On top of the world16 December 2011
The economic thaw in Sweden, Norway and Finland in recent years has allowed more renewable power, oil and gas, and infrastructure construction projects, with government spending supporting construction. Lifting firms hope the Eurozone economic crisis won’t break their winning streak. Cristina Brooks reports.
Economic expansion in the Nordic region has been above the EU average, giving businesses the green light to build. Insurance Insight reported that large lending and investment opportunities were available in regional construction last spring. “Sweden, in particular (4.4%), followed by Finland (2.4%) and Denmark (2%) close behind are showing good signs of economic growth.” (Insurance Insight: 2011)
Stabilising the regional economy, these governments have less debt than others in the EU, so businesses believe they can grow in the region with confidence. As Sweden, Norway, and Denmark do not use the Euro they may be less vulnerable to Eurozone economic fluctuations.
Eurostat, the official statistical office of the EU government, collects construction statistics. Eurostat’s Construction Production Index values are scaled to represent changes in the volume of construction output in different EU states.
Sweden leads the Nordics with the highest construction production value in the second quarter of this year (139.65) followed by Finland (129.37). Sweden and Finland have shown intermittent spikes of quarterly activity since 2009. They are followed by Norway (106.7) and Denmark (77.3).
Nordic construction production rates are higher than the EU average, slightly stronger than those of Germany and Turkey, and only surpassed by the skyrocketing rates of Poland, Romania and Balkan states like Montenegro.
Construction levels in the Nordic countries were resilient during the 2008 financial crisis when they showed a classic rapid recovery, Euroconstruct said in its June report. “The V curve of fast recovery, a fast drop followed by a fast rise, was seen, for example, in Finland, Sweden, Norway, Germany and Poland.”
The Baltic region, where many Nordic hire firms operate, is slow to recover from the 2008 crisis because construction spending relies on EU investment funds.
The Nordics are an inclement place to build, with downtimes mandatory over winter months and temperatures so cold cement won’t harden, so precast segments need to be transported from factories, but companies tough it out.
Stefan Bohlin is manager for mobile cranes at a Swedish rental firm Lambertsson Sverige AB. With three brands (WBM Hyrkranar, Ralling and Bararelaget Krancenter) that rent out mobile cranes and truck cranes. Lambertsson’s owner is construction company Peab, which is active in Sweden, Norway and Finland.
Bohlin says, “We have 60 mobile cranes from 30t to 300t and 10 truck cranes between 29tm and 150tm. We cover from Stockholm to Malmo with mobile cranes and truck cranes.”
“Lambertsson tower cranes operates in Sweden, Norway and Finland and together we have around 300 units of them running, at the moment we also have cranes from Holland, Germany and Denmark rented in for our market in Norway and Sweden today.”
Lambertsson’s success in 2011 attests to the stability of the Nordic economies throughout the financial crisis. “This year has been good year for our business. We had a down situation in 2009, but in 2010 everything picked up rather well.”
“The Swedish government have done very well during the last five years so we have a good economic situation in Sweden. If you compare with other countries, the construction is on the top floor at the moment but we don’t know what will happen next year.”
He added: “As you know, Sweden is not in the Euro but we are in the EU, so I think that is why. If you look at Norway they have their oil and they are not in the EU.”
Taking advantage of good economic conditions, mobile hire firms are expanding. Bohlin says, “In Sweden we have seen that mobile crane companies are growing and buying up smaller crane companies. There will be fewer smaller companies.”
Bohlin continues, “If you’re talking tower cranes, I think the market has been up and down for 25 years. Lambertsson started to invest in new Potain cranes in 2004 since we have an agency in Sweden and Norway.
“Earlier we had invested a lot in used big Linden cranes. Construction companies like Skanska have their own fleet. NCC have sold their fleet and rent their cranes today from rental companies like us. Peab is our owner and is the biggest construction company in Sweden today.”
Trond Helge Skretting, CEO of Nordic Crane Group based in Norway, explains how Nordic Crane Group came into being by merging of family-owned Stangeland Crane and Kynningsrud. “Nordic Crane Group was founded in 2008 by joining the crane division of two family owned businesses: Stangeland and Kynningsrud.
“Stangeland Crane has been a major provider of crane services on the west coast of Norway, developed through construction and building in the oil and gas industry in the last 30 years.
“Similarly Kynningsrud has been a major provider in the easten part of Norway and Sweden, in oil and gas as well as heavy industry, for the last 65 years.
“We took the crane division of both companies together and founded Nordic Crane Group, owned 50% by Kynningsrud and 50% by Stangeland,” says Skretting.
With business expanding in Eastern Norway, Nordic Crane Group recently acquired TO Bull in Oslo.
“At the moment our greatest activity in the business is within the construction industry in the eastern part of Norway. There is a lot of building going on.”
Skretting plans on opening a concrete element factory in 2012-2013 for building the ready-made concrete elements contractors need in order to build in winter.
Kim Emblem is technical manager for another business that works across borders, VestKran in Norway, providers of engineered lifting and transport in the Nordics and Turkey. Its diverse fleet includes mini cranes, mobile cranes and tower cranes in addition to jacks and other equipment.
“We have not had much growth in 2011, but we have made the basis for growth in 2012-2013.”
Emblem attributes stagnation in building to financing problems. “It has impacted on all building projects that have had problems getting financing because it requires a higher proportion of equity. The same applies to investments in new equipment.”
The industrial sector is not over the financial crisis yet. “Here there is much insecurity due to financial crisis, so this market will have minor setbacks.”
Nonetheless, there is a growing market for 50-200t cranes in infrastructure within the Nordics. “There is good activity in Norway and Turkey, so here we expect an increase,” says Emblem.
