Britain on the brink

20 August 2018


Housebuilding in the UK is slow. There is a shortage of big infrastructure projects. Is there anything to lift in the country at all? Julian Champkin looks at the state of the crane market in the UK.

Cranes go with construction; and construction in the UK at present cannot be said to be strong. New contracts in June this year reached £4.4bn, a decrease of 3% compared to May and the lowest performing month across construction for more than five years. These figures are from industry analysts Barbour ABI, included in the latest edition of their Economic & Construction Market Review.

Housebuilding, the industry’s biggest sector, also declined, says Barbour ABI, for the fourth month in a row. At £1.7bn in contracts awarded it is at its lowest point in the year. How then is the crane sector faring?

The mini-cranes segment is bucking those figures of gloom and is seeing growth. The UK market seems at last to be appreciating the uses and benefits of these handy little machines. Kranlyft have long been master distributor for Maeda in Europe, Russia and the Middle East. “Last year we had record sales of Maeda in the UK,” says sales executive Andy Crane. “UK sales this year have not beaten that so far, although sales for export to date are up on last year’s figures; but certainly we are well out of the recession and the market for minicranes is buoyant. Lots of them are now operating in and around city areas.”

Typical is the new 8t Maeda MC815, which he says is becoming very popular. The technology on it includes remote control, selflevelling, and an automatic selfstowing mode (the jib comes down to its rest and the hook stows itself).

“It has all the bells and whistles, but everyone wants the latest technology these days.” Moving up in size but sticking to light-weight machines, Kranlyft this year also acquired the UK and Ireland agency for Klaas aluminiumboom cranes. Aluminium booms, common on the continent for many years, have been less often seen in the UK—but this, even more than mini-cranes, is an area that after a slow start seems set to take off in this country. “Klaas is still new to us, but they are selling” says Crane.

“One of the models we are offering is the K750-RS, which is one of the smallest in the Klaas range. It is truck-mounted, on a Mitsubishi Fuso carrier which keeps the weight down to well under 7.5t. Among other advantages like speed on the road and fuel efficiency it means that you do not need an HGV licence to drive it. Now that truck-mounted cranes need MoT testing, we anticipate that some operators will be looking to replace older vehicles rather than perhaps struggle to get them through the test; and the K750-RS will be an ideal replacement. So we have high hopes for this machine.”

The other big maker of aluminium boom cranes is Böcker. In October last year the company opened Böcker UK, with new headquarters in Dudley near Birmingham, as a separate subsidiary to handle all sales and servicing in the country.

The move does seem to indicate a certain confidence in the UK. Its director is Alan Peck.

“Business is buoyant,” he says. “Our order book is full until March 2019. I am taking orders that I cannot fill until then. Our AK 4/6 6000 on a three-axle 26t carrier is an unprecedented success, our biggest selling crane. We have 150 AK series cranes in the UK now.

“The thinking behind opening the UK subsidiary is that we had already penetrated the market here for aluminium booms but Böcker has other products like elevator-lifts and top-lifts that you see on every street corner on the continent but hardly at all in the UK. We had sold some here, but the owners seemed to regard them as a niche product they didn’t want others to know about: they were the best-kept secret ever. But they are generating enquires and sales now, and by volume we think they will be our biggest sellers in 2019.”

Attitudes, Peck says, are changing towards new types of equipment.

“People used to chary of machines like our AK 52; they found it a stumbling-block that it has no crane cab. The crane is entirely radio-controlled. But now that we can show them what it can do, it is selling very well.”

Cranes on trailers are a similar story. “They have been very slow on the uptake. But Scotland is emerging as a market for them: they are so easy to tow that the big distances between jobs there suits them perfectly. And they can work on steep inclines and very rough ground, so telecoms people love them.”

Tower cranes, despite the housing woes, are similarly holding their own. Andy Brown, commercial director of Falcon, says: “Really, as far as we are concerned, the crane market in general is holding up quite well.

“Since 2013, we have seen significant expansion in our fleet, and that has continued. In 2014 we bought 64 new cranes; in 2015 it was 51; it was 48 and 60 in the next two years and to date in 2018 we have bought 36. So extrapolate that for the whole year, and the rate of expansion is in line with before.”

He emphasises that the company has also sold off older cranes from its fleet, this year as every year, so those figures do not show total fleet expansions.

“The aim is to keep our fleet modern; so this year we sold 18 used cranes, making our net gain seventeen tower cranes; but that too is in line with previous years.”

Tower cranes are indicators of medium- and high-rise construction but Falcon’s growth has been based on more modest heights: “We have traditionally concentrated on the lower rise end of the home-building market, so our cranes were not the biggest; but this year our two newest cranes, bought in the last couple of months, are Jaso J380 tower luffers, which are our largest so far and meant for bigger, taller projects. Certainly growth has been quite steady.”

The elephant in the room is of course Brexit. “There is a worry as we get closer to March next year” says Brown. “Enquiries about forthcoming jobs are still very strong indeed, but we do not know how many of these will be put on hold as the Brexit date gets closer. So there is optimism as we go into next year, but it is cautious optimism. When Brexit is ironed out we will know better where we stand.”

Robert Law, managing director of AGD Equipment, is less concerned about Brexit: “I don’t think it will make much difference, to be honest” he says.

“AGD sells crawlers—we are talking about heavier lifters now— and also operates a hire fleet. Any company which offers any kind of support infrastructure cannot survive on sales alone.

