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NEWS: IMPERIAL HOLDINGS ACQUIRES PENTAGON

South Africa-based Imperial Holdings Limited has acquired dealer group Pentagon. The buyout was made through Imperial’s Motus subsidiary though terms have not been announced.

Pentagon, established in 1991 by its current Chairman, Trevor Reeve, has grown steadily from an initial Vauxhall franchise base to represent leading car and van manufacturers, Peugeot, Seat, Mazda, Citroen, Kia, Renault, Nissan, Fiat, Alfa Romeo, Jeep and Mitsubishi. The group employs 1,262 people, 46% of those have been with the business for 5 years or more.

Existing management will remain throughout Penatgon ‘for a transitional period’ to ensure integration with Imperial’s existing vehicle business. The Pentagon name will remain.

Commenting on the transaction, Mark Lamberti, Group Chief Executive Officer of Imperial said, “We are delighted to expand our international retail footprint into the passenger and light commercial vehicle market in the UK through the acquisition of Pentagon.”

Imperial Holdings Limited is not to be confused with the similarly-named Imperial Automotive Limited.

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GROWTH IN SPARTAN TIMES

Spartan Motor Factors explain how expanding an independent factor chain in an age of consolidation is a bold move.

Inside the stockroom

It’s a busy morning in an industrial unit in Bridgend. Pickers run between almost-completed racks of car parts while phones ring and a printer spews out orders. Somewhere, a huge and noisy vacuum cleaner and a hammer drill wail intermittently like some industrial banshee.

We’re in the latest branch of Spartan Motor Factors on opening day, and it’s fair to say that the building, which was once home to a Partco, has not seen this level of activity for many years.

Not that getting the branch ready has been anything like glamour. “We were here all weekend putting up the racking” Director Lee Gratton says balefully, adding that there was still some work to do, but the factor was now ready to the phone lines and the roller doors for the garages of Bridgend.

Spartan is a relatively recent name on the factor scene. Started in 2012 by Lee Gratton, Jason Farrugia and Daniel Webb the company used the Motaquip scheme of supplying a stockpack of parts and consumables to the firm’s first branch in Newport. Both Gratton and Webb had a background of working in factors, while Farrugia was experienced in accountancy.

A branch in Cardiff followed a year later, which became the Head Office. It was, to be polite, a challenging time for an independent factor to go on an expansion drive. Private equity fuelled the growth of the main players, with the Parts Alliance and Groupauto making acquisitions, while Euro Car Parts famously opened a dozen branches in a single day in early 2013, leading to a war of attrition between the big players, which the newcomers had to find an answer. “Yes, it was not easy” laughed Gratton.

SOURCING STOCK
One of the problems related to sourcing stock. “With suppliers, their involvement with other motor factors can prevent you from opening an account” explained Gratton. “When we first opened in Newport, a supplier put in its range of stock – and a month later they came back and took it all out saying ‘sorry, we’ll give you a refund, but there is a conf lict of supply here. We are going to lose one of our biggest customers if we continue to supply you”. This was a reoccurring theme of the early days. “I had to ask why we can’t still have an account, but have our own separate deals?” Gratton pondered.

Spartan staff

There was a logical solution to getting hands on brands from a range of suppliers, and that was to join a buying group. Initially, the choice was the PDP, but just over a year later Spartan left and joined the IFA. There are always issues in swapping buying groups, but Jason Farrugia says the biggest problem was removing and replacing stock. “One of the main difficulties was cleansing the old stock out of the five branches” he recalled. “In terms of the brands themselves, it was not too much of a problem with customers as they were familiar with most of them, such asKYBandFAI–itisn’tas though we are trying to sell anything unknown.

On the subject of brands, buying group membership has helped Spartan move some offerings upmarket, “We’ve moved over to Wix and Mahle on filtration and it has improved our filter business no end” Farrugia said. “Before, we had a mix of brands. A quality product is something customers don’t mind paying a small amount extra for, and they don’t try to push you down on the price of filters”.

