Targeting China

Accession to the World Trade Organisation, work for the forthcoming 2008 Olympics in Beijing, acceleration from an agrarian to an industrialised economy, and socio-cultural change driven as much by satellite television as economic development - all of these factors are combining to generate unprecedented demand for the modern construction machinery in the People's Republic of China.

According to Yasushi Ishimaru, acting general manager of overseas marketing at Kato Works Ltd, demand for hydraulic truck cranes in China in the first half of 2002 was about 60% higher than in the previous year.

Liebherr-Werk Ehingen delivered 10 all terrains and a crawler crane to Chinese customers in 2002, compared to just one unit in 2001. The ATs included four LTM 1200/1s (200t), two LTM 1250/1s (250t) and an LTM 1300/1 (300t). The crawler was an LR 1400/2. Sales are expected to be at least as good in 2003.

'The market in China is moving now and has developed a lot. More and more semi-private companies are being established and looking for cranes with advanced technology and performance,' Liebherr says.

Sister company Liebherr-Werk Nenzing has also sold five of its 280t LR 1280 crawler cranes to Chinese customers this year. Two units are in operation with Sinopec and third is being delivered to the same customer this month. The fourth and fifth units are also being shipped this month, one to Shanghai Electric Construction Engineering and one to Anshan Iron Steel Factory.

Kobelco also reports strong demand in China for its large capacity crawlers such as the 200t rated 7200 and the 250t CKE 2500 for foundation work and power plant construction. Kobelco has sold more than 40 cranes this year to customers in China and Taiwan this year.

There is growing demand for the very biggest crawler cranes also. Demag delivered a 1,250t capacity CC 8800 to Sinopec in China this year as well as a CC 2800, two CC 2500s and a CC 1800-1 to other customers there.

Crane manufacturers have begun to re-evaluate their corporate presence in China. Manitowoc Crane Group has moved its Asia head office from Singapore to Shanghai, where its Potain division has a tower crane manufacturing plant.

Loader crane manufacturer Palfinger has been prompted by recent changes in the mainland China market structure to open a representative office in Beijing this year. Palfinger is aiming to set up a distribution and after-sales network. 'It is believed that the tightening up of legislation concerning the transportation business and the shift towards individual and privately owned companies banking on cost efficiency will trigger the truck loader crane market to finally take off,' says head of marketing Harald Böhaker.

The growing importance of China as a market for construction machinery has led to the launch of a Chinese Bauma fair, organised by the same people that run the famous Munich Bauma every three years. The first Bauma China was held last month at the Shanghai New International Expo Centre. According to one exhibitor, German piling equipment specialist Bauer, 'the success of this first exhibition is promising for the future'. During the four days of the fair there were approximately 50,000 visitors.

There were 350 exhibitors from 23 countries, including 94 from Germany. Crane manufacturers that exhibited include Demag, Grove, Potain and Sennebogen. Sumitomo distributor Tat Hong was also there.

Perhaps the 7th Beijing International Construction Machinery Exhibition & Seminar (BICES) next October will see a similarly strong, or even stronger, turnout from the crane industry. (Further details at www.const-mach.com.)

Patchy elsewhere

Elsewhere in Asia there has been a slow and patchy recovery from the financial crisis that began in Thailand in 1997. Various manufacturers report sales in Singapore, Taiwan and South Korea, and Kato and Liebherr both claim some success with mobile cranes in Vietnam. Liebherr companies delivered two new ATs (an LTM 1080/1 and an 1100/2) and an LR 1100 crawler crane to Vietnam in 2002

Other major successes reported by Liebherr Ehingen in the region include the sale of two 500t LTM 1500s into Singapore, a market previously considered unlikely to have a need for such large telescopics. The first unit was delivered to Bok Seng Crane in May 2002 and the second to Chua Chuan Leong in November. Customers in Singapore also took four used crawler cranes from Liebherr Hong Kong, the regional base of Liebherr Nenzing.

