Gloucestershire haulier Cullimore Group has seen the vast majority of its work dry up since the Covid-19 lockdown began on March 23, but MD Moreton Cullimore remains optimistic that things can only get better.
Recalling going to his Whitminster HQ the day after lockdown Cullimore said: “It was weird seeing 95% of the fleet parked up. It was like being there on a Sunday morning. It was very surreal to begin with.”
Cullimore, who is also a director of the RHA, welcomed the Chancellor’s announcement on Tuesday of an extension to the furlough scheme until the end of October, and hoped that would see the company through the worst of the slowdown without having to make large numbers of redundancies.
“Staff costs are 30% to 35% of most people’s businesses so that gives us a bit of breathing space,” he said. “At the same time it sets in the reality that we aren’t going to come out of this very quickly. That is the government propping up businesses for eight months and some people put the cost at £1bn a day. How do we even to begin to deal with that?”
Sympathy
Cullimore has sympathy with the government which he believes had little choice but to introduce the lockdown to save lives. “They were damned if they did and damned if they didn’t,” he said. “Reasonable people amongst us understand that but there is a minority who don’t and they make the most noise.”
As a high profile operator in the South West, Cullimore came in for some stick on social media in the early days of the lockdown for continuing to run part of the tipper fleet.
“Some people locally were vehement that everyone must stay at home and it is very easy for them to fire rockets at us from their laptops,” he said. “They couldn’t understand why we had construction trucks still on the road. We were still running some of our fleet because we had orders for aggregates and concrete from water works, sewage plants, roads – all those infrastructure works are still a necessity.”
Since then most of the tippers have however been laid up as construction projects ground to a halt.
“We have the occasional one out if there is emergency work and there will be some – not many – going back on the road next week,” said Cullimore. “After two or three days of the lockdown a lot of the forward orders had been cancelled. For housebuilders with 30 brickies on a site it was impossible to maintain social distancing. Some of them started back Monday [May 11] so we are making some of our fleet available next week.”
Supermarket work
A handful of Cullimore’s curtainsided trailers have been kept employed hauling organic flour for a local upmarket miller but an offer of work from a major supermarket was turned down.
“During the panic buying phase one of the big four offered us quite a lot of work,” he said. “But it was 700 miles-plus which would have been a 12-hour day for the driver at a rate of £510. We were told to be grateful but we decided it was just not worth it. Since I took over the business my philosophy has been to work smart not chase volume.”
The company acted quickly to put drivers on furlough as soon as the construction work dried up.
“In March our construction forward order book was full for six to eight weeks and we were considering hiring more drivers,” said Cullimore. “I came in to work at 8am on the Tuesday after the lockdown announcement and by 9.15am all that work had just disappeared.
"It was pretty scary because everything had gone from the forward order book and by Thursday lunchtime I was having meetings with 50 drivers to discuss furlough. I asked them to volunteer and most of them grasped the situation quickly and did volunteer for it. Within two weeks almost all of our staff – nearly 90 people – were on furlough.”
The extension of the furlough scheme to October gives the company more time but Cullimore doesn’t know if that will be long enough to allow the construction industry to return to work.
“That is a question you will have to ask me in about two weeks,” he said. “If I had to say today it’s a good thing for part of my fleet but I do worry for the muckaway tippers that take waste away from sites. We see no increase for that type of service whereas people are still requesting prices and availability for concrete and aggregate.
“If we are still calling on furlough by July 1 the economy has some very serious problems coming its way.”
The furniture company that Cullimore used to haul for has of course seen sales dry up. “That has been difficult because at the start of all this they asked us to take 50 containers which were being held in a port and charged ridiculous rates for storage,” said Cullimore. “I couldn’t take those containers because 60 of my vehicles were being parked up and I needed space for them. That work has stopped because we used to move the furniture to the showrooms and they are shut. That may start to creep back next week.”
Prudent
Cullimore Group has always been a financially prudent family firm, preferring to buy its assets rather than lease or rent, so with the vehicles laid up and staff furloughed its main fixed outgoings are taxes rather than finance payments.
“When this started we put in place an overdraft with our bank before the CBILS [government-backed loans at low rates] were available,” said Cullimore. “The overdraft facility was just in case cash flow became an issue, and we thought we were being prudent doing that.
“The bank gave us an overdraft at 7% which I took real offence at given that my small amount of truck finance is at 1.1% and we have been with that bank for over 50 years. When the CBILS came out we were told we weren’t eligible because we had an overdraft facility. A loan still has to be paid back so my philosophy is to stay away from them and hope you can trade out of it.”
When the lockdown began in March, many customers still hadn’t paid their January or February invoices but fortunately for Cullimore most debts have since been paid.
“In our world customers are on 30 days payment and most take 45 days or longer,” he said. “For a period of around two weeks we had no money coming in at all. That was worrying as some of our customers owed us up to £200,000. To be fair in the last two or three weeks, as customers start to get their furlough money in, most have started to clear the February debt. The risk is that if we don’t start trading again we will get to a point where there is again no money coming in.
“We are in the eye of a storm at the moment in that we have a decent amount of cash in the bank but we will have to trade for two months with no income.”
Taxation
A major outgoing for Cullimore even with no trucks on the road is the aggregates tax. Like VAT it has to be paid quarterly and HMRC is not sympathetic.
“For any aggregates that came out of our quarries in the last three months we still have to pay the tax,” said Cullimore. “I have written to the government to say if they want construction to restart they need to reconsider the tax, which accounts for £2 out of the £14 a tonne we charge the customer. If we are moving 500,000 tonnes a year we are liable for £1m in aggregates tax.
“We are also still paying a lot in business rates on our properties.”
Looking ahead, Cullimore is remaining positive and warned against the country talking itself into an even deeper recession than the UK is inevitably facing.
“If people like me adopt a negative attitude and just talk doom and gloom, there are a lot of people looking to us for direction,” he said. “The only way the economy will push on is if businesses and people go out there, do the work and spend the money. One of the biggest enemies apart from the disease itself will be people being too negative, too protective and talking ourselves into a far deeper recession like we did in 2008.
“We are facing a huge change in our routine and human beings generally don’t like change but as soon as we can and it’s safe to do so, we have to crack on. Hopefully by summer that feel-good factor will be back.”
