, also called plant hire
in some countries, is a service industry providing machinery, equipment and tools of all kinds and sizes (from earthmoving to powered access, power generation to hand-held tools etc.) for a limited period of time to final users, mainly to construction contractors but also to the industry and to individual consumer
Consumer is a broad label for any individuals or households that use goods generated within the economy. The concept of a consumer occurs in different contexts, so that the usage and significance of the term may vary.-Economics and marketing:...
The equipment rental industry is a relatively new industry, which first developed in Anglo-Saxon
Anglo-Saxon may refer to:* Anglo-Saxons, a group that invaded Britain** Old English, their language** Anglo-Saxon England, their history, one of various ships* White Anglo-Saxon Protestant, an ethnicity* Anglo-Saxon economy, modern macroeconomic term...
countries. The American Rental Association was founded as early as 1955, and first waves of consolidation
Consolidation or amalgamation is the act of merging many things into one. In business, it often refers to the mergers and acquisitions of many smaller companies into much larger ones. In the context of financial accounting, consolidation refers to the aggregation of financial statements of a group...
took place as early as in the 70’s in America, leading to the creation of companies with nation-wide operations.
Europe is catching up since the 80’s. The industry has moved from mostly family-owned
A family business is a business in which one or more members of one or more families have a significant ownership interest and significant commitments toward the business’ overall well-being....
A small business is a business that is privately owned and operated, with a small number of employees and relatively low volume of sales. Small businesses are normally privately owned corporations, partnerships, or sole proprietorships...
es to the creation of a number of international groups, some of which have an annual turnover
In business, revenue is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. In many countries, such as the United Kingdom, revenue is referred to as turnover....
close to €1billion. In 2007, 5 out of 10 of the largest equipment rental companies in the world were European. The large majority of companies in the industry however still have fewer than 5 employees and concentration in the industry is expected to set for a pause in 2008-2009 as a consequence of the international credit crunch
A credit crunch is a reduction in the general availability of loans or a sudden tightening of the conditions required to obtain a loan from the banks. A credit crunch generally involves a reduction in the availability of credit independent of a rise in official interest rates...
The situation of the equipment rental industry still varies largely from one country to another in Europe. The industry is indeed more mature in some markets than others. Equipment sales penetration
Market penetration is8th growth strategies of the Product-Market Growth Matrix defined by Ansoff. Market penetration occurs when a company enters/penetrates a market with current products. The best way to achieve this is by gaining competitors' customers...
is for example lowest in Italy
Italy , officially the Italian Republic languages]] under the European Charter for Regional or Minority Languages. In each of these, Italy's official name is as follows:;;;;;;;;), is a unitary parliamentary republic in South-Central Europe. To the north it borders France, Switzerland, Austria and...
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
(around 10-11%) and highest in the UK and Northern Europe
Northern Europe is the northern part or region of Europe. Northern Europe typically refers to the seven countries in the northern part of the European subcontinent which includes Denmark, Estonia, Latvia, Lithuania, Norway, Finland and Sweden...
(up to 62%). Its growth potential is still important in Southern, Central and Eastern Europe, where some countries saw a double-digit growth rate for rental in recent booming years.
The main reasons for the industry’s overall fast development are:
• Capital Release: In times where they have to demonstrate high levels of profit
In accounting, profit can be considered to be the difference between the purchase price and the costs of bringing to market whatever it is that is accounted as an enterprise in terms of the component costs of delivered goods and/or services and any operating or other expenses.-Definition:There are...
compared to invested capital
Invested Capital represents the total cash investment that shareholders and debtholders have made in a company. There are two different but completely equivalent methods for calculating invested capital...
, contractors are increasingly eager to rent equipment, as it allows them to minimize the size of their equipment fleet. Less immobilized capital, allows for improved cost control, lower maintenance costs as well as for a reduction in transportation fleets. Renting equipment with operators even allows for optimizing staff costs.
• Range of recent equipment available: Some rental companies have fleet inventories reaching up to the hundreds of thousands of pieces of equipment while others are very specialized in only a very specific product range. They can thus supply the most comprehensive range of state-of-the-art
The state of the art is the highest level of development, as of a device, technique, or scientific field, achieved at a particular time. It also refers to the level of development reached at any particular time as a result of the latest methodologies employed.- Origin :The earliest use of the term...
equipment – with or without qualified operators - as and when contractors / customers need it. Average fleet age in Europe is only 3.8 years.
