Propping specialist Groundforce believes the time is right to move into the European market, and thinks it can overturn traditional hostility towards the rental sector, as Margo Cole reports
UK-based excavation support specialist Groundforce is launching an assault on the European market, driven by a combination of the recession at home and favourable conditions overseas.
“In the UK, our sector is dominated by three or four companies,” explains Groundforce managing director David Williams. “We are all are adept at what we do, so we scrap for market share on quality, price and availability, but we are always going to be constrained by GDP growth in the UK.
“At the moment, that’s around 1% or 2%. Maybe it will go up to 3% or 4%, but that is pointing towards fairly slow burn growth - if at all - in the UK, so we have to look elsewhere for our growth.”
The company achieved more than 10% growth year on year in the years leading up to the recession, and publicly quoted parent company VP is keen to see those sort of numbers maintained. “The PLC is supportive, and funds are available,” says Williams. “They want to accelerate this process.”
“We are always going to be constrained by slow GDP growth. We have to look elsewhere for our growth”
David Williams, Groundforce
Until now, Groundforce’s forays overseas have mainly consisted of selling to UK
contractors working in the United States, the Middle East, South Africa and Eastern Europe, but the firm has now decided to commit to a sales and rental operation in mainland Europe for the first time. “We haven’t had the need to create a rental operation abroad before, and acceptance of rental in mainland Europe was not there,” says Williams.
In the UK, contractors traditionally get around 80% of their mechanical and non-mechanical equipment through hire firms, but the opposite is true in most of Europe, where rental accounts for just 20% of the market. But Williams believes the economic situation is changing attitudes - at least when it comes to the large-scale excavation support and propping equipment that Groundforce hires out.
The traditional way of supporting large basements or civils excavations in the rest of Europe is to use a bespoke welded steel frame, designed, cut and welded by a steel stockholder, and erected with the help of the contractor.
“It means you, as the contractor, get landed with a big bill, because you’re the proud owner of all that steel,” explains Williams.
“The stockholder may offer you a buy-back, but you have no idea whether he’ll be about by the time you’ve finished with it - the economic climate has seen many steel stockholders going to the wall. There’s also a cashflow issue - you’ve paid out the full amount at the beginning, and have to wait until the end of the job to get some of your money back,” he adds.
While Groundforce previously followed existing customers into Europe, the big break came when French contractor Bouygues opted to use the firm’s props instead of a welded steel frame to support the top down excavation on one side of the new Tyne Tunnel. “We spent six or seven months convincing Bouygues that our solution was the most cost effective and speedy method, and they took us on for the north side - which ended up ahead of the south,” says Williams.
“We introduced load monitoring to demonstrate the loads going through the props and any changes in the loads, and were able to provide accurate data that gave them gave peace of mind.”
The firm has been able to translate that success into new business from a number of European players, with orders coming in from Scandinavia, Germany, Austria and France. Earlier this year Groundforce opened its first European depot in Hanover, and a sales office in Frankfurt opens this month.
“So far it’s proving to be a very sustainable means of entry,” says Williams. “We’ve got a long way to go in terms of educating our customers, but we’re talking to all the major players, and they’re slowly coming on board.”
The company’s intention is to build a small depot network, initially in Germany, that can serve Northern Europe and emerging countries in the East.