Apart from access to brands, the knowledge base of the IFA has proven to be useful. “The IFA were really strong in the area and the brands were very strong. My co-Directors knew them from their Welsh Autoparts days, and I must say they have been brilliant” says Farrugia. “In the nine months since we have been members, I have learnt more about MAM, stockholdings and purchasing than I did for the whole five years that we have been in business before”.

Going back to opening day here in Bridgend, it will come as no surprise that the building is well suited to be a motor factor considering the previous occupant. Easy access to allow goods in and out is supported by a large stock room, with potential for a mezzanine. The building has an upstairs area with a meeting room and an office, while downstairs the original counter has been extended backwards to incorporate a small showroom area. This is still the subject of much drilling, hammering and Hoovering on our visit, although we manage to clear the area long enough to get a group photo.

Starting a factor chain in an era of consolidation might not be for the faint hearted, but Spartan hasn’t ruled out further expansion. “We have always been a little off the cuff… If the right opportunity presents itself” concluded Gratton.

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MADE IN CHINA: THE PLUSSES AND THE PITFALLS

Choosing where to site a factory is an issue that is as involved with peoples’ perceptions as it is with politics and cost

National brake pads

China is a country where it is cheap and easy to have products manufactured, but there are a number of things to consider if you want to get involved. “My view on producing in China is that it is very good, but if you allow local engineers to do it, they will do it their own way” said David Houlden, MD of National Autoparts. “The classic is if you give them a drawing and it will come back differently, because ‘it is easier’”.

Houlden is clear on a solution. “To overcome that you do it yourself. You have people out there on a very regular basis and keep those people in the factories. We employ a UK quality company to be out there and check stuff as well as our own engineers are there on a regular basis”.

He adds that the two factories that his company uses are owned in a joint venture with a local partner.

SKILL SET
When National took the decision to introduce pads, a new skill set was required. “Metal we understand, but for friction we had to take on someone for two and a half years” he said. “We didn’t know a lot about pads, so we employed a consultant who had OE experience, who is heavily involved in anything we do”.

However, manufacturing on the other side of the world is not without its problems. Even if the product quality is consistent, there is an issue of logistics to consider. Colin Smit, UK MD of Polish manufacturer Lumag, which sells the Breck light vehicle pad range in the UK said: “I wouldn’t want to place an order with five months worth of stock all the way from China”.

“From here (in Doncaster) we have a 98 percent pick rate and we can place a daily delivery on the factory if we want to. It only takes three days to get the stock from the factory” he said, adding that the warehouse had quite a high stockturn and there was no reason to tie stock, and therefore cash, up in inventory.

Producing in Europe is markedly more expensive, something Smit admits to being ‘a difficult sell’ to customers that are simply focused on price. “It’s a premium product, not a white- box product. We are targeting customers of premium brands”.

Meanwhile, some brake components are produced even closer home and are remanufactured in the UK.Brake Engineering has produced in Wales since it was founded in the 1980s. However, the days of needing to accrue a big stockpile of core for one reference before you begin are in the past. “Traditionally, a remanufacturer would stockpile individual references in cages until there is a large enough batch for it to remake” said Steve Willis, IAM General Manager at the firm’s parent company. Today, Willis says that this notion is obsolete. “If the car is on a ramp and needing a part, the garage isn’t going to wait for us to assemble a core pile, they will go somewhere else – so it is critical for us to service the need as soon as possible and Wrexham is all about making sure the highest service level is maintained” he said.

EXCHANGE PART SURCHARGE DEBATE

One benefit to producing new aftermarket stock in China is that you can bring a range of new-in-box product to market and not need to worry about collecting core returns. National’s David Houlden noted: “There’s an issue around surcharges where some companies look at a rack and say that it looks a bit pitted and there is nothing they can do with it, so they send it back to the factor, but what do they expect a factor to do with it?”

Surcharge aside, the benefits of remanufacturing are evident. First Line’s Jon Roughley made the point that investment results in an excellent product. “The demand for quality means that remanufacturers will have to keep re-investing as the gap between quality reman and ‘low-end’ parts continues to widen” he said. “Our customers want to fit premium quality, but at competitive prices and so remanufactured product remains attractive to the independent aftermarket”.

