Front runners16 December 2009
Germany is leading Europe out of the recession – but how is the country’s industrial lifting market faring? Ruth Ling talks to some of the major lifting equipment manufacturers in Europe's biggest economy.
The 16 countries which use the Euro and the broader 27-nation European Union showed expansion in the third quarter of the year of 0.4% in the Eurozone area and 0.2% for the whole EU.
Germany, Europe’s biggest economy, was running ahead of the pack, showing growth of 0.7% in the same period. According to Goldman Sachs economist Dirk Schumacher, the country’s acceleration was due to exports, investment and construction.
So does this mean good news for the German crane and hoist industry? Heinz-Helmut Kempkes, owner and managing director of KULI-Hebezeuge Helmut Kempkes GmbH, has a different view of the current situation than November’s trumpeting news headlines.
“I can’t see the market picking up at the moment,” he says. “Our company saw a reduction in orders very late in the crisis – for us the slowdown started only in July or August. We are still working our normal hours, and we are still using full-time freelance contract staff. So we still expect to realise a very high turnover for 2009 by the end of the year – about the same as in 2008. That was a record year for us.
“We struggled hard to reach that level, but we succeeded. But in 2010, we expect a reduction – we estimate by about 20% – though, remember, that’s coming from a very high level. And we still don’t find ourselves having to end contracts with our people; we are keeping 100% of our team. We are able to adjust our capacity to the reduced market. The only cuts will be to reduce temporary workers.”
Demag Cranes AG also found that the crane and material handling sectors were generally affected late in the economic cycle and will show signs of recovery at least six months later than other sectors.
“Despite the fact that a few positive early indicators are visible, the extent and duration of the crisis still cannot be predicted,” thinks the company’s spokesman, Nikolai Juchem.
“As a consequence, we have prepared ourselves well in order to weather these challenging times. The domestic market as well as the export markets have been particularly affected by reluctance to invest over the last months. Projects have been postponed. Besides the mature industrial nations, we still have a strong focus on the so-called BRIC states [Brazil, Russia, India and China].
“As a general strategic stance, customer-orientation is key for us. In this way, we will further optimise our service network and become as close as possible to our customers. By focusing on their needs, we will be able to utilise our technological leadership for maximum customer benefit.”
Oliver Meister, spokesman for remote control firm HBC-radiomatic, is cautiously optimistic. “As soon as markets in general start to recover, the demand for construction machinery and industrial equipment will increase,” he says. “Since the use of radio controls has become standard in many industrial branches, the demand for our products will increase simultaneously. As far as the current crisis is concerned, we see ourselves somewhat ahead of the curve.
“This has a lot to do with the crucial benefits of radio technology. The downturn of the market has forced many companies to focus on reducing costs by increasing their production efficiency. And increasing efficiency is exactly what radio controls can help with.”
Gerd Berger, sales and marketing manager of Hetronic Malta, responsible for the Middle East, Africa and India, whose company supplies radio remote control systems to the hoist sector, is similarly upbeat.
“The market will pick up in sync with everything else, but we are already prepared for recovery with marketing initiatives and cutting-edge new products to be ahead of the curve,” he says. “Hetronic has always been one of the first choices for crane makers as we have a reputation for high quality and reliability, and with our modular design we can ensure there are fewer down times during crane operations once a service is required. Even adapting to the diverse individual requirements of modern overhead crane applications is easy with our fully programmable H-Link receivers.”
Werner Bundscherer, general manager of the lifting and conveying division at ABM Greiffenberger GmbH, is more circumspect, saying: “We have always seen the hoist business going up and down approximately six months after the other industrial branches.” And he admits that both domestic and export sales have seen a reduction in double figures. “Exports were down more than domestic sales, but we now see the Asian markets especially are slowly getting back on track, while Europe, the US and our domestic markets are just starting to climb – you could say they’ve just left the valley.”
HBC-radiomatic also hints at their sales having reached their lowest point, so now the only way is up.
“While domestic sales are still above our expectations for 2009, exports found their bottom in the second quarter of 2009,” reports Meister. “We see a stabilisation and a trend towards slow recovery.”
