, most likely Croatia and Slovenia but possibly also Serbia, but given that the company already has units operating in Iraq, perhaps Bosnia is among the destinations for these units? It was clear that the two men did not wish to get too specific at this stage, given that the units will not be delivered until next year
An Aichi RZ150 installs glass sound suppression panels

When asked about the prospects of any acquisitions both Livnat and Schalekamp stresses their preference for “Greenfield” start ups, saying apart from buying used equipment what do you get from such acquisitions? No matter what people say you can not buy a customer base in this business, you might think that you do but in realty you do not. You then inherit all the baggage of the old business, bad habits, old equipment that you probably paid too much for and who knows what of a reputation.

On top of that what can we bring to a new market? Good local people like we have in Denmark know how to run a local business much better than we do, we can bring funding, buying power, log istics expertise but in Europe this is still very much a people business which is why the United Rentals concept will not work over here”
While Riwal is a market leading company it is still very much a family company, we have very little staff turnover and yet a young team, the access rental team for example has an average age of only 27” said Schalekamp

Thus the new businesses in Eastern Europe will be some form of joint venture with local businesses, either along the lines of re renting or a form of franchise with Riwal branding and philosophies.

Turning back to Holland, most access companies agree that rates are too low, as always in the rental business all over the world each “player” blames the other for indiscriminate rate cutting and claims to be whiter than white themselves, Riwal, possibly because it is the largest, often gets cited as a heavy discounter, when asked about this Dick Schalekamp said “We no longer work with list prices and discounts, the traditional way in Holland, we quote net prices and expect to achieve a good rate that reflects the quality that we offer. The problem with some companies is that they offer a certain discount when it is quiet and after a while the staff make no attempt to obtain better prices and the unprofitable rate then becomes the norm for that business. We don’t work that way and the proof is on our bottom line we make a reasonable profit”

On the international stage the adoption by some companies of ten to 12 year depreciation for their access equipment is we feel wrong, As we have already said we believe that if you have a strong belief in safety and quality then it is important to keep a young fleet if you depreciate a machine over 10 years or more it is not possible to sell it after three or even four years from anything but a significant loss” In Holland the minimum accepted period for machine depreciation has moved from five to six years.

Turning to the nuts and bolts of the business, Riwal has also been working on getting closer to the major platform users and modifying some of the fleet to suit special applications, (This has also been a strong JLG aim in recent years as represented by Sky welder etc.) two good examples quoted by Schalekamp were a number of Aichi crawler booms, that Riwal has equipped with larger baskets to work with the wide glass panels used on the motorway network as a form of sound insulation. The booms had to be submitted to a new CE approval process in the modified format. Another more recent project has been to fit a lifting mechanism to a Holland Lift scissor that places long heavy Sprinkler tubes into position for the crew simply need to plum it in.

The two partners were happy to continue talking about the business that they clearly love and enjoy, but all things must end, in summary Doron Livnat said that after a slower period for the European Access industry and there is still some room for a little more “shake out” but there is light on the horizon and we want to show the industry that we are a leading company, and that we believe in what we do and in our industry.”


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