Hirers are erring on the side of caution when it comes to clients, work, staff and assets.
The buzzword in the plant hire industry is “caution”. Rarely will industry unanimously agreed on an issue, but everyone has seen a drop in business and nobody wants to make any rash decisions when things are running as slowly as they have over the last 12 months.
Many hirers are now facing tough decisions on how to manage their firms during a slack period in their business. They have to decide whether to stick with what they know, or take on work in areas that might be new to them. After all, who would turn down work when the regular customers aren’t coming through the door as regularly as they once were?
But wouldn’t it be more prudent of them to stay close to the customers you have built up good relationships with, and carry on with the work they have proved they can do well?
Then there is the decision on what to do with the kit that was a shrewd investment when times were good and work was guaranteed, but is now sat in the yard. Should plant hirers buy new machinery or stave off this decision and let their existing kit depreciate?
Finally, there is the toughest decision on people and who to let go when the work drops off.
So where do the top plant hire executives see the work coming from, and what are the smart companies doing to put some wind back in their sails during the current lull?
Outlook: Where will the work come from?
The outlook from Speedy Hire for the coming year was a harsh 17 per cent decline. “We think 2010 could be worse as the government is reigning in public sector spending until 2011,” says chief executive Steve Corcoran. “If projects are coming to their conclusions, it’s difficult to see what is behind.”
Even so, Mr Corcoran says, the public sector offers the construction industry the best guarantee of work at the moment. “We’ve looked at main contractor’s order books and the public sector seems to be secure,” he says. “The private sector doesn’t look as good, with the exception of food retail, budget hotels and energy and waste.”
Lavendon Group chief executive Kevin Appleton agrees that the public sector offers the steadiest stream of work for plant hirers. “In general, there is not much coming from the manufacturing or retail sectors at the moment, so infrastructure and public works, the redevelopment of the transport network and plans to build schools and hospitals are important,” he says.
In recent years, work at height regulations and contractors’ health and safety policies have boosted access specialists, such as Lavendon. Does Mr Appleton see this as a buffer against the slowdown?
“It makes things a bit less ugly for us but it’s not like an anti gravity suit,” he says. “People are under a continuing or increasing pressure to work in a safe or compliant way. But if there are only half the people in work, then that doesn’t account for much.”
Hewden general manager of operations Kevin Parkes says hire firms have their eyes on the 2012 project. “The Olympics is everybody’s number one priority at the moment as it is one project that can’t be delayed. Power generation will be an area that will continue to provide work too – the recession will slow it, but there’s a massive need for the infrastructure in this country.”
Mr Parkes says Hewden is currently trying to get closer to its larger customers. “We’re being selective about where we spend our time at the moment and we have a huge drive to partner with Tier 1 and Tier 2 contractors,” he says.
Despite an undeliable slowdown in business, Mr Parkes is upbeat about the state of the market for plant hirers. “In the current climate, people haven’t the capital and they’re looking to improve their balance sheets by renting their plant,” he says.