A humble achiever, Jeff Fraser is very much future-focused. When asked to reflect on his journey to the top of industry, he admits, “I’m keen on looking forward and not dwelling too much on the past.” But Jeff’s career is nothing to breeze past, and neither is the remarkable two-year turnaround he and his team has accomplished since taking the top job at iconic Australian rental equipment specialist Coates Hire in 2016.
Over the past 20 years, Jeff has tried his hand at a number of industries, from services and infrastructure to electricity, gaming and resources. Prior to his current role as Coates Hire CEO, he held senior leadership positions at Australian gaming operator Tabcorp and electricity regulator NEMMCO – not to mention various roles with multinational mining giant BHP in both the US and Australia. Most recently, Jeff spent seven years with Downer Group, a leading integrated infrastructure services company in Australia and New Zealand. Starting as Group General Manager of Finance, Jeff worked his way up the ladder of the ASX100 company to the position of CFO Rail and then CFO Specialist Services.
But Coates Hire had Jeff in its sights and, in 2015, Jeff was targeted from a handful of corporate CFO contenders for his vision for the business and proven track record in driving results and turning companies around. He was director and CFO for just one year before he took the top spot as CEO in July 2016, following two tough years post-mining boom coupled with the resignation of the former CEO. Despite these formidable odds, Coates Hire has been on the up ever since.
The Coates Hire legacy
With origins going back to 1885, Coates Hire started out as a small local engineering company, John Coates & Co., based in Melbourne. More than 130 years on, the business has grown to be Australia’s largest equipment rental company – nearly four times the size of its closest competitor.
From large-scale mining and infrastructure projects to supporting local tradies, Coates Hire supplies to diverse markets including engineering and building, construction and maintenance, mining and resources, manufacturing, government and events. With an expanding base of 2,170 employees across 200 branches nationwide, the company promises that no matter where you or your projects are, Coates Hire will be nearby and able to satisfy your equipment needs.
To strengthen the business and encourage higher benchmarks as one of the world’s largest rental equipment investors, the company has injected more than A$2 billion into the industry over the past decade. From helping its customers to build hospitals and schools to supporting the development of the nation’s largest road networks, Coates Hire has earned a reputation for flexibility, reliability and safety – ensuring customers have the proper gear to get the job done right, on time and on budget.
With an extensive fleet of more than half a million pieces of equipment (with an average age of around 5 years) in its arsenal, Coates Hire lays claim to being a one-stop shop for all construction needs. The business’s portfolio includes portable buildings, access equipment, power generation, lighting towers, portable toilets, air compressors and pumps, scaffolding, traffic management equipment, general tools, propping and shoring, and temporary works engineering solutions.
- 230 branches Australia-wide
- 1.5 million pieces of equipment
- 2,400 employees
- 1 million items delivered every year
- 170 trucks
- 40,000 deliveries and 40,000 pickups per month
For many years, Western Australia enjoyed solid economic growth, high investments, and a record low unemployment rate – largely bolstered by the construction and mining boom. Coates Hire, like its peers, came under pressure when the national industry sector experienced a steep downturn that started in 2013 and continued into 2016, particularly in the west, and in regional Queensland. Faced with a shrinking market, reduced revenue, lower rental prices and significant leverage, Coates Hire needed a plan to reassure investors and banks, implement structural change and set the company on a sustainable growth trajectory.
That plan was envisaged by Jeff, supported by the Board and then delivered by Jeff and his team. “We’ve made a lot of changes over the past two years and it has been a continual journey to bring the business back to life,” says Jeff. “To truly turn a business around, you have to make returns, not just revenue. Everything we’ve done has been aimed at reintroducing some commercial acumen into Coates Hire.”
By altering the internal structure of the company, Jeff encouraged closer collaboration between the operations and sales teams, largely through the introduction of category management. “This is essentially like product management in the supermarket, except that we’re dealing with massive kits of equipment as opposed to cans of food,” he laughs. “It means putting people in place to look after certain products; where the products go on the shelf and how they’re moving along.”
“To truly turn a business around, you have to make returns, not just revenue.”
Jeff explains that refocusing on the customer experience was pivotal to aligning each division within the company and strengthening ties with a recovering consumer base. “We’re always thinking about what the customer wants and how we can get the best deal for them. We charge a premium so there’s no doubt we’re a price leader, but we’re asking a premium price for a premium product and service,” he notes.
“We right-sized the cost base to match market demand, started making more data-driven decisions, and improved our safety culture. We also sold off surplus assets, improved our investment decisions and asset life cycle, and changed the way we operate at every level. Ultimately, we put a new vision in place that focused on growth and returns. This cascaded all the way down the company so that every unit now has set goals that feed back into our overarching strategy. These changes took place between 2015–16 and the growth and improvement we saw leading into 2017 was remarkable – the proof of the pudding is in the eating.”
