Acumen

Last year Acumen Logistics Group gate-crashed the MT Top 100 for the first time, scant reward for a phenomenal performance over the past few years that has seen the company rise from an £8.2m turnover in 2009 to £20m in 2012.

While this rate of growth has not all been organic, it has certainly been through hard work. Acumen was founded in 2004 by chairman John Hodges, when he merged one of Autologic’s vehicle parts distribution subsidiaries with his existing transport business VAS. Then in October 2009 Acumen acquired 100% of the share capital of Auto UK Logistics followed by Grayston Automotive UK in January 2010.

For some this would be enough but for Chris Doughty, MD of its Acumen Distribution division, there is an element of frustration that the Northampton-based firm has not grown quicker. "In the past 10 years we have had a horrifically poor run of winning new customers," he insists.

Honesty

"We have hardly won one," he says with disarming honesty. "With everyone it is either an existing customer from old Acumen, or one of John’s customers from his old business. Beyond them I do not think we have won a proper genuine new customer of any significance."

Doughty believes Acumen has gained additional business from its customers because they "trust us to do a good job". Yet the firm’s uncompromising approach to business has led to some disappointment.

"With customers who don’t know us we get down to the last three, get praised and commended but don’t get the business because there are people willing to do it for silly money. And in these difficult times people need to save all the money they can and go for the cheapest option. But for those who have worked with us for a long while they know they won’t get in any trouble with us," he says.

But the numbers cannot lie, can they? "As old fashioned as it sounds we have done it through service," Doughty adds. "It looks like we have had good growth, but if we had actually been any good at winning new customers then we could have had two or three times that. It is all existing customers who trust us to do a good job."

He insists that Acumen can be quite conservative in its approach to business and tenders. He says there are rivals in the market who will take on business that he believes they either won’t make money on or will break even on, just because they will look to jack the prices up down the line: "We tend to cost things very carefully. We will not do anything for nothing."

Profit

The results don’t lie. Clearly Acumen doesn’t do business for nothing

For year ending 31 December 2012 the firm posted a turnover of £20.1m (down slightly from £20.7m in 2011) and a pre-tax profit of £616,306 (again down slightly from £753,279).

Hodges says: "We make a reasonable margin. We try and make 5% or 6% profit on revenue. We don’t always get it. We are trying to make a profit. There are lots of people in this business with good revenues, but they quote low prices.

"This is a market place where – if by some freak we manage to jerk our profit up to 10% or 15% - customers will find out and come knocking at the door. I would like to think that they think 5% profit is not unreasonable. Then you are in the ball-park of having a reasonable and sensible discussion with the customer," he insists.

"I am not so much interested in the percentage of margin as I am the pounds. I need to make sure we are generating a reasonable amount of profit that is generating cash."

Acumen has had its own internal struggles too. Merging together Auto UK and Grayston into Acumen’s Finished Vehicle Delivery division has proved a challenge - one that Doughty believes they underestimated at the time. He says the two together "lose very little" – after a low point of half a million pound a year losses at the outset. He believes that part of that though was due to inheriting under-performing contracts that required restructuring.

Hodges, a former non-executive director of Autologic, says that acquisitions are never entered into lightly but the division is now is a position where it can bid for contracts of significance.

Recession

For Acumen the recession has helped as well as hindered. Doughty believes that because conditions have been so tight for automotive manufacturers, and all the associated manufacturers throughout the supply chain, the temptation with logistics contracts has been to stick with what you know, leading to a low level of contract churn. However, as some markets pick up, some are looking at their options and seeing where they can making savings and/or efficiency improvements.

"Some are using the tender process to beat up the incumbent," he says. "But they are taking a big risk. If people are going to undercut us on our work they are not going to provide the service we do, I believe."

The two years of growth and change at Acumen have seen it make some changes on the property side too. It moved sites at its HQ in Northampton two years ago, away from a less than salubrious recycling plant that MT visited four years ago, to a rather more modern site just off the M1 near major Norbert Dentressangle and Carlsberg DCs. And in October last year subsidiary Acumen Distribution opened a new 50,000ft² warehouse in Halewood, Liverpool, on behalf of an automotive parts supplier. The warehouse, close to junction 6 of the M62, incorporates just under 2,000 pallet positions and a bulk storage area. It handles bulk inbound components and delivers parts on a sequenced, just-in-time basis to a nearby car seat manufacturing plant run by Johnson Control Automotive.

