Tractor hire venture proves a hit with users

By Jim Breen

Tractor usage trends usually follow a beaten path; either buy it outright and use it when required or hire in a contractor to do the work. Another approach, though less popular here in Ireland, is to simply hire a tractor as and when needed.

To muscle in on this niche market Kevin McGee, of Co. Louth established his own tractor hire business over two years ago. Here, we chart his progress to date.

Serious proposition

Kevin McGee first considered the hire business as a serious business venture towards the end of 2000. In his line of work, as a service man at Derek Plant's John Deere dealership in Lusk, Co Dublin, he knew many of the region's farmers and contractors.

More importantly, he knew the pressure under which they worked - with many needing heavy-duty machines at peak times and then struggling to justify the cost when things were quiet.

Taking a chance of sorts, he decided to start a hire business of his own. It began with one new tractor - not surprisingly a John Deere bought from Derek Plant Farm Machinery. He opted for a beefy 165hp 7710, complete with a front linkage and PTO.

He admits that he wasn't entirely sure at the time of purchase, whether or not the anticipated demand would actually materialise. He says: "When I ordered the tractor I wasn't certain that the plans worked out on paper would bear fruit. It was a risk, but one that I reckoned was worth taking."

The tractor arrived in September; and much to Kevin's relief take-up was immediate. In fact, within a few weeks the tractor was booked up for the following four months, tackling a range of tasks.

Demand for smaller units

On the back of this, Kevin quickly ordered a second tractor. This time he plumbed for a smaller unit - feedback had suggested that there was also demand for a smaller general-purpose tractor. In response, a new 6610 arrived the following January.

Alas, this tractor sat idle for the first couple of weeks. Belatedly, bookings then began to arrive thick and fast - so much so that the tractor did not return to Kevin's yard for a well-earned break until the following November!

Several purchases followed, with the most recent order (a 6620, 6820 and 6920S - all with suspended cabs and front axles) taking the current tally of tractors in Kevin's fleet to seven. This includes three 7810s - two of which are equipped with AutoPowr, John Deere's stepless transmission.

So who are the customers? Kevin explains: "The bigger tractors typically go to tillage men, particularly potato growers and silage contractors. They need powerful, robust tractors for heavy-duty cultivation or front/rear mowing work. The provision of a front linkage and PTO is practically a ‘must-have' for some of these users - workloads dictate they must do as much in a single pass as is possible.

"Smaller tractors - say 120 to 140hp - are ideal for general-purpose use. Contractors, for example, often find it difficult to justify having a fleet of tractors in the yard year-round, yet they may need extra horsepower to haul trailers during the silage campaign - that's where hire machines fit in."

He adds: "Dairy farmers too, are among my customers. They typically hire for shorter periods - in some cases just a day.

"They might need to get some slurry out or may need to get some jobs done around the farm. It makes sense for them to hire, rather than tie up capital in expensive machinery."

Charge-out rates

Hiring by the day however, is more expensive on a pro-rata basis than taking charge of a machine for longer periods. Kevin normally rents tractors by the week, with a top-spec 6820 costing up to €700 for a seven-day period.

If the tractor is kept for up to a month the ‘per-week' charge drops to €675; if it's kept for up to eight weeks it drops to €650 and so on.

Where significant distances are involved (tractors have travelled as far south as Kerry), Kevin employs a local haulier to move tractors from customer to customer. If a tractor is staying ‘local' it's simply driven from one spot to the next.

The only delay in making the switch arises when the tractor is due for a service, which Kevin undertakes himself.

This all sounds fine in theory, but what about the traditional fears; namely that hire machines are open to abuse? Kevin says that this was an initial worry, but one that has proved unfounded. He says: "Not a single machine has yet been returned with what could be termed ‘damage'; all my customers have treated the tractors with due care."

Deposit - peace of mind

He adds: "From the start, I put a deposit policy in place. This is done to ensure that a customer actually wants the tractor; the deposit secures his or her booking." Kevin does admit however, that it also serves as a deterrent: "If damage is done, the cost of repair is taken from that to begin with."

He says: "Many larger farmers and contractors have extended their own insurance to cover hired in machines; my own policy is needed where farmers with few machines of their own are involved. Insurance is a major cost he says, but not one that can be short-changed.

Conclusions thus far

So what's the verdict? So far, he says, it's been a positive exercise. "Demand for this service has far outweighed my expectations of two years ago," he adds.

"The hire business is still in its infancy here though, compared with the UK where huge tractor fleets are rented out by specialist firms.

"The hire business here is very much on an ad-hoc basis, with Irish farmers clinging to independence more so than across the water. Nevertheless," he says, "it can only grow in the coming years - especially with machine costs rising all the time.

"The next step is to look at ways to expand the business; I'm considering a much larger tractor at some point in the future, possibly a 300hp unit. Before investing in a machine of that size and stature however, I'll need to go through the figures once or twice more," he muses.

In any case his next tractor is likely to be a John Deere. Despite this busy ‘sideline' business Kevin does, after all, still work as a service man with Derek Plant Farm Machinery. And a staff discount does help to take the hard edge of those lofty price tags.