Don’t fear the R-word
4 July 2022
The main reason I launched this blog two years was to create a record of the tool hire industry in unprecedented times as Covid-19 took hold. And I can’t help feeling a sense of déjà vu at the moment, but for quite different reasons.
A month after the website was established, I wrote an item about economists debating the likely impact of the first lockdown. They discussed the likelihood of that dreaded R-word – recession – and, if that happened, possible recovery trajectories.
You can read that earlier piece here and in it I suggested that hirers should remain confident because many markets they serve were likely to stay strong.
As it happened, the economy did indeed enter recession the following month, which was also recorded here on the blog. This was hardly surprising as, at the time, 9 million people were at home, on furlough and not working. But as we all know, industry generally, including construction and equipment hire, bounced back strongly as pent-up demand led to more projects getting under way – something again noted here.
However, the R-word is being voiced again now in some circles. The worst of the pandemic might be behind us but spiralling energy costs, rising inflation, interest rate increases and, not least, global disruption caused by the Ukraine conflict have created fears of a prolonged slowdown.
Nevertheless, as that early blog post two years ago said, downturns do not affect all markets and territories in the same way. Indeed, the experiences of, say, many building contractors and hospitality organisers have been very different since April 2020.
And surely the same still applies. Individual markets are influenced by different dynamics and the tool hire and plant hire industries are amongst those better placed in the event of a downturn, and not just because cost-conscious users will choose to rent rather than buy. Consider this quick list of facts:
● Recent events like the Hillhead Show and Rail Live attracted very high visitor numbers. Would people really spend money on fuel at record prices to travel there – and take valuable time out of the office - if they weren’t seriously interested in buying and hiring equipment?
● Hirers are expanding. Today, for example, sees YES (Your Equipment Solutions) officially opening its new depot in Dundee; and specialist Welfare 4 Hire has established a new location at Birtley in Durham. Companies like these are in confident mood.
● Hirers are acquisitive. We’ve seen developments recently like Charles Wilson Engineers buying M&J Hire Centres and AER Rents (which owns Welfare 4 Hire) acquiring Chippindale Plant. Both firms have stated their readiness to make further purchases as they go for growth.
● Businesses are recruiting. There was a striking number of exhibitors at the shows mentioned above with signs on their stands promoting job opportunities, and more companies have been making similar announcements on social media.
And on that last point, vacancies are proving hard to fill, as also highlighted earlier on the blog. Furthermore, a major recruitment firm commented in the national press at the weekend that they saw no let-up in demand amongst companies wanting to hire people, suggesting that “either it is a different kind of recession, or it’s not a recession”.
So as always, trust your own figures and experiences. And proceed with confidence.