UK-based freight van maker LDV has confounded the doomsayers before. The company is too small to survive they said, and its no frills products are too old and too far off the pace. But the company, which traces its lineage back to the commercial vehicle days of British Leyland and before that Morris, has retained a niche in the British marketplace. Amid signs that all was not quite well, it was recently acquired by private equity firm Sun Capital. Where to next? Joe Ayling spoke to LDV marketing director Steve Miller.
What has changed at LDV since the takeover by Sun Capital?
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We are still the same commercial independent van maker, and that won’t change. All that has changed is that we have a new owner. Sun Capital shares the same ideas and philosophies as the previous owners, 3i, but we now have more capital to go forward.
What will the new investment vehicle bring to the company?
3i shared a vision of developing the business as the UK’s leading van manufacturer. Now this vision can become possible as the new company invests more money into the business.
Was this an easy transition to make?
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By GlobalDataWe have had significant media coverage and not all was helpful to the business’ plight. It was just a key shareholder selling on the business – a transaction between the previous owners and the new ones. We did continue trading throughout this period, which resulted in some important legal changes. Significantly the business is now called LDV Group Ltd instead of LDV Ltd, and all existing contractual agreements had to be legally updated, but we tried to make all changes as smooth as possible.
How are relations with your biggest customer, the UK’s Post Office, looking?
The Post Office is our longest serving and most loyal customer. We went out to see them before Christmas as they had Convoy and Pilot orders due in the first quarter of this year. We are working to change the product from the older to newer vans. The Post Office is happy to change its product requirement, as are the Ministry of Defence and LEX Defence. Our customers have plenty of goodwill for us to succeed.
Some customers are disappointed [that Pilot and Convoy ranges are being dropped] because although the Convoy and Pilot were the oldest ranges, they had specific attributes; but we all have to move on. Cutting the lines was due in the middle of 2006 anyway because the Euro 4 emission regulations take effect then and it did not make financial sense to bring products through to those standards.
Are there any plans to replace the Convoy and Pilot models with a new line?
A new, and not yet named, minibus will be brought forward to April 2006, instead of September. The new owners want experts to be included in production and the new minibus to be distributed more widely. LDV are looking to expand in the Middle East, Asia and have made agreements with distributors in Denmark.
In December, the LDV plant in Birmingham closed down for two weeks. Why?
We came out of September and November 2005 as the third best selling van in the UK marketplace, with only the Ford Transit and Mercedes Sprinter ahead. This was a fabulous achievement. But we had a bad sales month in November – falling to seventh in the UK commercial van marketplace. Consequently, we had to send the factory workers home for a two-week period. We did however pay everybody who got sent home for that period. Following the transaction with Sun Capital we progressively brought people back in to continue production. Because we are a small business we cannot carry excess stocks. We work on a three-month period and the November blip was more than anticipated so we decided to stop production.
How did the workers feel during this period?
We were open and honest but we never said people would be sent home without being paid. The workforce was disappointed with the way the press were reporting coverage. We felt desperate for the workers having to read and hear this coverage. TV cameras were outside the plant for three days, waiting to report that the plant was closing. When I gave the new announcement they all packed up and went home.
Some of those people working on Convoy and Pilot lines were not called back following the transaction and we had to look at other opportunities for those employees. Some are receiving improved training and getting new skills, with others working on used vehicle lines – which together sell 2,000 LDV used vehicles per year.
Will all the workers be re-employed when the new minibus is launched in April?
There could be up to 250 people not required by the business. HR and manufacturing are looking into how many people we need for the business’ new model and Maxus range. There are voluntary redundancy programmes running as we speak, meaning workers can leave for a payment, which varies by individual.
Automakers have to take a long-term perspective. It does not work like a retail shop and we don’t turn the light on in the morning and things just happen. There is building, painting and trimming to think about and if one of these elements is laid off, it has a knock on effect on the others.
How do you see 2006 turning out?
In 2006 we will be forging ahead with a full range of products in the market place. We will produce 15,000 vans for the UK market and more for export. Without any question we should be back as number three in the UK marketplace and we’d hope one day to be challenging the Sprinter for market share.
Sun Capital has expressed a long-term investment in the company and is not in for a quick turnover. Mr Megan has stated that when his interim position has finished, and Sun Capital find a new CEO, he will return to America as part of Sun’s management team.
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LDV Maxus
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