Liebherr Ehingen increased the number of used cranes it shipped to Malaysia but had no success in Taiwan. In 2001 it delivered two LTM 1160/2s to Taiwan but nothing at all in 2002. 'We sold one crane to a Taiwanese customer, but the crane was delivered to his branch office in China,' the company adds. 'For 2003 we expect recovery of the economy and the crane market.'

Kobelco, by contrast, had 'good demand' in Taiwan for its 80t class duty cycle BM 800HD for foundation works, indicating that a rise in demand for lift cranes may follow on later.

The crawler crane market in Hong Kong, where deep piled foundations are needed for so much construction on reclaimed land, has seen Liebherr Nenzing challenging Kobelco fiercely in recent years. Neither company is satisfied with the market this year, however.

'The Hong Kong market has shown a dramatic decrease in sales of new equipment,' says Andreas Ganahl, managing director of Liebherr Hong Kong.

Ganahl says that Korea has picked up and is a good market for used cranes. Liebherr Hong Kong delivered two HS 872 duty cycle crawlers to Korea this year. Sister company Liebherr Ehingen shares Nenzing's optimism over Korea and opened a branch office there in August. Liebherr Ehingen delivered three cranes to Korea in 2002 - a 200t all terrain and two large crawler cranes.

The tower crane operation, Liebherr-Werk Biberach, also has its eyes on Korea. While the tower crane market across Asia remains at low levels, with no sales growth in evidence, a large order for 30 top-slewing 280 EC-H cranes that may be about to come out of Korea has particular importance.

A major breakthrough was made by Manitowoc in Korea during the year when it received an order for a model 2250T lattice boom truck crane from the Daewoo shipyard in competition against Demag. It is a significant order for Manitowoc because all the big lattice boom crawler cranes in the yard are American Crane models. This unit was delivered in September with 91.4m of boom and a special wide version carrier.

Japanese crawler crane manufacturer Hitachi Sumitomo also lists Korea as a country where there is good demand, particularly for its 200t class SCX 2000. This company, or Hitachi Sumitomo Heavy Industries Construction Crane Co Ltd to give its full name, is the result of Sumitomo and Hitachi pooling their crane interests in July 2002. The SCX 2000 is the new name for the Sumitomo SC 2000-3. Machines with capacities of 90t and above are supplied by Sumitomo's Nagoya works and smaller machines are made at Hitachi's Tsuchiura works. The SCX 2000 was launched as the SC 2000-3 in 2001. Three units were shipped in 2001 and a further 12 by November 2002.

The first new crane from the combined Hitachi Sumitomo development team will be a 90t model launched in April 2003, with a 120t rated model to follow.

Hitachi Sumitomo reckons that that it has a 45% market share for crawler cranes in Asia - 'however, we aim to expand it much more' says international sales and marketing manager Takahiko Kosa.

'Thanks to making the best use of information channels for both parties, inquiries have been increasing,' Kosa says. Given that there appears to be no growth in demand in North America or Europe these days, Hitachi Sumitomo is targeting Asia in general, and China in particular.

Ian Banks, who until recently was regional general manager of Demag Mobile Cranes, based in Singapore, says: 'The market in Southeast Asia has remained fairly stable this year and has been restricted to such territories as Hong Kong, Taiwan and Singapore. There have been a number of large used crane sales including a Demag CC 6400 and six units of the CC 2600 to Singapore [delivered between mid 2001 and mid 2002 to Tiong Woon]. It seems that local companies have taken up the challenge of large crane rental, moving away from the highly competitive local taxi crane business, and venturing out into projects in other countries in the region for their business growth.'

Banks continues: 'The replacement crane market is visible again but new growth is still not apparent. Hong Kong and Thailand have begun large projects but the crane requirements for these are being met largely from the machines already available in the rental market.'

There are some sales still, though.

