Andrew Lupton (pictured below), and his brother Jonathan, stepped out from under their father’s shadow to guide Econ Engineering to the top of British winter maintenance. Next year will be the company’s 50th birthday and it shows no signs of slowing down. Dominic Browne spoke to Andrew about clearing the snow from the summits.
Adrew Lupton is the public face of Econ Engineering, which is, in turn, a company some might describe as the public face of the UK winter service fleet. For those unaware of Econ’s central role in UK winter service, there are a number of key statistics to remember about the company Andrew and his brother Jonathan are co-directors of. Its annual turnover is around £30m and, most importantly, it produces around 80% of all the salt-spreading vehicles used on the country’s roads.
In peak season last year, the company bought more spare parts than Royal Mail to service its share of the UK’s 4,000-strong winter fleet. Econ specialises in the local authority market; however, private-sector fleets are a somewhat underestimated chunk of this large pie. One gritter company Econ supplies in Leeds is said to have 80 gritters solely focused on providing substantial services for businesses – 80 gritters is roughly what would be used for three big city fleets put together.
A straight-forward business
As Jonathan works away behind the scenes managing the factory, Andrew is the one you will see at trade shows like Cold Comfort and making the rounds with clients. Ever the Yorkshireman, he is down to earth and straight forward and can often be quite stark in his appraisals of the challenges the sector faces.
In his strategic report for the company last March, Andrew states: ‘As the contractual commitments in the period of 2009 to 2011 unwind, the pressure on local authorities’ finances due to the increase in costs of awarding term maintenance has become excruciating. This has continued the need to fix costs over the medium term, leading to greater outsourcing of the principal expenditure, plant and equipment.’ He points out: ‘This can be witnessed by the pressure on the maintenance provider’s balance sheets as the true costs of undertaking the contracts becomes apparent,’ before adding – presumably because he couldn’t resist – an aside about ‘unfathomable’ spending plans from certain political parties.
Speaking to Highways this month, Andrew continues the theme with reference to the recent Carillion collapse: ‘A lot of people are losing a lot of money. They want to put the risk onto the supplier.
‘Procurement could be a lot more sophisticated. We could be more open and explore ways to get the costs down by making it less hassle to comply with contracts in terms of supplying larger contractors. With PFIs, a lot of them are using a fixed price model so they can be sure of price over four to five years. We have an MOU in place with Amey. They have fixed cost nationwide so when they are bidding, they can lock in seven to 10 years of winter service costs.’
He suggests the recent Highways England winter service contract, which went to a rival, was won by a bid that was ‘a lot lower’ than other tenders. He was keen to point out the risks inherent in such contracts these days, all of which are well worth pausing to consider. For example, with the lack of clarity over Brexit and the knock-on fluctuations in the value of the pound, Andrew appears to put forward the idea the smart money is in locking-in fixed prices, including with chassis builders, to give the tender security rather than make it more speculative.
The value of the pound is also on the company’s radar as an opportunity, rather than just a price risk.
In Andrew’s March 2017 report he also states: ‘With the opportunities afforded by the adjustment in the exchange rates, which would appear to be here for the medium term, then we will seek to take opportunities in the “mature” winter maintenance markets in the Eurozone.’
Econ has had much success in Eastern Europe, in places like Hungary, Bulgaria and Romania, but has turned down the chance to expand in Western Europe on several occasions. It has also rejected opportunities to move into the airport sector and the gully cleansing and wider waste market. None of which Andrew regrets.
He says: ‘We arranged with Whale Tankers that they would withdraw from winter on the proviso we would not enter gully and would market their products.’ He explains that the deal worked well for both companies.
This strategy of careful expansion goes back to the time Andrew and Jonathan took over ownership of the business and is a carefully calculated one, especially given the business muscle the company has at its disposal.
Andrew points out that the firm has experienced the most success when growing naturally: ‘In 1996, we closed down the agricultural business and focused on the highways and winter maintenance sectors, and concentrated on growth organically rather than buying businesses.
'My father, in the 1980s, had seven factories with around 15 to 40 people in each one, which was too much cost – particularly with the technology that was available at the time. Some of the companies we acquired were distressed, so trying to get them up and running was very time consuming and not as profitable. By divesting ourselves of lots of little factories, we focused on organic growth in one sector. That has been the overarching strategy.’
However, there are signs the company is pushing outwards once again. It has 150 of its spreaders in Scotland and is looking to open a service depot near Edinburgh, on the other side of the M8 belt, in order to ‘have logistics over that line’. The planning behind the move has already been six months in the making.
It is also considering expanding further into highways maintenance in light of the greater efficiencies councils are constantly trying to find. Andrew points out that the company is selling more hot boxes and he sees the market moving away from conventional tipper bodies as they don’t store the material as long, a vital issue with the increase in night working.
Andrew’s no-nonsense approach is perhaps best illustrated by his matter-of-fact take on the code of practice. He believes, perhaps uniquely but certainly with a good argument to make, the codes are too open to interpretation, exacerbating the already extensive fragmentation of the highway sector.
‘I have said to some in the National Winter Service Research Group’s (NWSRG) committee that there is a role for more of a consulting service rather than guidance service. Appendix H was so broad, people could read into it what they wanted, so it was not really helpful. The EU standard for rock salt is very broad for combi spreaders. Where is the standard for liquid de-icing?
‘I hear people want a uniform standard. Where is the definite document that says this is what we do, this is the standard for equipment? We need standards, not guidance or codes. We need less fragmentation to bring costs down. If everybody worked to one thing it would drive down costs so what we need is some standardisation.’
He is also cautious about the planned research from Highways England and the NWSRG into residual salt, and offered an alternative take.
‘We have been trying to measure residual salt levels for 25 years. It is not possible to measure residual salt at the kinds of speeds gritters operate at. Road temperature probes could create masses of data over years along a route and could be plugged back into a control system. That would seem far more deliverable within five years than residual salt measurements.’
The key to a good salesperson, Highways was once told, is honesty. Find out what the customer wants and deliver it, with no bull. Mr Lupton and his business practice could be the embodiment of this ethos. He pays his listener the honour of giving an open assessment of the subject in hand. While many might like to have him as their director, others might like to have him as prime minister. It could make a nice change to know what politicians really think.
Andrew is not without his soft spots – his family is an obvious one, as well as his second family at work. His voice changes when he talks about his staff and he seems immensely proud, in that most humble of ways, when he remarks that some of them have ‘been in the business longer than I have’.
Family businesses can sometimes experience problems when expanding. This is not something Econ has suffered from, and the great winner from all this hard work is the UK itself, and all of its open roads in the middle of winter.
