Ashtead, the equipment rental group, has become the latest company to raise pay for workers in North America, as labour shortages bite across the economy.
The FTSE 100 company said it would increase hourly pay by $1.25 to just under $25 for about 7,000 skilled employees.
Brendan Horgan, chief executive of the group, said that hiring staff for its new sites was “an extraordinary challenge” and there was a “fight for the businesses that get the best”.
Ashtead joins the likes of McDonald’s, Costco and Walmart, which have all unveiled plans to increase pay in an attempt to attract and retain staff.
The company, which trades as Sunbelt Rentals, lends equipment including diggers, power generators and aerial work platforms mainly to construction businesses but also to government service providers, disaster responses and live events. It supplied equipment for Covid-19 testing centres and the G7 event hosted this week in the UK.
Horgan believes that more pay rises are on the horizon, with inflation looking likely to stick around. “I think we will see far more inflation in the years to come,” he said. “I think [wage increases] will continue to move in that direction and faster than some may think.”
In May, US consumer prices climbed at their fastest pace since 2008, while the Dodge Momentum Index, which tracks the kind of commercial planning activity relevant to Ashtead, also hit a 13-year high last month thanks to supply constraints and surging demand.
Horgan said inflation would be a boon for businesses such as Ashtead because it would make construction equipment more expensive for construction companies to buy. “It is most definitely a net positive today. I think it will remain in that net positive for the year,” he said.
Supply chain disruptions, for example semiconductor shortages, affecting equipment producers such as JCB and John Deere would hurt smaller buyers compared with Ashtead, he added.
The company is reaping the benefits of high levels of construction activity and more customers turning to rentals after selling capital goods to secure liquidity during the peak of the coronavirus crisis last year.
Compared with the same period a year ago, Ashtead doubled its operating profit to £264m and its revenues were up 23 per cent to £1.27bn in the three months to the end of April, helping soften a fall in annual earnings. It posted record free cash flow of £1.38bn in the full year.