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Past Issues

November 2001

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New Vehicles

A tribute to 
ENTREPRENEURSHIP

Singing in the rain could well have been the music played at the edge of the harbour in East London as we stood listening to a group of guys telling of the absolute success of a real entrepreneurial type venture that encapsulates everything that is positive in this industry writes Patrick O'Leary.

It doesn't happen often that as a journalist, you set off on a story and end up returning to the office without one negative angle to report on. In fact, you come back with your original story angle embellished and enhanced by unexpected good news stuff you never expected to find along the way.

This is exactly what happened when I attended the recent handover function - to a group of owner-drivers - of eleven Mercedes-Benz Actros 2535 L 6x2s linked to customised LOHR auto-carrier trailers. I knew it was taking place somewhere in East London. What I didn't know was that the venue was situated in the heart of an area that has got to get a medal for emanating one of the most positive vibes I have yet felt in South Africa.

It didn't start out like that. When we disembarked from the small twin-prop Beechcraft at East London airport, the first impression was not exactly a warm one. We stepped from the plane into a tornado-type downpour and had to walk miles to the terminal building with heads bent low against the driving torrent.

Well OK - it wasn't exactly a torrent - more like a slight drizzle; and it wasn't exactly miles - more like 100-or-so metres. However, with FleetWatch technical correspondent Dave Scott crouched behind me using my small frame as a shield from the rain, I got the impression he felt it was a downpour of extraordinary proportions. Suffice to say, we made it safely to the terminal building where we were herded onto a Mercedes-Benz Sprinter to head off for the harbour area.

Magnificent achievement
I'm now going to deviate from the main purpose of this story because that's exactly what happened on the way. I knew that at the end of that short journey there would be good news waiting in the form of the handover of the rigs to the owner-drivers. What I didn't know was that on the way, we would be exposed to what is truly a magnificent achievement for both DaimlerChrysler and South Africa. I refer here to the manufacturing plant where the C-Class Mercedes-Benz is being manufactured for the rest of the world.

As we drive through the security gates and down the rows of new buildings, I start getting a warm feeling. I have been privileged to visit manufacturing plants in Germany, Italy, France, Spain, America, Japan, Sweden and elsewhere, and it's always saddened me when I wander through these plants that South Africa has always been on the receiving end of what comes out of these facilities. 

Certainly this was understandable during the years of sanctions when our political masters of the day kept us isolated from the rest of the world. However, since we have become part of the global market, I have so often wished that we could have similar facilities in South Africa. Facilities where products were being manufactured and accepted on the international markets as superb. Facilities where jobs were being created and value was being added to our economy. And good grief! Here it is! We do have such facilities!

Yes, I know that the motor industry has achieved excellent success in the arena of exports. It's not like the C-Class or the VW Golf 4 export programmes have been kept secrets. Not at all. It's just that being focussed on the trucking industry, which is more an import orientated sector, one does not get hands-on exposure to these facilities.

While on this point, Volkswagen South Africa recently achieved an export milestone with the manufacture of its 100 000th Golf 4 for export at its Uitenhage production facility. This brings to more than 136 000 the number of vehicles produced for export by Volkswagen South Africa over the past decade - including 27 720 Jetta 2s to China, 500 Audi A4s to Australia and 8 000 Golf 3s to the United Kingdom.

 

Global operator
And listen to what VW South Africa's MD, Hans-Christian Maergner, says of this programme. 
"Apart from generating billions of Rand in foreign exchange earnings for the country, the Golf 4 export programme has been particularly significant as it has enabled Volkswagen to move very quickly from a local manufacturer to a global operator." The C-Class Mercedes-Benz programme has done the same for DaimlerChrysler.

But let's get back into the Sprinter. We turn the corner and there they are - brand spanking new Mercedes-Benz cars waiting to cross the 'export bridge' from the factory to the Portnet holding area from where they will be shipped to markets all over the world.

