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Hirers told 'raise game and you can raise rates'

PLANT Conference speakers promise brighter prospects for hire sector if standards of service are improved

PLANT hirers need to be more proactive, more professional and more efficient if they are to improve their business with contractors.

If they show more confidence in raising rates, they should make money in an economic climate that is set to get healthier.

That was the message from speakers at the first Future of Plant Hire conference, hosted by the Construction Plant-hire Association and Construction News last week.

John Wainewright of specialist contractor Betta Environmental Services told delegates that he was willing to pay for a good service. He said: 'Our suppliers are as important to us as our customers, but I don't believe the plant hire industry is as proactive as others. Hirers do not come to me looking for business, and people are not providing their own ideas of how they can do things better.'

Mr Wainewright listed 10 factors that he wanted from a hirer, from on-site repair to machine reliability to integrity and professionalism, as well as price.

He said: 'Price is less important in a way, because if some of the other things go wrong, the hire rate pales into insignificance.'

He added that accurate and timely invoices were essential to ongoing partnership. 'It is surprising how long it takes to get a credit note sometimes.'

The need for quality service was echoed by Hugh Edeleanu, chairman of hirer HE Services. He said: 'Customers and hirers have to get value. Fleets need to be modern, for reliability and reputation. You need to give excellent service but don't let the customer bully you.

'Remember it's the plant hire company that sets the rates.'

Mr Edeleanu said he had been quoted £150 a week to hire a mini excavator and £225 for a backhoe. 'These are being hired at a loss. And no-one we spoke to asked us for a phone number.'

He added that many hirers didn't take account of all the indirect costs in the hire rate. 'The average cost of overheads per week per machine is £70-120, excluding finance and depreciation. Costs such as bad debts, compliance with health and safety regulations, damage and repair charges and the cost of theft and pilferage all have to be factored in.'

JLG sales director Andrew Fishburn also emphasised hidden costs. 'The average salesperson's call costs £114 each visit, excluding their salary, so to get value it is essential to pick the right person, train them properly, monitor their performance and motivate them on business improvement, not just unit sales.'

Positive prospects

THE FUTURE economic climate is encouraging for hirers, with prospects better than current speculation suggests, Roger Martin-Fagg of Henley Management Centre told delegates.

He said: 'There will be a steady growth in the economy, although stocks will not be going back to the levels of 1999-2000 for a long time.'

He added that manufacturing would see five years of growth and consumer spending would continue.

Additionally, banking in the UK is not likely to fail and interest rates are not set to climb above 5.25 per cent until 2006.

Mr Martin-Fagg said: 'With solid growth and a solid environment, you should make money. If not, it is your value proposition that needs looking at.'

But insurance premium rises are likely to have an impact on these profits, with such factors as changes in psychiatric claims requiring higher premiums to fund payouts.

Royal & Sun Alliance Liability Insurance Manager Neil Clutterbuck told hirers:

'Risk control can bring down premiums significantly, although not necessarily in the short term.

'I implore you to adopt a proactive approach and use insurance surveyors to assess the risks.'

He added that checking the policies of subbies and keeping proper records were vital and challenged the plant sector over its risk management.

He said: 'It's arguably negligent what some owners do in not protecting plant. You wouldn't do it to your car. And manufacturers should stop producing ignition keys that aren't unique.'