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Analyst predicts five-year growth for sector dominated by nine firms but potential threats loom on horizon


THE TOOL hire market in the UK will top £750 million within two years, with the nine biggest firms accounting for 65 per cent of the market.

That is the view of analyst AMA Research in its report, UK Tool Hire Market 2000. It fore-casts 23 per cent growth over the next five years from the current £660 million to £810 million.

The report concludes that the outlook for tool hirers is fairly optimistic, with more EC legislation, health and safety awareness and activity in construction all adding to market growth.

AMA reports a major shift in the make-up of the market (which does not include event hire or site accommodation), towards large hire operations. It estimates that of an approximate 2,000 outlets in the UK, multiple branch companies account for 62 per cent, 19 per cent higher than four years ago.

Small hirers with less than four branches comprise 19 per cent, a 30 per cent drop on four years ago. Builders' merchants account for the balance of 22 per cent.

Based on this consolidation, AMA believes the top nine companies account for 65 per cent of the market.

The report forecasts a rise in the larger companies' influence as the size and complexity of contracts drive more partnership deals.

It says: 'The possible substitution of longer-term for short frequency hire represents an additional attraction of partnerships [and] single sourcing often requires an extremely wide product range and in many cases regional or national coverage, with the result that it is usually the larger company which has the resources for this type of operation.'

But the report warns that there are potential threats to the industry from national automotive and electrical companies seeking to offer complementary services to their own sectors.

AMA also said that a major factor in the growth is the rise of facilities management companies for non-core activities and particularly for PFI projects.

'The growing trend to outsource has benefited the tool hire market in prime areas including infrastructure contracting, while a wide range of asset management activities has provided additional stimulus.'