Ryan Stokes CEO of Seven Group Holdings and Chairman of Coates Hire Board
In taking full ownership of Coates Hire, Seven Group Holding’s profits surged by more than 80% in the second half of 2017 – to reach A$159.8 million – amid rising demand in the mining industry for its earthmoving equipment parts. CEO of Seven Group Holdings and Chairman of the Coates Hire Board Ryan Stokes reflects on the company’s recent evolution and why it continues to come out on top in such a challenging environment.
“We’ve been involved with Coates Hire for more than a decade, acting as an engaged owner that overlooks operations while Jeff is responsible for running the business, leveraging its strengths and driving results. There has always been a market for rental equipment, but it’s extremely fragmented with dozens of smaller players. The key to staying ahead is continuous improvement across our customer service offering, our fleet, our equipment and our maintenance services.
“Right now, we’re seeing a lot of activity in the industrial infrastructure space where Coates Hire is well-positioned to understand the needs of its customers and provide support with a broad range of equipment. The market is evolving to become more reliant on external equipment suppliers such as Coates Hire, with prime contractors looking to own where it makes practical sense, and rent where it makes economic sense. Part of the business’s broader value proposition is its national network and close relationship with a number of clients across the industry spectrum.
“The market is also demanding more involved rental solutions rather than the traditional rent-and-go arrangement. To accommodate this, we’re upping our offering in holistic, engineered solutions in accordance with global models and best practice benchmarks.
“At the end of the day, it all comes down to the ease of doing business. This means engaging our workforce and leveraging our maintenance and support teams to make sure the equipment and solutions we provide are safe and reliable. On the face of it, these changes might seem quite simple, but there’s a complex number of concurrent levers that need to be pulled to drive outcome-based solutions. The way Jeff and his team have been able to thrive and adapt to change has been incredible – it’s the reason Coates Hire has such a strong future ahead of it.”
Change of hands
In September 2017, Seven Group Holdings (SGH) signed a A$517 million deal to buy out the remaining 53.3% of Coates Hire from private equity firm The Carlyle Group and a small handful of minority owners.
The move was as a direct result of the partial turnaround and the belief that Coates Hire, as a market leading business with a quality management team, would capture the opportunity of the East Coast infrastructure boom and the next mining expansion phase.
In response to the current East Coast opportunity, Jeff explains: “We have an increasing customer base in New South Wales and Victoria in particular, so we’ve put more equipment and people into our budget for 2019 to make sure we can support the surge in demand in the East.”
Due to the growing number and size of highway projects in the region, Coates Hire has invested in kilometres of BG800 road safety barriers, 200 new variable message boards, 75 solar-powered, temporary traffic lights and nine truck-mounted attenuators. As part of its commitment to providing reliable and modern equipment to its customers, the company is also set to commission A$15 million worth of generators and A$7 million worth of shoring and propping equipment for construction and demolition operators.
With a renewed leadership team, Coates Hire finished FY18 in a strong position with close to a billion dollars in revenue. Together with price adjustments, a focus on reducing turnaround times, fleet and branch relocations saw substantial increase in the company’s operating income margin.
“Between 2015–17, our leadership team stepped up and we completely transformed the business, developing a strong vision for growth. SGH recognised the potential we had to shape the rental industry in Australia and have supported us with access to capital to support our growth,” reflects Jeff. “We have exceptional customers who continue to stick by us, and we’re always working to improve our offering. We continue to challenge the status quo in the way that hire companies service their customers, because we think we can do it better.”
“We continue to challenge the status quo in the way that hire companies service their customers, because we think we can do it better.”
With assets in industrial services, oil and gas, and media, SGH’s FY18 strategy for Coates Hire was to support Coates Hire management to achieve a 20% growth in operating income with the aim of converting this to bottom line improvement via disciplined execution. Despite being hindered by a somewhat sluggish Western Australian market, Coates Hire’s focus on customer support is doing wonders in building a sustainable revenue base and improving the quality of its earnings.
Investing in WA
In April this year, Coates Hire announced a A$100 million investment in its WA operations over the next few years to reinforce its offering in the local market as the business cycle rotates. Jeff says the company will focus on specialist services such as high load propping, water management and ground engineering, and is actively hiring more mechanics, customer service representatives and salespeople. “The Western Australia market has had a challenging few years in adjusting to the decline in demand post-mining boom. However, we are now seeing an improvement and our customers need us to support them with additional equipment so they can deliver on projects across infrastructure mining and LNG.”