Berger says the market is also picking up for Hetronic Malta, with good orders having come in over the past couple of months.
Having started to feel the effects of the recession somewhat late, Kuli anticipates an upturn in its fortunes later rather than sooner. “We expect an increase in orders to come in the second half of next year,” says Kempkes. “We will do the same in the coming year as we did over the last one – being flexible, extending our working hours – and we can easily increase capacity by hiring temporary workers.”
All the companies Hoist contacted for this article admitted to having had to cut back on their production capacity. Bundscherer talks of ABM having to make “a slight reduction”, while Berger is more upfront, saying, “Who has not had to cut back? However, thanks to our lean and highly flexible production processes at Hetronic, we are able to deploy our resources in other ways, including strengthening our research and development activities, dedicating more time and people to improving internal efficiencies and approaching new markets and customers.
“We are redeveloping and redesigning our radio standard to fit the new crane generation, as well as developing new RRCs that include technologies ahead of those of our competitors and bringing all documentation approvals up to date according to new EN norms that will be enforced by Jan 2010.”
Demag is very frank in admitting the cuts it has had to make. “As the economic and financial crisis worsened at the end of 2008, the initial decline in business was clearly felt, particularly the drop in order intake in our port technology segment,” says Juchem.
“Demag Cranes responded quickly to the situation by cutting back the number of temporary employees and reducing annual leave and overtime hours. In March 2009, a short work week was imposed. Due to a further downturn in orders and the absence of any signals indicating a mid-term recovery, the management board proposed a restructuring programme to safeguard the future of the group.
“As part of capacity adjustments, we are cutting up to 750 jobs worldwide,” he reports. “During this period of crisis, we are monitoring and optimising our structure and we are reducing fixed and variable costs in our segments. We have also adopted the objective of more closely dovetailing the entire organisation: for example, by uniting management of shared services such as IT, human resources and purchasing under the roof of the Demag Cranes Group. With our restructuring programme, we aim to counter the uncertain market situation by adding further flexibility to our production capacity.”
Meister says that HBC-radiomatic has made some minor changes in its personnel structure to adapt to the market situation, but adds: “On the other hand, based on the strong economical position of HBC, we have significantly increased our production capacity by opening two brand new production facilities at our headquarters in Crailsheim within the last two years. Since we are focused on a long-term strategy, we will keep to this through the crisis to be well prepared for further growth as soon as market conditions improve.”
One way of doing that, he says, is that his company is focused on further improving its quality assurance system as well as increasing production efficiency. “We are investing in the optimisation of our product range and in the extension of markets by developing new radio systems that are applicable for various industry branches and not just for the crane sector.
“For example, we have recently introduced some brand new products for the wireless control of such diverse machinery as conveyor belts, racks and forestry winches. Another important aspect is the optimisation of HBC’s worldwide representation. As a worldwide market leader, we want to guarantee our customers can find a competent HBC contact anywhere in the world. For this reason, we have just recently opened a new Japanese subsidiary in Osaka.”
ABM is using the down-time, says Bundscherer, to streamline its internal work flows, optimise flow of material and invest in a new ERP system in order to gain flexibility and to be able to react more quickly to changing demands.
Hetronic is devoting time to its certification. Obtaining international safety certifications is a crucial part of its company philosophy, explains Berger, “in order to provide not only reliable and affordable but also very safe radio remote controls to various industries. So is our explosion-proof range of products certified by EXAM according to the most demanding EN regulations and just recently we obtained certifications according to UL and CSA standards.”
If crane and components manufacturers have varied experience of the recession and are reacting to it differently, are all end user markets in the same situation, or are any immune to the downturn?
“All end user markets are affected,” says Kempkes. “But at Kuli we have covered our backs as we are exporting to about 90 different countries at the moment, widely spread around the world. We supply our components to all kinds of industries, including steel, cement, chemicals and machinery manufacturers.”
Demag agrees. “Hardly any market has remained unaffected by the worldwide drop in demand as seen in the materials handling sector,” says Juchem. “There have been differing falls in demand, but nobody is immune to it. Sectors in the power generation field generally seem to be doing better. In this industry, we have implemented some interesting orders with our standard and process cranes in recent months. For example, we have equipped the new assembly plant for REpower Offshore installations in Bremerhaven.
