At the summit?

24 April 2008

Anyone looking for signs of an end to the current buoyant access market will not find them in this year’s Access Confidence survey. Over 380 survey respondents - a record number - display an overwhelming consensus about prospects for 2007: almost two out of three rental companies are planning to spend more in 2007 than in 2006; just 1% of all respondents think their business will shrink in 2007; and 80% of end users say that the demand for their machines will increase.

Our annual Confidence Index also reaches an all-time high of 72.5 (where 100 = extremely optimistic and 0 = extremely pessimistic).

The only hint of any a change to come can be seen in the still very positive responses from equipment end users, the people who buy machines for their own businesses or rent them from rental companies. Here, the vast majority - 87% - are still forecasting business growth, although the proportion expecting growth of over 10% has fallen from 32% to 26%. Similarly, a slightly larger number of end users will consider buying used machines next year - 55% rather than 48% - and fewer (40% compared to 47%) will grow their fleets in 2007.

Significantly, however, there is very little change in the levels of workload for aerial platforms predicted by end users, with 35% forecasting a 10% increase in demand and 45% looking at a 1-10% rise.

It is renters who represent the biggest chunk of the market, and also make up the largest number of respondents to the survey, so the positive results here will be cheering to manufacturers and distributors. In terms of investment plans for 2007, rental companies are falling over themselves to add new machines - 64% will grow their fleets (it was 65% last year) and only 18% have no plans to buy new machines (down from a quarter last year).

Indicative of this optimism was one comment from a German company; Fewer rental companies will rely on purchases of used machines (45% rather than 52%) and there also remains a decent outlook on rental rates, with 55% expecting some kind of rise (even if modest) and just 6% anticipating a fall.

Geographically, Europeans are the most optimistic, with North America and Australia/New Zealand less buoyant. Just over 50% of North American respondents said they would grow their fleets, and it was exactly 50% in Australia/NZ. This probably reflects the fact that North America is further on in the cycle that Europe, while Australia has been seeing heavy investment in platforms for several years.

One respondent did pick out one area of note in North America. “Early 2007 in the US will be strong for truck-mounted aerials as buyers pre-buy diesel chassis prior to 2007 emissions requirements. The second half of 2007 will be slow in this market.”

The Middle East, meanwhile, is also a standout area, with 65% saying they will grow their fleets and only 13% saying that there will be little or no investment. Asia Pacific is also in good shape, with 60% planning to expand fleets next year. Sample sizes in South Asia (India, Pakistan, Bangladesh) and South America were too small to draw any meaningful conclusions, although the few that did respond held optimistic views.

There is plenty of anecdotal evidence of optimism in these markets, however. One Indian company said; “With the setting up of shopping malls all over India...the business could be extraordinary.” The writer said that effective promotion of powered access was important if this opportunity is to be seized.

Several companies in Turkey said the country was seeing sustained demand for aerials; “There is an ever growing trend in the aerial platform business here in Turkey and this trend will go on as usual in the next year”, reported one.

There has, meanwhile, been a real improvement in the views of manufacturers/distributors. There has been a massive jump in the number who are forecasting a greater than 10% growth in business, up from 8% to 49%. Last year half were expecting no change, this year just 7% expect to see no improvement, and none are expecting sales to fall.

Over 90% will increase production levels, with just over a half forecasting +10% growth. On pricing, there is little change from the views expressed last year, which means that two thirds expect prices to rise and only 5% see prices coming down.

The move to increase production capacity will please many platform buyers, several of whom used the survey to express continued frustration at delivery times; “We require manufacturers supply and production to increase... Manufacturers seem to react to the market with a 8-12 month lag time, while rental companies can adapt to supply/demand I the market within one or two months.”

As in previous years, many of those who completed the survey think that prospects for the industry are great in the long term, with new markets in Eastern Europe, South America, China and Asia Pacific, and continued development even in more mature platform markets, where the drive towards the use of powered access equipment as an alternative to ladders and other non-powered forms of access will continue.

With so many development seeds being sown around the world, it is worth remembering that the small start-up operations of today are the major players of tomorrow. One respondent issued a useful reminder to the platform suppliers; “Big manufacturers must pay attention to the local newcomers.

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