Cat fight30 August 2000
Phil Bishop reports on the development of Favelle Favco’s range of crawler cranes and legal wrangles that are still rumbling
Laney Directional Drilling often finds itself working on muddy riverbanks, drilling pipelines under shipping channels. Based in Houston, Texas, with an international branch in Mexico, the American specialist contractor needs something more than a regular cherry picker for lifting pipelines around its sites. It has in its fleet several Mantis telescopic boom crawler cranes, but more recently it has turned to a rival product, newly developed last year by Favelle Favco Cranes (USA).
FFC crawler cranes are distinctive in that they are “90% Caterpillar”, according to their inventor, Danny Davis. The cranes basically comprise a standard drivetrain supplied by Caterpillar Industrial Products, and familiarly seen on Caterpillar excavators, plus a telescopic boom supplied by boom truck manufacturer Manitex. To say that all FFC does is stick the two together and look for a buyer would be a gross oversimplification – but not wholly inaccurate. Lattice boom versions are also offered.
Davis had come up with the Cat-based concept – innovative but not completely original, as others had explored the idea in the past – and persuaded Favelle Favco, the Australian tower crane manufacturer owned by Muhibbah Engineering of Malaysia since 1995, to back him. Favelle Favco Cranes (USA) was established in Port of Harlingen, Texas in late 1998. It was 10% owned by Davis, 90% by Muhibbah.
The engineering input was subcontracted to Eccon, the Austrian consultancy of Horst Zimmerman, former technical director of Liebherr-Werk Nenzing.
Enduring difficult market conditions in Asia, Muhibbah badly needed to tap into the US market which was still booming. With the tower crane market growing but still limited, it welcomed the approach from Davis, previously a senior executive in the Singapore office of leading US crawler crane manufacturer Manitowoc. Davis had grown disaffected by management changes above him and burned with unfulfilled ambition.
With Davis as president of the US operation, FFC showed its first machines last year at Conexpo, the massive equipment show in Las Vegas. At that stage the range was made up of: a 28 US ton and a 38 US ton capacity telescopic boom crawler crane, the FFC 28T and the FFC 38T; a 50 US ton lattice boom crawler, the FFC 50mT; and a 9 US ton rubber tyred cargo handler, the FFC 9T. All were strongly dependent on major components supplied by Caterpillar Industrial Products, and this was to be Davis and Favco’s key sales proposition: the parts are well proven and you can have unrivalled back-up from your local Cat dealer. The brilliance of the idea lay in its simplicity. But would it work? Could the market be persuaded? Davis spoke of first-year sales of 100 or more, with a little luck and a prevailing wind. But in fact after one year just six cranes had been sold. The vision was to tap into Caterpillar’s distribution network. But Cat dealers are independent and FFC’s relationship is with Caterpillar Industrial Products, which is not entirely the same as Caterpillar getting into the crane business. In fact, as of May this year FFC only had eight Cat dealers on board and in spite of attempts to export (in July 1999 the cranes were shown at the Conet exhibition in Tokyo) these were all in the USA.
Then on 8 September 1999 the story changed direction dramatically. The Malaysians flew into Texas and removed Davis without notice. Their grievance was that Davis had put his own name on the design patent. Having bankrolled the operation they figured they were entitled to at least partial ownership.
Much consulting of lawyers inevitably followed. Davis argued that it was all his idea in the first place. Muhibbah argued that it was some kind of breach of trust for Davis to put his own name on the patent when it was 90% owned by Muhibbah. Muhibbah offered Davis its 90% at a price Davis judged rather high; he countered with a equally steep rate for his 10%.
Davis claims ownership of the product; he wants to assemble and market the cranes himself. Not unnaturally, given the amount it has invested, Muhibbah sees things rather differently. They figure they had already paid Davis for his ideas by giving him 10% of the company. Legal wranglings continue and quite what will happen next remains unsure.
After various preliminary tussles, the big court battle is set for 13 November when Favelle Favco Cranes (USA)’s suit against Davis for breach of trust and to get ownership of the patent, and Davis’s suit against the company to stop it infringing his patent will both be heard. FFC has the more expensive lawyers, while Davis will be hoping to appeal to the natural sympathies felt towards underdogs. With it being a Texan court, Davis could be seen to have a certain home advantage. He has already developed ambitious plans should he win the legal battle.
While the suits are fighting it out, the crane guys have been getting on with their work.
FFC (USA)’s engineers worked hard to get CE certification – legally required for sale in the European Union – in time for the big Intermat show in Paris back in May.
A workshop was established in Papenburg in Germany, to assemble the Intermat machines. Depending on feedback from this show, FFC intends to set up its own assembly facility in Europe, either independently or in conjunction with Krøll in Denmark, the tower crane manufacturer Muhibbah acquired the year after it bought Favelle Favco.
To date FFC has built 16 of the Cat-based cranes and in the USA has sold just six, all through the Cat dealer, Mustang, based down the road in Houston, Texas. Of these six, four are with Laney Directional Drilling. Laney has three machines in the USA and one in Mexico. Robert ‘Scooter’ Hamil, Laney’s vice president and operations manager, says the Favco crane was chosen in preference to the more established Mantis teleboom crawlers because it appears to be a more rugged machine.
“The undercarriage and hydraulics have been proven over the years,” he says, in reference to the Caterpillar contribution, “so we think it will be a better, stronger machine. We have had good luck with the Mantis, but these we think are heavier duty and therefore will be good for the long term.
“Naturally, a heavier duty machine costs more money but it lasts longer, we hope.” It is early days yet, he says, but the Favco tele-crawlers have been used on several jobs and rapidly proved themselves at least sufficiently satisfactory for Laney to increase its initial order from one to the four it has today.
And that is about as much recommendation as any machine could wish for.
FFC was boosted by the addition of Rob Ferree to its ranks as sales vice president shortly before Intermat. Ferree is an experienced crane salesman with many years at Grove, in both Asia and the USA. FFC describes Intermat as a great success. “There were many serious enquiries, not only enquiring to buy the cranes, but also enquiring to represent the Favelle Favco product in their markets. Of the four cranes exhibited at the show, three were sold at the exhibition while the sale of the fourth unit is currently being negotiated.” The cranes that were sold, the telescopic 28T, 38T and the 50T models, went to J. Zwagerman International in the Netherlands. Its subsidiary, Crane House, signed up as exclusive dealer for the Netherlands (see News).
To crack the export market, FFC’s salesmen have also been working on major Caterpillar dealers such as Finning and Zeppelin. The latter, dominant in Germany, would need to be seduced away from German manufacturer Sennebogen with whom it has a close relationship.
Ignoring the legal tussles, as far as possible, FFC’s shop floor is also pressing ahead with plans to introduce three new larger models next year. The target is to exhibit at Bauma 2001 in Germany with a 50 US ton capacity telescopic boom crawler, a 75 US ton telescopic boom crawler and a 75t lattice boom crawler. The company is also aiming to have a refined version of the prototype 9 US ton wheeled machine shown at Conexpo and a 15 US ton version before the end of this year.