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TIME IS AN ENEMY WHEN YOU ARE HIRING STAFF

Don’t let the clock tick down when you need to fill a sales role

Let’s talk about time. If recruiting for a role yourself, you will spend countless hours sifting through applications and initial screenings.

At its most simple, using a recruiter will save you time and to use an example, time is critical when filling vacant sales roles. If the territory is vacant it means that another employee or even the hiring manager is covering the area and this could result in a loss in revenue as customers are not getting the right amount of contact. Another implication, people are human and if someone is covering two roles rather than just their own, it will cause issues. Trust me, I’ve been there!

People will talk sometimes to a recruiter rather than apply direct as it offers them in some cases some anonymity, also the roles I work on are not out there plastered across the job boards for all to see. Using a recruiter cuts out the headache of marketing the role, finding candidates and organising meetings. My ‘specialism’ (a horrible term) is in the body refinish market, but the same rules apply across the aftermarket and elsewhere.

But what if the boot is on the other foot and you are a candidate?. Why would you consider going to a recruiter instead of approaching the firms that interest you directly? Ideally, any good recruitment agency should act as the ‘compère’, between you as a candidate and a potential employer. Putting the right people in front of the right employer is a skill, encountering a large number of variables along the way. Yes, the skills must be right to do the role however much more is involved. There aremany more elements which come together to make the perfect candidate including personalities need to match with company culture and ethics. A good recruiter will understand the needs to match all aspects, the candidate must be right for the business in the same breath as the client being right for the candidate ensuring longevity for both client and candidate alike. Believe me this is no easy task.

Recruiters (well the good ones), have a network of hiring managers, business influencers and decision makers in multiple businesses. Something that as a candidate you in all likelihood don’t have, or not to the extent of an agent. All of these things go back to the issue of making the most of the limited time available – don’t waste yours.

TOP CANDIDATES MOVE QUICKLY

Research shows that from the start of the hiring process the top 10 percent of candidates have disappeared from the market in the first two working weeks. So, considering the average time to hire in the UK is approximately 28 days, the candidates remaining in your process from working day 11 onward are unlikely to be the right fit or the most qualified for your role. However, some companies will attempt to make a ‘good fit’ from the limited candidates now available and in effect taking on someone who doesn’t entirely fit the role because they need it filled and the slow process has cost them the best candidates.

In addition to this, a long hiring process is often the top reason candidates speak negatively about a brand or company. Candidates are now researching online reviews from former candidates or employees in the same way that they would from (say) Trip Advisor, when looking at holiday destinations. The result of this is that it can add 10 percent to the cost of every hire.

Remember the hiring process clock starts ticking as soon as that candidate submits the application not when you review it or when they sit in front of you at interview. By then the damage could have been done and your ideal candidate could have slipped through your fingers! So how long is your hiring process? Do you need to make changes?
Gavin Collier

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KUMHO TIRE SALE BLOCKED BY WORKERS

Kumho Tires plant in Georgia

A deal between the creditors of South Korean tyre brand Kumho Tire and Doublestar, a Chinese brand could be in jeopardy as workers in Korea threaten a general strike.

Problems at Kumho go back to 2010 when the company made a number of acquisitions, including the heavy engineering business of Daewoo. However, the losses quickly started to mount and a sale of the company was mooted, with various tyre and parts brands rumoured to be interested. Doublestar was confirmed as the buyer in May.

In a press conference, the joint committee against the sale of Kumho Tire to an overseas company told the Yonhap news agency they will stop all production lines at the tyre maker’s local plants and stage a general strike.

“The ongoing process to sell Kumho Tire to Qingdao Doublestar Co. will result in the transfer of some production volume to China from South Korea and lead to massive redundancies of local workers” Kang Jeong-ho who represents the committee told the agency.

Kumho employs 2,900 people at its tyre plants in the Korean peninsula.