The high speed rail project in Taiwan took delivery of four Demag AC 80s, he says, and the rail and road projects in Hong Kong saw the delivery of an AC 200 and two AC 300s.

There was also a breakthrough with the 40t three-axle city crane. 'Up until recently some countries have not permitted the use of single cab cranes on the road but we broke new ground this year in Hong Kong with an AC 40-1 for the Marine Police ,' says Banks

He adds: 'The new airport project in Thailand is creating interest throughout the rental companies in the region, but it is likely that demand will largely be met with the existing cranes in the region. The bids have been so competitive that there is hardly room for the rental companies to invest in new cranes.'

Overall, Demag sold more cranes in 2002 in Southeast Asia than it did in 2001, and the crawler business was strong, but the average capacity was down, suggesting no increase in revenues.

Since Terex took over Demag, it has closed down the Demag office in Singapore but Banks finds himself with a larger role than before. He is managing director of Mobile Cranes Asia Pte, Ltd, which is up and running already in Singapore and Vietnam and soon in Hong Kong and Thailand, he says. Banks explains: 'The aim is to continue as before in the sale, service and product support of the existing Demag range and expand to include the rest of the Terex Cranes product range in Southeast Asia.'

The truck loader market has shown 'clear signs of recovery' in Southeast Asia in the past year, according to Palfinger. As of the end of October, Palfinger's private sector sales in the region were up 56% on the same period of 2001, and 11% up on 2000. Palfinger recorded its greatest growth in Indonesia (up 90% on 2001) and Thailand (up 56%). Its sales rose 30% in Singapore and doubled in Malaysia, although from a low level.

A waterworks contract in the Philippines has given Palfinger a market share that might be as high as 80%, it believes. Army business remains at a steady high level due to continuing delivery of a contract awarded two years ago in Singapore.

'In general, we noticed an increased demand for high capacity cranes over 32tm, especially in Singapore and Hong Kong,' Harald Böhaker says.

Italian knuckle boom crane manufacturer Effer has enjoyed a 25% rise in sales in Asian markets in 2002. Its best sellers are its 50tm and 70tm models, although Effer reports growing interest in larger cranes up to 120tm. Effer delivered a massive eight-section, 105tm class 1250/8S to Hong Kong this year.

Japan

Japan, of course, remains a market apart in the region. It remains a severely depressed market. According to Kobelco, total domestic demand for lattice boom crawler cranes fell 25% in first half of fiscal 2002 (the six months ending 30 September 2002) against the same period last year, and demand for rough terrain cranes dropped 18%. Kobelco says that although overseas sales of its larger cranes grew owing to the stronger US and Chinese markets, its consolidated crane sales decreased to ¥8.1bn ($67.0m), down 19.3% from the same period last year. In addition to new crane sales, Kobelco worked on strengthening its stock business for cranes. It also began producing more parts inhouse.

Usually the only access for non-Japanese manufacturers to the Japanese market is with large all terrains. Demag, for example, sold two 650t rated AC 650 SSL units. SSL stands for sideways superlift, an attachment designed with the needs of the wind turbine erection market in mind, and these units will indeed be used for wind turbine erection, a market that Demag says is growing strongly in Japan. Liebherr Ehingen sold six ATs to Japanese customer in the first 10 months of 2002, namely two LTM 1090/2s, two LTM 1160/2s, an LTM 1200/1 and an LTM 1300/1. This was a slight increase on the five ATs that Liebherr sold in 2001.

Japanese crawler crane buyers are normally fully satisfied by the broad range of domestic product but Liebherr Nenzing made quite a breakthrough this year, selling its first units into Japan. Three units of the duty cycle HS 853 HD were sold to the contractor Obayashi, via German foundations specialist Bachy Soletanche, which has a cooperation agreement with Obayashi. The cranes are equipped with diaphragm wall grab type KS 02, designed and manufactured by Soletanche, which also equipped the machines with its control system that enables the operator to do a job fully automatically.