No more brokers!
Today I made the decision to cease trading with a customer. ……So what?
Well. The customer in question is a broker. A Pseudo Hire company with no tangible assets and who sells across the UK and cross hires in from various sources the length and breadth of the land.
The reasoning for this was their insatiable drive for lower pricing of both Hire rates and transport. This has been ongoing for some time, and they dangle prizes of potentially emptying one’s yard. However, when the gloss is wiped away the business and unending drive for lower pricing is not worth the effort.
There are a small nucleus of suppliers who will whore themselves to this Broker in the belief that being busy fools is preferable to being less busy but more profitable.
However, we have seen such tactics as agreeing a hire, then sending the official order over with a different hire price for the equipment and a discrepancy on the transport. It seems that this tactic is now used on every hire.
When this is corrected, they then sit on the invoice for the previously agreed price (which no-longer matches their order) and don’t communicate anything until the invoice is due for payment – some 60 days later! In the end, I have made the decision to close their account and walk away from their business, which has resulted in the refusal of six machines this week alone.
The point I’m making here is these types of business are killing the UK Hire Industry. They wave big orders around for their databases that they have purloined from former employers, but in truth they parasite off the genuine owners of the assets and over time very cleverly slide themselves between the hire company and their own customers and in doing so they take a margin from the genuine hire company who almost always ends up with the same kit as they would have had anyway.
The best description we have heard is it’s akin to fighting a battle against someone whom you’ve also provided the guns and the bullets!
These industry parasites don’t own the equipment, they don’t have engineers or trucks or workshops, but they are perfectly placed to take advantage of those who invest in these commodities. They are akin to a disease which needs to be eradicated before the UK hire industry is destroyed by appalling hire rates whilst they cream-off any meaningful profitability to the point of starving their own supply chain.
These individuals are too dull to realise that their suppliers need to make a profit and there is a growing resistance to wanting to deal with them, as all they are doing is driving down the rental rates for the owners of the assets to the point of certain lines becoming uneconomic.
Things must be done, and I believe the leading industry players - and all of us - need to spread the word.
Clements Plant & Access Hire
These are interesting times indeed. We have all cultivated alliances with main contractors plant departments over the years, and then watched as many have then grown their own hire fleets. Many would suggest that HSS and Speedy did this very thing. I think Jim is right to state his position, and the article will cause many people to reflect on their own decisions. As utilisation rises will the Brokers get squeezed from both positions?
The power of the order, another issue is growing hire fleets without growing sales professionals to go along side it #racetothebottom
The Hire companies can increase price if they don't contract the full lift service (Lift Contract), right?
Up and Over
You are correct Hire Manager. The Hire companies are to blame for devaluing their own assets by giving equipment away to these 'Pop Up' outfits that keep appearing. It seems that some hire companies are offering equipment to 'Middlemen' at well below agreed inter company rates that have existed for years between asset owning hire companies. Can they not see that they are cutting their own throats???? It's the tail wagging the dog! These 'middlemen' urinate down the backs of the equipment owing hire companies whilst convincing them that its raining! Madness.
I agree with 99% of the above apart from wanting to "eradicate" people trying to make a living and run their own business and that Brokers are "parasites"
Not all Brokers want to minimize rates, Brokers provide a great service to businesses hiring multiple items (not just powered access) that want a one stop shop and to benefit from the massive amount of time that saves them to concentrate on their own core skills. They can also be a good customer to certain reliable plant companies providing volume of hires at very acceptable hire rates.
You have exercised your choice and so can every other business owner.
Who's at fault for lowering rates, the broker for asking for the lower price to increase their margin or the business owner that agrees to the lower price?