The Plant Hire sector has historically focused on providing customers with a lower capital solution to sourcing equipment, with providers differentiating themselves on pricing, resulting in increasingly tight margins and the pursuit of lower cost of capital funding. Over the last few years, the market has developed into one where the major players now differentiate by a combination of niche products, international capability and the provision of supporting services such as training. The successful players embed themselves in their clients' organisations, creating bespoke solutions which deliver genuine cost savings and efficiencies, providing niche and often business critical products and services which are fundamental to their clients' operations.
Given that a number of the Plant Hire players provide services into the construction industry, the sector is susceptible to downturns in the economic cycle and recent dips in market demand have had a significant impact on utilisation levels, leading to significant competition on price and squeezing margins. A number of players have bucked the trend however, with those providing niche or business critical products and services, to an increasingly global client base, able to find growth despite these challenging economic conditions.
It has also led to a focus across the industry on maximising operational efficiency with many providers focusing on simplifying their propositions, reducing SKUs and making processes more systematic (from ordering, to depots, to maintenance and repair). Whilst the market continues to be competitive on pricing, where there is a strong client partnership and demand for specialism / knowledge as well as service consistency across geographies there have been opportunities for achieving both growth and higher margins. Management information is improving and more sophisticated ways of pricing are becoming common which has resulted in increasing investment in high quality technology platforms.
Deloitte is the leading firm of advisors to the Plant Hire sector across all its service lines and has a dedicated Plant Hire sector team that works with a range of businesses from small UK corporates to the largest firms with both UK and international presence. Through our long term trusted client relationships we have developed a deep sector expertise and understanding of the industry which enables us to help our clients understand their current challenges and how to address them as well as defining and delivering their future strategy.
We regularly advise Plant Hire companies on the following:
- Mergers and Acquisitions
- Financial and cash flow management
- Maximising operational efficiency
- Finance transformation and strategy
- Financial reporting and governance
- Property strategy optimisation
- Direct and indirect taxes
We would be delighted to discuss your opportunities and challenges and how we may be able to help.
“Addressing the key issues in the sector requires a joined up approach across the firm, utilising our deep industry knowledge to provide strategic insight and advice to help our clients meet their challenges head on.”