November 2013 – Plant Hire
Plant hire is one of those industries that (to the outsider, at least) sometimes seems more trouble than it’s worth.
You invest massive amounts of borrowed capital in very expensive equipment that costs you loads to maintain and insure…and then you hire it out to customers for peanuts.
Any hirer you speak to will volunteer the opinion that hire rates are unsustainable and most will place the blame squarely with the customer’s willingness to beat their suppliers down at every opportunity and always take the lowest price.
Of course, the protestations are loudest during the lean times and we have just had the mother of all recessions. But I’ve heard the same complaints during the boom – only, then, it was because the barriers to entry were too low and a plague of over-borrowed opportunists were jumping on the bandwagon and ruining it for everybody else.
This month we’ve taken a snapshot of the industry and our colleagues at Company Watch have been through the top hirer’s financial reports to discover that, actually, they’re not doing too badly – particularly when compared with their clients, the contractors.
Profit margins are higher in plant hire than in any of the contracting sectors we’ve looked at this year and, as we see on page 37, hirers have been busily buying up new kit this year in anticipation of increased workloads.
Of course, hire rates are still at rock-bottom. But I realise now that they probably always will be.
Developments in BIM