August 2009
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August EHN issue
Executive Report
Executive news
Miniquip’s fair share
Taking our industry's pulse
HAE makes its move
Market Report: Garden & Grounds Care
Growth business
Solid base
Arborists' array
Latest products
Forum
Winning more business
Profile: Sydenhams Hire Centres
On the march in Wessex
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Executive Hire News › Archives › August 2009 › Executive Report : Taking our industry's pulse
Executive Report : Taking our industry's pulse
EHN continues to analyse the impact of the current economic conditions, this month asking a selection of hire industry suppliers how they are responding to the challenges.
Mark Hodgkins, Chief Executive, ArcGen Hilta
"The market is tough at the moment, but by no means dead. Over the last six months, a greater proportion of our sales have been made to independent hirers, rather than the nationals, which is a reversal of the usual situation. Independents are being understandably cautious, but they are buying to keep their fleets up-to-date and to meet demand, which is encouraging. They are obviously trying to work their equipment harder, making sure it is out and earning money, so refreshing the machinery they offer remains vital.
It also means that, when the economic improvement really gains momentum, these hirers will be well placed to meet demand. Corporate restructuring specialists will tell you that more companies struggle emerging from recessions, because they had not made the necessary preparations for the return to growth, which can cause overtrading.
Hirers want products with features that offer benefits to their customers, such as better performance, reliability and economy. Interest in our 4in Hilta pump is strong because it is so fuel-efficient. Welder sales have been slower, but generator sales have remained reasonably buoyant, particularly of our ‘ultra silent’ machines that are ideal for use at events and in noise sensitive locations like hospitals and residential areas.
I believe that in challenging times, we all have to square up to our responsibilities and so, like everyone else, we have looked again at our product offering, marketing strategies, sales initiatives, pricing, key account customers and particular industry specialisms. It is necessary to reassess all aspects of your business in this totally changed environment."
Phil Winnington, Sales & Marketing Director, Seddons (Plant & Engineers)
"Our sales depots are working harder than at almost any other time in Seddons’ 58-year history, dealing with a considerable number of phone enquiries. The biggest difference is the reduction in construction equipment volumes and increased requests for replacement parts. We are now supplying a larger number of hire companies, from local independents to the nationals. Good partnerships and quality brands continue to strengthen us, and we have seen an increase in lawn and landscaping equipment from both Honda and Stihl. Whatever the economic climate, grass still grows.
Despite the challenges of the last 12 months we have launched our first Parts Handbook, introduced Taskman pressure washers powered by Honda engines, gone live with a new on-line store at www.seddondirect.co.uk, and moved our head office to bigger premises. So we are certainly equipping ourselves for any future uplift in demand."
Graham Dobbs, Sales Director, inspHire, with Marketing Manager Karen Miles
"We exceeded our sales target for the last quarter and we had a cracking June, with some substantial orders. From talking to hirers,
I would estimate that their business is typically 20% down compared with last year, and some have reluctantly had to make cuts in staff and in other areas. However, recently many have been sounding more confident.
Hirers have to look at their operations and achieve maximum efficiency. We have proved that inspHire software can save a small hire business £6,000 or more per year. If the program cuts out the hours spent on generating invoices and other paperwork, that time can be spent serving customers and winning new business.
Like any supplier we have to be continually innovative. The latest software systems offer features such as scheduled reporting, web portals and customer relationship management (CRM) functions that help hirers pinpoint inefficiencies, maximise business opportunities with existing customers and target new clients. There are still many businesses using paper-based systems or bespoke software that no longer meets their needs, and the latest hire management programs can help them move forward in challenging times.
We received much positive feedback when we exhibited at the recent Vertikal Days event at Haydock Park. We have recently been selected by Height for Hire/Easi-Uplifts to provide its hire management solution. Its MD John Ball, who is also President of IPAF, told us that investing in good internal systems was one of his key solutions to help his businesses through a recession."
