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The state of the UK RAC sector

A strange few weeks in the UK RAC sector has seen what some have described as the shock news at the demise of WR Refrigeration - one of the biggest RAC service companies in Europe. 

While it is very sad - particularly for those employees who have lost their jobs - it shouldn't really be a surprise should it? Everybody knows about the way supermarkets operate - continually screwing their suppliers' prices down. Sooner or later the supplier is forced out of business but what do the supermarkets do about it? Nothing. They find another supplier to fill the gap left and then start putting pressure on them as well. They get their suppliers so in thrall to them that they will take almost any deal available just to protect their contracts, even when those contracts are unsustainable.

Now, I'm not saying that was the sole cause of the demise of WR because I'm not in a position to know that, but this is typical of the behaviour of supermarket buyers and it wouldn't surprise anyone to find this is the case here. It does seem ludicrous though that since the first EIA Chilling Facts report was published and many supermarkets reacted by starting to roll out alternative refrigerants technology this put enormous pressure on their service providers to upskill their workforces at the very same time that they were putting pressure on their service providers to reduce or freeze their prices! You don't need to be an economics graduate to see how unsustainable that situation is. One can only hope that the new "big" supplier on the block, Integral, aren't forced down the same route as WR.

As for those who have lost their jobs in this crisis, the likelihood is that many of the engineers will find work - because good engineers are hard to come by and there is a general shortage of good, well-trained engineers. For those that don't find themselves gainfully employed in the industry soon there is always the possibility of starting up their own small RAC service companies, maybe along with other former colleagues. At the last AREA General Assembly we were analysing the latest figures we had of our membership and what was very obvious from the statistics was the proof of what many of us smaller contractors have always felt was the case: the RACHP sector isn't so much made up of SMEs (small to medium enterprises) but was in fact overwhelmingly represented by micro businesses - something like 95% of the service contractors in our sector right across Europe are made up of less than 10 employees, indeed many are sole traders.

Looking back over past blogs on this website this knowledge puts another spin on the content of the discussion threads, particularly the widespread grassroots support for the idea of an award for those who go the extra mile in servicing their customers. Industry awards generally are supported by and won by the big national contractors. As someone who has judged on a number of awards over the years it is a bit disconcerting that each year sees the same companies putting themselves forward often with similar contracts and entries. I can assure you all that the entries are diligently checked through before a winner is chosen, but it can seem to those on the outside that each year there is a lot of "same old, same old" in the list of winners.

Which is why it has been so heartening, at the very time one of Europe's biggest contractors has gone to the wall, that ACR News announced the new Customer Service Award as part of their annual awards ceremony. What better time to highlight the essential work at the sharp end of the industry and reward somebody regardless of the size of his/her company. I truly hope the inaugural winner of this award is somebody from one of the smaller companies - they are the true life blood of this industry.

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Posted by Graeme Fox 12 November 2013 10:06:00 Categories: Fox's Tales

Comments

By Graeme
12 November 2013 10:25:00
Thanks again for all the comments and support throughout the year. As Brian says, the year has ended on a much more positive note (WR issues aside) as most contractors seem to have been fairly buoyant in recent months.

Looking back over the year as we are prone to do on Hogmanay it's fair to say we've all had some trials and tribulations but I look forward to the new year with confidence and excitement at the challenges we'll be facing as we get used to working with alternative refrigerants in many applications - with all the issues that brings with it.

Hoping you've all had a great Christmas and wishing everyone in this fantastic industry of ours a very happy and prosperous 2014.
By Brian Holton
12 November 2013 10:24:00
Not just a funny few weeks Graeme, it has been a funny year.
In many ways the end of the year has finished on a more positive note. In a strange way, and I hope that the WR staff do not take this wrong, but the demise of WR removed the uncertainty that had been hanging over the industry for a while.
I hope my words are not considered disrespectful to the many WR staff who may still be out of work at Christmas but from an industry perspective, at least now we can move on and start 2014 with a clean(ish) slate and start a fresh.
I agree with many commentators that the whole Awards system within the industry feels tarnished by the WR successes over the past year which now appear self indulgent and actually quite offensive given the huge debts that they have left.
We are a small industry and the wounds WR have inflicted will be left as visible painful scars for a long time.
I agree with you Graeme that the new award announced by ACR is a great addition and I hope that some one from WR actually wins it.
All the best for 2014. Happy New Year
By John S
12 November 2013 10:23:00
Merry Christmas Graeme, I hope you and the rest of the ACR industry have a prosperous and successful New Year.
By Kieron Ellis
12 November 2013 10:22:00
Wonderful metaphor from Steve. I will never be able to think of AREA again without having this in mind.

