14 April 2021
The blog has highlighted just how busy many hirers are at the moment, conveying a mood in stark contrast to the situation a year ago when the nation was in lockdown.
However, I had interesting conversations recently with three industry professionals who suggest this might bring its own challenges.
There might also be implications for hire rates.
First, I spoke with the MD of one manufacturer who said he and his team are working all hours, including weekend shifts, to keep up with demand.
“We’re almost at overload,” he said. “Suppliers don’t have key components, and certain parts that we’d normally have no trouble getting are impossible. Some items are on six-month lead times or longer. We’re even looking at ways of making them ourselves.
“Our engineers are working super-fast to source alternatives from potential alternative suppliers who we might have been in contact with in the past. I’ve simply never known anything like it,” he continued.
“We’ve added 20% more people at the factory over the last few months and others are working longer hours. We might introduce extra shifts,” he said. And this would obviously have cost and overhead implications.
He also told me what many are noticing, namely that second-hand values of equipment are rising sharply.
My second conversation was with a hirer who said he had sadly had to turn down a hire of four mini excavators that morning. It would have been a pleasing order over a decent period.
He simply didn’t have any machines left in the yard and wouldn’t have for some time. His favoured supplier had none available and he couldn’t find any to re-hire.
And the third discussion was with a hirer who was frustrated by rising raw material prices – something again mentioned previously on the blog. An attachment manufacturer had just announced a double-digit price increase because of the spiralling cost of steel.
These conversations show that, while very welcome considering that a year ago the country was in lockdown, such strong demand is clearly bringing its own challenges.
And another one is the perennial issue of hire rates. If costs are rising and availability is limited, prices can only go one way – as people discovered when trying to buy pasta and toilet rolls last year.
So, against this background of supply and demand, why should anyone need to discount hire rates excessively to win business?
Yet according to other conversations I’m having, some companies still are. I’ll be following up on this in a future blog post.