‘Rationary times’ create a hire tailwind

17 January 2022

Here are some positive points about the hire industry’s prospects as we look ahead to the next 12 months. 

During an online presentation for equity analysts following Sunbelt Rentals parent Ashtead Group’s record half-year results last month, CEO Brendan Horgan made some fascinating comments about the market overall. 

True, Sunbelt’s outlook encompasses the US and Canada as well as the UK, but his observations apply equally to all territories.

“Markets are strong and, we think, shaping up to be stronger both in terms of physical end markets and the dynamics affecting rental,” he said. “And these dynamics are around demand levels, supply restraints, labour scarcity, inflation etc. 

“In a way it’s the perfect storm that we think [hirers] were purpose-built to solve.” 

Describing this as a tailwind for hire, Brendan Horgan believed that demand for equipment would continue to outstrip supply. (Indeed, JCB’s CEO Graeme Macdonald said recently that unprecedented supply chain disruption would impact production for the first six months of 2022). 

Brendan Horgan went on: “Our fleet team is working with our partner manufacturers for orders and build slots up to 2024. We are in rationary times.” 

This once again shows the importance of creating strong partnerships between hirers and suppliers going forward, in planning and securing the necessary equipment in terms of kit for both fleet replacement programmes and for growth requirements. 

Ashtead’s CEO saw other long term factors driving demand. These include the strength of construction following the bounce-back and the broader adoption of eco-friendly equipment. 

“One thing I am extraordinarily sure of is that rental penetration is growing. It’s growing in core products that we’ve always had, and it’s really, really gaining in [the] journey from diesel or internal combustion engines as we move into electrification.” 

So demand is growing. Moreover, if end users who normally would own equipment can’t get hold of it through poor availability, they may well look to hire it – creating even more demand. 

“The market is strong and we think is it shaping up to be stronger,” said Brendan Horgan. “This is not an inflexion point; this is an inflexion period that’s going to go on for a while.” 

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