I glance out the window and see from the sign on the side of one of the cars that it is bound for Sydney, Australia, probably to be bought by a South African - there's lots of them there nowadays. The one behind it is destined for Hong Kong - and so it goes. These sleek looking models are going all over the world. What a magnificent achievement for South Africa. Well done DaimlerChrysler.

 

We then head down the hill towards the harbour quay and half way down, we stop. There they are in the distance - a gleaming line-up of Actros 2535s with their LOHR trailers linked and stacked with various DaimlerChrysler models. I have to be honest. It was a thrill to see those shining C-Class models heading off for 'Sheila-land' but they pale into insignificance against the magnificence of a line-up of sparkling rigs ready to roll. There's something 'oomphy' about a line of trucks, isn't there? 

A few pics later and we're standing in the Portnet building built especially for the export programme. It has a number of tiers of parking areas and we're listening to Pieter Klinkradt, manager of the Portnet car terminal, explaining how it all works. Import models are also, by the way, held in this building until released for delivery to our local market.

Union tours
It's a sophisticated system involving bar-code technology to track and trace each model between the factory, the terminal, the ship and the eventual export destination. It's impressive stuff and my only question to Klinkradt is: "Have you had national union leaders tour the facility?"

	<---- McCarthy Truck Centre's John Miller (left) makes a plea to MVC's Liam Hickey (right) to please leave him so he can now "go back to my normal dose of prosac"
	<----  Good friend of South Africa, Peter Treibel from DaimlerChrysler overseas was there to join the celebrations.
----> Owner-driver Keith Hockey in a line up of some of the very 'chuffed' owner-drivers proudly laying claim to their rigs.

The answer is no. Certainly workers and union leaders from DaimlerChrysler have toured it but not the national union leaders. I suggest they do this so as to give union leaders a hands-on feel as to what is involved in setting up an export programme of this scale. That's an R86-million investment operating there.

I put this forward because, to be honest, it irks to think that so much money and effort goes into establishing such facilities to cater for the world markets and then we get strikes that threaten the whole programme - especially protracted strikes such as the last one where both the union and the employer bodies emerged from their negotiated settlement to state that there were 'no winners'.

What rot! One just can't begin to imagine this whole export effort being put on hold while we sort out our local problems. In effect, it puts the world on hold and we really don't need that given South Africa's dire need to create wealth and employment. As a matter of interest, I was approached later by Terry Taylor, manager external relations for the National Ports Authority, who said he had taken note of this request and would implement such a tour.

And now lets get off the detour and head off to the trucks.

All that is good
There are times when you see something and you know it doesn't get much better than this. This was such a time. Take a look at the accompanying photographs and see if you agree. The rigs as lined up exude positive confidence; they exude quality and excellence; they exude First World standards at their best; they exude all that is good.

 

And just as DaimlerChrysler can be proud of its export achievement, so too can the parties involved in putting this deal together be proud of their achievement - not only in speccing the rigs but in the total operational concept surrounding the rigs.

There are a number of parties involved here but one guy who stands out as the driver of the show is that mad Irishman who goes by the name of Liam Hickey, director of Motor Vehicle Carriers (MVC), a management firm specialising in the field of Autocarriers and owner/driver management.

FleetWatch has known Hickey for some time and can only commend him on his total dedication to getting things right 'first time on time'. He is a man who does not compromise standards which, one supposes, makes him not the easiest guy to deal with but when it all comes together, makes it so worthwhile for all parties involved.

And the parties involved here are MVC, DaimlerChrysler Services (who financed the deal), DaimlerChrysler's Mercedes-Benz commercial vehicle division, McCarthy Truck Centre, the auto-transporting company Autocarriers and the French trailer specialist LOHR.

All these parties worked closely over many months to make it all happen - and it wasn't easy for unlike what we saw on top of the hill where local manufacture rules, all the equipment for this order came in from overseas. In this sense, the deal is unique for DaimlerChrysler in that this is the first time an entire rig consisting of freight carrier and trailer combination has been imported as a full unit.

