Uplifting experiences21 November 2005
The USï„µeconomy has turned a corner, andthe country’s crane rental market is at lastenjoying a period of sustained growth
Confidence has at last returned to the US crane rental market. Order backlogs are now commonplace as more residential and infrastructure projects boost demand for lifting equipment.
Illinois-based Essex Crane president Ron Schad believes this is the first period of consolidated growth since before the September 11 attacks on the US.
The business environment started to turn around in 2004, says Schad, and it is gathering pace. He notes that customers have renewed faith in the market, with the energy and power sectors providing the bulk of the work.
Such was the extent of the slump in the sector that many development projects were left unfinished. “The opposite is now the case,” says Schad. “Those buildings are now being finished, and further development is taking place.”
Crawler cranes are particularly popular in wind energy sector applications, adds Schad.
Essex has also been increasingly involved in residential developments with Schad observing that State governments are now prepared to spend money on infrastructure. “The commercial and residential business has picked up,” he says. People who remain reluctant to put their money into banks and stocks are instead investing it in property.
“With this comes the need for new garages, car parks and shopping centres,” says Schad. “All of these are good for business.”
The slump in business in the latter part of the 20th Century gave Essex the opportunity to review its market strategy, and Schad identified the need to change. “We concentrated too much on the power industry, and geographically we were not working widely enough,” he recalls. In fact, he continues, Essex was only busy on the Gulf coast. “We’ve now got the biggest backlog of orders since 2000.”
When the rental business is slow, he explains, customers know they can take their time ordering a crane. They can’t do this when demand is high.
Schad expects the growth to continue. He says there is lots of work still to come. “The economics are good, and environmental power will continue to provide business,” he concludes.
Such is its confidence in the recovering market that Bigge Crane & Rigging Company of San Leandro, California acquired American Heavy Rigging and Hauling in late September this year, for an undisclosed price.
Bigge president Weston Settlemeir says the purchase of the Virginia-based company represents an opportunity to expand his business further on the east coast.
The company will no longer trade under its name, but Bigge has retained the services of general manager Jim Price and George Tanner as the management team for what will become the Bigge Major Projects Group - East Division.
Settlemeir is upbeat about future business prospects. “By the end of the year we would have sold $50m of equipment,” he says.
As Cranes Today went to press, Bigge had sold in the region of 40 used cranes since the turn of the year. “Things started to improve last year,” recalls Settlemeir, “which was good because we geared ourselves up for an increase in work in the power sector in 2003 and this didn’t happen.”
Bigge does not do much work with wind farms. “We do some,” says Settlemeir, “but it’s not an area we focus on.”
Bigge’s services in bridge construction have been in demand in California and on the East Coast. Settlemeir believes the next few months will be exciting times in bridge construction, with Bigge lifting 1,800t sections of the San Francisco Bay Bridge using strand jacks supplied by Dutch hydraulic lifting specialist Hydrospex. Work could begin on this project before Christmas.
Settlemeir expects the increase in business to be sustained in other areas too. “We don’t own any tower cranes but we do erect them, and there’s lots of work for them,” he says.
Las Vegas-based Jake’s Crane & Rigging has also seen more business coming its way. “China utilising so much of the world’s resources has probably been the single largest factor for that,” says Jake’s president Bob Dieleman.
He reckons that the big players will continue to grow in the US, but fears for the welfare of the smaller companies. With an increase in the number of mergers and acquisitions, he says, it is difficult for small companies to manage.
In addition, he adds, the cost of larger machines plus insurance and corresponding liability makes this complex business expensive. “Therefore,” he sums up, “I see fewer and fewer little guys.”
But Dieleman believes there could be a way forward for the minnows if they are able to focus on a niche in the market. “If someone truly understands an industry, and they have superior knowledge of a niche market, contractors will pay a premium rate for that specialist to perform work. The smart, hard working speciality crane companies will continue to play an important role,” he says.
In the Las Vegas area, says Dieleman, there is a much greater use of hammer head tower cranes because many residential high-rise condominiums in the area are reaching 40 stories and beyond.
“Projects like these are too high for ground cranes,” says Dieleman. They have a relatively small footprint as opposed to mega-resorts, he adds, and do not warrant the ultra high line speeds or capacities of the tower gantry cranes.
