Specialists hirers weather storm

There is little doubt that over supply of equipment drives down hire rates, leading to problems for suppliers and rental companies. Some diversify, to spread their risk among a number of products, while others opt to specialise, in an attempt to make their offering the best in the sector.

When we say specialist, we are not talking about ultra-rare equipment, just moving away from the mini excavator, mixer and dumper market to the likes of larger telehandlers, heavy earthmoving and materials handling kit and long-reach excavators.

So for those companies that have chosen to go down the specialist route, has the downturn been any easier? Or have the general hire firms, pushed by over capacity and low utilisation, turned towards those specialist sectors to boost their income?

UK Forks

Vp is a company that has turned from being a general hire firm into six specialist businesses, each offering a specific range of products and services. Perhaps the most conventional of those is UK Forks.

"We would stand by our strategy of having specialist divisions," says UK Forks managing director Haydn Davies. "We believe that it offers best value for the customer. We would say that there is a benefit in good times and in the bad."

Of course, the telehandler, more than any other machine, has been tied to the fortunes of the UK house building sector, which has seen a massive drop in business. But telescopic machines are used throughout construction and UK Forks has worked hard to tailor its business to the needs of those varied customers.

"It has been difficult, though there is some stability coming in the housing sector," Davies says.

"There is money being put into the public sector, in schools and other projects. But we have had to look at our fleet and meet the needs of the market."

Certainly that means reducing the overall size of the fleet to meet the demand, but it also results in a wide spread of machinery being offered. "The breadth of the range is the greatest that it has ever been," Davies says. "We have everything from 4m to 25m machines, they even go up to 30m. More than that though, we are able to offer choice. Some customers want a red machine, others a yellow one, for instance."

He says that the size of the fleet, and the expertise within the firm's staff, means that customers don't simply have one machine for the duration of a job. A site might need a 17m telescopic at some point in the build. But it can start out with a 4m or 7m machine, then change it to a 17m or a rotary model as the project progresses, changing back to a smaller model for clearing up towards the end of the project.

"Our brand values derive from our specialisation, so we are not diluted by having to offer a huge choice of products at the same time," says Davies.

Liebherr Rental

One company that does provide a wide range of machines for hire, though many are conventional, is Liebherr Rental. A subsidiary of the manufacturer, Liebherr Rental is able offer very high specification machines from its own line-up and, unlike some manufacturers who sell predominantly to hire firms, can hire those machines to contractors and customers.

"The majority of our business has been in civil engineering rehire and direct to contractors, with the likes of 30t tracked excavators," says Liebherr Rental's general manager Paul Clark.

Around a fifth of the fleet is working in traditionally strong Liebherr markets, such as materials handling and waste. The company has been able to take advantage of the reduction in fleet size of many of its customers by providing additional machinery as projects come up, for those contractors who don't want to purchase at this time.

"Some people just want a machine with a bucket, while others are looking for an individual high specification. We seem to be getting a share of both. But there is just no confidence to buy at this time," says Clark. "People are afraid to commit, and in some sectors it seems that for accounting reasons people want to rent."

The drawback with providing conventional equipment, even to a high specification, is that it can be off-hired just as quickly. "Last year we had good utilisation on dozers, but this year not at all. It has been the same with wheeled loaders, this year the quarry demand just isn't there," Clark says.

That said, Clark is still bringing equipment in from the Continent to join the fleet. From a start-up in January 2008 the hire fleet has grown to 80 machines in the UK. "We were hoping to have 300 machines by year three, but obviously we will be well below that. But we would still like to be in the hundreds," he says.

"We have machines on one-week to one-year rentals. We would of course like more long-term hire. But at present utilisation is around 50%."

Land & Water

Going down the specialist route can also limit the amount of work that your kit can carry out. Land & Water is perhaps one of the best known long-reach excavator and specialist water equipment providers in the UK, both for hire and through its own contracting business. But you can't simply change back to a conventional boom and put those machines to work elsewhere when times are slow.

"Being a specialist business has as many good points as bad points. You can't just go out and find work for specialist kit," says Land & Water director Richard Maclean.

"Everyone with standard machines is trying to find work too. We are definitely being effected as much as the standard hire firms. Contracting is 30-50% of the business, which gives us a core of work. But we are being affected and it is going to be a tough year.

"We are substantially quieter this year and we will be reducing the fleet by about 10%. But we have bought a lot of machines in the last two years, so we are fortunate in that we don't need to change much this year or next," he says.

The long-reach market has become more crowded of late too, as original equipment manufacturers (OEMs) have developed their own booms, making it easier for general contractors to enter the sector.

Maclean says: "The barriers to entry into the long-reach market are lower, now that OEMs are building them. We don't build our own machines now, but buy them in, unless our requirement is something not offered by the OEMs.

"Our speciality is understanding our client's application and being able to offer the most suitable equipment with a machine equipped for nearly all eventualities.

"This means our standard specification includes the use of biodegradable oils, cab guards, hose burst valves and certified lifting points that make our kit suitable for lifting operations. We also have weed cutting circuits, low- and high-flow auxiliary circuits and satellite reporting all as part of the standard specification."

That is perhaps the key to success as a specialist hire firm. Being a specialist means more than simply having the base machinery on offer. You need to be able to supply a range of ancillary equipment too.

"To support our machines we offer a wide range of attachments from GPS dig systems to underwater breakers, weed cutting buckets, tilt rotators, flails, grabs and grapples to name just a few," says Maclean.

More important even than that, you need an understanding of the work that is being done by your customers. Hirers need to know how to provide the essential back-up that is required to keep those machines working. That perhaps is the real speciality.