SPAIN COVID-10 Journey ACCESS INTERNATIONAL
Access Industry Expert Ivan Papell, CEO Gloobal MovingRent.
Speaks with AI’s Euan Youdale.
AI: Please explain briefly the businesses you have now and have been involved with in previous years.
IP: I have for more than 25 years, been involved in the Rental and Distribution of Powered Access and Material Lifting Equipment markets. Throughout these years I have had and managed my own Rental companies, managed others and assessed different Rental businesses. And enjoyed understanding the differences and how different European Countries perform.
I am nowadays tying to approach the market from different perspectives. I am busy with a group of Companies involved in 5 main areas; a) Rental of Vehicle Mount Aerials (the largest one in Spain), b) Rental of Powered and non-powered Access equipment, c) distribution of AWP and material lifting, d) Service, Training and Technical Inspection, and e) Telematics.
My aim is to put my best effort in trying the market (mainly Rental companies) to be and perform better every day. I believe the market needs to make a step forward and be more professional and efficient.
AI: From your experience, how has Covid-19 effected your country and the people it. (This could include from a health and political standpoint, and have people been offered financial support?)
IP: It had and still does have a big impact on people and companies. From both sides; health and economy.
Concerning health, the impact has been very big. There are already more than 26.000 deaths and more than 220.000 people have been infected. This figure is probably much larger since most of the people with symptoms have not had the chance to take the test. Tests were not available.
The preventive measures in Spain were taken far to late.
With regard to people and the way they face it; at the beginning, by mid march, people were quite afraid of being infected. But as time goes by it seems we as society, have somehow accepted the situation and assumed the risk. The deconfinement plan is now in place but lots of people do not follow the preventive measures, such as distance…
From the political standpoint it seems that again the measures were not in place when they should have, and all actions arrived to late, and still do. The government announced a 200 thousand million euros help, which represents a 20% of the GDP. Well, 60% of it should come from the public sector in form of credit with state guarantees. In reality, though The productive economy is not being helped, there are no Tax exceptions nor tax payments postponed nor direct help to families… The Spanish government has only put around 1,2% of the GDP versus other occidental economies that have put up to 9%.
About the Economy, Spain is the third hardest hit eurozone economy. The fall of the GDP in Q1 has been -5,2%. It is expected that the Economy will retreat -9,4%, when the Eurozone will do -7,7%.
AI: What have been the implications on the access industry and your company in the country for rental companies and manufacturers? (Have they reduced capex, investments, personnel, and any other insights).
IP: It has certainly had a big impact; Rental Co’s utilization levels have dropped to figures around 15%. People have already been confined for 8 weeks with 2 of them where only essential services could be active. Rental business’ business is to rent days. If construction sites are closed and people not allowed to go to work, machines are not bringing in any revenue.
Rental companies have a in their cost structure a high percentage of fixed costs and therefore many are struggling to get trough this period. All of them trying to re-finance their current debts monthly payments and trying to get new ones. This can help in the short-run, but it will have to be paid back.
I see managers taking as much credit as they can from banks and holding it until they do not see a clearer future. Which might put new investments on hold. They might have not decided to reduce capex, but certainly to put them together with some orders placed, in the freeze.
Most of Rental Co have gone into the temporary redundancy process. But workers do not get more than 1.000€ gross wage.
Manufacturers list of order taking is empty. Everyone has put all investments on hold.
AI: What is the situation in Spain now? (In terms of restrictions being reduced, construction sites opening back up, freedom of movement and ease of doing business).
IP: The deconfinement plan is now in place but still very restrictive. People can get out according to a timetable based on ages. But in their village/city.
It is not allowed to go out of your province…
Privately owned construction sites can open. With a very strict preventive measures which makes a much lower pace than before Covid19. Even though it is only allowed one worker-one machine the number of machines out on rent is still low.
Public sector sites are still closed.
It is certainly not easy to do business. All machines need to be disinfected when get out and when get back in. All technicians need to work with the masks, gloves, security distances, cannot touch anybody else’s material, etc. Customers asking for our internal security measures, etc. Need to call before going anywhere…
AI: How do you see this changing over the coming months? (Will new major private or public projects get started, will there be liquidity in the market, how long will the crises effect the economy of Spain for?)
IP: I do not see any major project getting started anytime soon, until the health is not guaranteed. We must have the vaccine or successful assays to determine antibodies against Covid19, before any new major private or public project starts.
