Executive Hire News › Archives › July 2009 › Crosshire : Keep hire rates sensible
Crosshire : Keep hire rates sensible
I am pleased to report that we have achieved a milestone for the current year. We have purchased our first batch of capital equipment since last September! I cannot remember going for so long, or being so ‘Scrooge-like’, as some members of my staff would put it, between capital purchases in more than 40 years in the industry.
Although we did remain loyal to an existing supplier, I did feel duty bound to explore the prices and offers from a number of potential suppliers because it is evident that a few equipment dealers are having an even harder time than hirers. One fact did emerge: the net cost of kit is going up. Yes, there are some deals around that might look attractive but they invariably involve last year’s unsold stock, ‘grey imports’ or third division manufacturers which have little or no track record in serving our market place.
If you want to offer your punters top class gear, when you get round to renewals you will be paying more than you may be expecting. This should not be surprising because, whether your bread and butter is a 2000watt angle grinder or a mini excavator, in real terms we have not faced any significant price rises for many years. I have to add also that quality and reliability have, for the most part, got better as well.
However, one thing that certainly has not improved in recent times is the hire rate. In fact, there is clear evidence that rates are dropping, with the worst net rates being peddled by the larger hire outfits. ‘Buy one, get one free’ is a slogan no longer confined to your local supermarket, and a generation of hire counter staff are being indoctrinated with the mantra that business must be bought at any price, whilst slick accountants are left to juggle with how the revenue is served up to satisfy the shareholders.
‘Profit’ centres within the same organisation seem to have become obsessed with putting one over on each other. One of my clients told me that he had got a suicidal price from a national company’s local depot, only to get a call from another branch of the same outfit twice the distance away, which said they would do it for less - and with free transport. The delivery truck would have had to pass their local depot on its way to site! Fortunately our man came to the conclusion that he might be better off paying a few quid more to us and getting a known standard of product and service.
With the pressure faced by buyers it is understandable that most will take the cheapest option without questioning whether they are genuinely getting value for money. If our industry is to pull itself out of this current emergency, then we have got to start engaging in some sensible pricing. When times do get better, as they surely will, it is going to stifle recovery if we have to struggle to lift our rates out of the pit that is being dug for them by many companies in our industry who really ought to know better.
The boardrooms of most of the larger operators do still have some experienced hiremen in them. So come on guys, you all know that the rates need to go up and stay up, and you won’t keep all the balls in the air on current prices for much longer. History has shown that once a company falls from the premier division in our industry it never returns to its former position. Independents should take heart from the fact that it is far easier to close a depot than it is to open one and rebuild trust, a situation that will surely mean more opportunities for family businesses as trade picks up.