An analysis of the U.K. tool hire market by a U.K. research firm shows that rapid changes caused by rising pricing pressure and cost-saving measures will dominate the market in 2009 and that as many as 25 percent of U.K. tool hire companies could be “at risk” in the deepening downturn.
The new market report, prepared by MTW Research and based on sales returns from 95 percent of the industry, found that tool and equipment suppliers are increasingly feeling the pinch of a downturn in demand for tool hire from a number of key end user sectors, resulting in decreasing volume demand and rising price competition. MTW predicts a more difficult trading period in the next 12 to 18 months, with a slowdown in capital expenditures by tool hire companies resulting in rising price competition among manufacturers that supply the industry. The report forecasts a 25 percent drop in capital expenditure in 2009, reflecting the wider slowdown in construction activity and subsequent impact on demand for tools throughout the supply chain.
Cost reduction and efficiency measures are likely to dominate the tool hire market in 2009 as the slowdown deepens, with redundancies and ‘scaling-down programs” becoming commonplace among tool hire firms. However, the report suggests that the focus on profitability by the industry now will help the market in the medium term by facilitating a faster return to profitability growth than many other sectors in the construction industry. The study predicts that by early 2010, the hire industry will be in a strong financial position to raise capital and is likely to increase spending on tools and equipment to meet the anticipated increased demand later in 2010 and into 2011.
In the short term, the public sector will be solid, preventing further declines. The rental market will also benefit by contractors being less willing or able to invest in capital equipment, the study indicates. Still, MTW Research shows that almost 25 percent of tool hire companies are considered to be “at risk.”
The report includes a review of tool hire market and industry trends in late 2008 as well as a ranking of companies providing sales estimates enabling market-share estimation, and illustrating key financial performance indicators. The report includes mailing, telephone and contact details for hire companies.
More information on the study can be obtained from www.marketresearchreports.com.