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Saturday, 7 June 2014

Beware odious forklift dealer practices


Acquiring forklifts through contact rental/lease, the most popular way in Britain, is a minefield for the unwary but how many truck users realise another minefield lies ahead when the contract period, typically five years, reaches the end? There is no issue if the trucks are bought outright, easily the cheapest form of acquisition, provided in-house maintenance is top notch, and the problem is also much reduced if the rental contract includes full maintenance. But for those users who rent without full maintenance included in the contract they are at risk of odious dealer practices that in some cases border on blackmail.

This is not to suggest that most forklift dealers are sharpers, far from it. The majority work hard to give their clients a good service but the fact remains that the industry is intensely competitive, many of the dealers (typically 20%-30%) are financially weak and so not only are they incentivised to shuffle the pack (deception by omission) at the beginning of a contract period, they may resort to thinly-disguised threats at the end of a contract because they desperately need the contract to be renewed.

Typical underhand examples just before contract renewal time include presenting truck users with unexpected bills for excessive truck use or damage. On the former, the best defence is to examine any new contracts' small print to discover how many hours truck usage per year the contract is based on. If no figure is provided, then customers should hammer that out with the supplier and define what the extra costs would be if those hours are exceeded. To be fair to the supplier, they will want to sell on or hire out their trucks after each five-year contract ends and the truck's rentability will be influenced by its condition and so it may need costly refurbishment.

Even if the designated hours usage has been exceeded and the consequent extra costs agreed at the start of a contract there is still the long-festering problem of paying for truck damage when it is returned to the supplier. A small nick to the driver's seat would mean paying for a new seat which would cost many hundreds of pounds. It is not so much the principle of having to pay for truck damage on return but the very inflated prices charged for the spares/repairs. All truck users should bear in mind that owing to the competitive nature of the forklift industry profit margins on sold counterbalance trucks are wafer thin and so they try to make up for that by charging high prices for spares. After all, they must make an adequate return somewhere. Even so, at times the matter has been highly contentious, with court action threatened, so to clear the air somewhat, the Forklift Truck Association (FLTA)* in Britain has issued a useful guide on what constitutes fair wear and tear issues.

So desperate, however, are some truck dealers to get a contract renewal that after presenting a hefty, unexpected bill at the close of the old contract they will offer to 'write off' those bills provided the customer renews the contract for another five years. This comes close to blackmail and should be strongly resisted because continuing with a new contract could be extremely costly if the nature of the user's business has changed. The user, for example, may wish to change from counterbalanced and reach trucks to articulated trucks to cope with an expanding business or, indeed, use different, more productive trucks not offered by the current supplier.

Another potentially more serious truck supplier ploy, when it realises it will not be getting a contract renewal, is to threaten to remove its trucks from a client's site, leaving the client with no means of shifting goods around the warehouse/factory. This would not be a problem if the renter had lined up a deal with another supplier so that the new trucks arrive at or just before the old contract expires. Alternatively, any truck user should seek greater assurance that their supplier has an ethical exit strategy when the end of the contract is reached.

In theory, truck users are likely to obtain more ethical deals from the large forklift manufacturers or dealers like Briggs Equipment because they have a reputation to maintain and will not risk that through adverse trade press publicity. Moreover, an extra comfort is the greater financial stability compared with small/medium -sized dealers. Smaller dealers should have their financial strength assessed because if one leases a truck from them the contract is with the lease company, not the dealer. If, therefore, the dealer goes bust and therefore can no longer provide a contracted maintenance regime the payments will still have to be made to the lessor on time. Finding an alternative truck maintenance company will almost always be more costly. Some extra comfort may also be gained by dealing only with companies belonging to one of the leading trade associations like the British Industrial Truck Association (BITA) and the FLTA.

If the problem persists or worsens a case could be made for an industry-independent 'watchdog' or ombudsman body to be created to whom one can register complaints of alleged odious dealer practices and where such complaints are upheld the dealers in question are placed on a widely published blacklist.

*www.fork-truck.org.uk   
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2 comments:

  1. Many customers view forklift service as a commodity and only from a single dimension low service labor rates. Unfortunately, this approach does not provide the outcome they desire: lowest total cost of ownership. You need to view service from multiple dimensions such as trained service technicians, the availability of quality parts, first-call fix rate and response time. When you’re able to look beyond low service rates and acknowledge these factors, you’ll begin to understand that you need a system in place in order to achieve the highest levels of performance and reliability. We call it the International Forklift. It’s built on a system of performance.

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