Critical mass: IRN speaks to Drew Semken, CEO of Force Access in Australia

Australian access rental company Force Access is benefitting from the boom in Australia’s natural resources market, but there is more to the company than that, says CEO Drew Semken.

How do you cope when one sector of your market goes into overdrive? In the case of Force Access of Australia, reacting to the country’s natural resources boom has meant a massive investment in its aerial platform fleet, in particular in large booms from 45 ft upwards. The average unit value of Force’s fleet had doubled over the past few years as a result.

However, Drew Semken, the company’s chief executive officer, tells IRN that while the natural resources market is indeed booming – and showing few signs of slowing up – it is not making Force a ‘one trick pony’, reliant on a single set of customers in a single market.

Force’s exposure to the mining and energy sector is actually around 22%, which he says is less than other major Australian rental groups like Coates Hire and Onsite Rental Group.

Force is active in other areas, even if they are not as buoyant as oil and gas and mining. “Construction isn’t shrinking”, says Mr Semken, who joined Force in 1998 when it was still called Australian Skyreach Equipment, “but its growing slower than it has been. Non-residential growth is 2% and it’s fairly competitive, but infrastructure – hospitals, road and rail – is strong, particularly government spending in hospitals, tunnelling and road projects.”

Robert Killian, Force’s general manager business development, says some of the public investment is in support of shifting demographic trends, such as to accommodate the rising number of retired Australians migrating north for better weather; “Hospital spending in Australia is quite large”, he says, “The largest hospital in the southern hemisphere is being built now in Queensland.”

Mr Killian, who joined Force in 2006 after a varied career that included senior positions at Brinks Australia and three years managing security for the Sydney Olympic Games, says the company “keeps a very close eye on our exposure to different markets. We break it up into more than 20 sectors, and understand our exposure to these sectors.”

Still, the natural resources market in Western Australia, Queensland and now the Northern Territories – focused on natural gas, coal, iron ore and uranium – has seen enormous investment. For example, three of the world’s largest liquefied natural gas (LNG) projects in the world are currently being developed in Australia at a cost of A$100 billion.

It has definitely helped Force Access grow into Australia’s biggest specialist access company, with a fleet of 4500 units – second only to Coates Hire – and the only one with national coverage, operating from 18 locations spread around the country.

Two of these depots are general rentals operations called Force Rentals. This business represents under 10% of revenues and is not likely to be expanded throughout the country.

Much of the company’s A$60 million investment in its fleet over the past few years has focused on bringing in hundreds of big telescopic and articulated booms, investment that has produced 20% year-on-year fleet growth (and inclusion in IRN’s IRN100 list.)

“There is room to do more”, says Mr Semken, “We can do deeper into the natural resources sector.”

Now that Force Access has built up its fleet the company will focus on continued growth through a mix of organic expansion and acquisitions. Acquisitions have played a significant part in the Force story in recent years: last year it bought NSW-based Novocastrian and Sydney-based Minipickers, and in 2010 it was Independent Access.

These additions followed on from an inward investment by private equity firm Helmsman Funds Management in August 2008, which saw Helmsman take a majority share of the business.

Drew Semken tells IRN that there will be opportunities to make further acquisitions of smaller, regional or city-based access renters in the coming months and years. At the same time, the company will make a real push into the truck mounted aerials market (these units are commonly called ‘travel towers’ in Australia).

This is what Minipickers does, renting insulated and non-insulated trucks for maintenance and utility work. Mr Semken says mobile phone G3/G4 network investment will make this an attractive market nationwide, with Force expecting to boost the 16 unit fleet operated by Minipickers.

Another area of investment will be telehandlers, with the fleet likely to double to more than 350-375 machines over the next year or two, many of them Merlo units. “I see it still as a youthful segment in our country”, says Mr Semken.

The network of 18 depots has expended bit by bit over the years, and now offers pretty much full coverage. “From a hub and spoke perspective, we’ve got the hubs covered”, says Robert Killian, “All the big metropolitan areas and all the big regional hubs are covered. Much of the extension to the network in the next couple of years will be spoke openings, supported by the existing hubs."

Fleet growth will be slower paced, with Mr Semken anticipating a fleet size of around 5500 within a few years.

Another focus in the coming years will be Force’s own platform refurbishment programme, extending the working lives of some of its bigger booms to 15 years. This links to the Australian requirement to give machines an overhaul after 10 years. Force will refurbish as many as 450-500 units a year in this way, extending their economic lives and freeing up capital for further investment.

“After 10 years we know exactly what we will do”, says Mr Semken, “We will still hold our average fleet age because there will still be an influx of new equipment.”

If the natural resources sector still presents opportunities, there is a feeling that a lot of the heavy work to create the company has now been done. The times of celebrating when the fleet hit a milestone fleets size of 3000 or 3500 units have passed, with Force having reached a critical mass.

“We are a global layer in access and the largest specialist in Australia”, says Mr Semken, “We are very proud of that.”

Might Force Access represent a good acquisition target for a company wanting to enter the Australian market? He agrees, and draws attention to the fact that Force’s private equity owner, Helmsman, it likely to be looking for an exit route in the relatively near future, having already owned Force for four years.

But he says he is not touting for a new owner. For the time being he is focused on rising to the challenge of a boom market.