Will the slowdown encourage plant hirers to take on different jobs?
Large firms say they want to strengthen relationships with existing customers. HSS managing director Chris Davies says he has noticed a shift in customers’ behaviour and plant hirers have to be on hand to accommodate their changing needs.
“Those of us who have been through a couple of recessions before can see the patterns,” he says. “The total pot of available work has been reduced and companies mould themselves to taking on different jobs. Bigger contractors are going to a lower level of work and taking on smaller jobs and the smaller contractor who last year had the next job lined up to go to may not have that now. Maybe he has much less notice on where the next job is.”
HSS last year embarked on a programme to reduce its overall number of depots and to open up “superstores” to provide a greater range of equipment under one roof. Over the last few months it has opened up a further two such stores in Leeds and Liverpool. “A hire company is in the business to reduce costs for their customers, otherwise they would just go out and buy the kit themselves,” he says. “From our perspective we are trading to our plan and we’re happy with that.”
CPA chief executive Colin Wood predicts prudence among hirers
An economic slowdown will force plant hirers to reign in their businesses and to make some tough decisions, says Construction Plant Hire Association chief executive Colin Wood.
“They have got to run a business more efficiently than they have done in their lives to make sure their available workforce is geared up to the work.”
With order books looking shakier than in recent times, hirers will be looking carefully at their available plant.
“Equipment will be under utilised and if it isn’t used for a long period, then hirers will have to make harsh decisions about that plant and the operators using it. It’s difficult to cut back, especially after many, many years in a boom.”
However, hirers face a second hand market flooded with machinery. “People are selling off excess equipment, but the prices they get won’t be anything like 12 to 18 months ago. The efficient companies will have got rid of their excess at the top of the market.”
Plant hirers will also be loathed to buy in new machinery while the economic outlook looks uncertain. “People aren’t replacing their cars because they’re worried about the increased payments,” says Mr Wood. “Likewise they’re not ordering new equipment, and as long as they get their maintenance right, they don’t have to. There are a lot of companies in Europe that run their kit a lot longer than we do and I’m aware of some that keep theirs for seven, eight or nine years. In the crane industry, a 10-year-old crane in good condition can do the same job as a two-year-old one.”
However, Mr Wood says hirers are faced with pressures from customers for the latest kit. “Customers don’t pay premiums for new machines,” he says. “They want state of the art modern equipment but don’t want to pay for it.”