Growing the Business
Having sold the business in 2007 for £255million, Martin gave our MD, Diane Banister an interview, discussing the growth and success of the business.
Diane worked with Martin and his Leadership Team for over 8 years delivering management development, sales and hire controller training.
For those who don’t know the history of the business, can you give us an overview of the business?
Ainscough Crane Hire started in 1976 with 6 cranes. I was the Manager, my sister did the accounts, 3 of my brothers drove cranes and we had 3 or 4 drivers.
Before then it was a scrap metal business and that’s how my dad first bought a crane.
By the end of the 70s, our first year’s trade was £100k turnover making 10k profit.
By the end of the 80s we were a £3 million turnover business making a £1 million profit which was phenomenal when you think a million pound back in the late 80s was a lot of money and it was a great margin and we were running a great business.
That was centred around the fact that we became a dominant player in the North West. We were very efficient, we ran it very very tight and it was just 3 depots, £3 million turnover and a million pound profit …fantastic.
And then we decided in the 90s that we could actually grow this business further, we got our confidence and we got the ambition to become a national company.
The early 90s coincided with the recession at the beginning of each decade and we also decided that geographically we had then 70 cranes, things were slowing down a little bit, we wanted to keep working, how could we do that ..spread ourselves geographically.?
First of all we moved up into Scotland where we took over a business called Interlift.
Then another business over in Newcastle went into receivership and we took on Peter Kernahan, the beloved Peter, and his team up in Newcastle and that depot made money for us every month since the day we took it over.
So we were starting to grow the business, principally northern biased at that stage, and then in about ‘93 we decided that we really wanted to do this thing properly, we’ve got to go to London, we’ve got to go to the towns of England.
So at that stage we took in some private equity funding and that gave us the wherewithal to go and buy businesses and we bought businesses in Kent, London, Coventry, Bristol and so gradually throughout the 90s, through a mixture of greenfield opening, taking over failed businesses and buying out other small businesses we ended up then with about 15 depots throughout the UK. By the end of the 90s, we’d gone from having 70 cranes to having 300 cranes.
We were the biggest independent; our competitors were Grayston White & Sparrow who were owned by Rentokil which in those days would be operating 500 cranes, Hewden Stuarts operating probably 300 cranes, Baldwins Crane Hire operating not just in the UK but in the States as well and with big cranes.
Because of the competition and supply in the market at that stage, sadly, the margins were thin, at the end of the 90s we were probably doing £30 million turnover and still making £1 million profit which is not a very smart way to do business. The reason that we tolerated that situation was that, I always had the knowledge or the confidence that sooner or later one of these other major competitors would have to change their operation.
They would have to reduce their cost, put prices up, hire rates were uncommercially low, there was over capacity in the market and we were all very busy fools. That was when you were helping us to protect prices.
The big break came really in 2000 when Rentokil put Grayston White & Sparrow up for sale; which we eventually bought.
Buying Grayston White & Sparrow
I wrote to Lazzard Brothers to say ” here I am little old Martin Ainscough from Wigan and I would like to come to talk to you about buying Grayston White & Sparrow” and I got a letter back saying do you realise how big this business is?
So I wrote back and said I know exactly how big this business is, I know far more about this business than you do as that’s my job. So we were gradually given a meeting in London in November in a very fancy office block in London.
Neil Partridge and I went down to London with one of our advisors and went into this meeting. This Frenchman asked me how much I thought Grayston White & Sparrow was worth and I said in my usual Wigan twang “ With respect sir you’re the seller you’ve got to tell me how much you think it’s worth.”
He said he thought it was worth about £40 million and I said well I’m very sorry but my opinion is that is probably more likely worth £12 million at which point we were politely asked to leave.
Where this £12 million came from was that was the maximum amount of money we could raise at the time.
Dead easy, it wasn’t a case of well why didn’t we offer him £30M or £40M we could only raise £12million that was our absolute limit.
So we came away from London disheartened but nevertheless conscious that something was going to change within the industry and hopefully that would lead to better times.
About 8 weeks later I got a phone call asking if we would go back to London, which is obviously a very encouraging sign and we went back to London and we were fortunate in the respect that what we also knew was that our competition at the time, Hewden Stuarts had been taken over by Finnings so they were in disarray, Baldwins had gone public and were having problems in the States so their share price had collapsed so they weren’t in a position to buy it so there was no other real obvious UK buyer.
Some of the big European companies could have bought it and indeed should have bought but they didn’t thankfully.
So we went back to London and we did a deal and bought the business for £12 million and £3 million deferred, effectively they loaned us £3 million that we paid them out of future profits.
The clever trick really then, the thing that really made the difference, if you put two businesses together, one’s got 300 cranes and one’s got 500 cranes you’ve got 800 cranes you haven’t actually resolved anything.
So what we did was to send 150 of the oldest cranes to a big auction in Rotterdam with a proviso that nothing could come back to the UK and we sold 150 cranes at auction and got about £4 – £5 million back straight away, so that was helpful.
We recruited from Hewden Stuart because we needed some assistance on the operation side of things and Ray Ledger joined us. He was probably the best cost cutter that I’ve ever come across and he executed a phenomenal job to his credit and so basically what we did, we reduced the fleet down to cranes out of the market and then over a period of time we then sold another 100 cranes but we replaced some of those with part exchanges for new ones etc.
So we modernised the fleet.
We sadly had to make probably about 500 people redundant because obviously we had a massive head office in the North East. We put depots together so we took out depot count from 15 to 25 so we merged depots but had some new ones opened so we were then the biggest player in the UK.
To give you the numbers which is the all important thing in my world as you know, we went from being a £30 million turnover making a £1 million profit to being a £60 /70 million turnover business with £10 million profit in less than 2 years so it transformed the business.
These were glory days, these were the days when all the hard work is paying off all the stuff we did with you, the selling, the systems, to downscale a business like that with such speed took a lot of doing a lot of effort and god bless Richard Prince and people like that unbelievable team of people.
So as well as getting all these new cranes, we were able to beef up the team, we got Steve Cook on the engineering, we got lots of different really really good people.
And then never being content at that stage in my life obviously we were then doing very well as a business and we were constantly watching our competitors.
We had our ducks in a row, by this stage we had demonstrated in our earlier acquisition to the banks and all the funders that we were capable of consolidating positons and making something out of an acquisition and not just making a bigger business that doesn’t make any more money.
So we bought Baldwins, but we bought the UK operation only. We put more cranes into the depots, so more utilisation without adding to the cost. We only increased the depot network by one, we streamlined the fleet again, probably took another 100 cranes out of it, to tighten the market up to make sure we had the best possible fleet. We then went to being in 2006/7 we were like a £100 million turnover business making 25 million a year profit.
So that was fantastic and then just to conclude the story we were massively dominant in the market we were probably 5 times bigger than our nearest competitor, which was still Hewden Stuart, at that stage.
In terms of big contracts we had to be careful obviously, we dealt with it all properly. You can’t alienate customers you still have to treat your customers with respect but we were able to work on more commercial terms, massive utilisation, still running cost tight, maximising the strength of the depot network and the big cranes etc
An Interview with Martin Ainscough Part 2 – Finger on the pulse
An Interview with Martin Ainscough Part 3 – Risk & Reward
An Interview with Martin Ainscough Part 4 – How Training Helped
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