TDG pulls out of France
UK based contract logistics company, TDG, has announced that it is to withdraw from direct operations in France. Following on a strategic review of its loss making operations, it has decided to transfer existing contracts from its La Flèche du Nord subsidiary to MGF Logistique with which it has developed a partnership.
The reason given by the management for its withdrawal, only a few years after it entered the French market, was that it had been impossible for the company to make money with a sub-scale operation. In the first half of 2003 its French business lost £0.5m (€0.73m) on a turnover of £18.1m (€26.4m). This compared with the overall group performance which saw revenues fall by 1% to £275.4m (€401.5m) and operating profits fall by 2% to £12.0m (€17.5m). The UK contract logistics division was one of the hardest hit with profits falling by 9% as a result of lower volumes, price pressure and the inability to pass on cost increases.
Despite withdrawing from an owned operation in France, the management claims that it has still not lost sight of its vision of providing customers with pan-European services. However to do this it has adopted a lower risk strategy of building alliances with corresponding companies in the key markets. To emphasize this, TDG announced that it had created a partnership with a German company, TTS, giving it access to the German and eastern European region.
TDG is the second UK company to pull out of mainland Europe this year, the first being Christian Salvesen. It too has adopted a partnership approach to supplying markets in which it had previous owned operations. Although this carries less risk, especially at a time of weak economic growth and high competition, it also has its drawbacks. The problems of a partnershipping approach include a lack of strategic control in important markets; lack of IT/product integration and the risk that partners are bought out by the competition.
