How Ainscough Crane Hire plans to beat the credit crunch

Expansion, management buyout, recession. Ainscough Crane Hire has survived it all and come through stronger than ever. Juliette Davies reports.

The start of the UK's economic downturn may not have been the best time to stage a £255m management buyout. But the management team at Ainscough Crane Hire has increased revenue and made another major acquisition at a time when many others are tightening their belts.

The previous managing director Martin Ainscough achieved considerable success, giving his successor Neil Partridge big boots to fill. "Martin did a great job of expanding the company, but myself and the rest of the team participated in that and we're carrying it on," he says.

"We're continuing to expand the business and boost revenues from about £96m in the year before the MBO, to £133m in the last fiscal, which is pleasing." And with a projected turnover of £150m for 2009, both the management team and its investor Bank of Scotland Integrated Finance should be happy.

When Partridge joined Ainscough in 1995 as finance director, the company reported a £12m revenue and operated from a handful of locations.

The recession at the end of the 1990s saw a huge oversupply of cranes and aggressive and detrimental competition between four nationals: Hewden (now owned by Finning) GWS (Grayston White and Sparrow) Baldwin Industrial Services and Ainscough. But in December 2000 Ainscough bought the much larger GWS to become the largest crane hire company in the UK.

Rationalisation programme

A rationalisation programme that integrated the two businesses saw the transformation of Ainscough. Partridge explains: "We ended up with a network of about 20 depots around the UK and revenues in excess of £50m. We sold 140 cranes, to reduce the oversupply in the UK, creating a sensible pricing structure. It benefits customers as there's no point in prices being so cheap that businesses go bust or are sold."

And when lack of success in the US forced Baldwin into receivership in late-2002, Ainscough bought it from the administrator, reinforcing its position as the market leader in the UK.

The most surprising part of this latest buyout is that it was never intended to be an MBO, until the end of the sale.

By 2006, the Ainscough family had developed other interests and it was a sensible time to sell the business, so accountancy firm PricewaterhouseCoopers was appointed towards the end of the year.

The company advised the family that to gain maximum proceeds, there needed to be a full management team in place. Partridge says: "I had been running the company for a couple of years before the sale and became chief operating officer. There was a management team in place, with myself, two sales directors, two operations directors (one for general cranes, one for heavy), a health and safety director and an engineering/service director."

Six entities were shortlisted from the first round of bids for further meetings but the US sub-prime mortgage crisis erupted and the start of the credit crunch became an unimagined opportunity.

Main contenders

Only seven weeks before the sale was concluded, US venture capitalists were forced to pull out, leaving two main contenders, a UK private equity house, and the Bank of Scotland Integrated Finance. As the BoS bid was structured as an MBO, PwC recommended the family accepts its offer.

"Hence it was the end of the process, not the beginning, where the transaction became an MBO. When Martin put it up for sale neither myself or the other directors went to the family and said: 'we'd like to buy this business'," says Partridge.

Despite the economic climate, the future looks bright for post-MBO Ainscough and it has recently bought Scotland's James Jack Lifting Services, meaning both staff numbers and the fleet have increased.

"At the time of the MBO we probably employed about 1,000 people in Ainscough, today we have 1,060, plus 120 in James Jack at the time of the MBO we had about 500 cranes and at the end of May we had approximately 540, plus another 60 at James Jack," says Partridge. The company has, however, sold 40 cranes and made some (less than 20) redundancies and not replaced retirees.

House-building slowdown

The slow-down in house building affects only a small sector of the crane hire industry, and Ainscough is heavily involved in infrastructure - rail, road, airports, as well as the power and petrol-chemical industries - all long-term investments that are less affected by market fluctuations.

However, Partridge says: "The rise in fuel cost in the past 12 months has put approximately £500,000 on our costs." In a £133m business, £500,000 extra costs is painful but not bad enough to causes fundamental concern.

Forward planning has to include a view of an economic upturn, which Partridge believes will be around mid-2010, by which time, construction of the Olympic venues will be under way. As the company has a number of cranes on the Olympic site, it might have to comply with the London Best Practice Guide's requirement to fit diesel particulate filters to plant over 35kW.

"There's a debate going on with the Olympic Development Authority as to whether diesel particulate filters are required," says Partridge.

"The quality of our crane fleet is second to none," he claims, "the average age is four and a half years, the all-terrain fleet is predominantly Liebherr, and our Terex and Grove cranes are good - we have a number of large Terex Demag on order, as well as a number of larger and smaller Liebherr."

Partridge sees no problems with the forthcoming changes to the Working Time Directive opt-out. "We have to opt out every year now, we're required to canvass our employees to see if they wish to opt out - I'm sure they will crane drivers like to work to earn money. We're not being dragged down the same working hours as Europe is, we still have the ability to opt out and I expect this company will continue to do so."

While deregulation of the CPCS means many companies have to rethink their training, Partridge explains that it could benefit the company. "The change in the training scheme increases our options to train our own drivers, it doesn't restrict us," says Partridge.

So with the benefit of hindsight, would he do it all again? "Absolutely. Ainscough is a fine company - a good employer, a good supplier, with a good reputation in the market. We have a good relationship with the Bank of Scotland Integrated Finance it has supported us and hasn't held us back, nor does it exert undue or unnatural pressure on us to go forward.

"It's been a privilege to have been managing director for the past 10 months and I think the whole team has enjoyed the experience," he says.

Neil Partridge and his team are working to make Ainscough Crane Hire the pot of gold at the end of the rainbow.