Archive | November, 2014

Comline makes the top 100 mid-sized UK business rankings

Comline makes the top 100 mid-sized UK business rankings

Malcolm-Rosher-TimesLuton-based Comline Auto Parts has been named as one of the fastest-growing mid-sized private companies in Britain, says financial house Investec.

The Mid-Market 100 ranking calculates the average annual growth of UK-registered companies over the last four years, who turnover more than £10 million per year, as only six automotive companies made it into the rankings.

Comline’s average annual growth rate was calculated at 29.7 percent with a profit margin of 4.6 percent, which saw the Luton-based aftermarket supplier ranked 58th in the listings.

Malcolm Rosher, Sales and Marketing Director at Comline, said: “Being named in the Investec Mid-Market 100 is a great honour for all at Comline and recognition for the considerable success the company has achieved in recent years. Our presence on this list further emphasises Comline’s position as one of the fastest growing automotive brands in Europe.”

Ed Cottrell of Investec added that Mid-Market 100, carried out by Duedil, indicates the size, health and size of UK’s mid-sized companies, and that the mid-market contributes nearly £1 trillion of revenues annually and more than a quarter of private sector employment.

“We know from our experience of working with mid-sized businesses that they are highly committed to investing for long-term growth and play a crucial role in the success of the UK’s broader economy. We look forward to seeing these companies go from strength to strength in the future and congratulate Comline for achieving their place in this year’s Investec Mid-Market 100,” said Cottrell.

The other five automotive companies listed included, Birmingham-based distributor Olympus Distribution, Car dealers Cars2, Ocean Automotive and Glyn Hopkins, and Ferrari restorers DK Engineering.

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CAT Factor Lives: GSF Car Parts Heathrow

GSF Car Parts HeathrowJohn Marsden explains how to keep parts moving around one of the busiest areas of the country.

The great comic writer Douglas Adams once noted that no-one has ever described something as being ‘as beautiful as an airport’. Surely, when he wrote this, he must have been thinking of the mish-mash architectural styles around Heathrow. The buildings near the transport hub are similarly mismatched and on a stark, grey and rainy October morning you really wonder who designed it.

However, what the area lacks in coherence, it makes up for with industry. Every street around Heathrow is alive with businesses, large and small plying their trades. With this comes a need for transport – it is a well-recorded fact that the nearby junction of the M25 deals with more traffic every day than any stretch of road in the UK. This means that there is an unusually high concentration of garages in the area – as well as the parts distributors that supply them.

This is where GSF Heathrow comes in. Originally a logistics hub for the car parts chain, it is now a main branch that can also supply other sub-branches. However, with the grinding traffic particularly dreadful on the day of our visit, we had to wonder how the branch managed to get parts to garages so quickly. The answer turned out to be simple, as Branch Manager John Marsden explained:

John Marsden“We use an agency of four bikes, so we use them every day and they distribute within an area of local trade – taking out parts such as service kits. It’s something that we thought of around two years ago as it saves the vans going in and out of local streets.”

He explained that the role of deciding which garages will have stock delivered by bike falls on the dispatcher as they know which garages are more likely to require an immediate response.

“If you can have this service for customers on the doorstep, you can have parts to them inside ten minutes,” explains Marsden. “Using vans, it can take 45 minutes even if the garage is practically next door.”

While you are not likely to fit half a dozen batteries and a pile of exhaust boxes on a bike, neither would you want to send one too far afield, so for this the branch has no fewer than 16 vans. According to Marsden, it is really important to work out the routes to achieve the fastest response times possible, as the competition are never too far away. “ECP flank us both left and right and there’s an Andrew Page to the south,” he grimaced, adding: “Every garage has a price on their rent per the hour – so we have to get there quickly. ”

You also need to build a rapport with customers and supply them with parts that fit, of course. Marsden explains: “Service levels are important as well as how the sales team are with their customers. People buy from people,” he says.

“They will obviously buy from the rep first as he’ll be going in and pushing the GSF brand, and from there it is about building the relationship.” In Marsden’s view, it is only after the garage is an established customer that it’s worth offering incentive schemes and free stuff.

Marsden finds that older customers tend to have divided loyalties, which can be problematic. “While they might like buying from GSF and have no problems with pricing and love our product, they do like to spread their spending so they are not putting all of their eggs in one basket,” he says, explaining that people who have been in the trade for a while like to feel that they have an allegiance with multiple suppliers. “Everyone in the trade would like to become a one-stop shop, but only a very small percentage of customers will use you in that way,” he says.

