The Shift Towards Hiring and What It Means for Maintenance
Best practice maintenance and lubrication are a safe bet in uncertain times
Equipment hire is a rapidly evolving, billion-dollar industry – and one the far-sighted pioneering equipment hirers of the 1950s would heartily applaud for its modern capabilities and innovative drive.
Today’s earth-moving machinery has made great strides in reducing site waste and increasing productivity. The range of products available for construction companies has widened extensively in recent years – and equipment manufacturers are also increasingly incorporating highly sophisticated new technologies into their kit.
When Brian Jones became president of the UK’s Construction Plant-hire Association last year, he noted that GPS, drones, 3D mapping and Building Information Modelling (BIM) will soon achieve mainstream deployment throughout the sector.
These advances are a response to fundamental changes the construction industry has undergone over the past 40 years. Contractors rely less on in-house skills and often choose to hire in the services of specialist sub-contractors on a project by project basis. This has allowed contractors to boost their balance sheets and become leaner operators in a highly competitive world, where margins rarely exceed 1-2%.
Equipment hire has grown as an industry off the back of this rationalisation, because it offers multiple benefits to contractors. Capital is not tied up for years and depreciation is no longer an issue. Hire fees are assigned to the operating expenditure (opex) column of each project. Hired equipment will tend to be new or recent generation, therefore more efficient and usually compliant with emissions regulations. Contractors can also select from a diverse range of machinery, tailored to suit specific job requirements, precisely as and when they need during a project. They can do all this with assurance that all hired equipment is regulatory compliant, meeting standards for health and safety, as well as technical criteria.
Of course, equipment hire is every bit as competitive a world as construction itself. It means contractors can factor low rental fees into their tendering, driving down the costs for clients and improving their own profitability.
Yet for all these upsides, equipment hire will only deliver benefits if the machinery is operating at peak performance. For this, a regular, smart maintenance regime is essential.
Machinery operatives say they place a high priority on looking after equipment properly, knowing it will maximise equipment lifespan, but maintenance teams are under pressure to cut costs and are often under-staffed. As a result, maintenance is being deprioritised.
A gap between intention and action is increasingly evident in the sector, and too often maintenance only receives proper attention after breakdowns have occurred. Given the consequences of poor maintenance – breakdowns and the wait for replacement kit; subsequent delays on site and possible liquidated damages if the project runs late – this is an approach with no long-term benefits. It means worse Total Cost of Ownership (TCO) for equipment hire companies, and project disruption for construction businesses.
“More than 43% of equipment hire breakdowns occur because of failure to lubricate.”
Another issue contributing to sub-optimal maintenance practices is a knowledge gap when it comes to the value of lubrication. More than 43% of equipment hire breakdowns occur because of failure to lubricate, according to a major new report by Shell Lubricants, based on a recent survey of 400 construction managers across Europe. Yet many managers still appear unaware that regular lubrication can reduce equipment downtime.
Lubrication is often described as the lifeblood of machinery; without it, systems seize up. In the face of intense competitive pressures, no equipment operator or contractor can afford to let his kit become anaemic.
At a time when UK construction is under the microscope, with reports such as Mark Farmer’s Modernise or Die calling for urgent changes to improve industry productivity, it’s clear that a more planned approach to maintenance could deliver significant output gains. And not just in the UK. Shell has surveyed people across Europe and found similar needs for a more systematic approach to servicing and regular lubrication.
With in-house maintenance patently under pressure, there’s a clear case for machinery operators to draw on advice and support from third-parties. Expert training from a lubricant supplier could make a big difference to the amount of downtime firms have to deal with.
More attention to maintenance allows for long service intervals which can be planned in advance, and extends equipment lifecycles – potentially even beyond OEM specification. Which means equipment hire companies get a lower total cost of operation and a greater return on investment.
Industry forecasts tell us equipment hire is set to grow across Europe over the next three years, albeit with regional variations. The European Rental Association is predicting a 3.4% rise in activity for 2019, with the highest increase in Germany and France1. Even brighter prospects are heralded for Eastern Europe by the Eastern European Construction Forecasting Association, which estimates Bulgaria’s construction activity to have grown by 7.4% last year and is set to continue.
Yet none of this expected growth will be achieved easily, as competition continues to intensify in all construction sectors across Europe and margins are set to remain wafer-thin. There are many factors beyond the control of contractors – such as the general state of the economy and client confidence. Yet something firmly within contractors’ own grasp, is efficient machine maintenance and lubrication.
In these unpredictable times, this is one investment that comes with a guaranteed payback.
Find out how lubricants can affect you and your maintenance costs, and what else you should think about, including getting the right partners involved.