Management tells Fred
Crawley how the lessor grew from an in-house function to an
outsourcing specialist.
its entanglement with the banking and auto manufacturing sectors, a
shrewd independent provider with no such ties could have everything
to play for. Dave Stanley, who took charge of business development
at Carillion Fleet Management (CFM) two years ago, is convinced
that his company is in a unique position to grow through doing what
it has traditionally done best: adaptation.
The business that now trades as Carillion Fleet
Management began its life as the internal fleet division of
building sector stalwart Tarmac more than 40 years ago. At that
stage, the division was entirely concerned with the internal
affairs of Tarmac – no small job, given the sheer variety of
vehicles in use by Tarmac’s tens of thousands of employees.
But when the giant shed its construction and
services divisions to concentrate on aggregate production in 1998,
it created a new company called Carillion plc. The task of running
Carillion and Tarmac’s fleets was transferred to the new entity,
under the name Carillion Fleet Management (CFM).
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CFM set an immediate precedent for external fleet
management, retaining the contract to manage the fleet of its
erstwhile parent in open competition, which it holds to this
day.
Waking the giant
When Stanley came on board from a
position at Fleet Logistics International in 2007, he found what he
calls a “sleeping giant” in CFM.
“I saw that the best practice used to
manage the Carillion fleet applied equally well to external work
with Tarmac”, he says. “We clearly had the potential to deliver a
quality, independent fleet service to both private and public
sector operators, if we could only develop our inward-looking
operational culture into something more outward-facing.”
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By GlobalDataWhat he had to work with was significantly larger
than the CFM that existed in 1998. In 2007, the CFM fleet comprised
around 7,000 cars and 3,000 commercial vehicles, a roster that grew
with Carillion plc’s acquisition of support and services firm
Arthur McAlpine (AMA) at the end of the year – an acquisition which
changed the nature of the entire Carillion group.
With AMA under its belt, Carillion found itself
with more business in support services than in construction, and
moved into a different sector as well as a different place in the
FTSE index. The new emphasis on support services fit well with
Stanley’s own agenda: spreading 40 years’ experience to other
businesses in the market, either through fleet leasing,
administrative services, or consultation.
One area of experience that transfered well to the
external market was CFM’s veteran status in commercial vehicle
management.
“Carillion plc is a company with over 50,000 people
worldwide,” says Stanley. “Within that, we have people working on
facilities management, infrastructure, roads, rail and in many
other sectors – all of them using different commercial vehicles.
Carillion relies on us to reduce costs, ensure efficiency, and
procure the right vehicles for the group, and so we should be
making use of that knowledge for our external work – both in
putting together bespoke CV fleets, and in advising on vehicle type
and usage for existing fleets.”
Another fleet management advantage that CFM enjoys
is its status as an independent lessor – without organisational
ties to manufacturers, it is in a position to recommend or provide
whichever vehicles fit an operator’s requirements, regardless of
brand. In some cases, this attitude takes CFM into interesting
territory – such as the supply of electric vehicles.
CFM supplied its first electric vehicle – a Smith
Edison electric van – to business supplies and managed services
company Office2Office last year. It has subsequently delivered four
such vehicles to grounds maintenance company Continental Landscapes
in Poole (see
Fleet Deals). So far the feedback has been good, and
Stanley is confident that the trend will grow.
“Carillion is one of only a handful of suppliers to
provide electric vehicles on contract hire, and the monthly cost
includes batteries,” he says. “Most of our rivals avoid the new
technology as they are unwilling to take the risk on vehicle and
battery disposal at the end of the contract hire agreement, but
when our current contracts end, the market will look very
different.”
More and more companies are seeing the potential
benefits of electric vehicles, he believes, and are adding them to
their fleets.
“Coupled with battery evolution, this means resale
values will improve as a market for used vehicles of this type
emerges,” Stanley argues.
The green ethos is prominent in CFM’s business, and
is, according to Stanley, “motivated by good business sense”,
adding that “regardless of any political and scientific
considerations, there is no doubt that green technologies improve
efficiency.”
He uses the example of CFM’s carbon footprint
evaluation service, which has seen increasing use in recent years
as CFM has worked with companies to create greener fleets.
Beside CFM’s green offerings, however, Stanley
realises that the business environment of 2009 will only grow
hungrier for other cost-cutting services as the recession
worsens.
“One way we’re helping customers to fight reduced
credit availability is to look more carefully at their existing
fleets and identify how vehicles are used,” he explains. “In many
cases, it is possible to reduce the overall number of vehicles
without decreasing usage levels, by choosing more suitable vehicles
for an application.”
Another increasingly popular option at CFM is its
daily rental service, which is seeing more uptake as more companies
seek occasional use of specialist vehicles without facing the
balance sheet implications of long term fleet use.
Downturn strategy
After all this talk of service and
assistance, it seems only fair to ask how CFM intends to survive
for itself in 2009, being involved as deeply as it is in the
construction sector – despite Carillion’s redefinition as a support
services company.
Stanley’s answer is pragmatic: “The coming year
will see us concentrating on what may be the only buoyant sector of
the economy, namely the public sector. Carillion plc has many close
ties there through infrastructure contracts, not to mention
relationships with public sector organisations in health and
education, and local authorities. Given the current economic
climate, this is a sector that we believe will be very responsive
to cost saving and value added services.”
Given Carillion Fleet Management’s track record for
making the most out of what it has had in past, one imagines that
Stanley’s programme of expansion will not find itself short of
fuel, even as the outlook for the fleet sector gets murkier.
