Merger brings opportunities – & troubles, too

17 August 2001

Merger brings opportunities – & troubles, too

Merging with Mid-Tak in

1999 has increased

business opportunities

significantly for the

Cotswold Machinery Ring.

But exploiting these

opportunities has not been

entirely problem free.

Andy Moore reports

COTSWOLD Machinery Rings merger with Mid-Tak Machinery Ring in August 1999 enabled CMR to increase its membership from 225 to 350 and turnover from £570,000 to £860,000.

"Joining forces with Mid-Tak has allowed us to more than double our operating area and take on a more diverse membership," says CMR manager Paul Hussell. "Before the merger, CMR covered mainly the Cotswold area. Now we extend from south Worcs down to Wilts and as far east as Northants."

Not all plain sailing

But merging with a neighbouring machinery ring hasnt all been plain sailing. "It has been a testing time generating business in the old Mid-Tak area because the the number of ring members took a downward turn," says Mr Hussell. "The main challenge has been to instil confidence back into the members by providing them with a higher level of service."

In addition to taking on a much larger operating area, CMR also inherited the fuel and labour supply business which, at its peak, turned over £250,000 and £100,000 respectively.

CMR has also been exposed to a multitude of small mixed farms which require a wide range of machinery to perform different operations.

In attempt to drum up more business, the ring has been carrying out what it describes as membership assessment visits. Started a year ago, members are visited to establish their machinery and labour requirements, together with the kit they can provide so CMRs database can be kept up to date and used more efficiently.

More business

"Visiting members in person should generate more business by finding out their specific machinery and labour needs and if they have any unused kit which can be pooled in the ring," says Mr Hussell. "One-to-one contact with our members is also extremely important from a customer relations point of view."

The foot-and-mouth crisis curtailed these visits and dealt a financial blow to the ring, says Mr Hussell. Being just below budget at the start of the outbreak, he says the crisis rapidly put a vice-like grip on turnover because machinery and labour could not be moved from one farm to another.

CMR finally saw its budget back on track last month after a relaxation of access restrictions to members farms.

Maintaining a healthy budget and turnover in the future will require the ring to achieve an even spread of members over its entire operating area, believes Mr Hussell.

The merger has also created economies of scale so the ring can reduce its monthly expenditure, enabling two full-time members of staff to be employed. Further efficiencies have recently been introduced in the form of an in-house accounts package run by assistant manager Sarah Wallbutton.

"We plan to encourage members to become more active across the whole area so they give a more valuable contribution to turnover," says Mr Hussell. "Some members tend to use the ring as an insurance service, while others are actively seeking work."

CMR also intends to recruit new members across the entire region where Mr Hussell says some of the larger estates have a traditional approach to farm management by operating all their own machinery.

"These estates, together with smaller units, have historically been self-sufficient when it comes to machinery maintenance and utilisation," he says. "Many of the producers in our area invested heavily in equipment in the late 80s and early 90s and the kit is now in need of replacement."

Reach crossroads

Mr Hussell believes these farms will eventually reach a crossroad and have to evaluate the economics of investing in new equipment or sourcing kit through the ring.

CMR future projects include developing an Autogas supply service which will allow members to buy gas at 5% to 10% less than buying direct from a supplier. Run in conjunction with co-operative group Country Wide Farmers, this service aims to sell gas through 15 depots over the next two years.

The ring is also actively involved in selling electricity through billing company EGNI Power, enabling members to make savings of up to 30%.

Another plan is to sellagro-chemicals and animal health products. &#42


Cotswold Machinery Ring, Moreton in Marsh, Glos GL56 9ZZ (0870-7401890

Chairman Tony Norris.

Manager Paul Hussell.

Operating area Cotswolds and central England.

Farming Mainly arable, mixed arable and sheep/beef/dairy farms and estates.

Members 350.

Fees £50 share, £85 annual subscription 2% commission on each half of transaction.

Turnover £860,000 for 1999/2000 financial year.

Most popular services Discounted fuel supply, baling, ploughing, hedge cutting, fertiliser spreading, slurry/muck application, skilled rural labour and training.

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