Very good blog Graeme. You have your finger of the pulse of the UK ACR industry and this shows in your writing and by your actions.

Look forward to hearing you speak in February
By Chris Elliot
12 November 2013 10:21:00
It certainly has been an interesting year Graeme. The demise of WR will draw attention again to the problems of working for the supermarket giants who treat refrigeration as though it is tins of beans.

AREA have continued to do great work as Steve Gill put it very well here in the comments, you really do represent the industry well because you 'stand on the shoulders of giants'. Something no other industry body can claim to do as well as you do.

And the Customer Service Award is a fantastic addition to the industry awards circuit which lets face it has become tainted by the WR farce, when they received an award as Contractor of the Year just moments before they collapsed. I agree with you that this new award is welcome even at at time when the industry is left licking its wounds.
Like you, I hope the winner is from one of the smaller companies for the same reasons as you.
As a close, I would say, looking back over the year of the winners and losers of 2013, the work of you (Graeme) and that of Steve Gill stand out as being the most significant for the long term health of this industry.

Keep up the good work Graeme. Hope to see more blogs from you in 2014
By Steve Gill
12 November 2013 10:20:00
Hi Graeme, yes, AREA represent all, both large and small (and even micro!), so your position is unparalleled.
I am glad to hear that mt description of AREA's elevated position is considered apt. It is meant to be all embracing. They are all giants! AREA have a wide spread of support from across the sector so their position can reflect this.


By Graeme
12 November 2013 10:19:00
Graham, maybe we should agree to disagree? I agree that late companies have had a huge effect on our industry and I'm not saying it's all bad, but neither is it all good. A lot of the ills in our sector are a direct result of the large corporate mentality with little or no regard for the historical nature of the sector. One of the things I love most about working on the RAC sector is that it is a small industry where everyone knows everyone. Attend any industry dinner and you frequently see competitors are also close friends - few industries are like that.

And thanks for the input to all - very apt description of the position of AREA Steve. We do benefit from representing so many companies I think, and even though many are very small or micro businesses we have a strong collective voice. I should point out that we do also represent the big companies too - giving us an unrivalled position.
By Martin James
12 November 2013 10:18:00
I think that is it not only Graeme and AREA that get a better view of the wider industry by standing on the shoulders of the micro companies that are giants in this industry. I think it is the large companies too. They will have a much wider view of the industry than a small company can have, but that said, it is because they stand on the shoulders of the micro ones.
I know what Graeme means when he refers to these small service operations as the life blood of the industry but I would also disagree with him, because these small companies are actually the very heart of the industry. Without them, the industry soon dies. No one would ever say that large companies are the heart of anything, in fact, they are more likely heartless.
It is great to see Graeme and Steve Gill supporting the new Award for frontline staff. Both of them constantly speak for the individuals that make up this industry. Good for them.
Finally, I agree with Graeme comments about supermarkets. As their profits increase, it is at the expense of their suppliers not because of their customers. Any one doing business with them does so at their own peril.
You will have heard the saying 'the greatest trick the devil ever played was making people think that he doesn't exist'. Well, the greatest trick the supermarkets ever played was making the ACR industry think that they are leaders of the industry and investing on all our futures. Great trick huh!
By Graham Young
12 November 2013 10:17:00
Graeme, are you saying that 'small companies' are the life blood of this industry? If so, I cannot agree with you.
I can agree that small companies possibly make up the lion's share of the industry, and also that these small companies are an essential ingredient in the mix that this industry is. But the 'life blood', no.
Whilst I fully accept that they may keeps the cogs turning and the industry machine well oiled, etc etc, it is ludicrous to suggest that any other than the real life blood of this industry is the very large companies. With out them we simply wouldn't have the industry that we have today. Simple as that.

Regarding the quote mentioned by Steve Gill - Standing on the shoulders of giants - for once I agree with him. AREA do have a wider view of this industry thanks to the many shoulders that support them. Whether that view is coloured by those holding up though is another matter.
By Mike Winters
12 November 2013 10:16:00
I think that Graeme is a giant in his own right in this industry.
By Brian Welbeck
12 November 2013 10:15:00
I agree with Graeme about working with supermarkets. They are killing us.

Heard a lot about the new customer service award and agree that it is a good idea.

