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Report gauges health of aerial work platform market

According to the International Powered Access Federation (IPAF), US Powered Access Rental Report, aerial work platform (AWP) related revenues reached US $8.8 billion in 2007 and are predicted to have fallen by three percent to US $8.5 billion in 2008.


April 29, 2009
By Canadian Rental Service

Topics

Rental will get an increasing share of a decreasing pie

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According to the International Powered Access Federation (IPAF), US Powered Access Rental Report, aerial work platform (AWP) related revenues reached US $8.8 billion in 2007 and are predicted to have fallen by three percent to US $8.5 billion in 2008.

The IPAF US Powered Access Rental Report is the result of a groundbreaking project to gather specific data on the powered access industry and to provide the industry with concrete data that was not available before. It was made possible by a first-time cooperation between the American Rental Association (ARA) and the IPAF, with research consultants IHS Global Insight.

The report says that the aerial work platform business in the US equates to about 35 percent of total revenue from the construction and industrial equipment rental market. It indicates the decline will continue into 2009, with AWP rental revenue in the US forecast to fall to US$7.7 billion, a decline of nearly 10 percent from the 2008 level.

The report predicts that the current US recession should end by late 2009, with shifts in the industry as residential and non-residential construction spending switch roles.

A broad recovery of AWP rental revenues is not expected to take place before 2011. However, on a positive note, most of the major economic and construction spending indicators show markets stabilizing in 2010 and then growing strongly after that.

Interestingly, the decrease of AWP rental revenues stemming from the lower demand is not expected to reduce the incidence of renting within the marketplace. All factors considered, the report concludes that rental penetration rates will remain at high values and may even, depending on the overall economic development, increase.

First, the AWP fleets of rental companies are much younger than those owned by contractors. When investments are cut and business confidence is low, companies will prefer to rent rather than buy new equipment. Second, the trend of specialization and technical progress favour modern rental fleets compared to older equipment, leading to a higher propensity to rent equipment.

So, while the recession will lead to reduced demand for AWPs in the short-term, rental penetration will remain resilient and stay at high levels or even increase. In other words, rental will get an increasing share of a decreasing pie.

Another important plus factor is that AWP’s are used in a wide range of applications not only construction, but also maintenance, seasonal work and trade/transportation applications. These major business segments also influence the AWP industry and will provide some buffer from the difficulties in the construction industry.

Commenting on the report, IPAF managing director Tim Whiteman says, “In a difficult situation, it is ever more vital to have facts and figures to make sound strategic decisions. IPAF’s activities are growing in North America and this groundbreaking report is part of the support that we offer to members.” www.ipaf.org