14.02.2005

BMS - Kran Ringen and words of wisdom

Last month we met with Søren Jensen, managing director of BMS, Denmark’s largest crane and access rental company. BMS recently merged with Kran Ringen, consolidating its market leadership.
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Søren Jensen, managing director of BMS

As we reported at the time, the merger looked like the first step of an exit strategy for owner and now 50 percent shareholder MT.Højgaards. While it would not confirm this we understand that it might indeed be interested in selling its holding. The which merged company operates now under the BMS banner, the transaction was only announced in November and yet the business is coming together at a rapid pace.

Discussing the Danish hire market, Jensen said that the last few years have been very difficult in Denmark with crane rates falling 11 percent in the past 12 months while access platform rates have dropped by 14 percent.

“We had ten good years here” he said thanks to all of the infrastructure projects such as the bridge to Sweden, the Airport expansion and rail lines etc.. but by 1999 it was slowing down rapidly, however the hurricane that hit us at that time created a great deal of work and masked the fact that regular business was drying up”

“so that when the clear up work was over the impact on us all was severe. We made some significant cut backs in 2001 but 2004 was a difficult year in that the first half was very slow and then the second half very busy, causing us to spend heavily on overtime in what was overall a slow year”

“The purchase of the Kran Ringen assets is already helping improve results, three depots have been merged while administration and back room functions are being combined thus spreading the fixed overhead. Other savings will result from transport costs, with the combined network no customer is more than two hours away from one of our depots” he said.

He also commented that “crane hirers must have picked up the lemming gene somewhere along the way”.” We end up giving more and more away with no charge and every one follows to what will surely be a disaster”.

“Sometimes I wonder if our worst enemy is our own sales guys they hate to ask for payment for anything! We have, over the last couple of years, given away: Free transport; Free lifting tackle; and Lower rates. Last year we started to roll this back, by charging for extras such as lifting beams etc”.

“We had found that each of our cranes carries 71 pieces of extra kit!, all of which needs to be re-certified every year”. “Last year we spent over DK800,000 (£80,000) on certifying those slings and tackle”!

“We have also begun to charge for transport time again although we are prepared to limit this to two hours”.

“I say to customers “we only want to charge for what we supply, if we do not supply it we will not charge you”.

“This has become a crazy business just like running taxis, customers can book a 400 tonner and then the night before, it might be raining and they cancel it with no penalty! The chances of us finding a new job for it within 12 hours are limited to say the least”!

“If I book a table in a good restaurant and cancel it with that sort of notice they will charge me”

“When rates are poor now we will sell machines, rather than plough on with too many units for market demand, if business picks up it does not take that long to buy a new one in”.

The company which was founded by the Danish government in 1953 as part of the Marshall plan. Revenues would have been DK 500 million this year had the company not sold off the scaffold rental business and sales division in November.
And what of the future?

“Well we have just purchased a small Swedish crane rental company TP Kranar AB in Helsingbor” said Jensen. When asked if this was part of a plan to roll out across Sweden he said “yes”,

Cranes an Access do they go togher?

On the oft debated subject of mixing Access and Cranes in the same company, he commented that many of the customers are the same and it allows the overhead to be spread, “we use the same location and same administration. It is essential though to keep it separate, we have separate sales people, separate hire desk and separate mechanics”.

“I remember reading the Cranes&Access issue that had Martin Ainscough and the man from GWS/PTP on the cover, I still take that out from time to time and re read the article in order to remind myself to keep it separate”

Moving on to the most profitable equipment in the BMS fleet Jensen is quite clear when it comes to cranes “ The 50 tonne Kato truck cranes, they come in once a year for the road inspection and certification and that is the last we hear until the next year”.

If Kato or Tadano ever decided to meet the demand for truck cranes and re enter the market it seems that BMS would be an eager customer “Running an all All-Terrain fleet is like driving a 4x4 when you never drive outside of London” He says “We don’t get a penny more on the hire rate for them and yet they cost more to buy and more to maintain”

The same question with the access fleet did not elicit such a rapid and clear response, but larger booms generally do better in the BMS fleet it seems, with JLG cited as a boom product that works well in the fleet..

Finally to wrap up the interview we asked about the diesel that crane hire companies use, “why normal diesel of course? “All companies have to sue the fully taxed diesel (which costs roughly the same price on the forecourt as in the UK) so this is not an issue”

When asking about the how the Danish authorities differentiate between contact lifting and crane hire Jensen had some difficulty understanding the two concepts.. “This is not an issue here in Denmark, we do are called for a crane and we go and do the lift, if the the crane driver takes the responsibility for the lift in that if he is not happy with any of the arrangements on site he will stop and demand that it is put right”.

Crane drivers are all licensed and generally go though both a training programme and an apprenticeship, starting off as an assistant on a larger crane and then when he is full licensed moving onto a small crane of his own and gradually moving up to larger and more sophisticated units.