How Klarius took on the dragon, and won

How Klarius took on the dragon, and won

Klarius took on the dragon in QH

Klarius took on the dragon in QH

It’s been almost 18 months since Quinton Hazell came home. After 24 years in US ownership, in February last year the independent aftermarket’s oldest and most famous brand returned to British soil when it was bought from Affinia Group by Klarius. It was a move that made the industry sit up and take notice: here was a relative newcomer to the aftermarket, a specialist in exhausts, taking on one of the biggest names in the sector.

“I think it shocked the industry,” says Tony Wilson, founder and chairman of Klarius. “We’ve generated more rumours in the marketplace than anybody else over the last 10 years: we’ve been owned by our customers; we’ve been mafia run…” He laughs. “I suppose it’s a form of flattery. Some people have been a bit scared about what’s been happening in the market because, quite clearly, when someone grows, somebody else fails. And we’ve taken substantial market share.”

When Wilson and his team bought QH, the company wasn’t in great shape. It was trading off its heritage but losing money.

But while Wilson was realistic about the challenge of restoring it back to its former glory, he wasn’t daunted. Klarius, having already turned around £7 million losses within a year of buying Arvin Meritor’s aftermarket emissions division in 2007, had been waiting for an opportunity to grow.

“When QH came up for sale, we jumped at the chance,” says Wilson. “It was just an unbelievable fit. We needed to expand our parts range, and it’s just such a great company.

“Quinton Hazell, like Arvin Meritor, had been neglected,” says Wilson. “As with most companies when the parent decides they’re going to sell, the first thing they do is stop investing. And in the automotive sector, if you stop investing, you start losing market share because investment in this sector is all about new parts. It’s all about keeping up with demand. But that’s not difficult to remedy, is it,” he says in true down to earth Wilson style. “It just takes a good lump of investment and some clear focus.

“QH had a massive set of loyal customers but they were getting a little brassed off with this big sleepy giant that just wasn’t working properly. When you buy an old house, you have to knock a few walls down, and that applies to business too. You’ve got to strip it back to solid foundations, and then you start building.

“At QH, there were some big walls to knock down,” he admits, “but what we found was a company full of frustrated people who just wanted to get the hell out there and do the job properly. They’d been restrained from doing that. Within 48 hours of the acquisition, we visited all the plants and spoke to every set of managers, and we said: ‘your handcuffs are off’.

As an example of just how far Quinton Hazell had slipped back in the market, when Klarius bought it, QH hadn’t produced a new part for two years. It had a lot of catching up to do, and in the last 12 months the company has brought 220 new parts to market, developed and manufactured at its UK and continental plants.

It is manufacturing, says Wilson,that will be QH’s ticket back to the big league. “QH has got unlimited potential,” he says. “And the massive difference between QH and other companies in the same business is that it is a manufacturer.”

Underlining this point, he recalls a conversation with a commercial fleet operator at an industry event the previous evening: “He told me he was having to wait 16 weeks for a new valve for a tanker. That’s 16 weeks that the vehicle is off the road. And why is it a 16 week lead time? Because the parts are being made in China.” Wilson is incredulous.

“All our plants are in Europe: in the UK, Spain and Germany. And they will continue to be. And we’re picking up orders from OE that normally source from Japan. We’ve just supplied a couple of hundred thousand water pumps to one manufacturer who’s production was stalled by lack of supply after the earthquake.”

At a time when many other suppliers are increasingly turning towards the Far East and other ‘low cost’ countries for their production, it is a strategy that goes against the grain. But it appears to be working.

“The view that you’ve got to get stuff manufactured in China because it’s cheap is nonsense,” says Wilson. “It’s nonsense because of the stockholding you have to take; it’s nonsense because of the delivery times. It just doesn’t work.

“We’re very proud of manufacturing in the UK. People still say ‘oh you can’t do that’, and Colwyn Bay was a great example. When we bought Quinton Hazell, all of the employees at that plant had been told it was closing and that they would be out of work in 10 months. The parent had placed the contracts in China. We reversed that decision in the first 48 hours of owning the company.

Quinton Hazell factories are now benefitting from the lean manufacturing techniques Klarius had already successfully applied to its existing emissions plants. “We took what was historically the model in the UK and in the aftermarket of manufacturing large batches and turned that into very rapid changeover. So we have small batch production over a very very much expanded parts range.

“We now have complete cell turnovers that two or three years ago would have taken two hours but now take eight minutes. That means that instead of doing batches of  500, we now do batches of 10. So we’re not sitting on mountainous amounts of stock. We’ve got rapid turnover and constant stock availability.”

