TOOL HIRE TOP TEN 2012
BUILDING ON RECOVERY
Catherine Stratton presents her 11th annual review of the UK’s Top Ten tool and equipment hirers.
The tool and equipment hire industry can look back on 2011 as a year in which it consolidated the recovery begun in 2010 and managed to grow against an unhelpful economic background. 2011 saw few changes of significance amongst the Tool Hire Top Ten, apart from Speedy divesting of its loss-making portable accommodation business.
The focus for hirers has been to manage their own businesses more efficiently and, where possible, to grow organically by introducing new product lines, securing new customers and improving depot networks. Acquisitions continue to be rare. Indeed, the only acquisition undertaken by a Top Ten hirer is that of Phoenix Surveying Equipment by Brandon, as detailed later.
The challenges of the recession and its aftermath have been met by a number of contrasting strategies. Three of the Top Ten - Jewson, TP and Hirebase - are owned by builders’ merchants and their focus has been to increasingly penetrate their owners’ customer base. All the indications are that they are succeeding, as they show strong growth figures in our tables. Consolidation within the builders’ merchant market over the past year or so is also giving these hirers access to widening customer bases.
Amongst the Top Ten independent hirers, the securing of long term preferred supplier deals has continued to be a top priority. Companies like Speedy and GAP have long argued that this gives them a degree of security and stability against the fluctuations of construction demand. Such contracts are now firmly established within the construction industry and are also becoming increasingly prevalent for non-mainstream construction hire customers.
Although the UK tool and equipment hire market already meets a high proportion of the overall equipment needs of the construction industry, there are indications that the recent recession and the longer term prospects of low growth have led construction companies to reassess their equipment ownership policies. There is every prospect that major construction companies will be reducing their holdings further and relying increasingly on the hire market. It seems inevitable that this will lead to a further expansion of long term supply agreements.
UK’s No. 1
Nevertheless in today’s environment, where construction activity continues at a low level, there is also merit in the approach of other tool and equipment hirers who see their primary market as local tradesmen. During periods of low construction demand, the requirements for repair and maintenance and small building works, such as alterations and extensions, come increasingly to the fore and the chief beneficiary is the local tradesman. This has helped many tool hirers through the recent recession and will sustain them through 2012.
This review is now in its eleventh year; until the 2008/2009 recession, the market experienced good growth and there were some significant consolidation moves. All the indications are that tool and equipment hire is now returning to sound health, but we must add the proviso that the economic outlook is grim. Hire does, however, have counter- cyclical properties. When times are tough, companies look for every opportunity to reduce overheads and hiring, rather than buying, is one of these. Hirers need to continue to press that message home at every opportunity.
Last year we expressed our concern that companies were not re-investing in their fleets. We are now four years away from the recession when the capital expenditure tap was turned off and four years is the average economic life of smaller plant - so re-investment is now vital.
During 2011 there have been signs of increased capital expenditure by the larger companies, but they are all aware that, due to price inflation, they are getting less for their money. Equipment is costing more, fuel and other overheads are continuing to rise and hirers have to recoup their outgoings. Some hire rates have moved ahead over the past year, but it is clear that more needs to be done to enable hirers to re-invest profitably and to meet customers’ demands for the highest standards of equipment and service. Hirers of all shapes and sizes need to stand firm on rates now.
Over the past eleven years, we have established a series of statistical tables to identify the Top Ten largest tool and equipment hirers in the UK and to estimate their market share. We would stress that our definition of tool and equipment hire embraces not just traditional
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