And it wasn't an easy one to put together. It was, for example, more expedient to send a South African Bureau of Standards (SABS) representative to LOHR's facility in France to homologate the trailers rather than have them arrive and do it here. And there was good reason for this seeing that the trailers on the eleven Actros trucks are both higher and longer than the norm for their class and had to be homologated to meet specific South Africa legislation.

It was thus that subsequent to the first trailer built by LOHR in France, a member of SABS went to Europe for certification. The other ten trailers were then built according to these strict specification guidelines - now known as AfriLOHR - because of its unique specifications meeting Southern African requirements.

Then there was the hiccup of the ship not being able to load the completed rigs due to the access ramp being too weak to take the weight. This resulted in the rigs sitting on the docks overseas for about two weeks until another ship arrived. 

Normal dose of Prosac
Perhaps the effort put in by all in making this all happen can be summed up in the words of John Miller, sales director of McCarthy Truck Centre, Cape Town, who pleaded with Hickey to now leave him alone so that "I can go back to my normal dose of Prosac." There were a lot of other friendly jibes directed at the Irishman. It was warn stuff all round.

As a matter of interest, final preparation of the vehicles was handled by McCarthy Truck Centre in Cape Town, which will also manage all scheduled maintenance according to the service contract and handle specific servicing on the trailers according to LOHR specifications.

McCarthy Truck Centre Cape Town is also assisting in driver training while LOHR, which is Europe's leading manufacturer of trailers for the transportation of vehicles, sent a technical expert to East London to assist technicians with a special five day training programme.

Early in 2002, the LOHR technical expert will carry out training with the McCarthy Truck Centre technical staff in Cape Town. And such training will be needed as these trailers are currently the most sophisticated fleet of carriers in South Africa.

The Actros vehicles have also been specially equipped and modified for these trailers as well as to cater for the business needs of the drivers. To this end, the cabs are equipped with provisional connections for telephones and fax machines, as well as a sound system, airconditioner and cruise control as convenience and comfort features, together with a single-piece lower bunk, adjustable steering wheel and full complement of instruments.

Other equipment includes the Mercedes-Benz' TELLIGENT-brake system with ABS and ASR, 16-speeds TELLIGENT gear shift, 800 litre fuel capacity and extra headlights.

The Actros is powered by Mercedes-Benz' six cylinder, 4-stroke direct injection turbocharged diesel engine with intercooler. It is mounted at 90 degrees in a V-configuration and displaces 11 946 cc to deliver 260 kW (356 hp) at 1 800 r/min and 1 730 Nm of torque at 1 080 r/min.

Interesting concept
But it's the deal behind the rigs that is truly an interesting one and emanates from Autocarriers - which has been transporting vehicles around South Africa since 1954 and now accounts for about 35% of all vehicles moved - wanting to increase its vehicle carrying capacity.

David Taylor, MD of the company, decided to go the same route he went some years ago, namely, the owner-driver route as a means not only of boosting his business but also of boosting black empowerment.

At that time, he decided to sub-contract some of the vehicles in his fleet to entrepreneurs. It was a bold move as the concept was new. It was also a route being taken by a number of companies. However, unlike some others whose schemes have failed dismally, his has succeeded and the reason for this lies in the original intention of Taylor to develop the owner-drivers "to become business people in their own right and build capital".

Proof that he has succeeded in this aim is given by the fact that this was the second vehicle for two of the owner-drivers who received rigs on the day. For Steven Jones and Charles Modondo, they now not only run the new Actros/Lohr combinations seen on these pages, but also own the former truck tractor they had been driving prior to this. The truck tractor will now be driven by drivers under their employ also hauling for Autocarriers.

Contrast this with the countless number of owner-driver schemes which have gone sour and this really stands out as a success story of note. The reason, FleetWatch contends, lies in the intention behind the schemes.

Right intention
In Taylor's case, the intention was the right one as he wanted to "develop drivers to become business people in their own right and build capital". In many other cases, it was token gesture stuff where lip service was being paid to the concept of black empowerment while with others, it was seen as a means of, for example, getting the unions off their backs.