However, in-house brands which never used to be seen in garages, particularly with the older customers are now among the fastest moving lines. Marsden says: “People used to buy and rely on OE stuff and the aftermarket only when necessary. Now that’s no longer the case. GSF’s house brand, Vetech as a range is something we’ve been pushing more and more and have been strong with a range of consumables, oils, granules and gloves. Once people use the oil and realise it is good and that both the garage and their customer are saving money there is a knock on effect.”

Marsden started with the company back when it was simply called German and Swedish. Right up until 2006 the chain only sold parts for cars from either German, Swedish (and latterly French) brands. “But every day we now sell parts for all makes of vehicles. In the early days, the product range wasn’t there, but the intelligence side of the business has greatly improved, and I would say we are now competing quite nicely.”

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How to avoid the curse of dead stock

Mike Owen tells a spooky tale of not dealing with old inventory and the bad impact this can have on return on investment.

There is no greater curse than stock that has died on the shelf. This is not stock that has become damaged but stock for which there is no longer a demand – whilst there are those that consider a set of king-pins and bushes for a Triumph Mayflower to be an appreciating asset, reality dictates that they are just scrap.

Return on investment is king especially in post-recessionary times, and accurate stock valuation is paramount to maintaining this; redundant, obsolete or overstock parts all impact badly on this.

At its most basic level, stock appears on the balance sheet of a company under the banner of ‘short term assets’ and is used in calculating the liquidity of a company – that all important current ratio; the difference between what you owe and what you have to pay for it with, this can be severely affected if a volume of your stock has a sale potential of ‘not-a-lot’.

Keep circulating

Return on investment at its simplest comes down to ‘circulation and return on funds employed’ – there is a lot of kidology talked about this, especially when it comes to stock. The basic premise is quite understandable: You invest £20,000 and you make 20 percent when you sell your goods. You circulate your stock five times a year and you make 100 percent return on your investment:

  • £20,000 x 20 percent = £4000
  • £4000 x 5 times circulation = £20,000
  • £20,000 return = £20,000 investment or 100 percent*

Traditionally, in the parts arena, circulation has been given the snazzy title of stock turn with various figures being quoted of five to eight times per year – the value of the stock being rotated through sales by a number of times (£100,000 sales, £20,000 stock = 5:1 stock turn) but you know all this… Here come some of the problems.

Stock turn is calculated, of course, net VAT but it should also be calculated without another factor and that is the profit element, calculating stock turn as net-cost divided by sales-value skews the result alarmingly. In the two examples given above the profit is considered above the sale value. If it is included, the results change like this:

  • £100,000 (sales) – £16,666 (profit included in sale) = £83,333 (net sales)
  • £20,000 stock = 4.17:1 stock turn

There is another significant figure that should be taken away from the sales figure to create a figure referred to as ‘True Stock Turn’. To calculate True Stock Turn you must remove all sales that do not rotate the stock on the shelf; stock that has been bought in to satisfy a demand rather than speculatively purchased to replenish or create shelf stock; put simply, if your customer asks for a turbocharger that you don’t hold on the shelf, but you can get for tomorrow morning delivery, has this moved your stock – No! If during the course of the year your purchases in this category are significant, you’ve got a problem.

Using the above example again and identifying non-stock sales (net) of £35,000 the example changes thus:

  • £16,666 (profit included in sale) + £35,000 (non-stock sales) = £51,666 (sales from stock)
  • £100,000 sales – £51,666 = £48,334 (net sales from stock)
  • £20,000 stock = 2.41:1 stock turn

I can hear the argument circulating about ‘yes, but we still made money’ but there is significant overinvestment in stock. If you take the net sales from stock figure above (£48,334) and divide that by the same example stock turn of five, this will give a target stock for that level of sales of under £10K (£9667). The balance of the stock is dormant, overstocked or heading to be both.

I was invited to look at a dealer in the deep South-West who was relocating his premises and was concerned over the volume of space required to be set aside for his voluminous stocks; using all of the above we identified that his true stock turn was 0.8:1, what he required was a skip and his requirement for space was in fact about the size of an average family bathroom.

The danger of this impending obsolescence is quite predictable but needs focus and control. Obsolete stock is often unsaleable full-stop. In the example used so far the company is in danger of suggesting through its accounts that the stock on hand is saleable when a portion of it is not (even on eBay). This disguises the onset of cash-flow problems and all that goes with it.