This, he says, is probably the Group’s biggest strength and he reports that former customers who had become disillusioned by QH’s sluggishness are starting to come back. “They’re realising it has changed and they’re seeing others who are buying from us enjoy significant growth. We deliver product every day, overnight, and through partners we deliver same day. That allows our customers to take their own stock down. It’s tough out there at the moment and some of our customers are seeing massive financial benefits through doing business with us because we’re working their terms and we’re releasing cash. We’re taking stock out, and reprofiling for them.”

Since Klarius took over Quinton Hazell, it has invested some £5 million in getting it back into shape. It now boasts a portfolio of 100,000 part numbers and sells more than 90,000 parts every day. “That’s one Klarius part fitted every second,” says Wilson.

It’s an impressive performance but Wilson and his team don’t plan on stopping here. They have some ambitious growth plans.

“There are a number of ways you can grow your business,” says Wilson. “One is to sell more product to your customers, and, as our customers grow, we do that. But the reality is that there are only so many exhausts, for example, that you can sell into one market. When you get to a certain critical mass, you start to see diminishing returns.

“Another way is to sell product to new customers, and there are a lot of emerging markets out there that we haven’t historically been involved in. Russia, for example, is a market that has grown beyond all recognition in the last 10 years, and that’s a market we’re looking at strategically. Turky is another.

The company, says Wilson, is ready “for growth mode” again. It recently opened 16 new depots and distribution centres across Europe and there are more in the pipeline – and he says Klarius is in discussions with several parties with regards to another acquisition. It is also expanding its product offering and eyeing new categories. Following the launch of rotating electrics in January, it plans to launch a full range of shock absorbers next month, which, says Wilson, will rival established players such as KYB and Monroe. And batteries and tyres are even being considered. “Everyone says, ‘oh you can’t do tyres’, but you know, it’s a range of part numbers that sits in a central warehouse and gets distributed out.

From Klarius’ birth as a small engineering company making flanges and brackets for exhaust manufacturers, it has come a long way. And Wilson is enjoying every minute of it.“I just love it. It’s a lifestyle, not a job. And everyone here is part of it. We’re making something very special. It’s sad isn’t it,” he grins and shrugs happily. He looks like a man who has found his niche in life.

“QH is 65 this year,” he continues. “And what a man Quinton Hazell was. He fought the car manufacturers and he won. He was just so revolutionary for a man whose company made bits for cars. And I just love that ‘stuff you, I’m going to do it’ attitude.

When Klarius bought Quinton Hazell, it’s turnover leaped to €350 million overnight. And Wilson has pledged to double it again by the end of 2012. It’s a bold statement but he is determined to make the Welsh dragon great again. Sir Quinton, one suspects, would be proud.

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MOT under attack – your garage at risk

MOT under attack – your garage at risk

SPECIAL REPORT
MOT UNDER ATTACK: YOUR BUSINESS IS AT RISK

Garages under threat: will the MOT schedule be changed?

Garages under threat: will the MOT schedule be changed?

Nine months on from the Government’s first tentative suggestion that an MOT regime review was on the cards, there is still no sign of the elusive consultation. But a shock announcement by the Secretary of State for Transport last month has jolted the industry into action.

Of course, quiet conversations with Government officials have been going on behind the scenes for some months; the industry’s representatives have been busy making friends in the corridors of power and dropping heavy hints about the disastrous consequences of mucking about with the test’s frequency.

And it did seem that friends had been made. Mike Penning, the Under-Secretary of State, graced the Retail Motor Industry Federation with his presence at its Annual Dinner just six months ago, where he reassured members of the trade that he was on the automotive industry’s side; indeed, he was one of its biggest fans.

So the revelation by Transport Minister Philip Hammond that the Government will, after all, be consulting on proposals to adopt a new test frequency was something of a bombshell – the warning sirens sounded immediately, forcing all the major trade bodies to adopt attack positions.

COST SAVING

CAT understands that three regimes will be consulted on: 4-1-1 (first test at four years, consecutive tests annually); 4-2-1 (first test at four years, second two years later and annually thereafter); and 4-2-2 (you get the picture). More shocking is that retention of the current tried and tested 3-1-1 regime appears not to be on the table at all.

Mr Hammond was widely quoted in the national media as saying: “Car technology has come a long way since the 1960s when our MOT regime was introduced. That’s why we think its right to look again to check whether we still have the right balance of MOT testing for modern vehicles. If we can move from first test at three years and yearly thereafter to four years, then two and then yearly, motorists could save £100.”

