PLANT HIRERS always complain that hire rates are too low. Well, they would, wouldn't they. But on this point Mr McGilvray (above) does seem to have a point.
'My first crane hire rate was £38/hr, ' he says. 'It is the same rate today, with some people hiring hydraulic cranes at £28/hr. That is not sustainable. We wouldn't do that.'
He goes through the maths: 'A driver gets £8-£10/hr plus costs. A crane operator costs £14/hr. A 65-tonne crane costs £250,000 at a finance rate of 8 per cent. Then add on running costs and wear and tear.'
Add it together and you get little change from a £38/hr hire rate.
'At £38/hr you have got to put out cranes at eight to 10 years old because there is no finance cost, ' Mr McGilvray says. 'The big problem is that the people hiring have got to realise the equipment is worth a lot of money, but they don't want to pay that rate. Also, a lot of jobs being tendered nine months before the start do not allow for wage inflation.'
This is not such an issue on larger cranes, for which operator wages are only around 15 to 20 per cent of the total cost. On smaller cranes it can be as high as 50 per cent. But it has led Weldex to a key decision.
'We are not buying cranes of less than 70 tonnes, ' says Mr McGilvray.
'We are concentrating on cranes from 80 to 600 tonnes. The market up to 60 tonnes is too competitive. with silly rates.'