Purchasing power

Aggreko supplied the Fifa World Cup with temporary power this spring.

Business has done remarkably well in turbulent economic times, say providers of temporary power, as companies are seeking to keep their investments down, while utilities are struggling to meet rising demand.

A global economic downturn will not pass anyone by unnoticed. And so providers of temporary power, used to making good money from supplying the construction business, keenly felt the effects of the slump in building activity in the region.

“We were heavily involved in the construction industry in the Middle East, so the downturn did affect that part of the business in particular,” says Phil Burns, managing director at Aggreko, one such provider of generators.

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The construction slump has not stopped Aggreko in its tracks, however. The company was able to remain utilisation rates, and even add US$30 million worth of generators to their Middle East fleet, as it benefited from clients adapting to the uncertainties of the recession.

“The rental option is becoming increasingly popular as it has a cushioning effect for companies who are uncertain about the long-term future of their projects. If a company which has purchased large amounts of equipment decides that a project must be put on hold, the financial damage incurred can be a major blow. Ultimately, renting equipment means that because ownership lies with Aggreko, so do all the risks,” explains Burns.

The appeal of rental power is not confined to construction, it is now popular with companies in all industries, including manufacturing, cement production, events and the oil and gas industry, who are all trying to prevent a large capital expenditure.

“Capex might affect the cash flow of the clients and rental power is a viable option during the economic crisis,” says Robert Bagatsing, group marketing head at RSS, another rental provider. Bagatsing also notes a broadening of his client base.

“Our market has not only deepened, but also widened. Instead of focusing on construction and real estate projects, we are now seeing a wide demand in industrial, oil and gas, commercial and defense related projects.”

In spite of the recession, RSS have managed to grow their business every year since its inception in 2007, and has beaten its forecast for 2009.