This is reflected in business activity this year to date, with almost 30% of businesses reporting a decline of between 5 to 10%.
There is consensus among plant hire businesses regarding the biggest challenges facing the industry. The rising cost of equipment was ranked as the challenge posing the greatest risk to business followed by increased fuel costs, staff shortage and maintaining a profitable hire rate.
Respondents, the majority of whom were owners of a plant hire business, elaborated on the challenges facing the industry. One business owner estimated that the cost of equipment had risen by at least 20% post-Covid. Staff shortages were felt across the industry due to a lack of migrant labour post-Brexit as well as a lack of trained operators which prevented businesses from providing a quality service to customers. It was also felt that there was now a saturated market for plant hire with a surge in app-based rental companies reliant on rehire and with a business model that does not require them to have their own assets or invest in people.
50% of those who responded to the survey knew of a plant hire business that had been forced to close in the last five years. Insights behind these closures included bad debt and high rates of finance from banks as well as a trend for owners of plant hire businesses taking early retirement and not passing the business on to the next generation.
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When asked what should be done to support the plant hire sector as it continues to face tough challenges, most looked to government and some to industry. It was felt that the government should intervene on payment terms to help change the mindset in an industry where late payment is the norm and seek to enforce 30-day payment terms by law. There was also a sense that there was a lack of commitment to and investment in big infrastructure projects in Scotland similar to the Queensferry Crossing a few years ago which resulted in jobs for construction. The end of the rebate on red diesel continues to be felt across the industry, especially those engaged in both contracting and plant hire, many would like to see some government support towards lowering the cost of fuel.
As for industry, it was felt that there was a need to raise the profile of the industry which would help attract young people to follow a career path in plant hire.
The survey was distributed to members of the SPOA ahead of a forthcoming development programme on 7th November: 'Hire Achievers – growing your success in plant hire' and when asked specifically about the type of training that would help plant hire businesses overcome the current challenges, the top area was around pricing/discounting and fair value. Respondents would also welcome training on how to increase revenue and spend per transaction, bringing your team along with you on the journey, and negotiation skills.
Speaking about the results of the survey, Callum Mackintosh, Immediate Past President of the SPOA and plant hirer himself, said: "This survey shows that plant hire businesses are struggling. Our forthcoming development programme will help business owners to equip themselves to face these challenges head on, but the government should be listening to these warning signs and intervening on key issues like the cost of fuel and looking ahead to invest in much needed infrastructure which would create jobs in construction and civil engineering and help to entice young people into the industry to work on flagship projects. The SPOA will continue to work with the CITB and engage directly with young people and our members to raise the profile of the industry and highlight the career paths available."
