Hire market to grow by 14%

New research forecasts growth of 3% a year until 2009, then 2% and 1% respectively in 2010 and 2011.

The plant and tool hire market is predicted to grow by 14% by 2011, topping £5bn in total (at 2006 prices), according to latest research from Market & Business Development (MBD).

The market, worth £4.3bn in 2005, is predicted to rise 3% a year through to 2009, 2% in 2010 and 1% in 2011, taking the total to £5.03bn at the end of the period. MBD said 35% of the plant hire market is in heavy and medium size earthmoving equipment, with a further 30% in smaller excavators, generators and general plant, while cranes and access equipment take 15% each.

Factors favouring hire are increasing health and safety requirements, the Work at Height Regulations, hand-arm/whole-body vibration and heightened environmental awareness, which have led contractors to request newer equipment and shorten replacement cycles. Such factors lead MBD to predict a £4.11bn plant hire market by 2011 with tool hire adding another £921m (see table).

The report says the increasing use of PFI has lessened the cyclical nature of the construction sector and any slowdown could be beneficial to the plant hire sector as uncertainty would cause contractors to resist capital purchases and favour hire. It is also predicting a shift in construction output from the North to London and the South East

The report identified a 2% increase in construction plant hire businesses in 2006 (to 4,400) operating through 6,070 depots –60% of which housed four employees or fewer. Almost 60% of the businesses had a turnover below £250,000, with only 3% topping £5m.

Copies of The UK Plant & Tool Hire Market Development report cost £550 and are available from MBD.

[Contract Journal, 15 November 2006, p 19]