Batting below average?

13 November 2014


Australia’s construction sector has failed to hit forecasts as commodity prices have fallen. Chris Webb looks at analysts’ outlook for the sector, and visited CICA to report on the cranes on show.

Worth an estimated AUD228bn (USD198bn) in 2014- 15, Australia's construction industry is the biggest per capita in the southern hemisphere by a large margin. But, according to the Australian Construction Industry Forum (ACIF), activity is down on predictions.

The shortfall may not be large, but it is worrying. Peter Barda, executive director of ACIF, stresses the shortfall is manageable and probably a short-lived anomaly, but having missed the AUD237bn (USD206bn) slated last year, attempts to explain what is going on: "Our reports explain that there are winners and losers in those big numbers -- by regions and work types."

"Growth in construction in some sectors, such as mining and heavy industry engineering, is now falling as the surge in global demand for Australia's resources takes a pause. "Meanwhile, key domestic markets are heating up. Growth in states such as New South Wales is picking up while growth in states such as Western Australia and Victoria is slowing."

The report shows reduced projected expenditure for engineering construction, with marginal growth in residential and non-residential building. The modest decline in engineering construction activity is largely driven by a moderation in mining activity and falls in investment in supporting infrastructure.

The ACIF report, compared to the November 2013 forecast, shows an expenditure curve for engineering construction in faster decline, down to approximately AUD100bn per annum by 2019-20. But it is not all bad news. The projections reflect a recovery in the very long run reflecting fundamental factors particularly the underlying demand for minerals and energy resources. Non-residential expenditure, where city cranes tend to do well, is expected to show modest growth in the short to medium term, with spending in health and aged care, accommodation and entertainment driving much of its growth.

Expenditure in residential building is projected to increase, supported by demand created through population growth and low interest rates. This upward trend is expected to moderate and flatten out in the medium term reflecting cyclical factors and the inevitable adjustment in interest rates above their historically low rates.

After more than a decade of sustained growth, the total value of engineering and commercial construction is expected to fall by 3.6% overall in 2014, followed by a further 1.8% in 2015 in nominal terms, according to the latest Australian Industry Group/ Australian Constructors Association Construction Outlook survey report. While engineering construction is expected to experience a downturn over the next two years, the total value of work will remain relatively high due to the sizable project pipeline and a number of long-dated projects.

Notable declines are expected in mining-related construction, heavy industrial projects and other civil projects (including ports and terminals). However, a pick-up in transport infrastructure construction in 2015 and continued growth in telecommunications infrastructure is expected to help plug some of the gap.

In addition, commercial construction is expected to edge out of the doldrums over the next two years with some large projects finally getting the green light. Australian Industry Group chief executive, Innes Willox, said: "The Construction Outlook confirms the Reserve Bank's recent suggestion that mining investment has started its anticipated decline.

"While this wind down will weigh heavily on the construction sector, there are encouraging signs in the outlook report that growth of transport and communication projects and a gradual pick-up in commercial construction will at least ease the decline in activity and help provide employment for many released from mining-related projects."

At CICA

The Crane Industry Council of Australia (CICA) held its 2014 Conference at the Sydney Olympic Park, from 24-26 September. Hosted by the New South Wales (NSW) Branch, and chaired by Paul Churchill, the venue and the event itself was, according to Alan Marshall, the CICA chief executive officer, "a triumph". It featured a record number of delegates -- 460 registrations in all -- and an unprecedented 52 exhibitor booth spaces, a gala awards dinner held in the Allphones Arena grand foyer and 34 cranes on display in the Olympic Park Dome.

In addition to a two-day speaker programme, a trade exhibition and an outdoor crane display, was a first-night conference networking dinner held amongst the crane display which was, says Marshall, "a powerful and colourful display of the cranes. It set the bar high for the activities to follow."

CICA also confirmed its new board will include Danny Black (Terex Australia) as president; Tom Smith (Williamstown Crane Hire, Melbourne) as vice president; and John Gillespie (immediate past president). Others confirmed were Albert Smith, Cheryl Woodhart, Andrew Esquilant, Jeff Sibbick, Bart Sutherland, Geoff Bevan, and Jeff Wilson.

Black replaces John Gillespie, who served as president for no fewer than 16 years, ten of them consecutively (2004-14). He was also president of CICA from 1988- 1992, and later 1998-2000.

Cranes Today caught up with Gillespie in Sydney. He has been a driving force with others at the council in establishing CraneSafe, a voluntary crane assessment programme throughout Australia. "The aim was to improve the lifting quality of equipment. As a result we have one of the world's leading crane inspection programmes," he said. "We want the industry itself to lead the way." Gillespie says government "interference" does nothing to improve safety in the industry, and possibly hampers progress in the promotion of safety: "There is red tape and costs."

There are anomalies in the government's approach to he regulating crane usage, he says, and a code of practice, which is as yet not finalised, fails to take into account machines in all categories, large and small.

"What we don't want is to have an industry [that is] forced to adhere to codes that are inappropriate." Decentralised governance brings its own problems, says Gillespie. "[In Australia] we have six states and two territories, all of which have their own ideas on how to regulate the industry."

