Markets Outlook: Trends and Events Impacting The Rental Industry
CONSTRUCTION INDUSTRY TRENDSThe European Construction Industry Federation (FIEC) said European construction fell 2.3% in 2013 to €1,162 billion. But it forecasts a 0.1% increase in 2014, equivalent to about €1 billion additional activity. FIEC said that cuts in government spending had been particularly damaging to the industry in 2013, with construction of public non-residential buildings falling -5.5%, while infrastructure was down -3.7%.
In the meantime, a forecast from the UK's Construction Products Association (CPA) has pointed to recovery in the construction industry starting in 2014 and continuing in 2015 and beyond with predicted construction output growth of 2.2% in 2014 and 4.5% in 2015.
On a particular note, and, according to CECE, the Committee for European Construction Equipment, the Russian construction equipment market is one of the growth engines for Europe, where government and private projects in the oil and gas industry, infrastructure and housing sectors are stimulating demand.
RENTAL INDUSTRY TRENDSFrom a rental perspective, most European companies have been waiting for a genuine recovery, focusing on efficiency rather than on expansion. Among the trends developed and pursued by the industry are:
Continued trend on outsourcing agreements
- Zeppelin Rentals acquiring a large part of Hochtief ’s Streif Baulogistik rental business, including the power, portable accommodation and project planning and logistics operations;
- Speedy Hire signing a contract with National Grid to provide hired plant and equipment under a managed services agreement;
- Ramirent signing various agreements with Finnish building firm and Finnish telecom giant Empower but also with Norwegian contractor.
Continued trend in online rental development
- BigRent.com in the US covering around 5,000 rental locations;
- Erento expanding in Europe.
Recent Trend on joint ventures in emerging markets or large construction projects
- Cramo and Ramirent forming a joint-venture for Russian and Ukrainian operations;
- Ramirent and Zeppelin Rentals forming a joint venture to combine resources and expertise in a bid to support construction of the world’s longest immersed tunnel – the Fehmarnbelt project.
Recent Trend in developing new services completing rental offer
- HSS Hire acquiring TecServ, servicing contract cleaning equipment in the UK;
- Cramo creating a new sub-brand, Cramo Adapteo, for its portable accommodation rental business to help it penetrate non-construction markets;
- Hewden’s “core products” delivery guarantee;
- Ramirent signing an agreement with NSS Group to acquire its weather shelter and scaffolding division Dry Construction Concept (DCC), a move in line with its “More Than Machines strategy”, delivering value added services and know-how;
- Zeppelin Group acquiring Blohm + Voss Inspection Service GmbH, providing testing and inspection services for mainly industrial customers in sectors including shipbuilding, ship repair, power generation, aviation and automotive and mechanical engineering;
- A-Plant launching “express stores” ;
- Loxam expanding its city centre rental project, with now 7 locations in Paris targeted at local craftsmen, SMEs and smaller contractors.
HSS Hire acquires UK Platforms, Haulotte group’s UK rental business, comprising a fleet of 2,400 units from 10 locations. This follows the previous purchase of generator rental company Abird and confirms a strategy of adding specialist businesses to the company’s traditional tool hire network.
FLASHBACK ON THE RENTAL INDUSTRY IN THE SECOND PART OF 2013
Portakabin acquires Oecon Mobilraum GmbH, a manufacturer and distributor of modular buildings in Germany, located near Stuttgart and selling from six locations in Germany and Austria. The acquisition gives Portakabin a significant inroad into Germany and adds to its existing sales and rental operations in France, Belgium and the Netherlands. Riwal buys the aerial work platform business of crane company Sarens Belgium NV. UK renters invest in developing markets with Nixon Hire agreeing on a joint venture with Al Jeri Transportation in Saudi Arabia and Speedy Hire establishing a 50/50 rental joint venture in Kazakhstan with Glasgow-based shipping, transport and oilfield services company J. & J. Denholm group.
GAM and Peruvian heavy equipment rental and sales company Crosland Técnica reach an agreement to cooperate on the Peruvian equipment rental market. UK-based Coates Offshore, owned by Australia’s Coates Hire, secures refinancing in support of international growth strategy in the rental business to the offshore oil and gas industry worldwide. Kiloutou acquires MOST Location, a family owned access rental company with around 1,000 platforms.
FLASHBACK ON THE RENTAL INDUSTRY IN THE FIRST PART OF 2014Volvo sells its North American rental business Volvo Rents to US private equity firm Platinum Equity, who gives the company a new name: BlueLine Rental. The transaction includes only the Volvo Rents operations in the US, Canada and Puerto Rico, with annual revenues of €450 million and 2,000 people. Outside America, the Volvo Rents brand is used by Volvo CE for its dealerrental operations.
Loxam buys Dansk Lift, a Danish powered access rental company. This move gives Loxam rental operations in Norway and Sweden for the first time and boosts its existing operation in Denmark.
United Rentals acquires a sizeable pump rental business, National Pump and Compressor, in an attempt to diversify further away from pure construction markets. The company operates from 35 locations, including 4 in Canada and 63% of its business is in the oil & gas and petrochemical sectors.
Hertz Corp is to spin-off its equipment rental division, Hertz Equipment Rental Corp. (HERC), in a US$2.5 billion deal that is expected to close in early 2015.
Saudi Arabian car rental and leasing company Hanco acquires Byrne Equipment Rental, one of the largest rental businesses in the Middle East.
Kiloutou acquires EWPA Majster, a leading rental company in Poland, operating 20 branches with a fleet of more than 4,000 machines.
Loxam acquires Dutch rental company Workx. The company has a network of 41 branches and employs 280 people.
IN THE MEANTIME, INNOVATION AND CONSOLIDATION CONTINUE AMONG THE EQUIPMENT MANUFACTURERSHyundai Heavy Industries completes its first factory in Brazil with capacity to produce up to 4,000 units between excavators, wheel loaders and backhoe loaders.
Sumitomo Corp., through its subsidiary SMS International Corp., increases its interest in Sunstate equipment Co, Phoenix, to 80%.
Volvo CE’s Chinese joint venture company, SDLG, opens its first production facility outside China. Manufacturing has started at its excavator factory in Brazil, an assembly hall within the Volvo CE facility in Pederneiras, São Paulo.
Netherlands power rental company Bredenoord partners with contractor Dura Vermeer to develop a hybrid power generator, which could reduce fuel use and CO2 emissions by up to 40%.
Yanmar acquires a 6.2% stake in Manitou and the two manufacturers will cross-distribute products in Latin America. This deal follows a similar strategic alliance for North America signed by both companies in 2012.
Chinese manufacturer Liugong expands its presence in Poland with the acquisition of components producer ZZN Transmission Plant, adjacent to dozer manufacturer HSW already bought by Liugong’s in 2012.
Xtreme Manufacturing acquires a majority stake in Snorkel from Tanfield, which retains 49%. Xtreme is a telehandler producer owned by Don Ahern, also owner of Ahern Rentals in Las Vegas. Back