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Managing to survive a downturn

For more than a decade the construction industry has enjoyed a period of sustained growth and the plant hire industry has flourished. But now the party’s over and it’s time to clear up the mess.

When the UK economy slid into recession in the early 1990s the plant-hire industry, fuelled by a commercial property boom during which it had invested heavily in new equipment, found itself over-equipped and over-populated.

There followed a period of blood-letting during which hire-rates plummeted way below viable levels and businesses went bust.

So how will we cope this time?

We canvassed opinion from the industry and the response suggests that while the plant hire sector is bracing itself for a bumpy ride, there’s a widespread confidence in its robustness.

There will be casualties, but fewer than last time. And, as ever, it will be the well-managed companies – those that have, to borrow David Cameron’s analogy, “mended the roof when the sun was shining” that will survive.

However, sombre the outlook, there is no sign of panic yet. But there are signs of real anxiety.

Several hire companies declined to go on the record, including a couple that explained that they feared their comments might alarm customers – “it’s a very sensitive time” remarked the marketing manager of one.

Doug Sprout, director, Hewden

“The Government’s announcement that it would pull forward public spending is welcome as this will bring more activity in education and health projects. [Read more]

Geoffrey Marsh, chairman, Marsh Plant

“I’ve seen this coming since August 2007 so it’s no surprise. We’ve reduced our crane fleet, especially the 25 tonne truck cranes. Last year we had 25 truck cranes in the fleet, now we’ve got 12 – the rest have gone to cash. [Read more]

Nick Lowe, general manager, HTC Plant

“What should we do? Start praying? Seriously, though, we are looking to sell some of our older cranes, though to who I don’t know. [Read more]

Paul Wood, managing director, Andrews Sykes Group

“It doesn’t matter really what line of business you’re in, it’s the companies that are well managed, focused and proactive that will survive, no matter how long and deep the recession turns out to be. [Read more]

Chris Davies, managing director, HSS

“Clearly the challenges in plant hire are self evident – reducing volumes and tighter cash. The impact on hirers where operational leverage is high will make it difficult and as trade debt becomes harder to collect, cash management will be a major issue. [Read more]

Steve Corcoran, chief executive, Speedy Hire

“The market has definitely tightened further in recent weeks but the diversity and depth of the plant hire industry’s customer base provides a degree of insulation from a downturn. [Read more]

Colin Wood, chief executive, CPA

“In a downturn the first thing plant hirers do is postpone the delivery of new equipment, and we’re already seeing that. [Read more]

Hugh Edeleanu, chairman, HE Services

“There is already an over-supply of equipment. The manufacturers had the potential to look ahead and should have taken action sooner. [Read more]