The CraneSafe assessment programme provides crane owners and operators with a process for third party assessment of safety aspects of their cranes; a common, industry-wide system for assessment of their plant; and, a single method by which crane operators, owners, manufacturers, suppliers, designers and importers can meet duty of care obligations under the State Occupational Health and Safety Acts (OH&S).

Gillespie says Australia may be on the cusp of a significant change in terms of how it regulates business and industry, and, surprisingly perhaps, cites neighbouring New Zealand as a precursor. "John Key [New Zealand's newly re-elected prime minister] has taken a 'hands-off' approach. There are signs that Tony Abbott wishes to free up the economy in a similar way."

Cranes on display It has been seen before, but not at a show in the southern hemisphere, so Manitowoc's highlighting of its synthetic hoisting rope innovation was a head-turner at CICA. The company also showed its newest three-axle all terrain crane, including the new Crane Control System (CCS). In the exhibition area, Manitowoc displayed a Grove GMK3060 allterrain crane equipped with the new Samson KZ-100, the first synthetic hoist rope for the crane industry, launched to the global market at ConExpo earlier this year.

During the manufacturers' panel, Manitowoc president Eric Etchart was asked for his thoughts on innovation and in particular in relation to the company's MLC300 and MLC650 crawler cranes, also launched at ConExpo 2014, and their variable positioning counterweight (VPC).

Etchart said: "Producing a crane with more capacity is easy. What is hard is producing that same crane, with a smaller footprint and which requires less preparation time and reduces costs. The VPC is unique to Manitowoc and we have patented the design."

Etchart was asked about that patent, and the company's current legal action over it. He said, "We take our IP very seriously and as a company we have invested a portion of our profits into research and innovation for many years, so it's important we protect that," he said. "We'll continue to prosecute any instance where we believe companies have stolen designs that are rightfully ours."

The 60t capacity Grove GMK3060 exhibited at the conference included Manitowoc's Crane Control System, a new operating system that will feature on all new cranes from the company in future, including the MLC300 and MLC650 crawler cranes. Manitowoc also showed an 80t capacity 8500- 1 crawler crane in the colours of Wollongong Cranes.

Link-Belt's New South Walesbased distributor Baden Davis Crane Connection showed the first HTT86100 truck terrain crane, in the colours of Gunnedah's GBP Cranes and Dubbo's Cole For Cranes. Combining the simple roadability of a truck crane with the on-site flexibility of an all terrain, the 85t crane is wellsuited to Australia's geography, with jobs often hundreds of miles apart.

Anthony Davis, MD and co-founder, says, "These cranes are unique because they have the attributes of a conventional truck crane with the added maneuverability of steerable rear wheels similar to an all terrain crane.

"The lower running costs of the truck crane and the higher road speeds make this crane ideal for travelling long distances. It can travel on NSW roads under the Category 1 IAP permit which give the crane access to more roads on the NSW network."

Crane Connection recently extended its offering to NSW and Australian Capital Territory customers, after being appointed as local agent for Tidd's PC25 articulated chassis crane. The crane was on show at the event with an additional counterweight system that extends the crane's lifting capacities "substantially",

Davis says, adding, "Although many of these machines have been sold in the various states of Australia, until the CICA conference no Tidds had been delivered into NSW. Francrane, a Sydney-based company, placed an order for a Tidd PC25 at the show." The crane was due to be delivered a week after the event.

In South Australia, Tidd is represented by RMB. Load 28 recently took delivery of a PC25 from RMB to complement its existing hire fleet. The machine was chosen, says the company, as it is especially suited to limited-access environments.

Sennebogen exhibited at the event with local distributor Pace. The company showed two telecrawlers, a 16t 613R and a 40t 634R. Pace signed order for two of the smaller units at the show. One 613R has already been at work close to the show, below the Sydney Opera House, where John Holland Group has been using a crane from Preston Group on foundation work for underground traffic and logistics works. The fist 643Rs in the country were also delivered this year.

Kobelco's Australian dealer Australian Crane and Machinery showed one of its own ACM400 aerial work platforms at the show, and showcased cranes from the Japanese crawler manufacturer. The company recently delivered a 180t CKE1800-1F to the Webb Dock upgrade project in Melbourne.

One example of the breadth of exhibitors at the show was the presence of ZF Services Australia. The driveline specialist was at the show to demonstrate its support for customers across the crane industry. Chris Adcock, ZF Services Australia managing director, said, "A comprehensive market study on the crane segment was commissioned mid-2013 and highlighted some gaps in our service. We really want to support not only the major OEMs, but also the crane fleet owners and operators, service providers and independent workshops to ensure that our customers see ZF as their number one choice for not only innovative driveline and chassis technology, but equally for its service and through-life support.

"The study highlighted not only the size of the market and the areas of opportunity to add value to current market conditions for us, but also the spare parts requirements, which we've take on board and made the necessary investments."

In addition to service workshops and distribution hubs in Sydney and Perth, ZF has a decentralised technical support team located in Melbourne and Brisbane, with strategically-located service partners across Australia and New Zealand.