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Market Report: Compact Plant Sales defy predictions Despite forecasts of a slowdown, compact plant sales into the hire industry have continued their remarkable growth. To start our Market Report, EHN examines the reasons behind the upward trend. The strength that the compact plant market has displayed for several years shows no sign of diminishing. With more work being undertaken in construction, landscaping and related markets, demand continues to grow. “Despite the view expressed by some people that sales must eventually fall, we are above our targets,” states Richard Sayers, Zone Sales Manager, Construction Equipment for Kubota (UK). “We estimate that, last year, UK sales of mini excavators up to 7 tonnes were just above 11,000. By the end of 2006, we believe a figure of between 12,500 and 13,000 will have been achieved. “The most popular category continues to be the 1.5-tonne machine. However, there has been significant growth in the 2-2.5 tonne segment. Many operators are replacing 3.5-tonne minis with these because they can be towed on a trailer within legal limits. In addition, 5-tonne machines have continued to replace backhoe loaders on many construction sites. There has been more growth in the zero tail swing market, which we believe will continue. Health & Safety benefits “There is a wider realisation of the benefits of these machines, particularly from a Health & Safety perspective. Between January and April this year, Kubota had achieved the same sales of zero tail swing machines that it had in the whole of 2005. Admittedly we had introduced new models, but we estimate this type of mini will represent approximately 20% of our sales in 2006. Hirers are winning substantial long-term contracts and establishing national agreements, which often results in them purchasing brand new machines as the amount of work involved justifies it. There is also a distinct trend for hirers to replace machines earlier: customers increasingly expect to be given a new or nearly new machine.” David Munns, Director, Compact Equipment for Volvo Construction Equipment, agrees that mini excavator sales have grown in 2006 and suggests that they are on track to reach approximately 13,000 by the end of the year. “Twelve months ago we predicted that the rate of growth would slow, but this has not happened. Volvo’s main sales increase has been in the 5-8 tonne machines, which are very popular for digging foundations and other construction site work. Several years ago a 14-tonne machine would have been used, but today’s technology means that the same amount of power can be produced from a smaller unit, with similar reach. “Our experience this year is that the 1-2 tonne segment has shown little change in sales, representing approximately 35%, with a slight increase in the 2-4 tonne market, which amounts to around 30%. 5-8 tonne machines make up approximately 20%. We estimate that 80% of sales are to the equipment and plant hire industries. There continues to be a substantial number of construction projects being undertaken, not just in the UK but throughout the rest of Europe. Overall, mini excavators continue to be ideal machines for hire fleets because they are in constant demand, are reliable and generate excellent returns on investment.” JCB Sales Managing Director, Matthew Taylor, depicts a similar situation. “We continue to see growth and increased competition. Greater emphasis on Health & Safety responsibilities means fewer operations are carried out by manual labour. The sub 1-tonne market, which really took off in the late 1990s, has progressively grown and now accounts for approximately 10% of overall sales volume, with major national tool hire companies seeing this as a revenue opportunity in their core customer base. “Overall, the 1.5-tonne market remains the largest segment but has been relatively static compared with others. In the 4-6 tonne category we are seeing growth at a greater rate and it now represents approximately 20% of the total market volume. The zero tail swing market continues to grow. Many users appreciate the benefits and manufacturers have to deliver this as a competitive offering, not only on performance but also cost-effectively.” Last year, Robert Brown, Managing Director of Ammann Equipment, reported that sales of its zero tail swing machines had exceeded those of its conventional minis for the first time. He states “This trend has continued, and the majority of sales this year have been for zero tail swing by a country mile. We first offered these machines in 1993 and are currently on our third generation of machines, with spacious cabs and other enhancements. “Our minis give true zero tail swing at front and rear, and this has become an important Health & Safety feature given the increasing redevelopment work at ‘brownfield’ sites with restricted working spaces. Overall, we also find that more tool hirers that hitherto only offered machines up to, say, 1.5 tonne are adding conventional or zero tail swing models up to 3 tonne, seeing the potential for them.” Increased dumper opportunities Another company confirming the upward trend is Seddons (Plant & Engineers) Ltd, whose operations include a dealership for Volvo machines and Ausa wheeled dumpers in parts of the Midlands. “Demand remains strong for all sizes of mini,” contends Sales & Marketing Director, Phil Winnington, “and this, in turn, creates extra opportunities for dumper sales. The two types of machine are almost umbilically linked, as they are so often used in tandem. Sales of dumpers have increased, in particular of Ausa’s new 3-tonne and 6-tonne machines, reflecting the amount of large construction projects that are being undertaken. “An interesting feature this year has been slight variations in demand. In the first few months, the market was slower, perhaps due to the sudden cold weather. There were also predictions of economic slowdown and a possible decrease in construction activity, and some hirers delayed purchasing. However, the decline did not happen, and from spring orders rose sharply. This has been maintained and as we near the end of the year demand remains strong. “Activity in the landscaping market is also positive, and the dividing line between the two is becoming increasingly narrow. At the Institute of Groundsmanship’s Saltex exhibition in September it was striking how many manufacturers there were displaying mini excavators, dumpers and skid-steer loaders. Compact tracked dumpers also continue to grow in popularity and represent another significant hire opportunity,” states Phil Winnington. “They are ideal for working with micro and mini excavators in confined areas, and high-tip versions can discharge material directly into a skip for maximum efficiency. With increased awareness of Health & Safety responsibilities concerning lifting and manual handling, demand can only increase further.” Static skid-steer market While the markets for mini excavators and compact dumpers is buoyant, the situation regarding skid-steer loaders and tracked loaders remains largely static. Estimates suggest that annual sales still stand at approximately 1,000 machines. John Burton, Bobcat Loaders Business Director, Europe, Middle East & Africa, states that “overall, the UK is a mature and fairly stable market. Our most popular machine continues to be the 2375kg S130 skid-steer. Some hire companies are showing revitalised interest in skid-steers, seeing the potential for achieving good rates for the machines, which can be fitted with many attachments. We see this as an on-going educational process, promoting the tool carrier and implement combination.” Proving this point is Paul Rolfe, Managing Director of Kent-based Versatile Equipment, which both sells and hires skid-steers and articulated loaders throughout the Home Counties. The company is gaining business by focusing on attachments and the work they can achieve, rather than the machines themselves. “It is not uncommon for hirers to have skid-steers but only to stock a couple of attachments, such as a bucket, which effectively just offers customers a large powered wheelbarrow. But we offer approximately 50 implements, such as augers, breakers, trenchers, pallet forks, industrial grapples, rakes and stump grinders. Once people see what they can do with the skid-steer, it creates demand. Tremendous power “We are winning increasing business from companies such as demolition contractors, landscapers, highways authorities, farmers and other professional users. Versatile’s range includes Thomas and Gehl skid-steers, and we also offer Avant articulated loaders, which are very popular because of their power and ability to work on soft ground. The compact machines are lightweight and manoeuvrable, and have tremendous power, being able to lift up to 60% of their own weight. A 1000kg machine could lift approximately 600kg. Again, they accept a huge range of attachments, and we have recently enjoyed strong demand from fencing contractors.” Overall, the outlook remains positive. As Kubota’s Richard Sayers states, “The number of houses being built or extended continues to grow, and the government has funded road and rail construction projects, and other infrastructure improvements. There is certainly no suggestion that demand will decrease.” • Executive Hire News › Archives › November 2006 › Market Report › Sales defy predictions
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