“For the Siemens location in Gorlitz, where the company manufactures steam turbines, we have supplied an integrated intralogistics solution. This includes crane installations operating on three levels that are specially designed to serve the needs of handling heavy loads, serving workplaces and optimising the assembly operation.”
HBC-radiomatic has found that the segment with applications of particularly high demand, in respect of both the crane and radio control, has shown a better resistance against the downturn compared to the segment of standard applications, says Meister.
Berger admits that Hetronic had originally believed no markets would be immune to the downturn, but now thinks that the Asian Pacific and Indian markets are less affected (“and indeed can even be called the winners”, he adds) compared to the European and North American markets.
ABM thinks that “the end user markets have not yet shown their full reaction to the recession; however we see that long-term project business such as steel mills or aluminium smelters are continuing almost without change”, according to Bundscherer.
So, while the German economy is officially out of the recession, and the hoist industry and its associated components companies are seeing promising signs of recovery, how have they been using the slowdown? All say they have taken advantage of it to step up research and development.
“We are focused on both aspects,” says Meister. “Of course, we have been using the time to search for new markets and applications that can be served by HBC-radiomatic products. On the other hand, we are investing in the development of new products to perfectly adapt our product range to the needs of our customers.”
“R&D is one of the core points in our philosophy to stay ahead of the competition, no matter what the economic situation is, so we are permanently engaged in research and developing new products,” says Berger.
“Very shortly, we will be releasing several new and exciting products to ensure that we stay one of the market leaders. This will include an extended range of serial interface receivers to be available off-the-shelf as well as an improved concept for master/slave tandem systems. Many systems are now also available with our new range of 2.4 GHz frequencies.”
ABM has also been busy developing new products and has just launched its biggest hoist drive GH40000. “We are now focusing on flexibility of our products in order to cope with different environmental requests as well as on the control side,” explains Bundscherer.
“We continuously carry out research and development, but during the high-boom phase we did not have the same momentum as we do now and will have in the first half of next year,” says Kempkes. “We will bring out our new products in the first half of next year – not completely new products, but improved products for end trucks and crane travelling and via rope hoist.”
Demag says that it approaches ‘innovation leadership’ as “much more than mere lip service”. Juchem explains: “For decades, we have maintained our position as the technology leader in our markets with consistent investments in research and development. To meet these goals, we will further optimise the value chain to the benefit of our customers, particularly during the crisis.
“For example, a new product we have developed for the industrial crane segment is a grab for handling packed rolls of paper. It enables both single items and sets of up to four rolls of paper with a total weight of six tons to be lifted. The new grab makes it possible to significantly increase the handling rates in automatic stores that are served by our process cranes.
“In our port technology segment, the AGV battery is an important module in handling equipment and is being developed as part of our green range programme. By implementing zero exhaust emissions, low-consumption and thus environmentally aware technologies, we aim to meet the current and future environmental requirements of our port and terminal customers.”
Diverse global customer base proves a winner
Lebus International Engineers GmbH is active in the hoist and crane sector by supplying specially engineered winch drums to manufacturers of construction cranes, ship and deck cranes, mining winches, offshore cranes and winching systems used in FPSO and oceanographic vessels.
It also serves other niche markets such as ski lifts, snow groomers and funicular railways. While Lebus makes traditional helical groove drums, it specialises in drums with parallel grooves for multi-layer spooling, and spooling accessories.
Cris Seidenather, managing director of Lebus International Engineers GmbH, says, “This diverse customer base somewhat insulates Lebus from economic downturn, as does the fact that our customer base is truly global. China is a particularly strong market for us currently, where clients include ZPMC and Wison Crane.
“We can report that there has been a noticeable downturn in orders from construction equipment manufacturers, but this has been largely mitigated by continued demand for much larger, more specialist equipment with higher value from other markets such as the offshore sector – the kind of applications where wire ropes up to several kilometres long must be guaranteed to spool off and on the drum perfectly smoothly every time.“