Jonathan Wiseman, Sales Manager, CTE UK
"Quite honestly, I am remaining upbeat. The Work at Height Regulations mean that people have to consider safe methods of working, and this is driving interest in powered access equipment from professionals working in markets such as construction, facilities management and forestry.
Hirers continue to buy from us, with recent sales to access specialists such as Power Platform Services of Godstone and Bury-based Higher Access, as well as independents like Dorking Tool Hire. Our compact spider units, the Traccess 135 and 170 tracked machines, have umbilical remote controls for safer manoeuvring and loading, and hirers like the fact that, being machine-specific, they also act as a security device. We will be showing our latest 26J machine at Saltex next month, mounted on a 7.5 tonne vehicle chassis.
We also exhibited at the Royal Show last month, and I have never seen so many members of the public coming on to the stand, aware that they should now not be using a ladder for tasks such as clearing gutters, painting windows and re-pointing chimneys, and seeking a safer alternative. This can only be good news for hirers of compact access products."
Sean Larter-Conway, Marketing Manager, Stihl GB
"Even in a difficult market, we are deriving excellent returns from the product innovations we continue to develop. Our dealers have responded enthusiastically to our first professional cordless hedge trimmers, and new Viking mowers that have rear rollers to give a striped finish, aimed at the top end of the domestic market.
We as a company expected a difficult year because of the slowdown in the construction industry. However, in the last two months we have been pleasantly surprised by a continuing demand for products like cut-off saws. Many contractors that drastically cut back on spending last year are now simply having to buy, or hire, new equipment to keep their fleets fresh.
Similarly, many hirers who came on to our stand at the Executive Hire Show told us that, instead of purchasing volume quantities of equipment, they would buy to meet immediate requirements. Sales of spare parts have risen dramatically this year, as hirers maximise the life of their products, and we continue to invest in providing training for workshop staff, so that they can maintain equipment in their fleets efficiently and cost-effectively.”
Clinton Patterson, Director International Operations, erento
"When we launched our on-line hire market place in February 2008, many were sceptical about its potential in the tool and equipment market. However, we are now adding more independents every week. They choose the products they want to list, supply details like location and price, and then potential customers seeking equipment on-line see results generated by proximity to their location. In this way, independents compete on an equal footing with national companies.
In one sense the challenging economic environment is benefiting us. Hirers are seeking additional sales channels, and we help expand their customer base as we supply them with the contact details of all enquirers so they can close the deal. Many companies are interested in e-commerce but lack the time and resources to develop a site and drive traffic to it, but erento offers a ready-made and proven solution. A recent YouGov poll found that 76% of people would use the Internet first to find what they need."
Mark Rogers, MD, Hiretech
"We introduced cost saving measures more than 18 months ago, without compromising our backup service levels, and sales last year were satisfactory for us. June was our best month for 20 months, so perhaps we are seeing the first green shoots of recovery that some commentators talk about. It is independent hirers who are buying more of our floor sanders and wallpaper strippers now, having been among the first to cut back a year or so ago. Their managers are hands-on at the coalface and can respond quickly to any upturn.
A lot of hirers say they achieve excellent utilisation from existing Hiretech products in their fleet, and in many cases they are repairing rather than replacing. Our sales of spares have risen greatly, as well as demands for servicing. This, in turn, must build up latent demand for replacement machines when current ones are beyond economic repair, so the challenge then will be to maintain stock availability. A steady economic recovery would, therefore, help manufacturers and their suppliers, rather than a sudden boom.
Perhaps some hirers have held back from buying, thinking they might eventually get better deals. However, many manufacturers reacted quickly to reduce production, so there may be little over-capacity in some market segments. Now could be the best time to buy. We know this from dealing with our own suppliers. Looking farther afield to our export markets, the US has obviously been affected, but Australia remains very strong for us. There is a tremendous amount of new housing being built in cities like Brisbane and throughout the state of Queensland."
Alex Pitt, Sales & Marketing Director, Camon Tracmaster
"Whilst this year has been challenging, we have been impressed with many independent hirers who have used their knowledge and experience to protect their business. Many have seen an opportunity in the gardening market and are benefiting from the 'grow your own' trend that continues to expand. As a result rotavators, and in particular the Camon C8, have continued to be popular this year. We have also seen sales of our TC07 turf cutter grow significantly.
