Why is the GCC’s access equipment sector a renter’s market?
With rental activities dominating the GCC’s access equipment market, suppliers are focussing on meeting demand from hire firms for durable, easy-to-maintain, and high-capacity units. Fatima de la Cerna reports
There’s no two ways about it: the GCC region is a renter’s market, as far as access equipment is concerned. Of course, that’s not necessarily a bad thing. On the contrary, it could be read as a sign of a maturing market, according to equipment suppliers.
Sharbel Kordahi, managing director of Terex Equipment Middle East, says that the last 18 months have witnessed rental companies enjoying high utilisation rates. These high rates, he adds, mean that the number of contractors and end-users who are opting to rent rather than buy is increasing.
“The natural progression of the access industry is leading to a more mature market with an increase in rental activities over equipment ownership, notably among contractors,” he tells Construction Week. “[The increase] is not only due to uncertainties in the market; it is also driven by the fact that contractors are beginning to see the advantages of renting machinery, including avoiding issues related to ownership, such as maintenance, transportation, documentation, and utilisation.”
Offering the same observation, Malcolm Early, vice president for marketing at Skyjack, and Alexis Potter, sales and marketing director of Rapid Access, stress the appeal of the rental model in terms of cost. Potter explains: “At a time when capital efficiency is a key driver in every business, it makes sense for customers to focus their finances on their core businesses.”
Meanwhile, Early points out: “The practice is for long hours of work and/or multi-shifts for the equipment in hard conditions involving heat and dust, and as such, the cost of ownership for a contractor rises and the [idea] of off-setting maintenance to rental companies becomes attractive.”
Rapid Access has reportedly been benefitting from the popularity of the rental model, with Potter noting: “Most contractors look to rent powered access equipment due to the specialist nature of the equipment and the wide range of tasks to be carried out at height.”
He adds: “2016 was an exceptional year for Rapid Access, with record levels of utilisation and machines on hire.
“Powered access equipment is increasingly being recognised as the safest and most efficient way of carrying out a range of tasks at height.”
This year, Potter continues, started on a similarly positive note for the company, with the first half delivering regional utilisations that were 3% to 4% higher compared to the same period of 2016.
He further reveals that Rapid Access is seeing opportunities in transportation infrastructure, commercial projects, and oil and gas, among other sectors.
In keeping with growing demand in the rental market, Kordahi points out that Terex’s latest Genie models have been designed to perform a variety of indoor and outdoor tasks. “This is exactly the type of product rental firms are looking for to boost their returns on investment (ROIs), and adapt to their customers needs,” he says.
Going into detail, Kordahi notes that the Middle East is largely a boom market for Genie, owing to the dominance of its construction, and oil and gas sectors.
“Productivity is a key focus, and the Genie Extra Capacity family of booms respond to this need by offering [capacities ranging] from 300kg to 454kg in the restricted zone,” he explains.
The manufacturer’s focus on capacity and versatility appears to be boosting its expectations from the Gulf market.
Although his assessment of 2016 and the start of 2017 is not as positive as Potter’s, Kordahi says that business is looking up for Terex, despite uncertainties caused by challenges in the oil and gas sector.
He elaborates: “A slowdown in the oil and gas sectors, especially in Saudi Arabia […] led to slow demand in Q1 and Q2 2016. Nevertheless, markets like Kuwait and the UAE partially compensated for the gap in Saudi, and we had a strong finish to the year and a healthy pipeline.
“Q1 2017 also started slowly, but we have seen our pipeline increase on a weekly basis, with customers gearing up for purchasing [new equipment] or renewing their fleets. In Q3 and Q4, we are expecting demand to be significantly higher than it was three months ago.”
In addition to capacity and versatility, safety is reportedly another factor influencing demand in the segment, with the global market becoming more safety conscious. Kordahi points out that this has led to more demand for protective products that focus on operator safety.
Noting that Rapid Access has observed the same trend in the market, Potter says: “This year has seen record demand for our range of secondary guarding devices, which are accessories that work together with our equipment to help reduce the risk of serious injury in the event of an operator entrapment incident.
“The system combines a pressure-sensitive strip that stops the machine in the event of an incident, with a loud alarm and flashing beacon to warn the surrounding operatives and staff.”
He goes on to clarify, however, that while equipment quality is important, the competence of equipment operators should also be highlighted by the industry.
“We saw great steps in the UAE in 2015, when the requirement for internationally accredited operator training was included in the Abu Dhabi Occupational Safety and Health Centre (OSHAD) Codes of Practice for the first time, but we are keen to see similar developments across the region,” he notes.
While also underscoring the need to make safety a priority by providing operator training and utilising equipment with features like second guarding, Early says that simplicity and durability are two other issues that require attention.
He elaborates: “[There’s a need] for relatively simple machines that are robust in [harsh] climatic conditions. That’s where Skyjack’s reputation comes into play. We aim to provide rental companies equipment that […] lower their maintenance costs.
“Simplicity in design and reliability mean that rental companies can easily and cost-effectively maintain the product and serve their customers.”
Talking about the types of access equipment seeing high demand in the Middle East market, Early says that all the typical equipment categories – DC scissors, rough terrain scissors, and booms – are represented, although booms are reportedly in higher demand than others.
“The influence of the petrochemical sector tends to mean the proportion of booms is greater than the [others],” Early says, concluding: “As infrastructure projects and oil prices regain confidence, I see the boom sector growing, and that is certainly reflected in the feedback we get from our customers in the region.”