Taylor's intention was the right one and that's why it has worked. And that's why he is confident of continuing to go this route while providing a quality service for his customers. The latest additions to the fleet will more than double the number of owner-drivers and will account for around 10% of the company's turnover.

Interesting is that when Taylor first decided to introduce owner-drivers into his fleet, he contacted Hickey - who has always believed that owner/drivers have tremendous scope in the long term in becoming fully-fledged transporters and business people - to drive the process. And it has worked. It is thus that when Taylor wanted to expand the programme, he once again contacted Hickey.

In essence, the arrangement is as follows. Autocarriers has the contract with the auto manufacturers to carry their vehicles. The company has, in turn, contracted their business to MVC who, in turn, has contracted each combination unit to an individual subcontractor who is an owner-driver.

MVC has put together all the equipment with the owner-driver owning the cab and chassis and MVC owning the remaining equipment From hereon in, MVC will assist the drivers in managing their financial affairs and other logistics, thus allowing the drivers to concentrate on the task of driving.

To assist drivers in managing their finances, MVC will ensure that all running, finance and other costs on the vehicles are made directly to creditors, while separate operating balances and full statements of earnings are kept and reconciled for the drivers each month.

According to Hickey, drivers have control of over 85% of a vehicle's expense, like fuel and tyres. Since drivers benefit economically by larger profits, loyalty to their contracts and sound management of their vehicles are of the utmost importance.

Another big plus here is that since Autocarriers guarantees drivers a minimum mileage - most drivers average 24 000 km per month - and incentives to keep costs as low as possible, much of the risk has been taken out of their own businesses. It's win-win all the way and it works to the benefit of all.

"When we assist the drivers, it is not like a boss/employee arrangement. It is a partnership where we all work towards a common goal. Their goal is to ensure a quality service is given to us so that we, in turn, can ensure a quality service is given to Autocarriers," says Hickey.

And it works as evidenced by Hickey successfully managing the first owner-driver operation for Autocarriers over the last five years with eight truck tractors. These trucks are also about to be replaced with new vehicles.

No innovation from banks
At the beginning of this article, I mentioned that there was no negative angle to this story. I wish that were true but there is, unfortunately, one. It lies in the fact that most of the banks ran from this contract seemingly due to it carrying the tag of 'owner-driver'.

Hickey has nothing but praise for DaimlerChrysler Services which, he says, provided an excellent service in the way the finance package was structured. As for the rest, he says it was most disappointing to see the lack of innovation from the financial institutions.

"I understand that most of the banks have had their fingers burnt by some of the more dubious owner-driver schemes that have been on the market. However, here is one which has a track record of success, where the work is guaranteed by a reputable and long-established company like Autocarriers, and where the ultimate clients are major players in the car industry such as DaimlerChrysler.

"One must also take into account that this is not a general freight, flat-deck type of operation. This is specialised transport where professionalism has to reign. An international company like Lohr would not get involved if it thought it was anything less than professional.

"Surely when one puts all this together, the banks must see that the risk is minimal. But they do not take any of this into account. It seems as if, irrespective of the contract or players involved, when the banks see the words owner-driver, they run from the deal," says Hickey.

This is not the first time FleetWatch has come across such a gripe. In fact, it is becoming common in the market and we feel many potential deals are thrown out due to many banks not having sufficient knowledge of the trucking industry and how it all works. The deal stops at the credit desk where you have someone who knows nothing about transport evaluating finance applications on the basis of assets, liabilities and how the balance sheet looks. Meanwhile you're sitting with a contract that is extremely healthy, lucrative and risk free.

Maybe Hickey and others who are involved in successful owner-driver schemes should change the name of the concept to something like the Billy Rautenbach scheme or the Cape Transport Holdings scheme. The banks were quite willing to finance these dud schemes to the tune of millions of Rand - and then lose their pants. So maybe it will work for owner-drivers.

That said, the rest is all so positive and we lift our hats in tribute to everyone involved in putting this deal together. It stands as a tribute to South African entrepreneurship in trucking.