Ed’s view: Deal or no deal?

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So far this year has seen some major business deals inked in the catering equipment supply chain, so is this a taste of things to come?

With the now-defunct PKS’ management joining forces with ScoMac to create a new Staffordshire servicing branch for the Scottish-headquartered distributor, and the Airedale Group welcoming Sleaford Catering Services into the fold, it seems that much of this movement has been focused on the maintenance sector.

In recent times we have seen a vast shortage of engineers and maintenance skills, so a narrowing of the amount of players in the field throws up some interesting possibilities. Either the remaining firms will hoover up the talent that’s left, the engineers could move away from the industry, or anyone set adrift could start up their own independent company and the cycle begins again. Independence clearly gives companies control over their own destinies, but of course being part of a larger entity allows access to vastly more funding.

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But do dealers themselves know what a good business deal is for their own outfits? I noticed that several people commented on the news of ScoMac’s expansion and were dismayed that sadly many at PKS had lost their jobs while the management could move into new roles. Of course it is tragic that redundancies had to take place, and I can only hope that those affected secure new employment quickly, but can any one of us say we wouldn’t have jumped at the chance to join up with another major distributor if that’s the offer on the table? Valuable industry knowledge and service coverage in the area is likely to remain thanks to this move.

It is better that some element is saved rather than the unfortunate fate of a distributor like Olive Branch Catering Equipment, which last month shut up shop due to scheduling problems which led to an exhausted supply chain and therefore cashflow problems.

Timings of deals can be vital too. For instance, in the spares supply sector in March, the First Choice Group made waves with the announcement that it was bought out by global concern, PT Holdings, the parent company of US giant, Parts Town. This buyout comes at a really positive point for First Choice, as it prepares to move into its own purpose-built headquarters in Cannock. Clearly its future prospects made it an attractive acquisition.

Likewise on the supplier side, light equipment specialist, Gilberts Foodservice Equipment, has managed to gain the backing of fellow sector player, Eddingtons, selling it the company’s foodservice division. The retail arm was not so lucky however, but once again, it is better that some part of it is saved, rather than leaving it to run into the ground if the prevailing commercial winds are not positive. Knowing when to let go or when to power on is a vital skill, and those who have it can turn their gut feelings into gold.

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2 Comments

  1. David Reynolds said:

    Interesting piece Clare, your comment about the shortage of engineers in particular. This topic was highlighted at an industry technical conference 3 years ago. One scary statistic was that 55% of engineers in the industry at the time were within 5 years of retirement. It would be interesting to know how much this has changed in the last 3 years ? Of the 3 subsequent scenarios you suggest, setting up on your own has so many significant barriers to entry (Safe Contractor, ISO standards, various on-site insurances, costly van stocks, staff training etc), that it would be a tough path to travel without deep pockets. That leaves consolidation or the leak of talent out of the industry, with a blend of the two the most likely outcome, to the detriment of all stakeholders in the industry.

    • Clare NichollsClare Nicholls said:

      Thanks for your comments David. Certainly something to think about – I shall research the current demographic stats.

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