We interviewed Nigel Morgan of Scheffler UK as part of CAT’s 40th anniversary series in 2019, which celebrated people in the industry with 40 years or more experience.
As anyone who ever attended any buying group’s week long ‘conference’ in the 20th century, you’ll know what we mean when we say that characters defined the aftermarket of years gone by.
“The market used to be driven by personalities” Nigel Morgan, MD of Scheffler UK recalled. “They were all entrepreneurs and had their own businesses and you dealt with them directly. You’d go to see them, shake hands and do a deal”.
As they say, it takes one to know one. The Morgan family business was in car parts, as a manufacturer’s agent for various brands, notably Boge OE shock absorbers for British Leyland in its various guises. The company was run by and named after Nigel’s father, Alan A Morgan, with sons Nigel and brother Alec working for him.
However, the bosses at Boge wanted to set up an aftermarket company in the UK, and they asked the Morgans if they’d be interested in setting one up. They were, and the family were soon out on the road meeting some of the aforementioned characters to get the aftermarket stock distributed around the country “We did a deal with Arnold Parker of the FSG [Factor Services Group, an early buying group] and that started to get the product moving” Morgan recalled.
Shock of the new
In fact, Boge was just one successful aftermarket brand among many represented by the family. As the business expanded and the family grew their network of contacts, they had a meeting with a man named Siegfried Kronmuller who was MD of German clutch manufacturer Lamellen und Kupplungsbau, better known simply as LuK. He knew the success that the Morgans had with Boge and wondered if they would be interested in being a manufacturer’s agent for his company.
The family were only too happy to oblige, but there was a small problem. “At the time, they didn’t sell clutch kits, they had loose plates, covers and bearings, plus they didn’t have a complete range” recalled Morgan. However, the quality of the product was high, and it looked like a product that would sell, so in the first quarter of 1979 at around about the same time that the first issue of this magazine was sent out, the first batches of LuK arrived in Britain.
The clutches were packaged into kits, but to infill the range the Morgans initially also bought product from Valeo, but in time the range of LuK products expanded and Valeo gots its own UK distribution, so to avoid conflict the decision was taken to continue to supply LuK.
This proved to be a sound move. The clutch market was expanding and where there had been a handful of part numbers covering dozens of vehicles a few years earlier, by the 1990s there were hundreds of individual references and customers liked the expertise that the family members had as well as the quality of the German product.
Things change, and by the mid nineties the concept of a manufacturer’s agent looked a bit old hat. LuK was now the Schaeffler Group was keen to ing its INA and FAG branded kits of bearings into the UK and so it offered to buy the Morgan’s company, which they accepted. Mr Morgan snr took the opportunity to retire, while the sons stayed on to run the business on behalf of Schaeffler.
“My brother Alec stayed for six months then he left and went to open up Banner Batteries” explained Morgan, adding that he had of course stayed to run the company. “We’d sold Banner before, along with brake discs, spark plugs and a range of other parts, but with the sale to Schaeffler we decided to diverge all of those products and concentrate on LuK”.
This was a time when factor chains were going through a period of expansion and brands that might have previously only supplied a short range of fast movers were now expanding and offering all-makes, so competition was fierce. “Our main competitors to begin with were QH and Borg and Beck, but as the proliferation of vehicles grew it became Sachs, Valeo and ZF” said Morgan.
However, an opportunity presented itself when Delphi, which was at the time the owner of the Borg and Beck clutch brand, decided it wanted to get out of that category altogether, but didn’t want to upset its existing customers.
“We did a deal with Sales Manager Charles Adams and Ian Voce, MD of Delphi at the time to take over its clutch distribution” recalled Morgan. “Although the distribution agreement ended, we took over the accounts with LuK – though the Borg and Beck brand name was acquired by Pete (Joyner) at First Line. It’s still around, I think they’ve done OK with it”.
Scheaffler’s UK business grew from a £2m turnover when the manufacturer acquired the company, to £175m last year. “It’s been quite a journey” reflected Morgan.
However, things have changed. The culture where you could become a supplier for life just by getting on the right side of the boss man is over, which Morgan puts down to the investors that came into the aftermarket a few years ago. “All the big investors saw the aftermarket as a profit opportunity. What we see is that the margins are being squeezed everywhere – and it’s not over yet” he said.
“We still have very strong relationships, but those we treasure today is with branch managers and their salespeople who believe that we can help them grow business. Business over the years has become transactional, which is okay – after all, we supply all of the big buying groups. But it has become about business, not personalities”.
Morgan has made no secret of his intention to retire in about 18 months. “I feel I’ve served my time and the market’ different. It needs younger, fresher eyes. When I started with LuK and I wanted to get INA and FAG up to the same level. We’re now a brand leader in wheel bearings and pretty well there in other categories. I feel I can say: ‘There you go guys, carry on’”.