TEMPORARY TUMBLE

With the benefit of hindsight it could be said that Potain’s timing stinks. It launched its big push into South East Asia at the exact moment that that very market decided to take a nose-dive.

But Eric Etchart, the man sent to spearhead Potain’s Asian revival and now managing director of Potain Pte, is not down-hearted and keeps his eye on the long term. “I’m very relaxed,” he says. “Obviously 1998 will not meet our original budget expectations, but the long term strategy will pay off.

“It’s only damaging our short term plans, but we are sticking to them.” Etchart moved from the Italian subsidiary to Singapore in August last year to set up the new division.

Potain cranes can be seen just about everywhere in South East Asia. Excluding China and Japan, as many as 40% of all tower cranes in Asia are Potain, according to the company’s own estimates, with most of them having been bought second-hand from European rental companies.

But Potain has fallen behind in recent years, even though the continent still accounts for about 25% of the company’s FF1.5bn turnover.

At the start of the decade Potain was very profitable on the back of excellent business in Europe, particularly France and Germany. It could perhaps fairly be accused of having rested on its laurels and, Etchart himself admits, Potain did not think enough about the Asian market where it was overtaken by manufacturers with luffing jib models.

The recent acquisitions by Muhibbah of both Favelle Favco and Krøll have given the Malaysian company the opportunity to dominate new sales in the Asian tower crane market and present a real threat to Potain and the rest.

As well as the currency crisis, a second blow to Potain’s Asian aspirations was its failure to strike an acquisition deal with Wolff, whose luffing range does well in the region, particularly at ports.

Potain now has its own luffing range, albeit nothing yet over the 300tm load moment range. Since launching its first luffers at the Intermat show in Paris last year it has sold 10 model MR90 luffers in Singapore, Malaysia and Hong Kong.

Potain does well in Hong Kong, where Manta has been its agent for about 20 years, and has sold about 70 units in each of the past two years. This gives Potain a market share of about 60%, Etchart reckons.

But competition in Hong Kong is growing, particularly from Liebherr and also the Chinese manufacturers. With the rental market down, sales are unlikely to be sustained in 1998.

Proficiency Equipment, which has a rental fleet of 65 tower cranes, says that rental rates were down from HK$7m a month at peak to HK$2m last year. While Proficiency’s 15 luffing models are still in demand, utilisation of the hammer-heads has been hit since the completion of Chek Lap Kok airport. Proficiency won’t be buying any more cranes this year, says managing director Richard Kwan. And this attitude is probably typical.

In South Korea, where the market is about 300 units a year, Liebherr’s licensee, Hanyang, and Kunkang Comedil are strong players. Potain had a good 1996 with more than 60 cranes sold, yielding FF100m, but 1997 was tough as the market fell 20% and he doesn’t hold out much hope for 1998.

Thailand, once a good market and where Wolff has a joint venture, was where the whole currency crisis sparked and it is a severely damaged market.

“It will take a long time to recover, so we will put less emphasis on it in the future,” Etchart says of Thailand.

Taiwan is a much smaller market, with about 40 or 50 units a year. “Taiwan is probably our weakest country,” Etchart admits. “We’ve lost momentum.” Liebherr again dominates, and Comansa has had some success too, he says.

Econ sold more than 100 Comansa cranes in SIngapore and Malaysia in 1996 and more than 35 in 1997, according to Ralf Hagestedt, the regional manager of Comansa Linden Asia Pte, which was recently established in Singapore and is this year opening a spare parts stock.

Comansa’s Singapore-based dealer, Econ Machinery, has taken the first two of Comansa’s brand new LCL luffing cranes, which are being exhibited for the first time at the Bauma show this month (see Bauma preview, this issue). A further eight LCL units are also ordered.

According to KH Ang, managing director of Tiong Woon Crane & Transport, Jaso and Gru Comedil are currently popular in Singapore. Jaso has Soon Douglas as its agent in the region.

It is easy to get the impression that Singapore is solely a luffing market and therefore not a Potain stronghold, but the luffers are all on the compact downtown sites and are thus highly visible. Around the island the mix is about 50/50 luffers/hammerheads, he says. “We’re growing in Singapore. The trend is towards rental.” This move towards rental suits Etchart because a strong asset of Potain cranes has always been their re-sale value. The currency crisis is likely to further strengthen the trend towards rental and away from contractor-purchasing. Anything that boosts the rental sector, it could be said, boosts Potain.

Another feature of the Singapore market, where the end use is building, is the desire for long jibs, whereas in South Korea the end use is more often heavy industry or steel handling, so high capacities of 20t and over is the key requirement.

Potain signed a new dealership in Singapore last July with Manta Singapore, a company formed in the shake-out of Malaysian company Mulpha’s 1996 acquisition of Manta in Hong Kong and Richard Machinery in Singapore. The parties are discussing extending the dealership to Malaysia as well, which is twice the Singapore market.

“If Manta get as good in Singapore and Malaysia as they are in Hong Kong we will be very happy,” Etchart says.

Like Singapore, Malaysia too is moving towards rental but the tower crane rental sector is only around 40% at the moment compared with Singapore’s 70%, he says.

Because of historical links, Vietnam is the one Asian country where French products are particularly welcomed. “We are selling, not a huge number, but we are selling,” he says. It is a small market that he expects to expand as international contractors move in and demand better equipment than much of the used stuff that has been shipped to Vietnam from more developed Asia countries.

The markets that particularly excite Etchart and Potain are China, unsurprisingly, and Indonesia. Indonesia may have suffered dreadful turmoil already this year and Potain has had orders cancelled. But it is a country with 200m people and rich in natural resources, giving Etchart cause for optimism in the long term. “1998 may be a bad year but the potential will remain. We expect growth in the future.” As for China, it is 10 years since its licensing agreement with a Chinese manufacturer was wound up. But last year Potain stuck its toe into Chinese waters once agin, this time through a manufacturing joint venture with Linghong near Shanghai.

“We see that as a long term project. If you think long term, you have got to be in China,” he says.