Growing confidence in the UK plant hire sector

The UK plant hire market is estimated to have grown by around 5% in 2015, with a further 3% growth forecast for 2016. The market is extremely diverse, reflecting a wide range of products, applications and influencing factors. The primary driver is the performance of the economy - and construction in particular – but other factors such as the weather, propensity to hire or buy, hire rates etc. all influence the market over the medium term.

AMA’s estimates of market value at around £3 billion relate to equipment hire only and excludes ancillary services, such as fuel, labour, ancillary equipment, transport etc., which can add substantial value in some hire sectors. Earth moving equipment represents the largest equipment sector, accounting for around 35% of overall plant hire value, and other key sectors include lifting; pumping, crushing & screening plant; generators & compressors; and road making equipment.

It is estimated that ‘construction’ accounts for around two-thirds of the plant hire market, with the remaining share accounted for by non-construction sector. As a result, demand for plant hire is heavily dependent on the level of construction activity. Infrastructure remains the key end-use sector, with other key sectors including housebuilding, offices, education and industrial, while major non-construction sectors include manufacturing, waste management and events.

In terms of supply, the UK plant hire market is extremely competitive and relatively fragmented, comprising a range of operators from national hire companies to local independents operating in the market. The leading 5 hire companies are estimated to account for around 25% share and the market structure continues to evolve - with some more reliant on construction while others have diversified into manufacturing, recycling or events. Since the downturn, there has been some consolidation as key companies have acquired smaller players, but conversely some new small companies have entered the hire of sectors such as powered access and telehandlers for example. The recovery in hire demand in 2014/15 has given many hire companies growing confidence to invest in fleet upgrades and expansion.

“Market improvement has allowed hire rates to rise in recent years, although some sectors, such as cranes, have only really started to see a noticeable improvement in 2014” said Andrew Hartley, Director of AMA Research. “More challenging conditions in 2015, however, saw some companies reduce their rates as well as reassess their capital expenditure plans. As market conditions improve, companies are expected to begin updating and expanding their fleets, and many hire companies have already implemented investment plans.”

Going forward, AMA forecasts further growth in 2016-17, as a result of some underlying growth in construction. However, construction activity levels are forecast to increase at lower growth rates towards the end of the review period, which is likely to impact on hire demand. As a result, the hire market is forecast to see modest but steady underlying growth of around 9% over the period 2017-2020.

Key sectors for demand in the forecast period is expected to be utilities, transport and housebuilding, while the events sector continues to provide good hire opportunities. Increasingly stringent health & safety and environmental legislation should also continue to provide some impetus to the market. However, the hire versus buy issue will continue to impact on the plant hire market and, as conditions improve, companies will continue to assess this issue. Market growth will also continue to be impacted by hire rates due to the competitive nature of the market and the need to maintain adequate levels of utilisation.

The ‘Plant Hire Market Report – UK 2016-2020 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services with over 25 years’ experience within the construction and home improvement markets.  The report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.