Liquidity levels will depend upon the policy and the agreement the European Institutions, IMF (International Monetary Fund) and the different government implement. And also at the speed they go.
If there is a new cash inflow, the Spanish government may start new investment on infrastructures and construction projects. But it will also depend on who will manage Spain.
To me, the drop in the GDP (in Q1-5,2%) and the strategies implemented by the Spanish government and the situation within Europe, shows a Spanish public accounts crisis and makes me think that I do not see a recovery to 2019 levels until mid 2022, in the best scenario.
AI: What changes have you made at your business so far to adapt to the situation?
IP: Our plan had 3 priorities:
- Protect employees’ health. Keep them safe.
- Protect jobs.
- Guarantee the liquidity of the Co.
People’s and Operations perspective:
- From the very beginning we sent all HQ and depots admin, office and commercial teams home and made sure they could work from there. It was quite simple, since the structure was already in place.
- Service engineers and drivers are split in teams and rotate every week (obviously with all preventive measures)
Protecting margins and profitability:
- Change people’s tasks priorities. Cash-flow and cash collections vs commercial activities
- We had to reach agreements with customers who had machines on short, medium and long run contracts. These last ones, not that simple.
- Had a deep look at our costs structure and try to reduce it asap.
Redesign and adjust the business model – speed very important:
- Short time effective measures vs potential new business model in the future
- Looking internally into or procedures to be more effective and gain efficiency.
- Be very close to the customers. Understanding what customers need and might do, in the near future. Confidence and customer support.
- New services; e-learning very active. Online training: theoretical part for free.
We are nowadays operating very effectively, probably better than 2 months ago. All members of the team have added up their best efforts in a way that I had never seen before anywhere. The amazing effort all employees have made is giant. They have all been very adaptive and with a high level of creativity. And work as a team, more than ever
AI: What changes or developments are you planning, or is the wider access industry planning, for the future? (This could be a greater level of digitisation and automation, or anything else).
IP: We have all purchased via internet more than ever. And feel more comfortable with it. We are all holding many more videoconferences than ever before. Us and our customers. This will have a big impact on the way we will interact with our customers.
Customers will also need to be more efficient and will most probably require more from us and from our services. They will need to perform better, which also means the machines they rent and the use of them. The digitalization and telematics were coming, but this situation will speed up this transformation process.
Companies implementing these systems will have the tools and the data to better mange their businesses and take the necessary competitive advantage the new situation will require.
This is a great opportunity to eliminate downtime. All the Industry should focus on it. Manufacturers, Rental companies, Service companies, Parts suppliers, Software and Hardware companies… The Industry should follow what companies like Trackunit are doing; putting their best efforts in eliminating downtime. Because this will make the Industry better
AI: Will there be fundamental changes in the way the access industry operates in the future, as a result of Covid-19? (This can include items mentioned above, more home working and whatever other areas you think).
IP: The world is not going to be de same as before Covid19. It has changed and so have our habits. And acceptance to technology and protection. I believe the globalization will have changed its shape.
It seems to me that all the changes that were coming are already here and being accepted and implemented immediately. It is clear to me that things like home working for Rental Companies was not in our minds, it now is and will happen. Why should all go to the office every day and we spend hours a week travelling. We have now realized that there is no real need to do it every day. Maybe twice a week is fine, more efficient and more cost effective.
It is a complete change to the way we have all been educated and used. But the change is right now, right here.
Crisis bring opportunities and require creativity and new strategies.
AI: How do you think the pandemic will effect Spain, the rental and manufacturing industry long term?
IP: Spain is a big country, with many different cultures and performances. And therefore, a big potential. But so far, poorly managed. The Rental market is still very fragmented. And commercially driven instead of performance.
The pandemic might have a big impact on Rental owners’ mentality. I hope they change the focus from growth to performance. I believe there is going to be great opportunities for the smart and solid players who understand the different cultures.
Some movements were about to happen in the market but will most probably be now put on hold for the coming months. The economic recovery form (V-U-L) will have a big impact on it.
Manufacturers are worldwide introducing new products focusing on sustainable and electric machines, telematics, etc. They will need to adapt to the new world and make sure they comply with Rental Co and End user requirements.
I would like to see how Chinese manufacturers step into the market and at the speed they adapt to the situation.