Stuart James, RMI director, pulled no punches in his appraisal of this statement. “We understand the consumer is seeing the move as a chance to save money on their MOT bills. However, the savings of as little as £25 a year will only escalate the repair bills that will come with bi-annual testing.”

TRADE FURY

He pointed out that maintenance standards are already slipping due to the lack of money car users currently have at their disposal. “This will in turn have a knock on effect on the safety of road users. This proposal could not come at a worse time for both garage owners and road users.”

Independent Automotive Aftermarket Federation member Richard Small, who runs Pentland Component Parts in Edinburgh, was equally horrified at the announcement. “Yes the MOT tests cost just over £50 but that’s not a lot to pay for a Government-approved safety check,” he said. “I say if safety-critical parts such as tyres and discs need replacing then they need replacing. Reducing the frequency of the MOT test won’t change this fact, and you can’t blame the annual MOT for it.

“If the Government really wanted to save the motorist some money, fuel prices and road tax would be far bigger game. You may take the maintenance and safety of your own car seriously, but what about the guy behind you? Are his brakes working properly? When were they last checked? Oh well, I guess you can take comfort that you both saved £50 as he ploughs into you!”

It’s an argument neatly illustrated by another IAAF member, Richard Stock of Marathon/ Benchmark Distribution. He wrote to his MP, Theresa Villiers, to register his concerns and enclosed a copy of the VT30 failure form for his family’s Vauxhall Zafira, which highlighted two “dangerous items” that he was thankfully able to put right before a potential accident could happen.

It doesn’t take much logical analysis to conclude that extending the gap between MOT tests will result in fewer defects being identified, and failed or failing parts putting the vehicle’s safe operation at risk for longer.
Richard Edy, director of the National Tyre Distributors Association, points out that, as with most other components, the vast majority of motorists do not inspect their tyres regularly – if at all – and for many, the annual MOT test is the only time that they are examined.

ROAD DEATH RISK

Edy cites figures from the Tyre Industry Federation, which show that 12 percent of tyres are illegal when they are replaced and that under the present 3-1-1 system, there are already 2.3 million tyre-related MOT failures every year.

“A move to 4-2-2 would inevitably lead to more tyre-related failures and an increase in accidents, injuries and fatalities. Already 216 people are killed or seriously injured every year in cases where tyre defects are reported and this figure would be bound to rise.

“Tyres are a safety-critical component of a vehicle and the only things that keep a car on the road. You can have the best brakes in the world, but if the tyres are bald and the road is wet, then your car won’t stop.”

VOSA statistics show that in 2009, tyres were responsible for 14.8 percent of all Class 4 failures and advisory notices; brakes were a problem for 25.3 percent of vehicles; and suspension components for 18.9 percent. The fact that these safety critical parts were identified as being dangerous at test means their risk to road safety was removed.

In 2008, an investigation by the Department from Transport estimated that moving to a 4-2-2 regime would result in 400 extra road deaths a year. Just three years later, a new report commissioned by the Coalition Government has slashed this figure. The Transport Research Laboratory has downscaled the likely death toll by an arguably unlikely 92 percent.

In its report, it states that there have been considerable technological advances in vehicle safety, emissions and reliability and that vehicle assemblers now issue new car warranties for longer than the traditional three year period. It also notes that vehicle defects are calculated to be a contributory factor in 3 percent of accidents in the UK. Vehicle defects, it says, are an “infrequent causation” of accidents, although it does concede that there is insufficient vehicle accident investigation data to properly support this assertion.

The IAAF makes the point that while the DFT’s 2008 research was based on statistical analysis and input from outside experts, and then quality checked by the Cabinet Office, that the TRL research was “hurriedly completed and has not been subject to any quality review”.

“Nevertheless,” says the Federation’s incredulous chief executive, Brian Spratt, “their conclusions are that the changes would lead to around 30 additional deaths each year, and yet the Secretary of State feels it gives enough justification for the current system to be discarded.”

So who’s right? Whose version of likely events do we trust? Is it a case of political spin; of lies damned lies and statistics? In CAT’s view just one extra road death would be too much. Surely we should be looking to reduce deaths rather than feigning grim acceptance at a few more, while sweeping those inconvenient bodies under the carpet.

John Ball, MOT chairman at the RMI and owner of the MoTest group of vehicle testing stations, says: “Why has there been such a change in the numbers? We need to know exactly what we are dealing with for the sake of the public’s safety. We are talking about lives being lost as a result of this move.”

