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Hire sector missing out on the boom, says report

PLANT The plant hire industry must address overcapacity and increase charges or face problems in the future

THE PLANT hire industry has failed to address the problems it faced a year ago and is still blighted by too many machines and low rates, according to a new report.

The Plant Hire Investment Report accuses the industry of having made little progress and of not taking advantage of the favourable economic situation of construction in general.The report claimed: 'There are times when the industry appears to have almost stood still.

Most of the problems that the industry has faced in recent times remain.'

The report identifies the inability to take advantage of the current construction boom as a key weakness. It said: 'The major problem seems to be famine at a time of plenty. The construction industry has boomed but, with a few exceptions, hirers have continued to be plagued by over-capacity and competitive rates.'

With interest rates seemingly on an upward trend, this also raises concerns over the prospects for plant hirers when the favourable climate deteriorates.

The report asked: 'If hirers cannot achieve good rates now, what happens when there is a downturn in demand? Over-borrowed hirers are in danger of being hit by a double-whammy of increased interest costs and falling revenues as construction activity declines in response to rate rises.'

Away from general plant some sectors have a more optimistic outlook. In particular, specialist hirers make up seven of the top 10 companies by profit margins.The overall state of tool hire also seems healthy when compared with general plant but 'further significant rationalisation looks inevitable'the report stated.

Rationalisation - in the form of Ainscough's purchase of Baldwin's fleet - has already generated improved rates for hirers of mobile cranes, with Ainscough's rivals also benefiting. But the powered access sector remains a step behind.

The Plant Hire Investment Report, by Catherine Stratton, is available from Jill Edwards (01895 819330) and costs £249.