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AM71002

AMA TOOL HIRE MARKET APRIL 2002

Key Areas

Table of Contents

Executive Summary

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This report covers: tool hire,carpentry,plumbing,building,HSS,Speedy,A-Plant,Hewden Stuart,Jewson,building and construction,home improvement,home improvement products,Tool Hire,Tool Hire Market Report,Tool Hire Market,Access Equipment,Drilling,Breaking,Concreting,Compacting,Cutting,Grinding,Heating,Cooling,Drying,Gardening,Landscaping,Plumbing,Pumping,Cleaning,Floor Preparation,Lighting,Welding,Power,Carpentry,Woodworking,handling,compact equipment

AMA Research have published the Fourth Edition of their review of the tool hire sector - 'The UK Tool Hire Market Report 2002'. This report represents a comprehensive and up-to-date review of the structure of the tool hire industry with particular emphasis on the following:-

• TOOL HIRE MARKET - Size, Structure, Trends, Forecasts.
• HIRE COMPANIES - National, Regional, Local, Specialists, Builders Merchants, Plant Hire.
• ANALYSIS BY PRODUCT GROUP -
  • Access Equipment,
  • Drilling & Breaking,
  • Concreting & Compacting,
  • Cutting & Grinding,
  • Heating, Cooling & Drying
  • Gardening & Landscaping,
  • Plumbing & Pumping,
  • Cleaning & Floor Preparation,
  • Lighting, Welding & Power,
  • Carpentry & Woodworking,
  • Miscellaneous Product Groupings - including handling, compact equipment etc.

The Hire market continues to experience major change at present with a combination of market growth and rationalisation of ownership. This unique report reviews developments within the industry, with emphasis on both Quantitative and Qualitative assessment of the market and has been compiled by marketing professionals with a background in building products.

The report reviews the general range of tools and equipment offered by most outlets, but specifically excludes heavy plant, catering, portable sanitation, audio-visual, space accommodation, recreational and furniture hire, and specialist lifting gear operations.

AMA Research

AMA Research are a specialist research company in building products and consumer durables. Other publications include market studies of Plant Hire, Access Equipment, Generators, Pumps, Abrasives, Dehumidifiers, Portable Power Tools, Builders and Plumbers Merchants, Garden Centres, Housebuilding, HVAC, Lighting, etc.

Key areas of coverage in the report include:-

HIRE MARKET

• Market definition in terms of type of outlets and range of products.
• Market size in value terms, 1990-2001 and forecasts up to 2006.
• Market trends 1993-2001: Factors influencing market development (Construction and industrial activity, new specialist products, growth of DIY market, privatisation, infrastructure investment).
• Future prospects for hire market - impact of construction activity, growth of Facilities Management, impact of PFI, new product ranges, product development targeted at hire market, etc.

TOOL HIRE COMPANIES

• Total volume of outlets - Multiple branch companies, Builders Merchants, Small Hire Companies.
• Share of Hire Market by Value - Multiple Branch Companies, Builders Merchants, Small hire companies.
• Market shares of major hire companies - growing rationalisation of industry, increasing shares through acquisitions and organic growth, comparison of shares in 1995 and 2001.
• Review of major national hire companies and larger regional operators - turnover, branches, company profiles, etc.
• Competitive structure - major hire companies, Builders Merchants.
• Review of major customers - builders, plumbers, local authorities, utilities, maintenance operations, DIY consumers, facilities management contractors.

PRODUCTS/SUPPLIERS

• Market size by major product group (see page 3 for list).
• Product mix within major product groups - major sectors.
• Product trends by product group - growth sectors, areas of specialisation, relative importance of hire market.
• Buying and Specification Process - decision-making process for purchasing equipment, key influences, health and safety issues, pricing, replacement cycles, specialist services.
• Major suppliers by product group.
• Impact of acquisitions on equipment replacement/updates.

FUTURE PROSPECTS/HOUSING/CONSTRUCTION

• New build, renovation, RMI, housing trends, building and construction output and orders.
• Prefabricated buildings, self-build, industrial, railway, woodworking and floor coverings.
• Future developments, implication for suppliers.
• Economic influences, future growth prospects for the hire market etc.

This report contains over 120 pages and more than 40 tables and charts and represents a comprehensive review of this rapidly changing market.