CLOSED FOR BUSINESS

The road safety factor is clearly of great concern, but there is also a financial element to lengthening MOT test intervals. Moving to a 4-2-2 test regime would be devastating to the UK’s 20,000 testing stations. It would halve the number of MOT tests conducted in the UK, which means half the amount of current revenue being earned by garages. Back in 2008, the Department for Transport recognised that  moving to a 4-2-2 system could lead to up to 40,000 job losses across the UK’s MOT network.

And the effects will be felt far more deeply by independent garages than their franchised counterparts. Around two thirds of all vehicle safety checks are carried out by the independent sector.

Of course, it’s not just workshops and technicians that would feel the pinch. With around 13 million Class 4 vehicles alone failing the MOT test each year, that adds up to an awful lot of parts that simply won’t be required.

Abandoning the annual test would wreak havoc right across the independent aftermarket. We simply can’t let it happen.

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Andrew Page hits 53 with Express depot launch

AndrewPage web smAndrew Page, the northern-rooted but south seeking factor chain, has opened new branches in Norwich and Loughborough.

The additions take the UK network to 53 branches and a customer base of more than 10,000.

The Loughborough depot is the factor’s first ‘Express’ site – a satellite operation supported by major branches nearby.

“The introduction of Express depots marks a major step forward for the company in ensuring wider access to our services and supplies,” said MD Mark Roberts.

“It means that Andrew Page customers of smaller towns or rural areas can enjoy the same benefits as those living near to larger branches.”

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Devon garage takes Bosch network to 500

A&K Gifford splashes the Bosch brand on its Holsworthy premises

A&K Gifford splashes the Bosch brand on its Holsworthy premises

Devon-based independent A&K Gifford has become the 500th garage to sign up to the Bosch Car Service network.

Anthony Gifford, senior partner and founder of the 40-year-old workshop, said: “I’m surprised and pleased to learn we are the 500th member.

“Bosch is a household name that people recognise and relate to quality, and that is one of the reasons that we wanted to join the network.

“Being part of the Bosch Car Service network will now enable us to take our business to the next level.

“We’ve been around for a long time and have built a strong and successful company, but we wanted to give ourselves access to all the latest training courses and diagnostic equipment that Bosch Car Service offers.”

The BCS milestone has been reached in Bosch’s 125th year of trading.

When the garage scheme was piloted in 2003 it had just six members in the South East, Yorkshire and Scotland. It now has national coverage and is approved by the Office of Fair Trading.

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RMI chief steps down

Rob Foulston has stepped down from the lead role at the Retail Motor Industry Federation.

Rob Foulston has stepped down as RMI chief

Rob Foulston has stepped down as RMI chief

He joined the trade association in 2009 from training company ReMIT, where he also continued as chief executive.

“Having achieved the objective I was given of putting the RMI back into profit, I am now stepping down as chief executive to pursue my other business interests, particularly ReMIT,” he said.

“The RMI 2010 results are excellent: sales are up, membership is up, costs are down and strong foundations have been laid for the future.

“If these foundations continue to be built upon, together with the new initiatives that have been put in place, the Federation will continue to thrive.

“I wish to thank my teams at the RMI and ReMIT for all their hard work and commitment and wish the RMI and all of its associations the best of luck.”

A new management structure and strategy for the Federation is under development.

In the interim, Sue Robinson, head of the franchised division, Stuart James, head of the garage division and finance director Kevin Waterman will take responsibility for running the RMI.

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Dayco rubbishes Universal rumours

CALLUM GOODLAND SM

Goodland will lead Dayco's UK aftermarket subsidiary

Dayco has moved to “rubbish” claims that its relationship with UK distributor Universal Automotive is in jeopardy.

In a statement issued this afternoon, the company called the rumours “uncharitable”. It also confirmed Universal as its primary distributor.

The rumours began circulating after Dayco reorganised its UK operation and formed an autonomous UK subsidiary.

Former Universal man Callum Goodland then left the company to lead Dayco Aftermarket UK.

He is joined by technical manager Andy Walters at Dayco’s HQ in Basildon, Essex. Dayco Europe’s regional sales manager, Gianluigi De Dea, will also provide support.

“Dayco is a leading OE parts manufacturer and should be represented by a leading distributor. Universal Automotive is just such an organisation and we are pleased to quell any rumours that suggest that our longstanding business relationship is under threat,” said Goodland.

“The action to establish the UK office can only add to the level of support that we can provide to Universal Automotive and its customers.”

