Ready for change?2 December 2002
Derrick Bailes reflects on the state of the lifting equipment industry and the need for change
This year's annual general meeting of the Lifting Equipment Engineers Association (LEEA), held at the beginning of November, provided a good insight into the state of the lifting industry in the UK. The AGM, and the open meeting that preceded it, brought together a cross-section of manufacturers, importers, and sales, hire and service specialists. It provided a rare opportunity for all concerned to air their thoughts on current trading conditions. Inevitably there was a fair deal of common ground, as well as a few conflicting opinions. However, it proved relatively easy to identify some of the issues that those directly involved in designing, manufacturing, distributing, selling, hiring and servicing lifting equipment consider critical in terms of the future of the industry. These include: changes to the supply chain, low cost imports, and the problems of securing insurance cover at a realistic price.
Supply chain under strain
Traditionally, the UK lifting industry has been characterised by a relatively stable supply chain that links manufacturers, sole importing agents/distributors and a network of local sales, hire and service specialists. For manufacturers and importers/distributors, the existence of this ready-made specialist sales, hire and service network eliminates the costs inherent in supporting the end user. For the sales, hire and service businesses, the sole agent or distributor removes the need to hold a high level of stock and offers expert support for a particular manufacturer's product range.
Compared with much of mainland Europe, this particular supply chain model has always been unusual. However, there is no doubt that significant change is now underway. Globalisation has brought with it far greater opportunities for sales, hire and service companies to deal direct with manufacturers from across the planet. With pressure on profit margins intensifying, the commercial appeal of cutting out the middleman is obvious. At the same time, the internet is now firmly established as a sales channel, enabling manufacturers and distributors to reach the end user far more easily, should they wish to. Catalogue-based marketing is also increasingly popular in the industrial sector, providing another alternative route to the customer.
Growth in low price imports
Regular readers will be aware that the growing volume of very low price, imported lifting equipment is a cause of some concern. The LEEA has always been careful to suggest that a 'bargain' price tag is not necessarily a sign of inadequate construction; the key consideration is always whether the item in question is fit for the intended application.
Lively debate on this subject ensued at the open meeting that preceded the LEEA's AGM proper. If accidents have been caused by such cut-price equipment, no examples have yet been brought to public attention. However, one LEEA member did circulate the results of a material analysis of a Chinese-made eyebolt that had been undertaken by metallurgists. Critically, it identified a carbon content well in excess of that recommended by the British standard for collared eyebolts. Improved hardness and strength had therefore been achieved at the expense of a greater degree of brittleness. "This means that they will be much more likely to fracture under shock loading," the report concluded, "which could be made worse if the eyebolts are used in cold conditions such as could be found in a typical British winter."
The AGM concluded with a presentation by an expert on the business insurance market. Anyone responsible for securing insurance on behalf of his or her company will be more than aware of the dramatic rises in premiums witnessed in the last year or so. Indeed, in some categories, it is becoming difficult to find insurers willing to offer cover at any price. The reasons for this are numerous, but include the impact of 11 September, the rise of no-win, no-fee legal services, and the effect that falling stock markets have had on the profitability of the insurance business.
For those companies involved in the supply of lifting equipment and related services, at best it means a significant rise in operating costs. At worst, the ability to carry out some or all of their established operations is being put in jeopardy. For end users, the effects are equally serious. Well established suppliers may be lost. Furthermore, fake insurance certification is not unknown. One way or another, customers end up footing the bill.
Change is inevitable
What conclusions can be drawn from this snapshot of the industry's current outlook? Manufacturers, distributors, importers and sales, hire and service specialists will undoubtedly have to come to terms with a changing environment. Like it or not, there is no going back to the old days. Internet and catalogue-based marketing is a fact of life, as are companies that are prepared to cut out long-established links in the supply chain, import straight from China or other east Asian sources and sell direct to the end user. For customers, the picture is also confused. In the short term at least, they can probably expect lower prices across a wide range of lifting equipment. However, the changes being experienced by the lifting industry also represent something of a minefield. The perceived quality of much of the equipment now entering the market remains a vexed issue. The analysis of the Chinese eyebolt highlights the fact that the integrity of basic materials is a common weakness of cut-price equipment. In such cases, passing an assessment in the relatively comfortable surroundings of a workshop is not necessarily evidence of a device's ability to withstand the rigours of the real world.
Buyers must be vigilant
The LEEA believes that wider specification of the harmonised European (CEN) standards by purchasers would go a long way towards eliminating the potential threat posed by poor quality lifting equipment. Unlike ISO standards, which often reflect the lowest common denominator, the harmonised European standards are intended to be watertight. Products that genuinely meet such standards will have what most would consider to be a good level of quality for such safety-critical equipment. The standard for chain used in chain hoists is an excellent example. EN 818-7 has a material specification that, in conjunction with the other properties specified, ensures that the chain will perform safely over the range of temperatures likely to be found in Europe, including north European winters. The same cannot be said for the equivalent ISO standard.
Certainly there can be little doubt that buyers of lifting equipment must proceed with caution. While it would be wrong to suggest that everything was rosy in the past, the need for customers to look beyond the price tag is now imperative. This is not just a reflection of concern about some of the product entering the market; change to the supply chain brings with it new problems. New sales channels may offer convenience, but are not always backed by the kind of expert advice and support that is vital as far as both safety and indeed efficiency of lifting operations are concerned. At the moment, the overriding impression of the new breed of supplier is that they treat lifting equipment as just another commodity. Add to the equation the current problems regarding insurance and it is clear that customers must check carefully the credentials of the supplier with whom they are planning to do business.
Future is still unclear
Significantly, these trends in the market coincide with a period in which far greater attention is being paid towards corporate responsibility for employees' health and safety. Typically, regulations are becoming more stringent, and punishment for those that transgress is becoming increasingly severe. The cost of getting lifting operations wrong has never been higher.
Against this backdrop, organisations such as the LEEA obviously have an important role to play, especially in terms of underlining the added value offered by appropriately qualified lifting equipment suppliers. Greater efforts must also be made to provide practical advice for buyers.
If the recent AGM is a fair reflection of the lifting business, change is inevitable, but the future shape of the industry is far from settled. Whatever the precise outcome of this current period of upheaval, it is vital that customers continue to enjoy access to the widest possible choice of good quality products and services, backed by readily available expert advice and after-sales care.