As a company we are reacting to the downturn in two ways. The first has been to spend time developing and expanding our product ranges, so that we hit the ground running when conditions start to improve with some really exciting new products for hirers. Secondly, we have been improving internal processes and structures, eliminating both time and financial costs where possible. We are extremely pleased that to date we have been able to hold on to all our staff, all of whom are pulling together and working hard in difficult trading conditions. Our hope, going forward, is obviously for a quick and steady recovery. However in the meantime we are more than happy to continue to work and support the hire industry, which we have seen to be resourceful and resilient."
Kevin Griffiths, General Manager, Pfaff-silberblau
"There is no doubt that our sales of manual handling equipment to both tool hirers and lifting gear hire specialists are down. Business is spasmodic, with many hirers simply reacting to enquiries and buying, rather than looking pro-actively and purchasing for the longer term. This also makes it very challenging for manufacturers to calculate stock holdings.
Given the Health & Safety legislation surrounding manual handling, this is a niche that hirers could develop. Indeed, this month we are launching new products such as aluminium gantries, mini conveyor systems, machine skates and additional types of pallet trucks. Other specialist markets remain positive for us, such as sales of screw jack lifting systems for aircraft manufacture and other industries, products for road and rail applications, and rigging hoists that we have developed for the events industry."
Andy Cairns, MD, Red Band UK
"The general consensus from the majority of hirers I speak to is that, while business could be better, it could be a whole lot worse, a belief I share. They also feel that slowly, but surely, confidence is starting to return to the industry and with it, business levels. Independents report that they are analysing their operations, many for the first time in recent years, in order to try and identify where new business can be generated. They are exploring new revenue streams and adding products to target different markets.
Last year, we at Red Band did a similar operation, assessing new sales opportunities that could be developed by our hire industry customers. We decided that work at height would continue to be a major driver of business and after much consideration, added the Power Tower push-around, low-level access platform. We launched the even smaller Power Tower Nano at the Executive Hire Show, and the response from hirers seeing the potential of these machines and the low-level access market has been amazing, with demand for the most part outstripping supply.
We have been monitoring the overall market by analysing our sales activities. This year started positively with a strong demand for equipment like masonry saws and the Power Tower, but it was not until the latter part of June that we saw an increase in demand for wet concreting equipment, suggesting that the year started with the re-opening of some sites which had been mothballed over the winter months, and that more recently, new virgin projects are beginning to start up, which is a very positive sign.
Hirers certainly need to remain aware of new products and possibilities. A lot of those I have spoken with remain cautiously optimistic about the future, and say that it is even more important for them to make time to attend events like the Executive Hire Show next February, in order to keep in touch with all that is new, so that they can win more business."
Robert Brown, MD, Ammann Equipment
"I would describe my outlook as ‘cautiously optimistic’. While some national hirers have over-borrowed and overspent, and have been closing depots and cutting jobs, there are a lot of independents who remain busy and are well run - often by the same people who founded the business - and who understand their local markets.
As we have seen from the number of auctions in recent months, some of the nationals have been net sellers of equipment. However, independents continue to invest steadily, renewing a proportion of their fleets so they are ready for the sharp rise in demand when the upturn inevitably comes. This is a market we have always been close to, and we are helping as much as we can. Hirers are buying from us and many have responded to our 0% finance initiatives, seeing that a modest level of hire business will more than cover the monthly payments.
Machines in particular demand include smaller mini excavators for landscaping projects and home extensions, and Cormidi tracked dumpers, although sales in recent months have been across the whole range.
It is hard to say whether we have actually reached the bottom of the decline, However, it was striking how the nation’s confidence rose when the national media began to headline other issues besides the ‘downturn’, such as swine flu, MPs’ expenses and Michael Jackson. It put the economic situation in a different perspective. When the bad news stops, many more people will become confident, and they will start spending."
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