Sykes believes specialist services will see it through downturn

While many hire companies seek to satisfy a wide range of contractors' plant, tool and site accommodation needs, there are a still a significant number of specialists who are successful in providing very narrow range of equipment.

Andrew Sykes is one such company. It makes no attempt to cover the full gambit of equipment and confines its offerings to pumps, heating, cooling and dehumidifying equipment.

According to Sykes sales director Steve Reeve, it's a recipe that has worked for 150 years and it still works now: in the first six months of its financial year the UK hire operation, Andrew Sykes Hire, accounted for £26m of the group's £34m turnover. To date, the company has not been badly hit by the downturn in UK construction market. But had the economic downturn hit in 2005, the company would have been in a far worse situation.

"Going back three years, we were very dependent on civil engineering and construction - it accounted for about 70% of our work," says Reeve. "But demand in the construction industry is very weather-dependent so we decided to diversify and seek contracts with companies and sectors where demand is less affected by the weather such as water companies, quarrying, power stations and so on. And we've been very successful. Today less than half our turnover is with construction companies. Had the downturn happened three years ago, our level of concern would have been far higher," he says.

Partly because of this diversification, over the past two years the company has seen its turnover grow by 45%, and as the market is relatively stable, Reeve concludes that this business has been won from other players in the market.

But it is exactly that dependency and unpredictability of demand that makes Sykes' formula work. When contractors start on a site, they will have an excavator or two, perhaps a telehandler and a couple of dumpers or ADTs, Reeve says. "But it's only when they dig the footings and the trench fills up with water that they will think of hiring a pump - and then they need it in a hurry."

Sykes has 30 depots nationwide and aims to get a pump to site in a maximum of four hours - it's usually much quicker - in an emergency such as a pipe burst or flash flooding.

Response times

It can also be easier to get pumps to people in the middle of the night than during normal working hours. "Our guys usually live reasonably close to the depot so they can get in quickly and be on their way without having to do battle with the traffic," Reeve says. "There will always be a pump or two in the depot to deploy in an emergency." He says they may not be the ideal machines for the job, but will keep the situation under control until more suitable units can be brought in.

Response times also figure in many of the contractual agreements that account for around half of Sykes' UK turnover. And many of these contracts are with civil engineers, builders and utility contractors who also have preferred supplier agreements in place with general hire companies that also offer pumps. So why don't they take pumps from the general hire companies?

"They come to us to get the right machine and the knowledge," says Reeve. "People know they are going to need a digger and so on, but they never know when they are going to need a pump or heating and ventilation equipment. A site manager can't know everything, and if the first hole they dig fills with water, they probably need some help," he explains.

"There's a limit to the skill set of any individual, and a site agent is no different, so when our guys arrive with some pumps they can advise on the optimum deployment of the equipment - they're our best salesmen," he says.

De-humidifying equipment

The same goes for the dehumidifiers, heaters and ventilation equipment the company supplies.

"We've had many incidences where our depots receive calls from customers desperate for some de-humidifying equipment," Reeve explains.

"When the delivery driver arrives, he is shown into some houses where plasterers are trying to finish their work, but the walls are dripping with condensation. Inside each house are several gas heaters (usually from another hire company) brought in by the site agent in a desperate attempt to dry the houses out. When our drivers turn up they say, 'you need to turn those off, they're making the situation worse' - but usually the agent won't believe them.

"A couple of phone conversations with our regional people convince the agents it is the right thing to do - and the de-humidifiers can do their job. "A general hire company would not have been able to offer that type of advice," he concludes.

Installation service

Another service that Sykes offers is to install the machinery it delivers - not only pumps, but also air conditioning units. When an air con unit breaks down, an entire office block can be uninhabitable, so something has to happen quickly.

Yet again, Sykes has to react to unscheduled demand. "There aren't many Sundays when there isn't a road closed as a crane hoists one of our air conditioning units onto the top of a building somewhere around the country," says Reeve. While Sykes can supply people to hook up the temporary unit, in these cases the M and E contractor will usually use its own staff.

As with other hire companies, Sykes has increased its fleet in the past couple of years but unlike many others, its utilisation has held up at around 70%. Another area of marked difference between Sykes' business and that of a general hire company is in the age of the fleet - on paper at least.

Reeve explains: "A pump consists of a chassis, an engine and a pump unit. On paper, a pump may be 10 years old, but if you look at the records you will see it is on its third engine and has had two new impellors - there's nothing else to go wrong.

"We have stringent off-hire inspections and a 14-day maintenance and inspection programme for machines remaining on site for longer periods, so we replace engines, pump units and wear parts on a regular basis."

Current climate

He believes the economic downturn will have a greater impact on general hire companies than specialists like Sykes: "I'd rather be a specialist than a generalist in the current economic climate," he says.

This confidence comes not from any belief that Sykes is immune from the downturn, but because he believes the business is well run and providing what customers want. "Business has not actually stopped. The market is still there, just smaller, and we need to win market share and have as efficient an operation as possible."

This forms Reeve's strategy going forward: "We need to increase penetration in each market sector and we are looking at different ways to do this. How can we be in the mind of somebody when they need to hire our products?"

That he is still looking forward in such uncertain times, while many in the hire industry are struggling to deal with today, speaks volumes. But then Sykes hasn't lasted for 150 years by only thinking of today.