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Executive Report: Changes bring challenges In the first of two articles for EHN, Nigel Strickland considers changes that are taking place within the construction industry, and how hirers must adapt their operations accordingly. Twenty-five years ago, a profile of the UK’s tool hire industry would have revealed a marketplace populated by a nascent national player, a multitude of strong regional companies, and a swathe of independent tool hirers with a presence in every town. Any major construction site was a business opportunity for a hire company, large or small. Builder’s merchants sold bricks, paint and timber, hire companies provided plant, and many major building contractors had their own in-house equipment hire operations. Overall, the majority of hire industry customers could be placed into neat categories, like DIY, Trade, Local Authority or ‘other’, and business was reasonably simple. However, fast-forward to 2006 and a radically different profile exists, shaped by mergers, acquisitions and consolidation. The main builder’s merchants are firmly established in tool hire, former regional hire companies now seek domination nationally, and some of the industry’s major players operate on a European and even global scale. Smaller independent businesses have adapted, or been swallowed up by bigger companies as the forces of evolution continue shaping the industry. Some traditional markets have disappeared while others have undergone radical change. Local government work and contracts were historically seen as a regular source of business by the hire industry. But competitive tendering, privatisation and outsourcing have relieved the majority of councils and local authorities of their previous roles in maintaining housing stock, highways, public spaces and workforces. The private sector now stands dominant where once public bodies held sway. In the DIY market, a media-led revolution has turned the notion of DIY from must-do maintenance into a lifestyle activity, with informed consumers hiring a much larger range of equipment. Gone are the Saturday morning hires of three-legged hub pullers and paraffin-powered flame-guns. Today’s public are more likely to hire mini excavators, nail guns and garden machinery for the weekend, blurring traditional boundaries. Nevertheless, the primary tool and equipment hire market remains construction, which has itself undergone major consolidation. Similarly, more specialised markets have arisen in infrastructure development, rail and landscaping. Nationwide contracts are being established for the facilities management industry, requiring national hirers to support their activities. Major construction and civil engineering companies no longer just seek tools and equipment, they also look for IT and management support services, and national preferred supplier agreements. So a relatively simple structure has been replaced by a more complex, responsive business model. Flexibility and market responsiveness are, therefore, essential skills, possessed by the best hire companies at local, regional and national levels. But is it possible to look further ahead, beyond simply being responsive, to see which factors will have a direct influence on the structure of our industry? Influence of government Technological advances and product developments will no doubt continue to create new markets by offering smarter and safer methods of working. However, in terms of direct impact, the biggest influence can be described simply in one word: government. If we focus on how government works, two clear strands of activity can be seen to be shaping construction and, in turn, the hire industry. The first aspect to consider is legislation, and specifically Health & Safety regulations. More than 2.2m people are employed in UK construction, making it the country’s biggest industry. It is also one of the most dangerous. In the last 25 years, more than 2,800 have died from injuries incurred as a result of construction related work, with many more suffering injury or illness. Governments have responded by introducing a steady stream of Health & Safety legislation. This, in turn, has influenced the hire industry in two ways. It has created a more disciplined inspection and testing regime that acts as a disincentive to contractors from owning and maintaining equipment. It follows that what a contractor doesn’t own has to be hired in, with a subsequent increase in demand. Secondly, legislation creates demand for solutions to changes in working practices, resolved through the use of new tools and equipment, technology and services. The Construction Priority cards produced during the 2004-05 Health & Safety Executive (HSE) ‘Revitalising Health & Safety Strategy’ campaign identified 11 significant areas requiring action. Of these, six have direct relevance to our industry. One area of concern, that of cement dermatitis, has led to the requirement for hot and cold running water to be provided on site, with improved welfare facilities, including wash basins that allow the user’s full forearm to be immersed. Identified risks regarding manual handling have created a need for mechanical handling aids and assistance with kerb and block lifting, such as can be achieved with vacuum lifts. Demand has also been created for equipment and techniques such as mechanical tying methods for steel fixing, such as cordless rebar tying tools, cutters and benders. Materials handling products like panel lifts can also provide important solutions. Consultation between all stakeholders The third identified category included HAV and noise exposure reduction. The assessment and decrease of vibration in hand tools has led to an almost unprecedented degree of consultation between all stakeholders, including manufacturers, hirers, contractors and the HSE. Another construction industry priority is work at height. Risks associated with the use of ladders, tower scaffolds and the problems imposed by fragile roofs were identified as key issues, and this has increased demand for specialist items such as podium towers and fall-arrest equipment. Lifting operations are also targets of concern, making essential the selection of appropriate equipment and the planning of lifting operations, using competent people. Finally, slips and trips have been identified as potential precursors to falls from height and ladder accidents. Campaigns have encouraged proper storage of materials and raised awareness of the need for tidy sites. Health & Safety legislation has, therefore, fundamentally changed the range of tools and equipment offered for hire. This influence will continue, with new regulations on the control of noise and RCS (respirable crystalline silica) dust exposure having recently been announced. Furthermore, legislation has created demand for training, with many hire companies adding this to their portfolio of services. Indeed, as the hire industry matures, its role as an active partner in dealing with Health & Safety issues is strengthening (as shown by the successful EHN HAV Conference 2006 in October). Public spending Apart from changing the way industry works through legislation, the second strand of government activity influencing the hire industry is public spending. Current levels of investment in school buildings, hospitals and the general infrastructure makes this the largest single client of UK construction. Current government spending includes the Building Schools for the Future programme, worth £5.1 billion, which will involve the rebuilding or refurbishing of every secondary school in the country over the next 10 to 15 years. Overall, the construction industry is understandably positive. According to the Royal Institute of Chartered Surveyors, the forecast as a whole remains bright, with new orders at levels not seen since the late 1980s. This is obviously a very positive indicator of the hire industry’s prospects. A subsequent article will examine other key areas of construction activity with relevance to hirers, such as the rapidly emerging market of renewable energy. Indeed, targets have been set for 10% of the UK’s electricity supply to be met in this manner by 2010, with an aspiration to broadly double this figure by 2020. What are the logistical problems - and the hire opportunities - associated with constructing a wind farm? Micro-generation development could see wind turbines installed in cities, towns and villages across the land. Such challenges lie ahead for the hire industry as environmental issues begin to dominate the political agenda. • • Nigel Strickland was until recently Marketing Manager with Brandon Tool Hire and now works as an independent consultant. Executive Hire News › Archives › December 2006 › Executive Report › Changes bring challenges
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