These are changes that needed to happen to make the company move forward: "We weathered our fair share of pain and grief when we took [the new Northampton site] on but at the old site we could have been chucked out with a week’s notice, which would have caused chaos for the business."

In the main Acumen’s preference is to base vehicles and operations on customers’ premises. There are exceptions however. Acumen’s Recycling division – which holds contracts with Newcastle-under-Lyme and St Helens councils – requires its own site, as does Acumen’s freight-forwarding arm in Halifax. But its predominant approach of basing its operations on customers’ sites is at the heart of its service delivery.

"With some customers if we were an hour and a half late their lines would stop, which would mean the manufacturers' lines would stop and they would get fined anything up to £10,000 a minute. If we go to an individual plant for multiple years without causing a line stoppage, when they go out to tender again that is quite a big thing. There has to be a significant reason to change and hopefully that trust is what we have developed with our customers," says Doughty.

Price v service

So why, for some customers, is service a less important than price when it comes to tenders? "There are different types of customers. If it is something where it is just a warehouse full of stuff then it probably does come down to price," he says.

The automotive market was struggling in the early days of the downturn, but in recent years it has seen a boom – particularly in UK-based automotive assembly. The likes of Honda, Nissan and Toyota have all invested heavily, encouraged by the government, in manufacturing plants in the UK – primarily driven by the downturn in the eurozone – and currency fluctuations have kept UK plants busy. Meanwhile UK consumers' appetite for new cars has shown no sign of abating. According to the SMMT new car registrations are up 9.3% year-on-year so far in 2013 and premium bands – such as Land Rover, a key Acumen customer – a reporting increases in sales.

"What helps us in what is currently, happily, a boom time is not the number of cars sold in the UK, but the number made in the UK. In our car delivery business almost everything we do is for export, so we go for Land Rover in Solihull to Southampton and those vehicles go to the US or China or the Middle East. In terms of our in-bound business that is also related to the number of cars built, and the number of seats built. As long as they are building more cars then we will be busier. Happily this year the UK car industry is going to build over two million cars which will be more than at any time in our history, even compared to the heydays of the 1960s and 1970s. That is not doing us any harm," says Doughty.

Weak pound

That said a stronger pound would hurt both UK-based car manufacturing and, therefore Acumen’s ability to do business. And it is fair to say that many in the market – particularly for finished vehicle deliveries – have found it difficult. Last year the likes of Sensible Transport and Spirit Motortransport folded – and the UK stock of operating car transporters has diminished. This has had a negative impact on the UK car transporter market as a whole, namely a lack of capacity to cope with the peaks associated with the new car registration plates in March and September.

In February the DfT decided to relax cabotage rules for car transporter firms around these peaks, allowing foreign-registered operators to come to the UK and pick up some volumes. This is a move Doughty is dismissive of: "The only way customers will agree to putting the rates up to a sustainable level are if they feel some pain, and the only time that will happen are the two peaks in March and September. If you take that pain away by bringing foreign [operators] in to take on the excess, all that is going to do is extend the period of time we have to work under sub-economic rates.

"For the industry to recover it needs there to be not enough car transporters to move the cars [in March and September]. And then customers would start to appreciate more that we need to invest in equipment," he insists.

The search goes on

In June 2012 commercial director John Stocker left to join 3PL Gefco asits sales and marketing director. While a blow to Acumen, it has also been fortuitous for the firm as Gefco has started on a seven-year pan-European contract with GM – a manufacturer with which Acumen was already working with. That means that Acumen is now subcontracting for Gefco on the work.

However the search continues for a replacement for Stocker at Acumen. Hodges says: “It is an issue. We have not been too good at selling new business. We have someone to sell the automotive business, and we have someone selling the recycling business but we do not have anyone selling our core distribution business.

“We have not been successful in our search so far.”

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