With the announcement by the UK’s
Finance & Leasing Association last month that plant and
machinery finance is 44 percent down on Q1 last year, does a foray
into the short term hire market present an opportunity for
equipment lessors to gain extra business from a whole new
market?
As any lessor well knows, with cash flow for
many companies slowing to a trickle, businesses which would
formerly have purchased all their plant up front are going to
leasing companies in the hope of securing vital equipment through
monthly lease payment.
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For the same reason though, many companies
which would formerly have been confident to sign up to a five year
contract hire agreement are unsure of where they will be only 12
months down the road, and are therefore looking for a shorter
commitment.
Enter the plant hire companies. HAE, Europe’s
hire company association, has more than 1,000 members in the UK and
Ireland, working across the plant, machinery, vehicle,
audio/visual, catering and leisure sectors, and offering equipment
at high rates on a daily or weekly basis.
So, is there room for leasing companies to get
involved in the short term hire market, and pick up on customers
who have been driven out of the yearly contract hire market?
One would expect short-term hire may present a
strong opportunity for assets at end of lease or recovered from
insolvent clients, which could provide income immediately.
The answer, needless to say, depends on the
lessor’s business model.
For a flexible plant lessor with the resolve
to undertake an extremely unpredictable shift in business culture,
there is no doubting the potential expansion of client base that a
move into the world of short-term hire could bring.
Fred Crawley
