18 May 2021
New approaches to procuring cooling and power generation equipment could prove essential for manufacturers ramping up production to meet rising demand, says Matt Watson of Aggreko.
According to the Confederation of British Industry (CBI) April industrial trends survey, UK manufacturing optimism is rising at its fastest rate in 48 years. Additional CBI findings predict that the sector’s potential economic rebound will coincide with a sharp rise in output expected next quarter.
Though manufacturers may look to invest in new equipment to meet this increasing post-pandemic demand, the sector needs to strike a balance between increasing production and futureproofing current operations, according to Watson, manufacturing specialist at Aggreko Northern Europe.
He said: “The disruption brought on by the pandemic means many businesses may be operating with stretched capex budgets. As such, they may be faced with a question – how can they meet this demand, while minimising financial risk?
“No-one knows what the future holds, so while the predicted boom by the CBI is welcome news, reduced levels of capital means businesses may need more agile equipment purchasing strategies to suit changing circumstances. Simply put, generators and cooling equipment are expensive to purchase outright, and as demand levels out, they may prove costly burdens unsuitable for manufacturers’ everyday utility requirements.”
Businesses may be able to increase output and safeguard against uncertainty by hiring equipment as an ongoing opex expense.
Watson added: “As demand rises, innovation around equipment will likely follow suit, and companies opting for permanent equipment may run the risk of this equipment becoming outmoded over time. As such, companies already contending with reduced purchasing budgets may run the risk of their organisation becoming uncompetitive as a result.
“This is a must-avoid situation at a time when the manufacturing sector is continuing to get back on its feet after an extremely difficult year. Rental equipment provides a means by which companies can avoid falling behind and take advantage of the peaking demand predicted by the CBI, while remaining adaptable for the future.”