There are several calculations and methods that can be used to deal with obsolete stock and, unless you are motivated by the size of your tax bill, reduce that as well. There is a standard computation used by accountants on stock – please don’t use it, it’s unrealistic and often insufficient. HMRC give you almost an open hand on this matter, provided you can prove the logic of what you have done and that there is no hint of evasion – don’t ask your accountant, tell them.

The old days

For those of you who can recall when Nelson had both eyes, the majority of parts stockists, factor and dealer alike used a system called VISIrecord which predated computer systems, was labour intensive and had the simplest ‘stock-to-zero’ system incorporated in its stock level control – it has long been replaced [although the company continues to trade to this day – Ed] with algorithms that even if you manage to sell that last set of Mayflower pins and bushes, will encourage you to order another set – this is the stuff of stock nightmares.

Stock management becomes a deeper problem with virtually all components being application specific – where is ‘Joe Lucas’ when we need him? These specific parts now need monitoring more so than ever, they change mid model-year and a change of supplier puts so much at risk of obsolescence. The garages need information, and you need the information to give the garages – choose your suppliers carefully.

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Piercing issue of tattoos in the work place

Matthew Hobbs

Matthew Hobbs

How much discretion do employers have with policies regarding their staff’s appearance? Nick Jones and Matthew Hobbs look at the law.

Given that the oldest examples date back nearly 6000 years, and with speculation that the practice has been around for considerably longer, it is probably a surprise that there are still issues relating to tattooing. When the wife of the Prime Minister has her own piece of visible, permanent body art, surely it’s time to put any debate to rest?

Interestingly, while tattoos have surged in popularity in recent years, the legal position hasn’t quite caught up with public opinion on the subject and tattoos and employment continue to cause issues for employers and employees alike.

In an age of marketing and brand recognition, it is probably unsurprising that most businesses will seek to retain a level of control over their public image. This includes the presentation and appearance of their frontline or customer-facing staff, the commonly accepted logic being that a customer or client will make certain inferences regarding the company from the appearance of its representatives.

Employers’ discretion

Nick Jones

Nick Jones

Under UK law there is little restriction on an employer’s dress code and appearance policy, unless it offends the provisions of the Equality Act 2010, by way of discrimination, or harassment.

Discrimination is only classed for the purposes of the Act if it is based on a ‘protected characteristic’, which covers age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation.

Discrimination can be either direct or indirect. Direct discrimination arises when an employee is treated less favourably. Indirect discrimination occurs where a ‘provision, criterion or practice’ of the employer is applied equally to all employees, but has the effect of causing less favourable treatment to those with the protected characteristic. An example is a policy that only allows for full-time working hours. Given that women are more likely to have childcare responsibilities and therefore to work part-time, this can be seen as being discriminatory on the basis of sex.

As any policy on tattooing or piercing is likely to be applied universally across all employees, or at least across all employees of a similar position or role, such policies will not be directly discriminatory.

Potential ground for conflict to an exclusive policy on tattooing and piercing comes via the protected characteristic of religion or belief. If a tattoo, or a piercing, forms an integral part of a person’s religion or belief, the argument could be made that any blanket ban would be indirectly discriminatory. However, the bar is high and there are a few hurdles to overcome. Previously decided cases have established that to classify it must be genuinely held, must be a belief and not an opinion or viewpoint, must be a weighty and substantial aspect of human life and behaviour, must attain a certain level of seriousness, cohesion and importance, and it must be worthy of respect in a democratic society.

The argument could also be raised that as a group, young people are more likely to be ‘inked’, therefore, any anti-tattoo policy could be discriminatory based on age. But, with tattoos growing in popularity amongst the older generation also, how long this may be relevant is debatable.

Even if indirect discrimination is proved, this does not necessarily mean that the law will intervene. Indirect discrimination is capable of being ‘objectively justified’, if the policy in place is to address a legitimate aim and is proportionate to achieving that aim.

In Eweida v British Airways, a case involving a Christian employee wearing a crucifix at work, the Court of Appeal held that BA’s policy, which sought the consistent appearance of its customer-facing staff, was a proportionate response to a legitimate aim.

The European Court of Human Rights disagreed citing Article 9’s right to freedom of thought, conscience and religion, the ECHR held that the policy could not be objectively justified – the crucifix was discrete and there was no evidence to support the view that wearing it could adversely affect public opinion of BA. However, in other cases, restrictions have been held to be enforceable.

Therefore, if an employer can show a legitimate reason for a policy regarding tattoos and piercings and the restrictions imposed are proportionate to that aim, the policy will be enforceable, even if it is initially held to be indirectly discriminatory.

