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TLS was once a problem child for parent company GE. But the rental firm may now be coming of age, as chief executive Carl D’Ammassa explains. It’s cold, grey and... well, Stoke-on-Trent. And then TLS marketing director Duncan Frame utters a phrase seldom spoken in earnest: “Stoke is a really exciting place to be.” But all the TLS Vehicle Rental guys are excited – you can see them brimming with it, because they have reached a key point in the company’s financial rebirth. A new strategy, new  depots – including this one in Stoke – and the new sensation of making a profit.

Much of this turnaround in TLS’s fortunes is down to the efforts of chief executive officer Carl D’Ammassa. Although he has been in this post only since October 2007, he was previously chief operating officer, and clearly knows the company inside out. TLS was bought by US giant General Electric (GE) in 1998 and, in 2001, its new parent charged the firm with a £50m loss when its discounts didn’t meet internal accounting standards. Although nothing illegal had occurred, it was a scandal that reached the mainstream press. And so TLS was doubly cursed – not only failing financially, but doing so in the public eye.

Profit

This year the firm expects to post £5m profit on an £80m turnover and D’Ammassa has decided on a ‘back to basics’ approach, now its five-year turnaround is complete. The rental fleet will comprise cars through to 3.5-tonne vans and then jump to 7.5-tonners, tippers, dry  freight boxes and 18-tonners. He anticipates plugging the middle ground with 5-tonne and 6-tonne vans: “We find customers want either to move up the weight range to 18 tonnes, or to carry as much as possible without having to train their people for LGV licences,” he explains.

So how is this back to basics? “Previously, TLS grew very fast and we were all things to all people – we offered ambulances, waste collection vehicles, lots of things that are better offered by specialists. Not any more,” says D’Ammassa. In addition, sister company GE Plant Hire, which D’Ammassa also heads up, invested badly and indiscriminately in expensive bespoke kit which couldn’t provide a return on investment, leading to a £2m loss.

While vehicle rental will remain the biggest revenue source for TLS, it will no longer necessarily be the biggest customer draw. As is the current trend, TLS is repositioning itself as ‘a fleet management company’. This translates as offering a full service – third-party maintenance, mobile fitters, telematics and contract-hire. “Our offering is now ‘joined up’. Customers have lots of entry points – they can come in and cherry-pick exactly which bits of our services they want,” says marketing director Frame.

Telematics

D’Ammassa expects that by the end of 2009 telematics will be contributing £1m to turnover, maintenance £4m and rental £85m. Its contract-hire side has been slightly neglected in favour of rental, but he is determined to increase the current fleet of 1,500 contract-hire vehicles to 6,000-plus by the end of 2009. “Our customers want contract-hire and, as part of GE, we can offer it,” he reveals. Each of the 28 TLS locations has its own workshop, plus there are four sites for its Broadway Motor Company which will retail its used vehicles. “Doing our own maintenance and retail keeps our overall lifecycle costs low. We’ll have eight Broadway locations by 2008, spread throughout the UK,” says D’Ammassa.

GE Plant Hire will also play its part. D’Ammassa intends to exploit the 72 locations which the plant-hire business has throughout the UK in order to expand TLS without incurring extra cost. “There is significant overlap between the customer base for GE Plant Hire and TLS in terms of construction. But they will remain separate cost centres because, while the plant hire is 80% construction, TLS services a wide community outside that market.” That includes local authorities, facilities managers and SMEs (small to medium enterprises).

Stoke is the third new depot opened recently, and the second that will share its facility with plant hire. D’Ammassa intends to open eight more along the same lines. The Stoke-on-Trent depot has 135 vehicles on opening, but will run 250 by the end of 2009. Site sharing is about ‘cost avoidance’, says D’Ammassa. After a chequered history, GE now has exceptionally high standards of corporate governance and D’Ammassa is aware he cannot therefore open a new site nearly as cheaply as his rivals. “It would cost us £150,000 to open a site with a portable office,” he says ruefully. “That’s just for the tests and searches, such as deep core soil samples, which GE demands. Its approach to health and safety is extremely laudable, but a drag commercially.

Learning curve

“There are two things that will get you fired outright from GE,” he continues. “A breach of integrity and a breach of health and safety. It’s that important.” TLS has undergone a fairly steep learning curve in the last five years; its regional teams had good local roots but little sense of unity, and the two regional managers (covering North and South) were overstretched. The head office team has now been overhauled and the number of regional managers raised to five; the local teams are now being reintroduced to the benefits of being one big organisation.

“Local roots and relationships are important and all of our depots are expected to give something back to the communities they are operating in. But we’re also having initiatives which emphasise the sense of teamwork across the board.” On example is last year’s Children In Need appeal, for which TLS depots together raised £5,000 through various initiatives – one driver even had the GE symbol shaved into the back of his head.

Vehicle utilisation has also been a priority. “It was far too low; we’re now pushing 80%. But GE’s standards for corporate responsibility are very high so, with our in-house maintenance, we should be able to get our fleet uptime to 90%,” says D’Ammassa. “I don’t believe anyone else in the rental market offers the range of services we do now,” he says. “We’ll still be number two to Northgate in fleet size, but number one for service.”