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UK Construction Equipment Rental Market
2007-2013 (£m)
The UK construction
equipment rental market is estimated to be worth some £3409m in
2010, having declined by an estimated 15% in 2010 compared to the
previous year. Market decline over the last three years has been
significant, though difficult to estimate, reflecting variable but
generally adverse trends of different hire product groups and the
wide range of end use sectors – including, for example, private
commercial construction, housebuilding, industrial, and home
improvement, etc.
Earth moving equipment,
estimated to be the largest product sector, accounts for around 24%
of hire turnover, while lifting accounts for around 14%, access
equipment, also skips and rubbish chutes at around 12%, pumping,
crushing and screening plant, also hand and power tools, 5%, etc.
Key factors
underpinning low level, long term market growth include health and
safety issues, environmental and energy efficiency legislation,
also significant utility and infrastructure projects – for example,
Crossrail and Amp 5 – also relatively more positive trends in the
housebuilding sector. Regional growth opportunities are likely to
continue to drive certain rental sectors, for example, new road
construction, coastal defence work, wind turbines, etc. Positive
niche sector construction influences include life extension
projects for the ageing power generation asset base while nuclear
power station decommissioning projects provide hire opportunities
in the short, medium and long term.
In the long term, the
nuclear power station new build sector is likely to provide some
additional hire opportunities with a reported ten sites identified
in England and Wales, though recent adverse publicity may impact on
this build programme. Utility infrastructure opportunities also
include the Amp 5 water industry investment programme, in addition
to the National Grid burying of electrical cables. Railway
electrification, growth in homeland security (a reported 10% per
annum market growth in Western countries), waste to energy projects
and the handling of biomass feedstocks are likely to provide a
range of hire opportunities in the long term.
Adverse influences
bearing on the UK hire market include the forecast decline in
non-domestic construction in 2011-2015 - reflecting capital
spending cuts in the public sector in particular - though this
should be partially offset by a more buoyant infrastructure sector
and gradual recovery in private commercial markets. Rising fuel and
energy costs are likely to impact on hire companies margins, to
some extent. In addition, the inflationary effect of compliance
with EPA reduction targets for emissions on equipment pricing
levels is also likely to erode hire company margins in the long
term.
Anecdotal evidence
suggests that the regular supply of plant components and equipment
has been adversely impacted by the effects of the Japanese
earthquake and tsunami. Furthermore, fleet update programmes have
also experienced difficult supply conditions for the same reasons.
Our estimates are for a
flat to marginally declining 2011, before limited market recovery
of around 1-2% 2012-2013, with marginally more positive growth of
around 2-3% through the period 2014-2015. It is emphasised that the
economic environment in mid-2011 is extremely volatile and fragile,
therefore the above forecasts are subject to change. In addition,
it is also difficult to estimate the timing and scale of the
slowdown and eventual recovery. |