Tattoo rules

ACAS, the publicly-funded non-government organisation set up to assist in resolving employment disputes, has recently provided updated guidance on dress code policies, which includes consideration of tattooing and piercing. While its comments are not prescriptive, they encourage employers to strongly consider the reasons behind any dress code and to have such policies written down and clearly communicated to all staff. Emphasis is placed on policies being reasonable and proportionate.

If an employer has a strict policy regarding tattoos and piercings, this is likely to obstruct certain people to employment, with little protection afforded under the current discrimination legislation. What then, of the employer who seeks to introduce a new, more stringent policy on tattoos and piercings, or an employee who intentionally contravenes an existing policy? This strays into the area of dismissal, and whether such a dismissal is ‘fair’.

The Employment Rights Act 1996 sets out five specific grounds for dismissal that may be considered to be fair. Issues of conduct can include the refusal of a lawful request, such as requesting covering any visible tattoos or piercings. In the case of a tattoo policy it is likely an Employment Tribunal will include consideration of whether the policy itself is reasonable. Similar rationale to the discrimination legislation is likely to be used – does the policy address a legitimate business need, and if so, is the effect proportionate to the outcome it wishes to achieve?

It is clear that employers do have a considerable level of discretion in their tattoo and piercing policies, and it is wise to have such policies in an accessible written format and to ensure any changes in policy are reasonable and communicated effectively to employees, but the grounds for challenging such policies are limited under current legislation. Tattoos arguably enjoy wider public acceptance now than at any other point in history, and it may only be a matter of time before the law catches up.

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CAT Retailer Lives: Elliotts

IMG_9843Joe Elliott on the homecoming of Coventry City FC and on returning to the world of accessory retail with the business his grandfather started in the city in 1908.

This year saw the return of a familiar face to the aftermarket, when Joe Elliott, Owner of Elliotts, returned to the motor accessory scene once again.

Bizarrely, it was something of a charming homecoming for a store that has been operating in Coventry since 1908. And it was mirrored by another one of Joe’s loves returning to the city – Coventry City Football Club after being exiled to Northampton Town’s Sixfields ground for last season.

On his return he admits that while the business is still operating on its original site – opened by his grandfather Joesph Warden Elliott, who originally sold bicycles – the approach is slightly different to the past, as he explains.

“It’s the first time we’ve decided to subcontract things to do with the business. It’s already successful, and I’m sure it will continue to be over the winter.”

The Elliotts story dates back to when his grandfather opened the store on the corner of Gulson and London Road, and he recalls how at the time of opening Coventry was seen as a hot-bed of engineering.

“My grandfather was a fantastic engineer, and he worked on one of the first flights across the English Channel when he was working for Humber, who made aero engines in the very early days,” recalls Joe. “Of course, cycles were invented in Coventry and it has always been a hot-bed for engineering.

“Through the years Elliotts progressed as a garage, it was the very first petrol station in Coventry. In fact they used to sell petrol in two gallon petrol cans, and we were the first garage to have petrol pumps.”

It wouldn’t be until 1958 that Joe would make his first foray into the business, and it is at that point that the decision was made to focus on the retail side of the business. He admits that he didn’t know too much about engines when he joined the family business, but adds that the timing couldn’t have been better as he explains.

“I suppose I struck it lucky in that the Mini, the Triumph Herald, the Vauxhall Viva and the Ford Anglia 105e came out. The whole world of motoring changed just as I went into business.

“So I went into the trade and started building up a much bigger stock of car accessories, because these cars were coming out with nothing on them, just four wheels, a steering wheel and four seats – if you were lucky. There was a tremendous opportunity to upgrade with twin carburettors, Pico exhausts and all of this type of stuff it was just fantastic.”

Throughout the 1960s, 1970s and 1980s the business thrived and at its peak it employed 28 members of staff. In the 1990s, Elliott expanded the store’s remit by introducing more replacement parts and began to sell to garages.

In 2004 however, it looked as if the dream was over, as he took the decision to sell the business to Oscott Holdings, who also bought Fletchers in Birmingham. However this tale was to have a happy ending, because when Elliotts went bust in 2010, it gave Joe the perfect opportunity to make his return to the sector.

“During this time in 1983 I was Chairman of A1 Motor Stores and that gave us a lot of fun,” said Joe. “But I only kept my one store in Coventry until 2004. Motormania ran it for a couple of years and they went out of business, then Motorworld ran it until they decided to exit the business last November.

