The tower entrepreneurs

In the space of little more than a month, two tower crane manufacturers arrived for the first time across Australia: German manufacturer Wolffkran and Chinese manufacturer Fushun Yongmao. Wolffkran signed a deal with Melbourne-based crane rental and concrete and formworks contractor Caelli Group, which holds an open house on 7-8 May. The Fushun Yongmaos come via Fushun distributor Lewis Equipment of the USA, which has signed a dealership agreement and USD 30m crane deal with tower crane rental firm and former Comedil dealer Verticon, also headquartered in Melbourne.

Both brands are new to the market, so they face an uphill battle compared with the established players, particularly former native Favelle Favco. Caelli, for example, maintains a fleet of 11 Favco luffing-jib cranes. "The Favelle Favcos remain strong in Australia as they have quick speeds and good lifting capacity and are easy to erect and climb compared to some European cranes," says George Micevski, Caelli plant operations manager. But he adds that they will be phased out as new Wolffs come through. The company has five Wolff 355Bs on order and an option on the 500B. The Melbourne market in particular - in complete contrast to Sydney - is dominated by luffers, says Bertram Breitenbach, Wolffkran business development manager. "Since Caelli is located in Melbourne, luffers are the first to come, but certainly not the only ones."

"Of course Favelle Favco has still a very strong presence," Breitenbach says, but adds that this dominance may have something to do with tradition, and not just cranes. "The presence of certain brands is usually bound to the presence of construction or rental companies that have started up with one or two brands and stick to them to facilitate their internal processes as service and rigging and coordination of the assignments of the cranes."

Verticon managing director and chief executive officer Andrew Torrington also says that Favelle Favco is weaker than it used to be. "Favco certainly has been the traditional favorite, however this has changed significantly in recent years. There is now a good acceptance of electric hammerheads in all Australian markets. Potain has a strong presence in Perth however Liebherr, Potain, Comedil, Comansa and Favco are well represented along the east coast also. Verticon has a mix of all of these cranes, particularly Liebherr. We see the Sun electric luffing and hammerhead cranes gaining a strong presence along the east coast of Australia within the next two years." By Sun, he is referring to the SunCrane branding of Fushun Yongmao towers.

Both new manufacturers are keen, and the dealers are enthusiastic about their markets. "With investments of AUD 20m-30m within the next few years, I believe strongly that this market holds a big potential for us," Breitenbach at Wolff says. "We can feel that the demand is immense and very interesting."

"The market on the east coast of Australia remains strong, although still rather fragmented in terms of tower crane hirers," says Torrington at Verticon.

Many differences

Although they share a market, and share high hopes, the dealers could not be more different in many ways. Caelli's Wolffkran deal is the family owned company's first-ever dealership in its 34 years of history as a concrete contractor. The company now has 650 employees, and 120 plant operators. "Our main business is formwork and concrete, but we have also owned and operated cranes and concrete pumps for a number of years," says Micevski. "We currently have a large number of employees who specialise in tower crane operation, rigging and maintenance so we don't expect too many changes from our current structure until we expand the tower crane operation interstate."

Verticon, on the other hand, was created from scratch in 2004 from the merger of crane rental firms Seca in Queensland and Econ in Victoria, and was extended in September 2005 to add Fire Up Cranes & Rigging in New South Wales. It is a crane-only business. It is publicly listed, and claims to be the Australian east coast's largest tower crane hirer, with more than 100 cranes and 60 hoists. Its turnover is about AUD 40m per year.

The company has ridden a rocky road. In January 2008, it sold back part of its New Zealand operation to Daniel Smith Industries, which had originally sold it in 2005. The crawler and mobile business went back to Daniel Smith, and the tower business was sold to Lewis Equipment in December 2007. The sale paid down 'a significant amount' of debt and freed up capital to buy new cranes, according to Torrington. "All of the original vendors have now left the business, which we see as a positive step forward. We are now focused on turning around the performance of the group through the significant reinvestment in new tower cranes and hoists and the ability to change the nature of the hire market ongoing," he says.

When Verticon took on Fushun Yongmao, it dropped its previous Comedil dealership. "The switch from Comedil to Sun tower cranes was based on a technical decision, delivery times, availability of parts, service and cost," Torrington says. "The alliance will enable Verticon to replace its older fleet of cranes with a new standardised generation of cranes more suitable for the changing demands of builders and also significantly grow our hoist business," he also says. Both Verticon and Lewis are dealers of GJJ construction hoists of China.

He adds: "Demand for tower cranes and hoists is growing - however, demand for a hirer with newer plant and equipment, quality staff, policies and procedures and ISO accredited OHS&E systems is even stronger. We aim to meet this point of difference in the market."

Torrington is referring indirectly to recent management changes made within Verticon. "The business model is being simplified and the customer experience being standardised to a consistent, quality level of service."

The market approach

The crane brands approach the market from perhaps different ends; it is unclear if the two will compete head-to-head. As a high-end German brand, Wolff has a high-end price tag to go with it. Fushun Yongmao cranes are less well-established outside of perhaps its Chinese domestic market, but have much more competitive pricing.

"We believe in Fushun Yongmao and are working very closely with them to continue to refine and improve the product line to worldwide standards," says Kyle Lewis, president of Lewis Equipment. "Our customers are seeking out the new and technologically advanced equipment, which overcomes any potential stigma. We have seen equipment design and quality improve for years from Germany, Sweden, France and Italy. It is now time for the quality Chinese manufactured products to step forward on the world stage."

Verticon emphasises that Lewis forms a crucial link between the customer and crane-maker. "Lewis has significant experience in dealing with and hiring Sun cranes and indeed GJJ hoists. Lewis also has the technical backing in terms of dealing direct with the factory," says Torrington at Verticon. "We see the relationship with Lewis as an opportunity for Verticon to leverage off this experience and for Lewis to assist Verticon in retiring our older fleet."

This relationship is more complicated than Caelli's direct relationship with Wolffkran. But they still rely on mutual cooperation. Caelli has expected, and has received, support from Wolff, Micevski says. "We initially chose Wolff because of their superior product, the quick delivery times into Australia and for their customer support. Wolff has been very helpful in complying with the stringent Australian Standards on tower cranes," he says. Caelli plans to offer its own rigging, maintenance and storage services for customers, Micevski says.

Wolffkran was particularly concerned with customer service, because Australia is so far away, says Breitenbach at Wolffkran. He calls Caelli's service 'excellent' and adds: "It has a strong presence in Victoria and also is active in Queensland - both very interesting markets to start with".