Think 'standing on the shoulders of giants' is an amazing quote from Steve Gill and a wonderful description of unparallelled view that Graeme in his role at AREA has. Great work Graeme, keep it up.

By Pete
12 November 2013 10:14:00
It is a good reminder from Graeme that the vast majority of us work for very small operations with fewer than 10 people. This is often overlooked.
I like Steve Gill's description of 'Standing on Giants' enables those higher up to see further. Graeme's work with AREA and Steve's words made me feel all the more important and part of this industry.
Finally, the customer service award first is real opportunity to show just how the ethos of embracing the whole of the industry in whatever role and whatever size company really can work. Great initiative. I hope it the success it deserves to be. Well done Graeme and Steve and not forgetting Neil Everitt for promoting it.
By Steve Gill
12 November 2013 10:13:00
Graeme, it is interesting that our industry is made up of so many micro-businesses, particularly in the service sector.

Such a fragmented industry makes the dissemination of, and the gathering of, information particularly difficult, which can impact industry quality and standards. The role of trade associations and professional bodies such as AREA are essential in addition to product support that these businesses receive from ACR manufacturers and suppliers. It is therefore encouraging to hear that AREA has such a wide membership base.

It has been said that we see further by standing on the shoulders of giants. The micro-businesses that make up your membership may not be large in size but it is with their inclusion and involvement that as a whole industry we will progress. They may be small but their importance if huge. The whole is greater than the sum of all the parts.

