The industry's performance is forecast to deteriorate over the next two years, in line with the contraction in infrastructure projects
Melbourne, Australia (PRWEB) December 04, 2014
The Machinery and Scaffolding Rental industry mainly rents machinery and scaffolding to downstream construction and mining companies on the basis of dry hire, which is the hiring of equipment without operators. Industry revenue growth has been volatile over the past five years. According to IBISWorld industry analyst Anthony Kelly, “revenue has been adversely influenced by subdued investment in the key building markets, which has most severely affected the large-scale hire firms servicing the commercial building sector in the major metropolitan markets.” By contrast, the industry has benefited from demand resulting from the surge of investment into a broad range of infrastructure and the unprecedented investment into new mining developments. Industry revenue is projected to increase by an annualised 5.0% over the five years through 2014-15, to total $6.5 billion. This growth has supported profit margins, particularly for firms supplying customers in the mining and infrastructure markets.
A major correction in demand conditions has emerged in the past two years in response to the winding back of investment into mineral and energy developments on the completion of major projects. “The industry's performance is forecast to continue to deteriorate over the next two years, in line with the contraction of capital expenditure into resource-related infrastructure projects,” says Kelly. However, demand for construction equipment hire will be partially buoyed by the recovery of investment into the downstream housing and non-residential building markets and ongoing demand from DIY homeowners. The industry's performance is forecast to recover marginally with the return of investment into the mining and infrastructure markets in later years.
The Machinery and Scaffolding Rental industry has a low market share concentration. The industry is in a mature phase of its life cycle as activity winds back in the mining sector, but since the late 2000s new players have been attracted to the industry to compete across dispersed geographical markets and diverse product rental markets. The industry is relatively fragmented, with the majority of enterprises employing fewer than 20 people, including businesses with no employees. The relative ease of entry into the lower end of the market, which serves small contractors and households with low-value construction equipment, is a factor in the low level of industry concentration. There has been some consolidation among the larger players since the late 2000s, but the concentration level has decreased due to the influx of new players and the current winding back of activity for several of the firms heavily exposed to the mining and infrastructure markets IBISWorld expects merger and acquisition activity to increase over the next five years as players position themselves to benefit from economies of scale.
For more information, visit IBISWorld’s Machinery and Scaffolding Rental industry in Australia report page.
Companies in the industry primarily supply industrial machinery, plant and equipment without operators. Equipment is hired or leased from stock purposefully held for this function. Industry operators provide equipment on an operating lease basis, with financial leasing activities excluded from the industry.
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