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Tool hirers face tough market thoughout 2009

Rising pricing pressure and cost saving measures will dominate the market in 2009, according to a report from MTW Research.

The market report, based on sales returns from 95 per cent of the industry, found that Tool and Equipment suppliers are increasingly feeling the pinch of a downturn in demand for tool hire from a number of key end use sectors, resulting in falling volume demand and rising price competition.

The report points to a more difficult trading period in the next 12-18 months, with a slowdown in capital expenditure by tool hire companies resulting in rising price competition amongst tool manufacturers who supply to this sector. It forecasts a decline of some 25 per cent in capital expenditure during 2009, reflecting the wider slowdown in construction activity and subsequent impact on demand for tools throughout the supply chain.

Cost reduction and efficiency measures are likely to dominate the tool hire market in 2009 as the economic slowdown deepens, with redundancies and ‘scaling down programmes’ by the tool hire companies becoming increasingly common.

However, the report suggests that while there is likely to be some pain in the short term, the focus on profitability by the industry now, should assist the market in the medium term by enabling a faster return to profitability growth than many other sectors in the construction industry. For the short term, the public sector is seen as crucial for underpinning market demand and preventing further substantial declines in volume and value.

MTW Research’s also found that almost 25 per cent of tool hire companies are considered to be ‘at risk’, reflecting the difficult trading environment at present.