Jeff explains that the investment is focused on the equipment mix these projects demand, such as compaction and earthmoving equipment, lighting, generators and elevated work platforms. “It will also include specialist products and services such as traffic management, ground support, water treatment and shutdown support. Where there’s an opportunity for us to add value through a combination of equipment and engineering support services, we’ll be there to help our customers deliver these complex projects.”
Try before you buy
Jeff says the greatest challenge facing the equipment rental industry is an obvious one – convincing customers to hire before they buy. “Rather than customers buying equipment they might only use for a week or a month, we make the argument » that a better alternative would be to use our services and hire what they need. It’s important we become credible in their eyes and earn their return business so they might choose to hire for a longer period next time,” he explains.
However, the rental industry is highly fragmented. While Coates Hire has approximately 20% of the market, its next closest competitors hold approximately 5% while the rest is made up of hundreds of smaller equipment hire companies. “We know the smaller players will struggle. They won’t be able to keep up with the technological advancements to come, so consolidation is inevitable. We continue to invest and push for innovation to make sure we’re leading the market forward. Unfortunately, that means some small players will be left behind.”
While its customer base is dispersed across major infrastructure, mining and engineering segments, Coates Hire is also well-placed to serve small enterprises and local contractors because of its widespread branch network. “We are introducing customer support centres in every state to create a single point of contact for customers, no matter where their project might take them,” Jeff explains. “We continue to invest time and money in improving digital interfaces that will benefit both our own operations and those of our customers, which we’ll roll out over the next 12 months.”
In the short-term, Jeff has his eyes on operational improvements including a reduction in manual data handling, aimed at improving Coates Hire’s employee value proposition for both current and future staff.
“We’ve stepped up our game. This year it’s all about investing in our people, attracting and retaining talent, and making sure their skill sets meet our future requirements,” he explains. “We have more than 2,000 employees and 500 contractors, so talent retention is crucial given the demand in the market. However, there is a huge shortage of qualified people looking for work in this space. We don’t always have to be the preferred choice, but we want to make sure people know how Coates Hire compares with our smaller competitors.”
Jeff started this process from the executive team down. “We recently sent 115 people from top management to a three-day leadership conference focused on understanding the difference between management and leadership – because they’re not the same thing,” he notes. “We also introduced our own online peer-to-peer reward and recognition program through Redii.” Born out of Naomi Simson’s Australian gift website RedBalloon, Redii is a cloud-based software designed to drive workplace creativity and foster a supportive workplace culture – and it’s seen great success nationwide.
“Since launching our internal program, Me2u in December 2017, we’ve had more than 12,500 peer-to-peer recognitions across the company. Whether that’s someone just reaching out to say, ‘I noticed you’ve done a great job’, or ‘That was a great safety talk’, or ‘You really helped me today – thanks for your assistance’.
“Naomi Simson came in to introduce the program herself, and everyone has taken to it better than I’d hoped for,” adds Jeff. “It’s not just a manager saying something to a peer, it can be manager to manager, peer to peer and even peer to manager it’s all inclusive and it’s amazing to see such high numbers in just six months.”
To develop its top talent, Coates Hire’s in-house leadership training program formulates individual career plans for each senior manager. “This is the first year we’ve had a dedicated talent and succession planning initiative that’s focused on developing leadership skills and investing in their future,” says Jeff.
“Once we get it right with these first 25 leaders, the program will be expanded to cover the rest of our 350 leaders across the business. And that’s exactly what leadership is about – creating an environment where every individual is inspired to achieve their best, contribute to team goals, and deliver on their promises. It’s about integrity, honesty, respect and accountability. It’s not just about me.”
“It’s about integrity, honesty, respect and accountability.”
Well aware that digital transformation is reshaping every aspect of the way businesses operate, Jeff has implemented company-wide policies to ensure every business unit is integrating new technology to improve the customer experience. “Backed by strong investment from the Board, we’ll continue along the path of digital transformation, with a strong emphasis on the quality and understanding of our digital data, as we use it to better connect our business to our customers,” he explains.
With 170 trucks doing 40,000 deliveries and pickups per month, it’s essential that Coates Hire’s transport management system flows smoothly. Jeff is excited to announce that the GPS-tracked trucking system recently introduced in Brisbane will soon be rolled out nationwide, providing customers with more detailed delivery and pick-up data. “We’re working towards what you would expect from Australia Post, where customers are updated via SMS when their delivery has left the yard. Through telematics, we’ll soon be able to offer customers live data relating to time and fuel usage, maintenance requirements and the location of their gear. Our WA team is working on this with some of the large mining houses to determine the impact it will have on customer productivity.”