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REMY: EUROPEAN EXPANSION PLANED BY NEW OWNER

A new group has been formed to help remanufacturing brand Remy expand across Europe.

The new group, known as BPI Group Europe combines Remy with Brake Parts Inc. Europe. The division plans to expand the brand with new product offerings under the Remy brand.

“While the company’s name has changed, our customers can continue to count on the trusted Remy brand now and in the future” said Zoltán Király, President and Executive Director, BPI Group Europe.

Remy was acquired by Brake Parts Inc. from Borg-Warner in 2016.

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PARTS ALLIANCE TAKEOVER: UNI SELECT DEAL COMPLETED

The deal announced earlier in the year between Canada-based Uni Select and The Parts Alliance has been completed with the former acquiring the latter from a private equity group.

Now the deal has been completed, Parts Alliance CEO Peter Sephton will join Uni Select’s Executive Team as President and Chief Executive Officer of the European Automotive Group.

“All of my colleagues in our organization, our suppliers, members and all other stakeholders see the opportunity for long term financial growth and stability, as well as personal growth as we join a team of like-minded individuals,” said Peter Sephton.

“We could not be more pleased to be adding The Parts Alliance to the Uni-Select family. This is an exciting new growth pillar for Uni-Select in the large and fragmented UK marketplace” commented Uni Select CEO Henry Buckley.

 

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‘CHASING MARKHAM’ RALLY PREP: PHASE TWO STARTS

PROMOTION ON BEHALF OF BILSTEIN GROUP

Applications for the Chasing Markham Rally 2017 closed in May and phase two of the planning is underway. Participants have now been formally notified of their places and so the real fun can officially get started!

So what’s next? The welcome packs have gone out to our lovely teams, with all the extra details they need to know for the trip and what they can expect from us. Then, we’ve got quite a few cars to pick up and assign which we can’t wait to do as we see the first signs of our amazing rally take shape.

After that, let the modifications and fundraising begin! Of course, we will be doing everything in our power to help our participants. We will be sharing the donations page far and wide, and the first step of this was completed at Automechanika Birmingham 2017, as we handed out vintage mugs, cookies and leaflets with all the details on how to donate. And if we do say so ourselves, the mugs went down pretty well with visitors on the stand.

There are still plenty of ways you can be involved: you can sponsor one of our teams, contribute to our fundraising efforts and you can follow all the twists and turns by joining our Facebook page @Chasingmarkham. We’ll be posting all our latest updates on there as things progress.

Teams will be announced on the facebook page over the coming weeks and we know they will appreciate any support to help them towards their fundraising targets.

Donations are now open, with every penny going towards helping industry charity BEN. You can find out more about them and all the brilliant things they do by visiting ben.org.uk.

To donate, simply visit www.justgiving.co.uk/chasingmarkham, or text TCMR55 and the amount you wish to donate to 70070. Anything you can spare would be greatly appreciated and will count towards our overall fundraising total.

Now, if you forgot to register or have suddenly decided you want to come along, get in touch via email: chasingmarkham@bilsteingroup.com or via our Facebook page, search @chasingmarkham. And we’ll see what we can do.

Stay tuned!

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BREAKING: A2 MOTOR PARTS JOINS IFA

 

A2 Motor Factors has joined buying group, the IFA

Group Chair, Gary Kennet has hailed the action, saying: “We are very pleased and extend a warm welcome”.

Interestingly, given the name, Burselem-based A2 is a member of A1 Motor Stores.

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ELF BACK ON THE SHELF

Lube maker Total has reintroduced the Elf brand to coincide with the latter’s 50th anniversary.

The oil firm will introduce a new line up, known as the ‘Sporti’ range comprising of six lubricants in a range of popular viscosities and with various OEM approvals. The product is now available in 208-litre barrels and 20-litre packs. Five litre and one litre refill packs will follow shortly.

Aimed at the mid-market, the maker says that the newcomers will all be blended with high-quality base oils and raw materials, though they will not have the so-called ‘Age Resistance’ additive technology used in the range-topping Total Quartz line.

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