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TABLE OF CONTENTS

TABLES & CHARTS

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EXECUTIVE SUMMARY

In the two years under review since our last full report, the UK Tool Hire market has experienced a period of generally difficult trading conditions, although certain hire product sectors have performed better than others. In general terms, the UK tool hire industry is characterised by increasing concentration and competition, with pressure on rates and profit margins a continuing trend.
The total market in 2001 is estimated to be worth some £700 million at hire prices, which represents only marginal growth or relatively flat conditions in real terms.

Trading conditions improved from 1993, after the depression of the early 1990's, although 1996 was relatively flat. In general terms, there was the beginnings of a recovery in 1997, followed by a period of flatter demand in 1998 due to the effects of the South East Asian crisis, the strength of Sterling, and difficult conditions in the UK economy, particularly the manufacturing and overall construction sectors.

Although 1999 and 2000 witnessed an underlying improvement in construction in particular and the economy in general, the continuing high level of Sterling, weak manufacturing sector and restructuring in the automotive and steel industries, resulted in flat or relatively stable conditions. Furthermore, the situation was exacerbated by adverse short-term factors such as the fuel crisis, flooding, and inflated transport costs and delivery periods, although flooding benefited pump, generator and heater hire.

The situation in 2001 saw continuing improvement in the construction sector and a deterioration in manufacturing and the export markets such as America, Germany and Japan. Additionally, persistent flooding, high winds and foot and mouth disease delayed access to construction and building sites, whilst the cumulative effect upon events, leisure and tourism of foot and mouth and the September 11th terrorist attacks, all adversely impacted the overall tool hire market. Again, flooding benefited generator, pump and dehumidifier hire.

Reviewing the situation at the date of publication of this report, there appears to be little prospect in the short term of an improvement in the manufacturing, IT and telecom sectors. It is therefore indicated that, despite improving construction, marginal growth of 2 percent, or in real terms flat or stable conditions apply to 2002, followed by modest growth up to around 4-5 percent in 2006.

In terms of industry structure, the market leaders are HSS, Speedy, A-Plant, Hewden Stuart and Jewson. These companies have expanded their networks rapidly through acquisition, organic growth, or a combination of both. Travis Perkins, Brandon, VP Plc, GAP Group and Wolseley (Hire Centres) also have substantial networks.

Within our definition, and focussing on purely tool hire, the tool hire industry is estimated to comprise around 2100 outlets in the UK, although it should be borne in mind that rationalisation has resulted in branch closures and the relocation of others. The high level of acquisitions has resulted in a substantial level of 'substitution', with many existing branches changing ownership, but there has also been a significant programme of new branch openings. An innovative development is reflected in HSS's UK agency programme with independent builder merchants.

Multiple branch companies (with 4 or more outlets) account for around 73 percent of the market, builders merchants 18 percent and small hire companies 9 percent, which represents a substantial mix change over the last 4 years.

The range of products offered by hire companies is wide. Our report excludes heavy plant, catering, portable sanitation, space accommodation, audio-visual equipment, event and specialist lifting gear, etc. and associated specialist outlets. Within the general tool equipment market, access equipment is on average the largest product sector typically accounting for around 12 percent of turnover. Drilling & breaking, plumbing & pumping, and lighting, welding & power are also major product groups, each accounting for around 9 percent of hire turnover, whilst compact plant represents a rapidly growing but somewhat smaller sector.

The range of customers for tool hire companies has expanded considerably over the past decade. Whereas builders, plumbers and general maintenance contractors have been the traditional customer base, demand from the DIY/home improvement, local government, industry, FM contractors and heating and ventilating engineers has grown significantly.

The growing trend to outsourcing, or divesting non-core company activities to external 'Facilities Management' companies, continues to benefit the tool hire market, with prime areas including 'infrastructure contracting' (especially water and sewage, and railway systems), and a wide and varied range of asset management activities, for example building maintenance. PFI and PPP projects, including Health, Education, Home Office, Transport and Defence are all strong growth areas for the future. Also supporting growth prospects in the tool hire market is the increasing media coverage of more adventurous and creative types of gardening/landscaping and home improvement.
Increasingly demanding Health and Safety standards, environmental, emissions and acoustic regulations tend to add value to the tool hire market, which is displaying signs of approaching a more mature stage of development, reflected in the increasing importance of niche sub sectors.

Text © 2002 AMA Research

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