INDEPENDENT tool hirers face an uncertain future as they are increasingly squeezed out of the market by national players and face a growing threat from builders' merchants and DIY stores, according to a new report on the sector.
But the overall market is expected to grow, thanks to increasing opportunities in facilities management and infrastructure.
According to market analyst AMA, small hirers have seen a drastic reduction in their share of the £700 million tool market, from 49 per cent in 1996 to 9 per cent last year. Multiple outlets, with four or more branches, increased their share from 43 per cent to 73 per cent in the same period, while builders' merchants increased from 8 per cent to 18 per cent. Reflecting the growing consolidation, the top 10 hirers, including merchants, account for 77 per cent of the market between them.
'Independent operators have found it increasingly difficult to compete with larger outlets due to the expense of range updates; adequate instruction; health and safety implications and product servicing, ' says the report.
It concludes: 'It is now increasingly difficult for individuals to establish new tool hire operations, given the above factors.'
Furthermore, the authors warn, increasing power among the nationals will lead to price pressure throughout the market as more national supply deals are struck.
AMA forecasts increasing activity from the major DIY chains, which it says are attracting growing custom from tradesmen as well as the public, with both B & Q and Focus Do-It-All trialling tool hire.
'It would appear that it is at a relatively early stage of development, but it is clear that the sector offers considerable scope for expanding tool hire sales and the overall market.
It is therefore viewed as a significant stage in the evolution of the UK market, though it is difficult to forecast the level of success.'
AMA expects the market to increase steadily over the next four years, climbing between two and four per cent annually to reach £820 million by 2006.
It finds room for optimism in increased government spending on PFI projects and infrastructure, especially water, roads and railways. The report states: 'Both new rail routes and upgraded existing routes provide opportunities for tool hire, particularly at a time when safety factors and track and signalling renewals are sharply in focus.'
The construction industry's moves towards outsourcing and facilities management are also expected to result in increased business for tool hire, although AMA indicates that new product opportunities are likely to come in areas outside of the core tool sector.
AMA also warns that new entrants could have an impact on the market in the form of large automotive firms or electrical wholesalers.
UK Tool Hire Market 2002 costs £545.