While most landscapers will need at least one tractor in their armoury, hiring in a power unit can pay dividends for specific contracts or when diversifying into new operations.
New Holland’s James Doyle explains: “The advantages of hire are the lack of capital outlay which helps with cash flow. Contractors can make accurate costings for the duration of hire period and it is an ideal approach for short term contracts. Hire can also offer increased flexibility for smaller contractors.
However, James does point out that purchasers have the advantage of a full warranty and can make flexible payments via finance programmes.
“When purchasing a tractor you can also choose the exact specification that you require for your workload; hire units do tend to have a lower specification.”
SGM UK is one of the industry’s leading hirers, and Steven McInroy comments that while business is relatively buoyant, landscapers are being very prudent at the moment “We have seen an increase in spot hires and contracts agreed on a month to month basis. While the grass cutting season now lasts seven months, contractors are concerned that budget cuts will see mowing put on hold later in the year, so they will not need a tractor.”
Tractor specification is kept basic in order to bring the capital cost of each unit down and thus allow SGM UK to keep hire rates competitive but Steven does point out: “One must is plenty of power to handle a set of hydraulic gang mowers – 75hp tractors are our most popular hire and tend to be out for the whole season. They’re also in demand with a front loader for contractors operating chippers.”
And it seems that long term hire is being preferred to purchase, even by some of the major players. SGM UK has 10 Massey Ferguson tractors of varying sizes out with Ringway in Rotherham, on a contract which has a year to run with the option of a further 12 months, and Steven suggests that even if the company’s workload alters, they are likely to continue to hire.
“The benefit of the type of contract we have offered Ringway is the service package. It is an added value option which enables them to fix their costs and have peace of mind and was crucial in securing the contract. It is a major advantage over purchasing a tractor, regardless of how good the finance deal appears.”
Golf and Turf, a specialist division of John Deere dealer Burdens, is still enjoying a boom in both tractor sales and hire, says Simon Reynolds. But he comments that he is seeing a shift in the contracts being undertaken by his customers.
“We traditionally hire a lot of tractors to landscapers for new build work, but renovation work seems to be providing the bulk of the contracts this year. In this sector, 50-70hp tractors are the most popular – they are still easy to transport but can handle powerful implements.”
The company specialises in offering complete packages of equipment for renovation projects, from the tractor down to seeders and top dressers, and carefully matches the right implement to the power unit.
“Most of our hires are complete outfits, which gives the hirer peace of mind that the implements are compatible and items such as the pto shaft will fit,” explains Simon. “It’s an ideal way to diversify into new areas while a contractor’s traditional workload is slow, and as we also have an extensive stock of groundcare equipment for sale, many contractors will also use it as a ‘try before you buy’ opportunity. A high proportion of these hires then lead to a sale.”
Simon adds that in all cases, back up is an important element of the package, and is one reason why the company restricts its service to within a couple of hours’ drive of the depots.
Finance
A number of finance companies have pulled out of this sector, but manufacturer-linked organisations still offer opportunities, and John Deere’s Henry Bredin says that while landscapers are inclined to make tractors last a year or two longer in the current climate, the availability of good finance packages can make a purchase more attractive
New Holland group company CNH Capital is offering a 0 per cent finance deal on its entire groundcare power unit range. This entails 2+22 payments at 0 per cent on 50 per cent of the balance, a boon when cashflow is tight.
New Holland’s groundcare specialist James Doyle comments: “This package allows the customer to accurately budget his fixed costs, which is a great help in times of restricted cashflow. We work closely with CNH Capital to ensure that all packages are designed to meet our customers’ needs, and we would expect it to be particularly successful in the landscaping sector, which needs top class machinery but is currently experiencing a financial squeeze.”
Tim Pinney of Rustons Engineering suggests that hard-pressed businesses could benefit from an operating lease rather than an outright purchase.
“This can be set over three to five years, after which the tractor is handed back or swapped for a new one, depending on the business circumstances. It is tax efficient as the hire costs can be offset against tax and helps with cash flow.”