When to divisionalise?
29 February 2008
“By the mid-90s we had two choices about how to expand”, says KDM's Keith McIvor, “we could open more depots or expand into different products. We could already travel to all parts of Northern Ireland quite easily from the Cookstown depot, so the next step was to look at products that weren't available everywhere, and that would travel.”
The first of these special rental divisions was cabin rental in 1999, called K Cabin, followed in 2002 by K Loo, a portable toilet business (see photo). “If a site needed a cabin, the chances are it needed a toilet as well”, he says.
The search for other divisions continued, and in 2002 KDM entered into a joint venture with Northern Ireland genset importer Macgen to establish Rentagen Ltd, a power rental company. Mr McIvor bought out the 50/50 partner in 2003 and it became K Power, the third of KDM's divisions. In 2003 a powered access arm was formed – K Lift – which now has a fleet of 250 aerial platforms as well as 140 telehandlers and industrial forklifts.
Is this approach suitable for any rental company? “You have to be a sizeable enough player to justify a number of dedicated employees. And you have to be a proper regional player”, says Keith McIvor, “It has to have enough scale to do that economically.”
What kind of scale is required? In the case of Northern Ireland, a small country with a population of 1.7 million, Mr McIvor says his aim is to be in the top two or three in each of the product areas – cabins, toilets, access and generators – and thinks he has achieved that.
The divisions are run with a certain number of product specialists, and although the sales function for each division is separate, the support costs are shared between the divisions. For example, the company has a single transport controller who oversees the logistics side of all the KDM equipment at both the Cookstown and Belfast depots.