Vest Kran’s Emblem hopes that revenues from its new branch in Turkey will help it increase utilisation over the four months of downtime each winter. “We think our investments in Turkey will help because we have about four months out of each year in Norway and Sweden in the winter time with low activity, in Turkey it is possible to take advantage of having the equipment and personnel active all the time 12 months a year.
“This is necessary when the price level is so low as it is now.”
Matti Nieminen of Finnish rental Nostokonepalvelu, a firm Nieminen focused on industrial heavy lift projects and sea transport, explains that these markets are still recovering from the crisis.
“Cranes are working in quite big range of different industrial fields,” he says. They work in taxi crane service, heavy lift and transport. The company also has a ro-ro deck cargo vessel for sea transport.
The Nordic region is known in the lifting world for heavy oil and gas operations in the North Sea, but increasingly there are investments in renewable energy projects, some of which are related to emissions reductions plans that have government support.
All Nordic countries are home to windfarms, with large onshore windfarm Markbygden in Sweden is set to be one of the world’s largest in 2020. In Sweden, 55% of electricity consumed in 2008 was generated from renewable sources, 100% in Norway, and 30% in Finland, and all of these figures are well over the European average (16.7 %).
Wind power is an important growth sector in Sweden for Lambertsson’s mobile crane business, Bararelaget. Bohlin says, “We have a lot of wind power plants that are being erected in Sweden so there are a lot of German companies using our cranes, but we haven’t invested in those big cranes that you need for this business.”
Nostokonepalvelu’s Nieminen says, “For wind business, Sweden gives most of the projects at the moment.”
Vest Kran has been providing for the wind power sector for a long time, it says, and relies on the strength of its broad range of services to tackle these complex jobs.
Emblem says: “Here we are pioneers, we have worked on windmills in all the years there has been windmill work, we also do the installation, transport and engineering.
“Here our customers plan to increase projects in 2012-2013 so we expect an increase in this market also for us.”
“On the windmills we use cranes from 100–200t for the preassembly and rigging of the big cranes, and 350–1,200t for the wind turbine assembly. It all depends on the wind turbine type and site.
“One of the special cranes for this is our Terex CC2800-NT [narrow track] that is specially built and fully optimised for windmill jobs.”
Nordic Crane Group has also invested in CC2800 crawler cranes, and has two with a 600t capacity which it uses for wind installation through its Nordic Crane Wind company.
Skretting says: “The Nordic Crane Wind company’s fleet has been developed by acquiring Swedish companies. Today, Nordic Crane Wind has a fleet of three LG1750 (750t lattice boom truck cranes), three CC 2800 (600t crawler cranes) and five 500t telescopic mobile cranes.
The group continues to be involved with the oil and gas side of the energy industry, Skretting says, “Our business is split between construction, windmill, oil and gas, heavy transport and engineering, along the 3,000km coastline from the southern part of Sweden and throughout all of Norway.”
As far as construction on land goes, equipment rental firm Ramirent has found a large market for its newly acquired towers in Sweden and Norway. Franciska Janzon, director of corporate communications says that utilisation is close to 100%.
Ramirent and construction firm NCC are building a Facebook server farm in Luleå, Sweden based on the availability of hydropower. NCC has a decade-old relationship with Ramirent, and in 2004 Ramirent bought out Altima, NCC’s branch for machinery operations, with its fleet of tower cranes.
Facebook’s servers need a lot of energy to back them up during outages, and this energy will be certified according to LEED energy conservation standards. The Facebook server will use hydropower energy generated by a nearby river and diesel generators in case of a blackout.
Facebook chose Sweden not only for its renewable energy resources, but also because it will use the natural cold to cool server farms using outside air in winter; temperatures reach yearly lows of -15°C (5°F).
Google, building a server farm in Finland for its renewable energy, has adopted a similar strategy.
Kranexpressen is a mobile crane and truck crane hire firm in Denmark. Managing director Lars Ebbesen says the company works in construction but has strategically shifted to include lifting services for energy.
But, Ebbesen says, the business is “still a lot of buildings for factory and concrete houses, big ones for industry, and commercial buildings.”
Kranexpressen restructured its business ahead of the financial crisis to do more work for energy plants. Ebbesen says: “We sold a couple of cranes and did all the work in 2008 to make the business ready for the crisis, so we did okay.”
Ebbesen continues, “The business went from a lot of house building to some more energy facilities, petrol and renewable energy sites they are building instead of coal and oil. We are doing some transportation of big stuff in boats, as well as work in ports and work in construction sites.”
Baltic growth cut
Unfortunately, hire firms operating in the Baltics have not been able to return to the booming rates they experienced right before the 2008 crisis.
Ebbesen at Kranexpressen works on projects in the Baltics and says that while markets are steady elsewhere, the hiring market in the Baltics is slow.
“It may be getting up, but let’s say it’s a bit quiet but now there might be a bit more work.”
Some contractors expanding in the Baltics have had to retrace their steps. NCC, working on residential construction recently sold its eight-year-old Lithuanian branch.
However, Finnish equipment hire firm Ramirent had steady revenue from the Baltics this year with a 39% increase in sales within the region primarily for power plants.
Back on ice
The tentative growth in the Nordics could be put in the deep freeze during the Euro crisis; it expected to ‘pause’ until 2013, said Euroconstruct in November.
It made a correction of its mid-year optimism this autumn, noting that governments will dramatically tighten their budgets and this will impact confidence in new build.
This may mean that Nordic companies will not expand in 2012 at the same rate they have for the past two years, but will remain stable.