Robust business model sees EIE group successfully negotiate pandemic The COVID-19 lockdown and related restrictions compelled EIE Group to re-evaluate its operations and find ways to streamline the business. The hard work paid off with EIE Group recording a healthy improvement in cash flow in 2019 and paying its employees full salaries throughout the lockdown period.
“Where we lost on the new equipment side, we gained on the pre-owned side. This bears testimony to our robust business model and overall agility,” notes Neubert.
EIE CEO Gary Neubert says the operations side of the business, which encompasses service, maintenance, parts and rental, performed exceptionally well during the lockdown period, as did the preowned part of the business.
While more customers chose to rent their equipment during the initial phases of the lockdown, this changed in October when EIE Group noted a 50/50 rental versus cash sales split.
“The greatest knock to the business was on the sale of new equipment, with the market down by close to 40%. This was the result of customers deciding to hold back on capital expenditure and ensure cashflow during the lockdown period.” EIE Group decided early on to defleet some of its short-term rental machines and bring them back into stock by rebuilding them and selling them as pre-owned. This was a prudent decision, given the increased movement, the business witnessed in the pre-owned market. 8
Lifting Africa - Jan/Feb 2021
“With an anticipated 70% rental versus 30% cash split, we expected the widespread uncertainty to compel many more customers to adopt the rental route going forward. Due to favourable bank lending rates and a greater willingness by the financial institutions to invest in industrial machinery, this has not happened,” says Neubert. With more businesses in Europe choosing the rental route, the team at EIE Group does expect this trend to be adopted by more operations in South Africa in the foreseeable future.
Another trend EIE Group expects to see in 2021 is the decision by customers to extend the lives of their forklifts and maintain their products for longer periods, that is, sweating their assets to ensure greater cash flow. Neubert says COVID-19 has also accelerated the adoption of new technologies at EIE Group. “Our Rapid response app, Mobile Mechanic and CRM systems are up and running and there is a major drive by our IT team to come up with new technologies that can support the business and make it more efficient.” Amidst the pandemic, EIE Group continued to develop its employees and nurture young talent. “There is a big drive in the business to attract young talent. One of our greatest success stories this year is our successful sales cadet training programme. We have always battled to find good salespeople for the business, so we decided at the beginning of the year to launch an in-house