October Forum 25/9/08 16:18 Page 1
UNPRECEDENTED TIMES
As we compile this Forum on 25 September, we are still reeling in suggested that of the G7 high income countries, only the UK is likely
the aftermath of the shock waves that have hit the global economy to experience negative growth in the third and fourth quarters of this
in the last 10 days or so. On an almost daily basis, financial year. The CBI has reinforced this prediction by stating that we are
institutions have been collapsing or being taken over to prevent their almost certainly in the early stages of a recession but its Director
demise. Whilst most of the action has centred on the United States, General believes it will be much milder than the recessions of the
we have not been without our considerable difficulties as the Lloyds early 1990s and 1980s. There remain some grounds for optimism;
TSB acquisition of HBOS and the Bradford & Bingley agreement unemployment is still relatively low, as are interest rates. Inflation
with GMAC-RFC illustrate. Inevitably, there are more problems looks as though it should begin to fall.
waiting in the wings and, no doubt, some of them will have emerged
by the time you read this. We have still to see the real effect of the credit crunch on corporate
finance. A worrying aspect of the Lloyds TSB/HBOS deal, and other
What should also have become clear is whether the US banking mergers, is the increasing restriction of choice for both
government’s proposed $700 billion rescue bid will get through personal and corporate bank customers. In particular, the limited
Congress. At present it looks set for a very difficult passage and will choice available to small businesses, where the strong presence of
almost certainly be, at best, subject to considerable amendment. HBOS has been generally acknowledged, is a cause for some concern.
If it does not get through, the administration predicts the US
economy could “grind to a halt”. This is frightening stuff, just as Times are getting harder for our hire industry but, as we have
much for the rest of us as the US citizen, and no doubt something of stressed in previous Forums, there are still many opportunities for
an exaggeration to bring congressmen into line. At this juncture, determined, ambitious hirers. This month, we profile Hire Station,
however, we must assume that a rescue package of some sort will commencing on page 15, and find a confident management team
be passed. The longer term implications for the US economy of continuing to expand both its tool and specialist hire activities.
carrying so much extra government debt are worrying but, Its virtual hire partnerships, achieving £20,000/month turnover –
of course, the failure to act would have more immediate and harmful all in cash – look particularly inventive.
repercussions.
Even the normally publicity-shy Andrews Sykes Hire has raised its
So what is all this likely to mean for us? The pressure on the dollar profile by opening its massive, new flagship depot in Birmingham.
has already led to further increases in oil prices (denominated in Starting on page 39, MD Paul Wood argues, “we are diversifying
dollars) but, with a slowdown in economies across the world now within the markets we already serve and are developing other niche
looking inevitable, it seems likely that oil prices will stabilise, and, markets within construction, such as underfloor heating installers,
perhaps, fall. So we might also expect other inflationary pressures to and other segments such as telecommunications, utilities,
lessen as demand drops. This should give some scope for interest IT installations and refineries. We see many strong opportunities and
rate cuts; the possibility of a 0.25% reduction ahead of Christmas, new routes to market.” Just for good measure, we also spoke to a
as we mentioned in last month’s Forum, still looks on the cards. good number of hirers visiting the grounds care and landscaping
exhibition, IOG Saltex, and report their positive comments, kicking
Of course, the UK economy is not in great shape; the Organisation off on page 19. Check out their insight into this market – there are
for Economic Co-operation and Development has recently many growth opportunities to be unearthed here!
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