Published: September 2012
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About this report
In this report we review the UK plant hire industry. We quantify the market size and historical growth rates while reviewing key factors behind these figures and exploring drivers of profitability.
We also carry out an in-depth analysis of the drivers of industry growth – in particular relevant economic and market indicators such as levels of unemployment, construction and infrastructure spending, oil exploration and water industry capex.
Our analysis of historical trends and forecasts is anchored in this information. While many reports on the industry contain data and description, a critical objective for us in writing this report has been to prioritise our insights and conclusions.
What are the objectives of this market report?
Plant hire is a significant UK industry which has seen its fortunes vary dramatically in response to the economic environment. We believe that, in order for those involved in the market to make the best decisions in this complex and changing environment, they need to have access to the best information and understanding of the trends and drivers. The aim of this report is to provide this.
It is intended for plant hire companies themselves as well as investors and others considering entering the market, banks, analysts, consultants and other advisors with interests in the sector.
What are the sources and methodology?
This market report is based on
– Publicly available data including company annual reports, websites, press releases and government statistics.
– Interviews with senior-level contacts in the market.
– In-depth analysis of the macroeconomic environment and other relevant market drivers.
Information from these sources has been synthesised and presented clearly and concisely with extensive use of charts and tables to illuminate points and support conclusions.
The UK Plant Hire Market – 5
Market size and growth – 8
Market size & growth
Performance of leading providersMarket drivers
Discussion of market drivers
Drivers and their impact
Market drivers – 11
Competitive landscape – 20
Profiles of the main competitors
Forecasts – 30
Key drivers forecast
Risks to the forecast
List of figures
Appendix – 38
List of figures (UK Plant Hire Market Report)
1. Revenue segmentation by market served (2010-11) / %
2. Average Fleet Age (most recent year) / Years
3. Market size and growth / £m
4. Leading operators historical revenue trend and market growth / %
5. Leading operators pre-tax margin / %
6. Employee numbers, revenue per employee for leading operators / £’000
7. UK GDP in current prices (money GDP), inflation (GDP deflator) and real GDP / % annual changes
8. UK Inflation: Consumer price index and GDP deflator / % annual change
9. UK employment / annual % change
10. UK construction spending by type / £bn
11. Infrastructure investment as a proportion of GDP / %
12. UK infrastructure spending by type / £m
13. UK mining and quarrying investment / £m
14. Total Expenses of UK Oil Exploration / £bn
15. Net Water Capital Investment / £bn
16. Leading operators’ historical revenue / £m
17. Leading operators’ pre-tax profit margin / %
18. Employees and revenue per employee for leading operators (most recent year) / £’000
19. Net book value of rental fleets, fleet asset turns / £m, turns
20. Hewden Stuart: net book value of rental fleet, fleet asset turns / £m, turns
21. Select Plant Hire Limited summary financials
22. Aggreko UK Limited summary financials
23. Hewden Stuart Limited summary financials
24. Harsco Infrastructure Services Limited summary financials
25. Ainscough Crane Hire Limited summary financials
26. Briggs Equipment UK Limited summary financials
27. Nationwide Platforms Limited summary financials
28. UK GDP in current prices, inflation (GDP deflator) and real GDP / % annual changes. Historical and forecast
29. UK Consumer Price Index and GDP deflator / % annual change. Historical and 30. OBR Autumn 2011 forecast
31. UK employment / annual % change
32. UK construction spending: historical and forecast / £bn
33. UK infrastructure investment pipeline by sector (2011) / %
34. Total Expenses of UK Oil Exploration / £bn
35. Net Capital Water investment / £bn
36. Forecast market size and growth / £m
The plant hire market includes large pieces of equipment such as excavators, cranes or access platforms, as well as non mechanical equipment, such as power generators.
The main benefits of hiring versus owning the equipment include:
– High levels of availability of the latest equipment at the right location and in good working order.
– Freeing-up capital.
– Outsourcing costs of ownership – including repair and maintenance, equipment testing, storage and inventory management – as well as any liabilities.
– Simplifying the charging of plant costs to specific jobs.
The market is served by a series of specialist operators, such as Select Hire, Aggreko, Harsco, Briggs Equipment, Hewden Stuart, Ainscough and Nationwide Platforms.
Plant hire companies generally focus on longer term leasing agreements, with 3-6 month periods being typical.
Market growth and drivers
The market is around £3.1bn in size.
Prior to the onset of recession in 2008, the industry enjoyed a combination of high growth and strong margins.
– The market grew as penetration increased with new customers adopting it, existing customers using it more and the hire range and service offer extended to new areas.
The construction industry, its core market, turned down in 2009. Following this plant hire revenues decreased and the set of leading companies saw profits fall.
Plant hire companies responded to by shrinking costs to match lower revenues by reducing both headcount levels and hire fleet sizes and focusing on revenue opportunities such as:
– More resilient areas of construction, such as infrastructure spending where the government has a long pipeline of major projects.
– Other sectors with more stable demand, such as manufacturing, maintenance services, events and utilities.
– Value added services.
– Overseas markets, such as the Middle East, where there remains a buoyant construction market and plant hire is less mature.
The plant hire market remains below the levels reached in 2007-08.
Ongoing weakness in, and exposure to, the construction sector as well as the performance of the economy as a whole, indicate that plant hire market recovery is not likely before 2015.