The plant hire market is expected to grow in value by 16 per cent by 2015 following an expected contraction of 2 per cent in 2010, according to a recent report from market research firm MBD.
By 2015, MBD estimates that plant hire will be worth around £4.6 billion (at 2010 prices), up from an estimated £4 billion this year.
The report confirms that 2010 has been a difficult year for hirers, with the market contracting 2 per cent this year. However, this year has been better than 2009, which saw a 16 per cent decline, which according to MBD could have been considerably worse. “The downward trend evident since 2008, is largely a reflection of the significant downturn in new construction activity, in particular in the private housing and commercial sectors, as a result of the economic and financial crisis,” says the report. “Furthermore, profit margins have been squeezed as intensified price competition has put hire rates under increased pressure. However a stronger decline is believed to have been avoided, partly due to increased government spending on public build projects, mainly in 2009. Some demand for plant and tool hire was also maintained in civil engineering and the repair and maintenance sectors during the economic downturn.”
Return to growth
However, growth for 2011 is estimated to be slight, with just a 1 per cent increase for the year. The report says: “The modest increase projected for 2011 is largely a reflection of the continued uncertain outlook in the construction sector, with output levels anticipated to remain subdued, at least in the short-term. Furthermore, impending public spending cuts also raise the level of uncertainty concerning future demand for plant and tool hire in the public sector.”
MBD says it expects a private sector recovery, which should provide opportunities for hire firms. “However, despite growth projected for the private construction sector, output is anticipated to remain below the levels seen prior to the downturn,” says the report.
Civil engineering appears to hold the most promise for hirers. According to MBD, the utilities and renewable power generation markets show the strongest potential, although this is tempered by an expected decline in large-scale public infrastructure works such as roads. Hire is also expected to play a crucial role in the construction industry. MBD says it expects hire to supply up to 80 per cent of all construction plant requirements between 2011 and 2015.
But the report has a bright note for the wider sector: “Demand for plant and tool hire is closely linked to output levels in the overall construction industry, as well as to civil engineering and repair and maintenance activity. Thus the market follows a similar development to overall construction output.” If plant hire is set to grow, that could also be a positive sign for the rest of the construction industry.