Plant hire: is it the right option for your business?

While buying equipment has its advantages, hiring it can sometimes be more cost-effective, says Kris Collins.

If you oversee grounds maintenance operations for a local authority or are a contractor working in the sector, the chances are you can walk into your storage unit and spot a piece of machinery that hasn't been taken out for months. It may only be used a few times a year and yet you invested thousands of pounds in it, just for it to sit there collecting dust. Was that the right move? And did you ever consider hiring the equipment to do the job at a much lower cost?

From the small landscape maintenance firm needing a petrol hedge trimmer to the large contractor and local authority parks and gardens teams needing full-size green-waste shredders, there is a hire option to suit. As with most sectors, within the hire industry there are small independents, large nationals and sector specialists - even the machinery manufacturers themselves often offer hire options to their customers.

Why hire?

In general, there are four good reasons why hiring machinery could be the right choice for your business: there is no capital outlay, no long-term storage requirements, no maintenance or servicing costs and the latest models and technology are always readily available. In an increasingly health-and-safety-conscious environment, hire equipment brings many other opportunities too. The hire industry tends to service and look after its own machinery. Most buy directly from manufacturers and distributors, and are then responsible for servicing and warranty, ensuring health and safety legislation is upheld.

Specialist grounds-care machinery supplier Scottish Grass Machinery Hire (SGM Hire) of Inverkeithing, Scotland, recently launched its 2008/09 product catalogue. With a fleet now in excess of 6,000 machines, SGM is able to offer customers a one-stop shop for all their requirements. With support from its 11 service centres around the UK, SGM is well placed to meet customer needs.

SGM managing director Steven McInroy explains: "Ride-on mowers and tractors are our bread-and-butter lines but working with local authorities and contractors we offer a range of seasonal items which they would not ordinarily want to buy outright. Whether it's leaf-collection machines, coring machines for golf greens or chippers, we carry a high stock of these and many other items for the right times of year."

Though not tied to any particular manufacturers, McInroy notes that some are in higher demand than others: "We are reasonably independent, not being tied to any particular manufacturer, but when it comes to the high output mowers, for example, customers tend to specify the manufacturer they want their machine from. If it's a ride-on triple mower we tend to utilise Hayter or Ransomes, if it's a tractor we are talking Massy Ferguson or Klass. Our customers are very aware of the quality machines that come from top brands."

The company offers its customers the flexible supply of grounds-care machinery for a fixed cost, with all servicing, maintenance and breakdown responses built in. Customers are able to choose from spot or long-term hire arrangements but still enjoy the benefit of SGM's service support.

National hire company HSS has built a reputation in many industries and recognises the importance of supporting the horticulture sector. While it's possible to hire anything from carpet cleaners to mobile traffic lights, marketing manager Chris Bagnall says gardening and landscape equipment is a strong area of supply for the company.

Bagnall sees good trade from commercial landscapers across its range of chippers and shredders, lawn-care products and hedge and tree-cutting equipment. From small hedge trimmers to dumper trucks, Bagnall says HSS can remove the capital costs of new machinery for businesses while backing this with maintenance and servicing of all machinery. The company has a network of depots across the country and can link up its customers with the most convenient depot for use.

Similarly, A-Plant has built up a nationwide supply network from its primary location at Ford, Hampshire. A-Plant continues to supply and coordinate a very wide selection of equipment for hire by groundscare customers throughout Great Britain. In addition, the fleet of groundscare products from A-Plant is complemented by a large selection of equipment available from over 200 plant, tool and specialist depots that the company operates to cover England, Wales and Scotland.

Kit maintenance

A big bonus for the hire customer is the transfer of responsibility for fleet maintenance and servicing to a third party. Hiring puts the responsibility for upkeep of the equipment in the hands of the hire company and in the case of breakdown, the equipment will be repaired on-site by engineers or a replacement machine can be provided to reduce downtime at the work site. This does much to meet the criteria set by health and safety legislation.

McInroy explains: "Health and safety is an increasing driving factor in hiring equipment. One of the things we have to keep up to date at all times is maintenance records, something which a lot of traditional local authorities find hard to keep up to date themselves."

As well as maintenance and machine safety, there is also operator competence to address in order to reduce accidents and misuse of machinery hired out. McInroy has seen a lot of money invested by local authorities and contractors in staff training. While he believes health and safety has done much to drive this, it is also about reducing costs down the line. He adds: "Accident damage can be quite a huge cost on any contract - the more training you are doing with your operators, the better.

Part and parcel of our installation procedure is to take the machinery to the site and offer a demonstration. When there is longevity to a hire contract, there is a commitment needed from our customers to train their own staff. We can involve ourselves in the ongoing training of staff, utilising our own Lantra and Bagma trainers. We're taking training to a new standard - it's certainly not a case of, "You've taken delivery, now sign on the dotted line", there is some real meat behind what we offer our customers in that respect."

