Lavendon Group - A Major Force in Powered Access
Powered access is a generic name given to machines that enable people to work safely and efficiently at height. Some of the other terms that are used are mobile elevating work platforms (or “MEWP”), aerial platforms, cherry pickers and flying carpets. See a description of the different equipment types on our " Products and Services" page.
Lavendon is a member of
A Rental Market
Between 90% and 95% of the output of many manufacturers of powered access equipment goes into rental fleets, such as that operated by Lavendon Group’s subsidiaries. The principal reasons why end-users choose to rent rather than own this kind of equipment, include:
- The machines are very application-specific, meaning a wide range of equipment is often necessary to meet all job requirements
- The machines are subject to strict maintenance regimes performed by qualified engineers
- The machines have a capital cost of up to £500,000, making it a large purchase for businesses for whom it is a non-core activity
- The machines are often required by the same end-user in different parts of the country, meaning that means for transporting the equipment are also required
A Growing Market
There are there main factors driving growth in powered access rental.
- Legislation: the Temporary Work at Height Directive (2001/45/EC) obliges EU member states to have matching legislation on their statute books. This directive places the onus on employers to ensure that employees and contractors are working at height by the safest possible means. Although application of the legislation varies state by state, the trend of legislative pressure is clearly in favour of safer working at height
- Efficiency gains: the adoption of powered access in construction and R&M has increased efficiency levels in the US over the past two decades. Penetration levels of powered access in Europe (measured as numbers of units per $ billion of relevant construction or R&M activity) still trail those of the US, particularly outside of the new build construction sector
- Construction methods: the switch to steel frame construction, and away from concrete, drives more intensive use of powered access. The use of structural steel in non-residential construction has been gaining share in Europe over the last twenty years. At the same time building complexity, and the development of so-called "smart buildings" mean that fit-outs and repairs are more complex than in the past. This again drives an increased demand for powered access use as a safe, speedy and efficient means of performing work at height.
A Growing Business
Lavendon has almost 22,000 units in its fleet at the end of 2009, making it the largest operator of powered access equipment outside of North America. Lavendon is the only publicly quoted specialist access rental business in Europe.
The national markets for powered access across Europe are still fairly fragmented, with the top 10 players not having much more than 70% of the market in any of the markets where Lavendon operates. As well as benefiting from a number of background factors promoting organic growth, Lavendon has been at the forefront of the consolidation process within the European access rental market.
Through growing the business Lavendon is able to secure benefits of economies of scale, attraction and retention of industry-leading staff and a stronger commercial position on the various sectors in which it operates. This, in turn, produces a business that delivers disproportionately strong incremental profits when revenues are increasing.
A Defensible Business
The strongly cash-generative nature of Lavendon offers considerable protection in times of slow market demand as, in the short-to-medium term, capital expenditure can be dramatically reduced, or delayed, without substantially harming the business' competitive position. In turn this means that the business can then use its strong cash flows to de-leverage its balance sheet, positioning itself to take advantage of growth opportunities as the market downturn comes to an end.