The Rental Market Rebound
Despite the pandemic-led uncertainty of 2020, the demand for rented construction equipment and piling machinery has remained high. It has recently been estimated that the global construction equipment rental market is worth $77 billion. Within the UK, the plant hire industry is worth £6.2 billion annually, a figure which is predicted to grow by 11% next year.
It has been suggested that there a number of internal and external factors which may be responsible for the market’s steady growth. From an increase in government funding and initiatives, to a surge in demand for construction projects, there are a variety of influencing forces which have enabled the plant hire industry to thrive.
Arguably demand is a key component to discuss, as it is considered a main driving factor behind the plant hire industry’s consistent and steady growth. Increased government investment in areas such as infrastructure and public housing projects has positively contributed towards the overall demand for rental equipment. However, there is a moderate level of revenue volatility within the rental industry. Revenue is driven by demand, which in turn is driven by investment in construction projects. This means if the demand for construction projects grows, there will be a knock-on effect generating a need for construction work/workers and subsequently for rented equipment. The plant hire industry is dependent on the level of activity within the economy, reflecting both positive and negative growth patterns.
An additional factor to consider are the immediate and associated costs of owning versus renting a machine. The higher total cost of ownership may have encouraged more smaller and medium sized businesses to rent instead of buy. Renting machinery reduces the need for physical storage space, eradicates maintenance costs, and enables the firm to avoid potential financial, operating, and compliance risks. Taking advantage of the various plant hire options available nowadays, provides an economical alternative to smaller firms, enabling them to minimise costs and improve profit margins. During the height of the pandemic, economic uncertainty most likely encouraged firms to rent rather than purchase machinery outright, a strategy which benefitted overall demand.
Moreover, allowing customers to hire equipment enables them flexibility. Presenting consumers with the ability to ‘try before they buy’, enables prospective buyers to trial an assortment of equipment and machinery before they commit to the purchase. Firms may want to trial various pieces of equipment to ensure they align with potential diversification plans, or rent a specific piece of equipment to complete a one-off project, where purchasing machinery isn’t warranted. A key benefit of renting equipment is that it enables businesses to remain reactive to market changes and adaptable, with the scope of taking on new types of work and being able to diversify.
In spite of challenges such as the shift from red to white diesel, supply chain issues, and the aforementioned pandemic, the plant hire sector within the UK continues to experience annual growth. Renting machinery and equipment has many advantages and is a practical solution for many smaller businesses.
Does your project require piling? Here at Piling Equipment Ltd, we’re proud to have a variety of piling rigs, foundation equipment, and drilling consumables all available for nationwide hire. Our rental process is straightforward, and we offer a range of flexible options to suit all schedules, projects, and budgets. For more information about our current hire fleet, tech specs and rig capabilities, or to enquire, please contact our team today.