Dieleman points out that the trends with rough terrains are largely monitored by union rules and regulations. Cranes of 80USt capacity and below only require a single operator so crane rental companies can offer the sub 80USt class at more competitive rates.
Meanwhile, the second hand market has seen at least a 20% increase in the last year, according to Dieleman. And, he says, the future looks bright: “Cranes remain the most efficient material handling machines in existence and there is a tremendous amount of work coming in nearly every industry.”
Ohio-based All Erection & Rigging reports that it too is busy in all areas, including the sale and rental of rough terrains, all terrains, crawlers, and tower cranes.
Jack Swan, vice president of operations, notes that sales activity has been “substantially larger” this year compared with last. “The prices of both new and used equipment have increased as much as 25%,” he adds.
Swan says the US market is as strong as he has seen it, and All Crane is expecting the trend to continue for the next two to four years. “Some manufacturers are already quoting 2007 delivery,” he adds. But he warns: “With the large demand, increased costs and availability issues, prices are escalating at a point that could become an issue.”
This is also being reflected in higher rental rates. “However,” he continues, “the US dollar remains weak, which should help with any exports either new or used if the US market should soften.”
Many buyers who have been fixed on only buying or renting later model cranes are becoming receptive to older models at higher prices as they are realising this is their only option, explains Swan.
All Erection has seen a growing acceptance of tower cranes in the US because, says Swan, the industry is realising that although they need greater expertise to operate, they are no more difficult to maintain than the new hydraulic lifters or crawlers which, themselves, are full of electronics.
Swan says the demand for cranes is widespread throughout commercial development and housing construction. “There is also a huge amount of work for large cranes in the power and environmental industries,” says Swan. “Add on top of all this the unfortunate results of the recent storms that have devastated our nation, and the demand is almost overwhelming.”
One consequence of this is a huge demand on all the auxiliary services that are required to operate, maintain, and deliver the cranes. Swan says this is causing a shortage of qualified personnel. But, he insists: “We are ready to meet this demand.”
Tower crane specialist Morrow Equipment Company of Salem, Oregon says its order backlog is double the level at this time last year. “This has come as a surprise,” says president Christian Chalupny. “Business is excellent, but it has only really taken off during the second half of the year.”
Chalupny says the growth has been reflected in the boom in condominium properties across the States. “This area has grown over the past couple of years and it is still rising,” he says.
Morrow anticipates that it will slow down in time but the market cannot get enough tower cranes at the moment for the construction of these residential blocks, some of which are 500ft high.
“There is a lot of speculation,” says Chalupny, “about when demand will level out and eventually start to decline again.”
The US rental business was at rock bottom two years ago, and there might be a tendency to get over-excited now business is good. But Chalupny says Morrow is being cautious. “We have tried not to buy too much equipment, and leave ourselves with too much,” he says.
Nonetheless, he adds: “I heard a statistic a short time ago, that said there will be three times as many tower cranes being brought into the US this year than last.”
Morrow buys cranes from construction giant Liebherr and, according to Chalupny, the German giant is quoting delivery times of four to six months on new cranes.
Memphis, Tennesse-based Barnhart Crane & Rigging is also enjoying better business than at this time last year and, according to senior vice president sales Jeff Latture, the trend is set to continue. “Backlog is up by more than four-fold with prospects remaining good for the next 12 months,” he says. He adds that most equipment is being booked significantly in advance.
Latture believes the primary force behind Barnhart’s upturn in fortunes has been the energy business. The power industry, he says, has started to grow again along with environmental compliance and green energy.
Latture adds: “Petroleum refining is seeing substantial investment in clean fuels, and this has resulted in increased demand for maintenance after two years of a recession.”
Barnhart is confident in the future so long as owners do not over-expand by purchasing in the misguided belief that the boom will continue forever. Latture points out that rates are heading upwards, and the crane industry must maintain this trend to fund investment.
“Over the next five years many of the smaller family companies will change hands and the US will see a level of consolidation,” reckons Latture.
Barnhart expects demand for 500t to 600t crawlers to continue to grow over the next 10 years following the pattern of growth in the energy market.
The second hand market is still expensive and Barnhart notices a shortage of new cranes to buy.