“So the opportunity was there, and I thought I would have another go, it would have been a shame to see the company die. Obviously the company is well over 100 years old, so I have gone back in and I am enjoying it again.”

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RMI HAILS SECURITY INFO SCHEME

RMI HAILS SECURITY INFO SCHEME

The Independent Garage Association (IGA) has hailed the new SERMI (Security related Repair and Maintenance Information) scheme as a ‘significant step towards having a level playing field for accessing security manufacturer information;’ calling it a ‘victory’ for its membership.

The SERMI scheme means that independent garages are another step closer towards accessing Manufacturer Security Information. It has been set up to develop, operate and maintain a process which forms a part of the ISO standard for repair information. The scheme sets out the rules and requirements for independent operators who can demonstrate the necessary integrity to be granted access to security related info.

RMI Standards and Certification says it is positioned to be the first organisation in Europe to accredit against this standard, which will keep the UK independent sector competitive and ensure that consumers and fleet operators do not have to make any compromises when choosing an independent garage for service and repair.

Stuart James, IGA Director, who has long been fighting for the rights of independent garages to access manufacturer technical information, called SERMI a huge step forward for the IGA and its members. “The ability to access manufacturer security information takes us ever closer to the ‘level playing field’ promised by EU legislation, and I am delighted that there has been a giant leap towards achieving it,” he said.

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Inside Line: Bilstein

Bilstein has released details of its many Mercedes W124 upgrade options to allow enthusiasts to uprate, enhance or totally restore the handling of their cherished E-Class. As the OEM supplier to almost all of Mercedes creations, the Bilstein B8 dampers are the obvious fitment when bringing a W124 back to better than ‘day one’ condition.

Bilstein offer fitments for every engine variant of the W124 models, with each fitment borrowing heavily from the firm’s enviable knowledge with each chassis. Bilstein has used this to create a range of dampers that maintains the character and comfort of the original car, but with an even sharper focus on handling precision, making it faster through the turns and more rewarding to drive. The Bilstein B8 damper offers an ‘as new’ OEM quality restoration part and is perfect for the concours purist or driving enthusiast.

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Inside Line: RMI

Mercedes E200 2.1d 2009 on – Fault code P2005, no noticeable drivability issues. P2005 suggests a fault with the intake manifold intake runner solenoid is stuck open – indicating a wiring issue, solenoid/actuator, or a mechanical fault. Usual cause is on high mileage vehicles where the mechanism fails.

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Inside Line: TecRMI

Technical note

MERCEDES-BENZ E-CLASS (W212) E 200 CGI

Air suspension – Error message in the instrument cluster
Reference number(s): LI32.22-P-049709
Fault symptoms: Instrument cluster shows warning message -STOP car too low or fault-.
Fault code: C155664 C156A00 C156C00 C156D00 C157200
Causes: Relay for air suspension compressor
Remedy: Replace relay for air suspension compressor. Work off fault codes.

Technical note

MERCEDES-BENZ E-CLASS (W212) E 200 CGI

Automatic gearbox – Error code P0894, Error code P2502, Error code P2505, Error code P2711, Gear shifting problems
Reference number(s): LI27.60-P-012020
Fault symptoms: No friction locking or hard shifting of gears between second and third gear. Transmission runs in limp-home mode
Error code(s): P0894 P2502 P2505 P2711
Causes: K1 piston in the transmission damaged.
Remedy: Repair transmission. Replace multiplate clutch. Recode the transmission control unit.

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Inside Line: Manbat

Relaunched in 2009 after an absence of several years, the Mercedes E-Class incorporated Start-Stop technology in many of the models across the range, particularly in the eco-friendly Blue EFFICIENCY versions.

As many examples are well within reach of the independent sector, workshops and the technicians undertaking service and repair work on these variants, need to bear in mind that all post-2009 E-Class models are designed to use high performance batteries such as the VARTA® Silver Dynamic AGM. In addition, those with a Start-Stop system will also require specialist knowledge and equipment to ensure the correct removal and installation process is followed.

As the battery in the Start-Stop system is integrated with the vehicle’s battery management system and its ECU, thorough diagnosis is required to discover whether the battery needs to be replaced or if there is an underlying cause that might have led to its premature failure.

Having the ability to cancel and reset the fault codes that may be required for associated components like the alternator and starter motor, as well as the Start-Stop system, means that workshops would be wise to invest in the necessary tooling and training to allow them to tackle these issues.

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