Norway's UCO makes plans for downturn
13 February 2009
Bjorn Larsen, managing director of Skanska-owned UCO, told IRN; "Our customers in construction are dropping by up to 15-20% this year - that's the common budget for 2009. If we do the same things as last year then it will hit us the same." He said UCO had already started to diversify into new markets before the crisis, including work on railway construction and maintenance and renting to local authorities.
"We will try to keep the revenue at the same level this year - that's the goal; it's rather ambitious", said Mr Larsen, speaking to IRN at the Norwegian Rental Association's annual convention in Oslo, "So far we are at last year's level."
In addition to seeking out new markets, UCO is also continuing to expand its network, with a third depot in the Oslo area recently established. Mr Larsen said there would be no new recruitment in operational staff this year, "but I will add sales people."
Norwegian rental companies attending the rental convention were generally in optimistic mood, despite the credit crisis and the fall in construction volumes in the country.
Mr Ove Lunde, chairman of the association and managing director of rental company Flexleie, told IRN that Norway's economy was still strong, with a lot of investment in the oil and gas sector; "investment will be about NOK 149 billion in 2009, that's about NOK 20 billion more than 2008.
"The building industry is falling, especially housing, but infrastructure is growing, and I think we will see the impact of the government [stimulus] package in three to six months".
Eivind Boe, chief executive officer of Bautas, which is Ramirent's business in Norway, told IRN that the market had been slowly decreasing since January 2008, and the his company was now looking to reduce costs. However, he said the government economic plan would have a positive impact; "We probably won't see the impact before the summer, but I think the government has done the right thing", he said.
Mr Boe added that the finance crisis would also alert contractors of the value of using rental companies to reduce their risks. "There is less risk in renting equipment than buying...I don't think that we as a rental community have been good enough at marketing that aspect , and customers haven't paid enough attention to it, but it's an important benefit of the business."