Blakedown Landscapes director Jon Griffin employs a mixture of hiring and buying when sourcing equipment (see box, right). He believes competence training needs to be in place for all kit, whether the company owns it or hires it in for a short period. He explains: "Training is essential in ensuring your staff are competent and certified operators, and there is a legal obligation to demonstrate proof of competence. You are also obliged by law to ensure equipment is safe and fit for purpose. By renting you ensure you don't have to cope with a fleet of tired machines that you need to maintain yourself, you are renting in modern, well-maintained and relatively new machinery, offsetting much of the problem."

Dealing with the manufacturer

If you are set on using a specific brand of machine, it is worth approaching the manufacturer directly to see what hiring options it can offer you. Some offer direct rental while others can put you in touch with hire firms that stock its products.

Wood and waste-chipper manufacturer Timberwolf does not hire out directly but has such a service. Sales director Alex Ball says hiring out is important to the Suffolk-based business. He points out: "The majority of landscapers and tree surgeons own their own kit, but not all, and we are seeing hire options become more prevalent. Hire is as important to us as sales.

"We don't offer rentals ourselves - customers ring here and we put them in touch with a hire outlet local to them. These will be independent businesses that have bought our products to offer for hire.

"There are lots of advantages to hire, it gives any user the ability and flexibility to respond more quickly to jobs that are outside the remit of their normal machinery.

"Local authorities and bigger contractors working for the likes of Network Rail tend to take out long-term hire options as its is easier for them to factor in the hire cost - they have to quote a price for a contract and they need to know what their costs are going to be - with hire options there are no hidden extras or unforeseeable repair costs."

ALL FOR HIRING

Blakedown Landscapes has national hire agreements with three of the UK's larger hire companies as well as local contracts with smaller firms around the country in order to efficiently get machinery out to sites when needed.

Bristol-based director Jon Griffin tells HW: " We tend to hire in general construction equipment, anything from micro-dumpers and diggers to bulldozers and big excavators, as they are readily available to rent."

Griffin has several reasons for operating this way. First, there is capital cashflow to think about.

"If you buy a mini digger, you are looking at £20,000 to 30,000 - that amount then becomes tied to the bit of machinery," he says."You also have to send that one piece of kit around the country to meet the needs of your various contracts. The price of hiring the right piece of transport - a beaver tail trailer, for example - often makes the process cost-prohibitive. The hire companies run their own lorries and can deliver to most sites cost-effectively."

Health and safety legislation is a big driver in Griffin's hire ethos. He says: "Increasingly in the current - and I must say, correct - health and safety environment there is an obligation to demonstrate that all machinery is properly serviced and maintained. By renting machinery we effectively offset much of that responsibility to the hire company."

"We vet the companies we hire from quite carefully as the quality of the machinery drives or enables the quality of our product. If you've got worn-out machines you aren't going to be able to build as efficiently as if you have a new, properly maintained modern machine."

ALL FOR BUYING

If you operate a large concern with a high turnover of cash and multiple sites across the country, hiring machinery in may not be the answer for your business. Kent-based English Landscapes generates an annual turnover of around £20m from its grounds maintenance operations alone, it buys machinery equipment outright for its contracts across the country.

Business development manager Robin Gumbrell says that it is no small operation by any means and that each contract the business carries needs its own kit. He explains: Larger items of kit like tractors and mowers as well as specialist items for sports grounds contracts - vertidrainers, top dressers - will last us four or five years, and these are bought and written off over that period of time. It's rare that we hire any equipment; when it does happens it tends to be the kind of seasonal equipment that you wouldn't want sitting around for the rest of the year.

Blakedown buys much of its more specialist equipment. "We tend to buy outright specialist groundscare equipment, tractors and tractor-mounted equipment," explains Bristol-based director Jon Griffin. "They are rarely available to hire and because there is often a seasonal demand for this kind of machinery, they are even rarer to find for hire at those peak times. We also tend to buy in compact tractors and ride-on mowers - we need to ensure the tractor and implement is within the weight limit of our van units, to meet legislation."

Buying equipment outright makes more sense if you are looking for a clean, one-off expense. Also, the machine will be yours alone, and you won't need to return it at a given time.

Remember, too, that items owned in order to conduct business come under the title of "fixed assets", which are evaluated by potential investors, banks, creditors and other stakeholders.

Consider as well that bought equipment is always available for your use, even if there's a sudden or unexpected need for it.

Familiarity with owned equipment ensures you can trust it and enables you to know its foibles. Every item of powered equipment is different - even if it's identical models.

There are good financial packages available, if you can't afford to make a large capital outlay. Many of the big-name manufacturers offer finance packages that would allow you to buy the latest machinery.

 


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