What a difference a year makes

The first port of call is Ireland’s Arklow Crane Hire, run by Niall O’Toole: “We are probably doing 10% of the work we were doing in 2005 and 2006. Back then, we were turning over €2.5 million, but now, it is a fraction of that.

“These days, we are down to two Liebherr mobile cranes, a 40t and a 90t. To make matters worse, the rates you hire them for has halved. Previously you could rent them out for €1200 for 10 hours; now the most you could get for that is €600.”

His difficulties are a direct result of a drop in demand for crane work in his country. For a decade until the recession, property investments were hugely popular and profitable, and a price bubble was beginning to form. When this burst in 2007, Ireland's economy shrunk by 10% — the economic definition of a depression.

“The housing market is definitely to blame,” commented Niall. “We now have over 300,000 surplus houses in Ireland, just sitting empty. There is no demand for new houses here and so there is no new building work; just the occasional finishing of incomplete projects. We are down to 2 or 3 major contractors now. With no building industry, the demand for tower cranes has fallen especially. There are probably only half a dozen tower cranes in Dublin.”

The dip in the country’s fortunes has hit Niall’s firm where it hurts the most; he sold 5 cranes in the past two years, reducing his fleet from 7 to 2. With the sale of his largest crane, a 100t Liebherr mobile, it is clear that the rental demand for such machines just isn’t what it used to be. Niall says that his situation is far from unique.

Rental rate pressure
A similar pattern emerged when Cranes Today spoke to British firm Roadcraft Crane & Plant. Director Paul Moors says, “Things are still very much the same as they were 2 or 3 years ago. Utilisation of our cranes is slightly better than before, however rates are still lower than they should be.”

Moors acknowledges that Roadcraft is surviving better than many others in similar situations: “During the past year, we are fortunate enough not to have had to sell any of our fleet of mobile cranes. We haven’t added to our fleet either, because it is not a brilliant time for mobile cranes in general. I wouldn’t think about investing in cranes until a solid pattern of work emerges.”

At Burnett Crane Hire, Peter Burnett says that over the last 12 months, the utilisation of his 15t and 30t truck cranes has declined: “I’d say there has been around 20% less work than last year. There is a lot of false hope and projects were cancelled.”

Burnett says, “The public sector cuts have had a knock-on effect on us. They are starting to bite as the suppliers to the public sector are beginning to feel the squeeze.”

Reasons to be cheerful
Over in India, however, there are plenty of reasons to be cheerful. ABG Heavy Industries is a large company with the even larger task of assisting India’s ongoing economic growth. With growth of 10% forecasted for 2012, this means a lot of new infrastructure, a lot of commercial construction and a lot of residential building.

Project manager R C Swamy explains: “It’s going okay here, there has been no downturn as far as we can see. The status quo is being maintained; the market is in the same condition as it was a year ago. Over the last five years it’s been up and down, but business has consistently been high overall.”

India’s economy has proved to be tough; while the western world was facing financial ruin in 2008, India reported growth of 6.5%, before bouncing back to 8% the following year.

Despite this, India has until recently lagged behind in the crane department. Most work was done by manual labour. Smaller cranes have taken up this work, which has improved safety, reduced accidents and boosted productivity.

Swamy says: “It is true that manpower is being overtaken by lifting technology. More cranes are being used now on new projects that manpower cannot handle, such as steel plants and thermal power projects, as well as many new high-rise buildings.”

Turning enquiries into work
It is quite a different story in Iran. Part Loader is a crane seller and rental firm with presences in Iran’s capital, Tehran, as well as Dubai. Board member Amir Mehrabadi Jr says, “What’s happening in Iran is that the market is slow. It is gradually starting to pick up, but there have been no significant changes in the past year.

“There is no market for new cranes in Iran. It’s not like five years ago. Back then, with second-hand cranes we were selling 100 units per year. But now, in the past two to three years, this has reduced to 10 units per year, maybe even just seven or eight.”

As with other countries, there are small signs of a recovery, Mehrabadi says: “Compared to previous years, we are being approached more and more by our clients. Not every enquiry becomes a secured deal, and altogether it has not been the change we were hoping for.

“Iran's crane industry is doing better than the rest of the Middle East, even the UAE. Because of the restrictions [on international trade], it makes our market very limited. That means that Iran has not been as badly affected by the global financial crisis as other countries in this region. We are hopeful that we will have made an 80% recovery by next year. That would mean trade returns to the levels of five years ago.”

Amir says that the renting of cranes has been largely undisturbed by the downturn in economic fortunes: “The rental market is very good at the moment and revenue from this is high. Because of this, we probably rank in the top three crane companies in Iran.

“90% of our business takes place in Iran, in both selling and renting of cranes, but we do not only deal with the Middle East. The rest of our trade takes place mainly in South Korea and Singapore. We used to do a lot of business with Japan, but not anymore, due to the trading restrictions.”

Building diversity
Enjoying a busy year was Ainscough Crane Hire, one of the UK’s largest crane rental firms. With 45% of their work coming from the ailing construction industry, Ainscough has avoided the hazards of specialising in a single market. In addition to the construction industry, the firm is involved in the energy and infrastructure sectors. By diversifying, Ainscough is keen to pursue these growth areas as the economy recovers.

A typical example of Ainscough’s recent activity is the installation of over 40 onshore wind turbines in Ayrshire. This decidedly modern operation was carried out using a 500t Liebherr LG1500 and a 600t Terex TC2800, both lattice boom truck cranes. Other tasks have seen their fleet involved in petrochemicals, oil and gas power stations, and even shipbuilding work.

While no single pattern emerges when reviewing the previous twelve months in the crane industry, it is fair to say that fortunes have polarised, with the larger companies having done well, and the smaller companies having experienced periods of painfully slow trade. For some less trade can mean no trade at all, with a few firms vanishing from the Fleet File altogether since last year's survey.

This is the time to diversify, to explore every avenue available. As Ainscough has demonstrated, there is life outside of construction. And as Burnett Crane Hire has shown, even smaller crane companies can seek non-construction alternatives, however inconsistent these may be.

Whatever the state of the economy, there is always demand for cranes. The difficulty is finding a niche and clinging to it.