ADL rides high on international sales and targets £1billion turnover
Alexander Dennis claims to be one of the fastest growing bus and coach manufacturers in the world with a growing international reputation for its double-deck buses and chassis production.
Its latest financial results show record revenue of £602million in 2015, up from £501million in 2014 with a long term goal of achieving £1billion of sales by 2020. The increase in turnover has certainly been impressive since the business was created in 2004 following the failure of Transbus, and international sales in particular are now a key driver of future growth. In 2015, international sales accounted for 43 per cent of sales at £261million, compared to just 9 per cent in 2009 at £29million.
Among the recent contract wins are 90 Enviro500s for Mexico City due to be delivered in mid 2017 and 25 E500s for Auckland, as well as the collaboration with BYD to build an initial 51-strong fleet of 12m electric Enviro200s for Go Ahead. And the latter partnership has just been extended with the announcement of the development of a 10.8m BYD/ADL electric bus to be launched shortly. (See News p6.)
And while bus manufacturing is never likely to be the most profitable operation in the corporate world, ADL chief executive Colin Robertson points to a record profit after tax of £18.5million in 2015 as a key achievement, boosted by all-time-high sales of 2,700 vehicles and kits.
Hong Kong has been a key market for Alexander Dennis, particularly in recent years, although its forbears have been delivering buses there since 1975. It was market leader in 2015 with an 89 per cent share and more than 6,000 of its vehicles are in operation on the island. Robertson points out that the Hong Kong market will return to “more normal” volumes over the next few years after a surge since 2014 to meet the fleet replacement requirements.
ADL has steadily built its international presence with a mix of wholly-owned businesses, joint ventures and partnerships in North and Central America, China, Malaysia, Singapore and New Zealand.
Its plant in Zuhai, China is now producing 24 vehicles a week, according to Robertson, with chassis supplied from its operation in Malaysia which recorded its 1000th chassis delivery last year. In North America, ADL has a joint venture with New Flyer to develop midibuses in Minnesota, a partnership with ABC in Indiana, and a wholly-owned body plant in Toronto on the back of a $500million order won last year for up to 403 Enviro500s.
The double-deck Enviro500 has been the key product in North America with no direct competition and more than 600 vehicles are now in service, although according to Robertson, there are significant costs involved in producing for the US market, including a very expensive testing regime at the Altoona facility. ADL is also active in New Zealand in partnership with local manufacturer Kiwi Bus in Auckland.
ADL reports very positive passenger reactions in areas where it has demonstrated its E500 in places where there is no experience of double-decks, including Mexico City where 80 per cent of passengers rated the bus at more than eight out of ten, with 32 per cent giving it a maximum ten out of ten. And the forthcoming arrival of ADL double-decks in Mexico next year should be welcomed, since 92 per cent of respondents said they would like this type of bus in the city.
“There is huge international potential for high capacity vehicles,” says Robertson. “We are a big player in a small niche market.”
ADL has also developed a three-door, two staircase concept vehicle for a demonstration in Singapore which was accompanied by a major public consultation exercise in a country that is set to embark on a transition from artics to double-deck buses.
Despite the uncertainties that may be caused by the Brexit vote, continental Europe is still on the agenda as well, with demonstrations undertaken in Germany and Switzerland last autumn, including an attempt to challenge the iconic Berlin double-deck market.
In the UK, ADL has been the market leader for the past five years with a share of more than 40 per cent. It registered 1,228 vehicles in 2015, ahead of Wrightbus at 869 and Volvo at 327. In 2016 so far, ADL claims an overall share of 44 per cent of the bus market including a 57 per cent share in midibuses and 40 per cent in double-deck.
Robertson points out that despite not winning TfL’s New Routemaster tender in December 2009, ADL’s turnover in its domestic market has been above £300million since 2011.
The launch of the Enviro400H City at last year’s show has been followed by some significant orders, including a follow-on one from Arriva London which is adding 34 to its original batch of 19 vehicles.
“Arriva’s new order is endorsement of the City specification and the performance of the first batch,” says Keith Watson, ADL customer development director.
And operators outside the capital have also bought into the City concept with the total now over 100, according to Watson.
ADL is increasingly becoming involved in the external styling of its customers’ buses and has deployed its in-house expertise alongside customers’ own design consultants to produce liveries that blend with the body contours of a vehicle, including new designs for Blackpool Transport’s Palladium E400 Citys.
“More and more of our buses leave the factory and go straight to work with all the vinyls fitted at the factory,” adds Robertson.
What is described as immersive branding is also becoming popular, according to ADL, as seen in the recently-delivered double-decks for Stagecoach’s Lake District services that use innovative graphics throughout the interior to inform and entertain passengers.
Of course in the bus sector, aftermarket support is critical to the enduring success of a vehicle model. Robertson acknowledges that service is critical and points to the investment and attention that ADL has given to this area in recent years. “We don’t always need to be first to market with a new product, but we do need to make sure it is well supported.”
And he offers a colourful analogy: “sales is about kissing babies, while service is about changing nappies,” adding wryly that you need to make sure you take care of both ends.
Group quality and customer service director aftermarket George McAdam stresses the importance of providing training to operators. The ADL customer training centre was launched in 2008 and has seen more than 6,000 people graduate from its courses to date. Current data suggests that product availability for the ADL brand is consistently above 99 per cent, according to McAdam, and its response to VOR incidences averages 90 per cent in 24 hours with an average of 80 per cent of vehicles back in service within 48 hours.
Parts stocks are held at strategic locations around the world to support ADL products with Skelmersdale holding 8,000 part lines in an £11.2million inventory and further stock is held in Ottawa, Las Vegas, Hong Kong, Singapore, Malaysia and Auckland.
With the increasing role of telematics for operational and maintenance purposes, the company is trialling a new ADL Connect system, which brings together a range of elements including remote diagnostics, automated parts ordering, driver walk-round checks and engineering dashboards, with the aim of rolling it out fully next year.