I was also heartened to hear of the launch of the Customer Service Award. Breaking this industry down to its smallest denominator; down to the individuals that work within it, no matter what the size of organisation, it is people that make a difference. Those at the sharp-end are the face of the industry to many so I share your enthusiasm for the new award and the timing of it.
By Phil Whitehead
12 November 2013 10:12:00
The ACR Industry in the UK only has itself to blame for any woes that it has. It constantly sells itself short and under values the knowledge and expertise that it has. The WR Management must shoulder the responsibility for the demise of the Company but if anyone actual cut its throat, it was not the supermarkets, it was the other contractors and service providers who are prepared to under cut them. The UK ACR industry is cutting its own throat, no one else.
Graeme, I agree with your closing comments about the new Customer Service Award. It is long overdue that that those are the sharp end of things get the recognition they deserve. These are the people actually holding this industry up. I think this is a great initiative which will being focus to talent that makes this industry special to our customers. At the end of the day it is those that pay our bills.
Well done Graeme and ACR News for launching this new Award.
By Canyon
12 November 2013 10:11:00
Graeme, I can think of many examples of individuals from small companies who are fine examples 'excellent customer service'. Very often their business depends upon the level of service that they offer so it is perhaps not too surprising that those that offer the best often have the best businesses and the most loyal customers.
Compare that with the much larger companies where individuals are just cogs in the corporate machine; isn't even more remarkable when an individual from one of this huge organisaions really stands out and shines? To my mind, to fight against the faceless corporate policy, to battle against all the red-tape and bureaucracy, and to still be able to offer special customer service really is exceptional.
Large company, small company, I just hope that the judges recognise a worthy winner and that as an industry we can take pride in the excellent service that we actually do offer.
Good blog.
By Graeme
12 November 2013 10:10:00
Thanks for the feedback to all of you. Mike, If you're sure you're coming to the show in Birmingham I now know I will definitely be there on the Wednesday 12th February in the HRP Business Intelligence Theatre from 1030am until 1pm for the B&ES seminar session. Come and introduce yourself there - looking forward to it. Barry, I was having a bit of a go at supermarkets because they've been doing this to many businesses in many different sectors for years now - very few farmers who have dealt with supermarkets have anything good to say about them, indeed I know of a few who have also gone out of business. I think the problem is that companies who supply supermarkets often go into it with best intentions but rapidly find themselves in thrall to them and in a situation where they have to lay people off or take ever dwindling margins. Personally, I'd rather walk away and if more RAC contractors did the same then I think we'd all benefit in the long run, but for whatever reason many others don't see business this way and take the view that it's better to take work with little or no profit and keep your staff occupied than lay them off. You simply can't keep operating that way though - it should only be a very short term measure. Glad I don't have to deal with them though - easy to say this from outside. Thanks again for the feedback from all of you - much appreciated. Whether it's agreeing or disagreeing with the content of my blog doesn't matter - all feedback is good and can often stimulate a debate or discussion, which is what I try to do with my blogs anyway.
By Barry
12 November 2013 10:09:00
Graeme, how can you say that doing work for supermarkets ultimately ends up in the company going bust? There are many companies that operate in this sector very effectively and show no signs of calling in the administrators. Sure, it can be argued that there have been some high profile causalities in recent times, bit whose fault is that? It is all to easy to blame the aggressive purchasing tactics of the supermarkets. The problem lies not with them and their professional buyers but with the ACR industry who are too eager to cut each others throats. If each company held out for a sensible margin there is more then enough to go around, but what happens; the contractors get drawn into chasing larger contracts with lower and lower margin. If in fact there is any margin at all. This ridicules trading situation was not created by the supermarkets, but they may have been quick to exploit it.
I must also disagree with your other observation that introduction of new technologies into the supermarket sector was demanded by supermarkets while at the same time freezing prices. This is simply not true. Every thing would have been negotiated. If the supermarkets demanded more (and yes I am sure they did) the boot should have been on the other foot giving an opportunity for the ACR industry to charge more. It was poor negotiation, and nothing else, by the ACR industry and in particular WR that will have resulted in their demise. No other industry would have wasted this golden opportunity to charge for additional scope of works quite like the ACR industry has. We only have ourselves to blame.
Having said all that, I do agree with your comments about the new Customer Service Award. Great initiative. I read Steve Gill's blog about the Fred Award and like you I am glad to see that ACR News have taken it up.
We now have two highly commendable awards: the student of the year, and the customer service award. Both aimed at individuals that are making a difference. I should add that the Alan Moor, the Fred Jamieson, and the Phil Creaney Awards are also given to individuals that I can respect.
Graeme, I am glad that you have written such a challenging blog again. I disagree with you, but I support the fact that you have written it.
By Pete
12 November 2013 10:08:00
Good to see something new from Graeme. It has been too long.
Agree that the supermarkets are difficult to work for, but whether they are the reason that WR went into administration remains to be seen.
What is surprising is that WR have won so mant awards in the last year and most recently the Cooling Industry Awards Contractor of the Year. I don't don't the options that were available to the judges so this can not be a criticism of them, but WR winning has to raise questions.
The new customer service award is just what is needed to redress the focus of industry awards. Well done to ACR News for organising it, to Steve Gill for suggesting it, and to Graeme for promoting it.
I understand that this award will be made to an individual rather than a company. As Graeme said, this is an excellent opportunity to promote the work of those at the sharp end of things, who are customer facing. It is these people that really make a difference. Well said Graeme.
By Mike
12 November 2013 10:07:00
Great Blog Graeme. It is good to see something new from you.
I have never run a business so it is difficult for someone like me to have any real knowledge of what was going on at WR. But I do know that we all have choices to make and it would appear that the management of WR made some bad ones.If not, they would still be in business. Why do I say that? I say it have incomes, budgets and expenses to cover. We also all have skills to sell. At an individual and household level I do just that, and you know what? I manage to balance the books each month, each year. Sure, I may be ignorant about the intricacies of running a business, but at some level, it must be very similar. You have to earn more than you spend. Whats' more, you have to have it in the bank before you spend or go into debt. If not, you either earn more (I have changed jobs 3 times in the last 10 years, or you spend less ( I cancelled a holiday 3 years ago because my wife was out of work at the time and we couldn't afford it).
The people in charge of companies are professionals, or meant to be, so if they crash, like WR have, to my mind, it is their fault.
I am well aware that working for the supermarkets is not easy. Sure, they want to pay less, sure they want to pay later, sure they want more for their money. Name a customer in any industry that doesn't. The truth is that WR had the option to charge more, to look for different clients, to down size. They had many options which I don't suppose are easy to make, and I am certain they would be beyond me, but they did have options and choices to make. That is what senior managers are paid very highly to do. As it was, they chose to celebrate winning awards while their company sank. It is too easy to blame the supermarkets. The working for them was so terrible, the management should have found an alternative market to be in.
Like you Graeme, I really do welcome the New Customer Service Award from ACR News. I think this is a wonderful initiative and a refreshing change to the usual merry-go round of Awards for big companies like WR. I read Steve Gill's blog about the Fred Award and like many think this is something of a grassroots award. I too am interested to see who will be the first winner of it. I don't want to say anything negative about it, but I was slightly disappointed by the rather bland name for the award, but lets not detract from the concept as I understand that choosing the not that straight forward.
Good to see you writing again Graeme, great blog. I look forward to meeting you in February at the ACR News Exhibition.
15/11/13
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