After 12 months of data entry, analysis, system development and testing, the Coates Hire Run-up Safety Check (RUSC) Program was launched last year to improve efficiencies in routine safety checks and ensure all assets undergo a detailed fleet inspection after each hire. Now, it’s the leading maintenance program in the industry. “Our RUSC mobile phone application allows every mechanic to scan equipment as it comes into the yard, and presents them with a digital checklist,” Jeff remarks. “Previously, our mechanics would have had to shuffle through paperwork, but now it’s all data-driven and the process takes less time than it used to.”
Playing it safe
As the largest equipment supplier with the largest roll-on, roll-off fleet in Australia, Coates Hire prides itself on high-quality industry training. Its mantra, ‘Safety First, Zero Harm’ is reinforced by Jeff’s firm belief that no job is so important it can’t be done safely. “Safety first is our highest priority value. Our customers expect this and, more importantly, our employees, contractors, partners and site visitors deserve to go home every night in the same condition as they come to work,” explains Jeff.
The Coates Hire in-house training division, in conjunction with its partner DuPont, has helped the company move even closer to its Zero Harm target. “All managers are trained by DuPont on best safety practices and by bringing injury management in-house, we ensure that our employees receive the best possible care and are able to quickly return to normal duties following an injury,” explains Jeff. “We’ll soon roll out additional DuPont training, and we have implemented improved load and unload procedures, and clearly marked exclusion zones in every Coates Hire branch. We are also looking to improve our pre-employment medical processes and use preventive health and wellbeing initiatives such as physiotherapy and ‘warm up for work’ programs.”
Jeff says it’s essential to make safe behaviour and workplace conditions part of the culture at Coates Hire, thus preventing incidents and injuries and cutting costs due to lost time. “While our numbers are improving, they’re still trialling compared with those of the companies we work with. Having come from organisations like BHP and Downer, I know firsthand that companies in the resources industry have some of the best safety statistics in Australia,” Jeff notes. “We’re working hard to improve our safety reputation so we’re seen as a trustworthy partner of choice.”
Coates Hire’s growth is directly related to the growth of its people. “We’re proud, passionate people,” Jeff explains. “Our people are our differentiator, so we need to invest in them, maximise their engagement, and help them reach their full potential within the business. Training is an essential ingredient that helps people decide where they want to take their career, so it’s important that they see a career path at Coates Hire.”
The company continues to improve on its training capabilities via the Coates Hire Academy and its registered training organisation, where it delivers a range of blended learning programs.
In January next year, Coates Hire will expand its apprentice training program to accommodate for the skills shortage in Australia. “For us, it’s about quality over quantity. We won’t take on an apprentice we can’t train properly. We’ll take on 10 apprentices in Victoria and 10 in New South Wales and, at the end of the four years, they’ll be equipped for anything the industry throws at them.”
Jeff believes one of the best ways to improve the safety culture at Coates Hire is to ensure that leaders are continually building on the capabilities of their teams. “Leadership is about getting the best out of your people. I’m a big believer in the idea of educating, empowering and holding accountable,” he explains. “We instil in our leaders the importance of managing risk by introducing monthly risk reviews, workplace inspections, safety action meetings, and by linking incentives with safety. If leaders don’t manage risks, they forfeit their bonuses.”
Coates Hire treats local events as a core part of its business. With its scale and local branch network, the business provides dedicated onsite teams to manage the changing needs of an event as it evolves – from unforeseen weather conditions to higher than expected crowds. “Events require a diverse range of equipment – from lighting and barriers, to toilets and washrooms, site facilities, generators and temporary signage. Our expertise in these areas means that event organisers can rely on Coates Hire as a one-stop shop for all of their needs,” explains Jeff.
Through its Community Outreach Program, Coates Hire supports local communities across Australia with annual donations of funds and equipment via its branch network. “While we support big local events for commercial reasons, we also understand the important role these events play in the community. Our customers and staff reside in these locations and we think it’s important to be involved in events that matter to our customers.”
Coates Hire is a long-term partner of the Black Dog Institute, an Australian not-for-profit dedicated to understanding, preventing and treating mental illness. With every hire made in the month of December 2015, Coates Hire made a commitment to donate A$2 to the Black Dog Institute – raising a total of A$71,162.
Coates Hire has partnered with the Humpty Dumpty Foundation for many years, assisting it with both the provision of equipment and donations, primarily through the annual Balmoral Burn race, held every May in Sydney, Australia.
Each year, Coates Hire donates A$10,000 to South East Queensland’s Ronald McDonald House as the charity partner of the Coates Hire Ipswich SuperSprint.