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RAC drives work through Autocrew garages

Autocrew garages benefit from RAC work

Autocrew garages benefit from RAC work

Bosch and Euro Car Parts have joined forces with the RAC to deliver their new Autocrew Garage network.

The RAC will direct work on vehicles that cannot be repaired by the roadside – which amounts to at least 500,000 vehicles every year – to Autocrew member garages.

RAC equipment manager Mark Johnson said: “We need a network of garages that will produce the same level of service we provide to our customers.

“If the RAC Patrol recommends a garage, as far as the customer is concerned, if anything goes wrong it’s our fault. So we want a network we can have faith in.”

Bosch bought Autocrew from ZF Systems in 2009 and is now in the process of rolling it out across Europe, with the ultimate goal of making it a global presence.

It hopes to sign up 750 independent garages in the UK within three years, depending on the quality of applicants.

“We have a lot to offer and we’ve got a lot of experience in workshop concepts,” said Helen Watkins, Autocrew’s concept manager.

“Ideally, we want more Bosch products to be fitted to consumer cars.”

Garages that sign up to the scheme will agree to buy 30 percent of their parts through Euro Car Parts.

10 percent of their parts spend must also be with Bosch.

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Indies storm Golden Garages top 10

Indy's have stormed this year's awards

Indy's have stormed this year's awards

Seven of the top 10 regional Golden Garages winners are independent repair businesses, according to competition organiser Motor Codes.

The list includes CAT Garage of the Year 2011 ABP Motorsport and Award finalist Anglo Continental Cars in Milton Keynes.

The garages were picked out by motorists prepared to share the secret of where they receive the best service.

Voting has now closed – and the top 10 now face a grilling from an expert judging panel, including CAT’s editor, Emma Butcher.

The RAC will also conduct an independent assessment of the businesses before the overall Golden Garage is announced in April.

Motor Codes boss Chris Mason said: “Fighting back against the negative image often unfairly associated with garages, Golden Garages is there to champion examples of good service.

“It allows motorists to tell fellow drivers about the safe havens – garages that give top customer service.”

The UK’s top 10 garages will each receive £200 of experience vouchers from Unipart, £650 of Snap-On Tools vouchers, a year’s free subscription to Motor Codes and credit to spend on Motor Codes marketing materials.

The Golden Garage will also receive £2250 of Snap-On Tools vouchers, three years’ free subscription to Motor Codes and additional credit to spend in the Motor Codes shop.

*Independent garage finalist

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Uniparts faces recession with £9.5 million profits

01 2009 RallyMatch RS 03

Uniparts is ending 2010 on a high

Unipart Group is back on form after doubling profits in 2010.

Pre-tax earnings grew from £4.9 million in 2009 to £9.5 million from a turnover of £1.13 billion.

During the year the Group’s operations generated £8.9m in cash of which £7.0m was reinvested as capital investment.

The results reflect good performances and growth across most of the Group’s businesses together with some significant new business wins.

Commenting on the results, chief John Neill said The Unipart Way – the company’s people and efficiency philosophy – had played a key part in achieving the growth.

“Like many other companies, the last two years have been particularly challenging for our business but 2010 has seen a return to growth, with excellent performances across our logistics, manufacturing and international business.”

The Group’s markets span a wide range of sectors including automotive, technology, retail, rail, defence, health, utilities, leisure, marine and manufacturing.

Its technology logistics business has enjoyed a particularly successful 12 months, wining a major contract with Virgin Mobile; opening a new dedicated repair centre for BSkyB; and developing its partnership with Vodafone.

Similarly, despite continuing economic pressure in the consumer logistics sector, Homebase has extended its partnership with Unipart Logistics for a ground-breaking 12 years.

In its manufacturing operations, Unipart reports a rapid increase in volumes during 2010, exceeding performance from before the economic recession.

This, it said, was driven in part by VMs returning to production to meet consumer demand and by new model introductions.

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A1MS drives member sales with new website

The new site has consumer appeal

The new site has consumer appeal

A1 Motor Stores has revamped its consumer facing website and created a new members-only intranet portal.

New sections on www.a1motorstores.co.uk include hints and tips from experts as well as DIY guide produced in collaboration with Haynes manuals.

Users can search for their local A1 store, see products on special offer and get gift ideas.

Importantly for A1’s 189 members, sales made online are channeled to their individual ecommerce sites.

The A14U intranet keeps members up-to-date with the latest A1MS news and events and includes member profiles and supplier information

A1 chief Derrick Lawton said the new online offering was the result of heavy investment.

He added: “We are confident that users will find this new website much easier to find the products that they are looking for – therefore driving greater business to our members.”

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