• Maintenance, compliance with standards and regulations: Rental companies bear the responsibility for ensuring the equipment they rent out complies with all applicable regulations. Safety checks are performed before each delivery.
Key Figures on Equipment Rental in Europe
In early 2009, the European Rental Association
The ERA - European Rental Association is a trade association of the equipment rental sector in Europe.-History and Mission:The ERA was set up in 2006 to promote and represent an industry that was largely overlooked and seen as an integral part of the construction industry itself...
and IHS - Global Insight
published the first-ever statistical report on Europe’s rental industry, based on a research
Research can be defined as the scientific search for knowledge, or as any systematic investigation, to establish novel facts, solve new or existing problems, prove new ideas, or develop new theories, usually using a scientific method...
carried out in 11 countries (Belgium
Belgium , officially the Kingdom of Belgium, is a federal state in Western Europe. It is a founding member of the European Union and hosts the EU's headquarters, and those of several other major international organisations such as NATO.Belgium is also a member of, or affiliated to, many...
Denmark is a Scandinavian country in Northern Europe. The countries of Denmark and Greenland, as well as the Faroe Islands, constitute the Kingdom of Denmark . It is the southernmost of the Nordic countries, southwest of Sweden and south of Norway, and bordered to the south by Germany. Denmark...
, Germany, Finland
Finland , officially the Republic of Finland, is a Nordic country situated in the Fennoscandian region of Northern Europe. It is bordered by Sweden in the west, Norway in the north and Russia in the east, while Estonia lies to its south across the Gulf of Finland.Around 5.4 million people reside...
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
, Italy, The Netherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...
Norway , officially the Kingdom of Norway, is a Nordic unitary constitutional monarchy whose territory comprises the western portion of the Scandinavian Peninsula, Jan Mayen, and the Arctic archipelago of Svalbard and Bouvet Island. Norway has a total area of and a population of about 4.9 million...
Spain , officially the Kingdom of Spain languages]] under the European Charter for Regional or Minority Languages. In each of these, Spain's official name is as follows:;;;;;;), is a country and member state of the European Union located in southwestern Europe on the Iberian Peninsula...
Sweden , officially the Kingdom of Sweden , is a Nordic country on the Scandinavian Peninsula in Northern Europe. Sweden borders with Norway and Finland and is connected to Denmark by a bridge-tunnel across the Öresund....
and the UK).
According to this study and previous research on countries not included in the study, the total size of the European equipment rental market was €33.6 billion in 2008. Of the €33.6 billion turnover, €24.4 billion are without operators and €9.2 billion are with operators.
In the 11 countries surveyed, 36,400 companies were active in rental in 2006 and they collectively employed 177,500 people in some 22,400 rental depot
Depot is from the French dépôt which means a deposit or a storehouse. In English, depot can mean any one of a number of things, with minor variances between the different English speaking countries:Transport* Train station...
Average fleet age in 2008 was 3.8 years, ranging from 2.9 years for the lowest country to 5.7 years for the highest.
Information on equipment rental in Europe:
Europe - ERA European Rental Association
Denmark - Danish Rental Association
Finland - Association of Finnish Technical Traders
France - DLR
Germany - BBI
Italy – Assodimi
The Netherlands – Verhuurnet
Romania - Romanian Rental Association
Spain – ASEAMAC
Spain – ANAPAT
Spain – FANAGRUMAC
Sweden – Swedish Rental Association
UK – Construction Plant Hire Association
UK - Hire Association Europe
International - International Powered Access Federation
Information on equipment rental worldwide:
Global - The Global Rental Alliance
USA - ARA - American Rental Association
Canada - Canadian Rental Association
Europe - ERA - European Rental Association
Australia - Hire and Rental Industry Association of Australia
New Zealand - Hire Industry Association of New Zealand
Brazil - Associacao Brasileira das Empresas Locador as de Bens Moveis (ALEC)
South Africa - Contractors Plant Hire Association (South Africa)