Conflicting interests, split opinions20 November 2017
I've had a series of interesting conversations over recent weeks. It's a time of year when we get many invitations to product launches and factory open days. I've also had a chance to catch up with a few senior executives as they take on new roles, or as their companies go through a transition.
Those conversations and visits have resulted in a series of profiles and interviews in this issue. They also reveal a few interesting splits between the interests of crane owners and manufacturers.
As I detail in my profile in this issue, Frank Bardonaro has had a leading role in the US industry since before the turn of the millennium, and has helped shape some of its biggest fleets. He is now COO of Maxim, which recently merged with one of his former companies, AmQuip.
When I got to the 'Anything I've missed?' part of our interview, he was keen to point out how much the slow recovery of new crane sales has benefitted crane hirers. He largely ascribes the travails of the crane hire sector in the late aughts to the over-supply of cranes.
During his two-year stint at Terex, heading up mobile crane sales, he and his colleagues were keen to point out how the company was trying to guide customers to affordable purchases. Today, as an executive with one of the world's biggest hirers, he believes that many smaller companies are not properly thinking through how they will pay off their equipment finance, and keep rental rates up.
I put this to John Garrison, CEO of Terex, in casual conversation at their recent Zweibrücken open day. He was, unsurprisingly, amused at my suggestion they should look to sell less cranes. Obviously, there is little hope of any crane manufacturer scaling back production when there are customers wanting cranes.
I'd guess a smaller crane owner might disagree with Bardonaro too. When you're one of the world's biggest crane owners, overall rental rate strength is key. When you're an owner operator looking to buy your second crane, to take advantage of strengthening demand and grab market share, your interest is going to be less in long term rental rates, more in getting the crane you need when you spot a potential use for it.
Another crane owner I spoke to, Ludo Sarens, had his own blunt critique of the crane industry. Over the many years he's been in the industry — his whole life, in a way, as he is the second generation of the family owners of the Sarens business — he has seen the number of manufacturers of wheeled mobile cranes get smaller and smaller. He was deeply sceptical of the pressures faced by the two US-based, stock market listed, manufacturers. He was equally concerned by recent management changes at Tadano's German operation. And he saw only disadvantages to the Liebherr approach of building almost every component in-house. Worse, he fears that of the four major suppliers his company relies on currently, it may find itself soon with only two or three to choose from.
I'm sure that our contacts at the manufacturers would each have their responses to this — that the stock market helps keep Terex and Manitowoc efficient, that Tadano can point to a legacy of successes and innovations, that Liebherr's sourcing strategy helps it build highly optimised cranes — but it is noteworthy that one of the world's most experienced buyers of cranes has these concerns.
At the ESTA crane section meeting in Krakow last month, I saw another concern raised. In the UK, our local owners' group, the Construction Plant-hire Association has, reasonably successfully, kept a clear line between bare hire and contract lifts. In Europe, even the biggest companies find themselves being pushed to bundle in services like lift planning. And, around the world, across the construction industry, there are not always clear responsibilities when it comes to supplying and verifying information on site conditions.
Here, the conflict is not between the interests of crane owners and crane builders, but between the interests of the crane industry and its customers. It's going to take continuous, concerted efforts to develop and maintain clear hire and contract lift terms. But, both for commercial and safety reasons, it is a battle that the industry should keep fighting.
Will North, editor