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There are various interpretations of
the definition of the UK Construction Equipment Rental Market. The
focus of this report is on equipment generally used in construction,
repair maintenance and improvement (RMI), and DIY applications, but
there are significant areas of overlap with equipment which is also used
for ‘non-construction’ purposes – for example, skips, generators and
portable accommodation, etc.
The construction equipment rental
market is primarily driven by niche sector construction growth , health
and safety and environmental legislation, repair maintenance and
improvement operations, and the sound performance of the UK economy. It
is forecast that all these factors will contribute to positive long term
growth, with the impact also of product innovation and the development
of new market sectors.
Given the difficulties of market
definition, the total market in 2006 is estimated to be worth around
£4.4 billion at hire market prices, which represents positive growth of
around 6% compared to 2005.
In overall terms,
the solid performance of the UK economy has underpinned a degree of
stability to many hire market sectors. From 2003-2005, higher
government spending sustained construction growth, although the
manufacturing and industrial sector remained relatively stable, with
underlying motivation from waste management operations and legislation,
in particular the ‘Work at Height Regulations 2005’.
More recently,
during 2004/2006, activity levels in commercial construction have
remained relatively stable but in overall terms the construction market
has been stimulated by substantial increases in health, education,
defence and infrastructure funding, also an increasing awareness of the
need to alleviate the housing shortage. However, the retail/home
improvement/DIY sector is in relatively poor shape, reflecting a decline
in the housing market and consumer confidence. The manufacturing sector
has also experienced relatively lacklustre conditions but there are
signs of a modest improvement.
The largest sector
of the construction equipment rental market is earth-moving equipment,
estimated to account for over 27% of the overall market. Lifting
equipment, including material handlers and cranes, accounts for an
estimated 14%, while skips and rubbish chutes account for over 11% of
the overall hire market value. Powered access and portable
accommodation hire are demonstrating strong growth, while tower cranes,
crawler cranes, excavators and telehandlers are also growing
significantly, with generally positive forecasts for sectors allied to
construction – for example, falsework/form work/shoring/propping/ ground
support/scaffolding/piling, etc.
Adverse influences
impacting on the hire market include skills shortages, in particular
drivers and fitters, the rising cost of health and safety compliances
(which are particularly exacting in the road/ rail sector), and also
rising fuel and energy costs.
The construction
equipment rental market remains relatively fragmented, despite
continuing concentration in the specialist sector. Construction
equipment rental companies include companies primarily operating either
in plant hire, tool hire, or specialist hire, defined as rental
companies focussing on one, or a relatively narrow range, of product
sectors – for example, cranes and powered access. Hewden /Finning are
the market leaders with an estimated 8% share, followed by Speedy Hire,
with a 7% share, A-Plant 4%, HSS and SGB 2-3%, and Hydrex, VP Plc,
Lavendon, Aggreko, Andrews Sykes, Longville Group, Ainscough and Gap
Group with around 1-2% share. It should be added that Hydrex have
achieved high sustained annual growth rates, and are regarded as a major
player in the UK hire market, while Speedy, market leaders in the UK
tool hire market, have developed rapidly in ‘equipment hire’, and have
become the second largest player in the hire market.
There are
estimated to be around 4500-5000 outlets currently offering construction
equipment rental services in the UK. In addition, there are estimated
to be a further 2000 outlets offering specialist rental services, e.g.
skip hire, portable accommodation hire, primary construction equipment
hire, tippers, sweepers, bowsers, etc. Product development includes
innovative equipment designed to increase productivity, for example the
further extension of the ‘tool carrier’ concept, and ‘compact’ plant.
Long term
prospects for the construction equipment rental industry are viewed as
positive, driven by legislative and environmental trends, also niche
sector construction growth, with more specialist sectors including
prefabrication and the clean-up of nuclear sites. In overall terms, our
forecast is for annual growth rates of 4-6% from 2007-2010, though there
will be significant regional variations reflecting the influences of
location of the extractive industries, waste management operations, the
petro chemical industries, housebuilding projects, renewables,
seasonal/ climate factors, and the periodic impact of entertainments and
events.
Construction generally remains a
positive sector of the economy. Housebuilding is set to rise steadily
to meet demand levels – particularly in Southern England – while
education, health and infrastructure are all subject to high levels of
Government investment which should underpin growth over the next 3-5
years. Equipment rental remains a favoured option for contractors in all
sectors and, therefore, should result in steady market growth in the
medium term future. |