“Sales have been very low this year; fortunately rental is our bread and butter.” That too, he says, has been quiet this year, but is showing signs of improvement.

AGD has invested over the last two years in modernising its hire fleet, and in changing its emphasis from lattice-boom crawlers to telescopic crawlers.

“We used to have 50 latticebooms; we are now down to ten. We have replaced them with telescopic crawlers, so now our fleet is of 40 telescopics and ten lattices, with mini-cranes as well.”

He cites as reason for the change new entrants to the lattice-boom rental market who are charging extremely low rates that would seem difficult, if not impossible, to sustain. The need for large crawlers is heavily dependant on large infrastructure projects, and these at present, he says, are few and far between.

“There is some rail work, and we have been involved in smart motorways and in flood alleviation projects. Crossrail has been very big, but that is coming to an end now. Hinkley Point power station is another, but that is not enormous yet: it is not sucking up hundreds of cranes.” The big forthcoming infrastructure project is of course HS2, the projected new London to Birmingham and the East Midlands rail link, which is scheduled to start next year. So far contracts have been awarded for design work but nothing further. Opinion seems to be that it will be the end of 2019 before physical activity on the ground begins. “When it does come, it will be a real boost for everyone in this sector,” he says.

One large infrastructure project that is current, and which has received relatively little public attention, is the Thames Tideway Sewer scheme, a £5bn project involving 30km of tunnel along either side of the river and down its centre, from London to Beckley.

“But HS2 will blow that and all the others out of the water” says Law. “It is that big. Infrastructure work really does seem feast or famine.”

His view chimes with that of Michael Dall, lead economist at Barbour ABI, the industry analysts we quoted at the opening:

“The lack of large value projects has now become more noticeable. Over the first six months of 2018 we have seen a lack of ‘mega projects’.

They are usually valued into the hundreds of millions and we have become accustomed to seeing them being awarded in previous years. Without these projects, particularly from the infrastructure sector, the industry cannot replicate strong figures each month until this trend is reversed.”

Dave Rees, of NRC Cranes, agrees with Law that in the present climate crane hire supports crane sales. “It is definitely rentals that keep sales alive” he says. “No one could survive on sales alone.”

He too finds the sales market at the moment slow: “Flat would be a good word. The sales industry is not exactly setting the world on fire.”

And, as with AGD, for NRC telescopic crawlers are also taking over from lattice-boom. “Telescopics do seem to be the way forward. In terms of utilisation, in the 40/50/60t range customers are finding them much more useful. They are ready to work as soon as they reach a site. Logistically they are a better fit.

“There will still be a need for lattice but the growing demand is for telescopics, and that is where we shall make our main investments. So we shall be renewing rather than expanding our fleet: for renters what is important just now is not having the biggest fleet but having the most modern fleet.

“There has been a big influx in new cranes in the last few years” he says. “A lot came onto the market.”

And he too makes the point about low-rate competition from new entrants to the rental market: “It is saturated in terms of numbers. Competition is a good thing, but there is an abundance of crawlers on the rental market just now.”

He can provide an explanation for the current flat-lining in crane sales. In two words it is Tier 5. “Engine emissions are driving, or rather slowing down, sales. Trying to sell a crane during a changeover period is not easy. Customers naturally want to wait for the newer product. All the big projects are starting to ask for the latest—that is, the lowest-emission—products.

HS2 is saying that it wants only Tier 5 engines on that project. The problem with that is that no major company yet makes Tier 5 models— they won’t be around until next year.

We represent Link-Belt and HSC (the new branding of what was Hitachi Sumitomo), and their Tier 5 models will arrive mid to end of 2019. A large crane is a ten-year investment that gives a 20-year return, so noone can afford to replace their whole fleet at once. There has to be a transition period.

“I anticipate that there will have to be some kind of dispensation for cranes on big projects like HS2 until production catches up.”

Mark Evans of Kobelco is also considering the effects of forthcoming Tier 5 requirements. Kobelco at present sell only lattice crawlers in the UK; and here is where Tier 5 and other regulations become a consideration. “We are looking at telecrawler cranes, but they would need to be CE compliant [ie compliant with European Community regulations]. Ours at present comply with Japanese regulations. With the advent of Tier 5 soon, some time in 2019, we are evaluating whether we should do the CE certification work on the present generation of telecrawlers or wait for the next generation. It is a question of what is the right time to do the work and on which machines to do it.”

However, “sales have been improving this year” he says. “We had a reasonably good year last year, and that has continued. Sales to contractors are becoming busier: there is work for them to do so they are either adding to their fleets or else hiring from rental fleets who in turn are buying also. For us, sales for 2018 are ahead of sales for 2017. We are up in Britain, and in Europe too.”

In summary then, sales of innovative products can surprise while sales of larger traditional units are slow. At the heavier-lift end, the shape of the market is shifting from lattice-booms towards telescopic. Large infrastructure projects are in short supply, although HS2 may prove a bonanza for those who have modernised their fleet. And, as ever, Brexit is the big unknown.

Falcon move taller with their new Jaso luffer
Kobelco recently sold these two CKE900G-2s to Delden Cranes of Nottingham
Thames Tideway scheme, one of the few large infrastructure projects in the UK
AGD is seeing telecrawlers taking market share from smaller lattice booms