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Historically, key customers for plant hire companies were UK house builders. Recent significant changes within the industry have seen many smaller construction companies being acquired by larger sized competitors, with many major house builders also selling the plant and equipment they owned outright to plant hire companies during the recent economic downturn.
This shift in the landscape of the industry has resulted in larger sized house builders taking an increased share of the house building contracts which have been available. This means that it has become increasingly important for plant hire companies to have a geographical reach which can cover the entire UK, and an increased fleet size, so they can meet the changing requirements of UK house builders.
Subcontractors and Customers
However, home builders have also become increasingly reliant on subcontractors who are usually the direct customers of plant hire companies. While this presents an opportunity for plant hire companies to achieve improved results via higher rates, this ultimately comes at a cost to the house builder, which has resulted in some house builders insisting that their subcontractors only used a retained plant hire company.
It is likely that the most immediate driver of growth for the plant hire industry will be private housing and home building. The plant hire sector enjoyed a period of strengthened growth during the early part of the 21st Century, and although this growth was impacted by the global recession of 2008, there has since been a steady and strong recovery, which was helped by preparations for the 2012 London Olympics. There are now signs that the industry is reaching the point of consolidation, and it is estimated that the industry will be worth over £6 billion by 2020.
The rental industry underwent a period of strong growth for large parts of the first decade this century, which was eventually curtailed by the recession as demand from the construction market fell dramatically. However, the plant hire industry is inextricably linked with the wider construction sector.
House Building Boosters
It is hoped that the volume of house building will be further boosted by schemes such as New Buy, First Buy and Help to Buy, which were introduced by the UK government, alongside the Housing and Planning Act, which aims to deliver 1 million new homes by 2020, in an attempt to kick-start the house building market and solve the housing crisis. These measures, in conjunction with record low interest rates, have massively increased demand for new properties, with this growth in demand being passed on to house builders and plant hire companies who provide vital equipment and machines.
So, although the construction sector is currently experiencing high levels of inflation in terms of the cost of labour and raw materials, as business confidence continues to return and the economy continues to grow, it is expected that there will be an increase in house building. This is most likely in the more prosperous South East region of the UK, which has maintained exceptional growth even during the financial crisis. This will be a major driver in demand for the rental of equipment and plant.