It seems to be the same the world over. Interest rates are down. Construction is booming. Crane hire companies are renewing or expanding their fleets. The only problem is that the waiting time for new machines is too long, with manufacturers quoting at least a year and often more than two years.
“I have never experienced activity like we have had in the past year. It is unbelievable. Construction is just very, very strong. 2006 was out best year ever and we should repeat that as a minimum this year,” says Sören Jansen, managing director of BMS, Denmark’s largest mobile crane hire company. “The problem is we can’t get cranes.”
Kenneth Nilsson of Kenson, the Grove distributor in Sweden, says: “I have been 38 years in this business and have never seen anything like this. Everybody wants to buy.”
“It’s very hot in south Sweden,” says Henrik Ekelin, manager of Malmö-based mobile crane rental company Ralling, and he is not talking about the weather. “There is a lot of work to do. We have no spare cranes.” Ralling has cranes working on house building propjects as well as a major tunnel project and a new waste to energy plant, both in Malmö. Ekelin says that Ralling wants to buy five or six more cranes. He placed orders for three in May, the largest of which is a 300t Liebherr LTM 1300-5.1, “but they can’t deliver for 18 months,” he says.
“The market is indeed very good and listening to other colleagues in the big towns of Sweden the market there is even better. They don’t have enough cranes for their customers,” says Erik Bogg, chief operating officer of Mora Mobillyft AB, based in a small town in mid Sweden.
Current workloads represent a significant turnaround in fortune for many crane owners in the region. “In Sweden we have had 15 years of bad times because the government stopped building homes and public work construction in 1991,” says Lars Morast, chairman of the Swedish Crane Rental Association. “We lost 35% of our members and 35% of our best cranes. And now, over the last year, every hook in the country is occupied. We are very busy today. The government is building houses again.”
It is not just house building. There are industrial projects across the region, oil and gas projects, renewable energy, tunnels, highway infrastructure and commercial construction.
Henrik Ekelin, manager of Swedish rental company Ralling, says the boom now happening was slow in coming to Sweden. “When we built the bridge between Sweden and Denmark, we expected growth but it didn’t happen. Finally it now is.” The Öresund crossing, linking the Danish capital of Copenhagen and the Swedish city of Malmö, opened in 2000.
Others attribute the construction boom simply to low interest rates and a strong world economy.
However, though crane owners are much busier, securing good profits can still be a problem.
Jorgen Radendal, managing director of Kranenexpressen, says of his home market in Sweden: “Rental rates are low because there are too many cranes in the market, especially in the south, where we have Danish and German companies competing. The prices now have been the same since 1991.”
Henrik Ekelin says rental rates have been raised “a bit, but not as much as we wanted”.
“We are like the farmers in France, complaining all the time,” says Christer Edin, managing director of Swedish rental company Edins Kranar. “Actually business is very good and rates have gone up.” However, he qualifies this by adding that over the past 10 or 15 years rental rates have still not risen as much as costs. “We are making money and have always done but the problem is that we are working too many hours, and have been for 20 months now.
Mats Pernhage, general manager of Kynningsrud Kran AB, the Swedish branch of the Norwegian company Kynningsrud Kran AS, says: “The prices could be better of course.” However, rental rates are now going up, he adds.
Like other companies Kynningsrud is very busy with its fleet of 110 mobile cranes and four crawlers. “We work on the west coast of Sweden and the southern part of Norway. We have a lot of jobs to do both in Norway and Sweden,” says Pernhage. “For us, this year and next year will be good years.” He says that workload is peaking in Norway this year but will not peak in Sweden until next year. “The building industry is going very fast and some big industries are doing a lot of new installations.”
Consolidation activity
Some believe the key to better profits is consolidation of the crane rental industry. Jorgen Radendal says it would lead to higher rental rates. Sören Jansen says it would reduce costs. “Further consolidation of the Scandinavian crane rental market is much needed to drive down cost and harvest synergies,” Jansen says.
Geography makes consolidation difficult in Scandinavia. Norway and Sweden are long thin countries with low population densities largely centred on metropolitan areas. As Jansen says: “One thing that makes it difficult is the large geographic distances. If you are in northern Norway, no one is going to come and challenge you, not like in Denmark and Germany. But price pressure will make it happen.”
To some extent, consolidation is already happening. It is hard to see how Denmark could be much more consolidated. BMS has already secured itself more than 50% of the market, having acquired Krangaarden in 2001, HVS Kraner in 2002 and Kran Ringen in 2004. In 2005 it crossed the Öresund and opened its first Swedish depot with the acquisition of TP Kranar. Earlier this year it bought the Danish machinery moving specialist Söndergaard, based in Jutland. The BMS group now has 135 mobile cranes, 30 truck loaders and 700 aerial work platforms. Its sales turnover in 2006 was €67m ($83.8m).
Thomas Wolff, managing director of Terex-Demag’s Scandinavian office, says there has already been some significant merger and acquisition activity among rental companies in Norway over the past few years, and he predicts more for Sweden over the next five years, especially with several owners of smaller companies reaching retirement age.
Between 2000 and 2002 Kynningsrud brought together six companies in Norway and Sweden, including the Swedish companies Maxlift, Tunga Lyft and Kran-Elve. And last year it took over Oslo-based Delmark Transport.
This year has seen the Johansson brothers in Sweden selling their mobile crane rental businesses Bärarelaget Krancenter in Helsingborg and Ralling in Malmö. The buyer was Lambertssons, the tower crane division of Peab, which is one of Sweden’s top three construction companies.
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“Christer Edin, managing director of rental company Edins Kranar” |
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We are like the farmers in France, complaining all the time. Actually business is very good and rates have gone up |
Finland’s largest rental company, Havator, closed three acquisition deals in May, buying the transport company CS Trans in Vaasa, Pika-Tikas, a powered access rental specialist in Helsinki and Avilun, a crane hire company in Helsinki which has a small but modern fleet of Liebherr and Terex-Demag all terrains.
Havator has strengthened its financial position for such deals. In December last year group president Erkki Hanhirova, who became sole owner after buying out his brother Antti, sold a 20% share in the company to strengthen the finances. Iceland-based Kaupthing Bank and Finnish private-sector pension insurer Varma Erki now each have 10% of the business.
The main motivation for this was to maintain momentum and keep growth on its current trajectory, explains says CEO Jussi Yli-Niemi, who joined the company from the steel industry around the time of the stock sale.
Havator is one of the Scandinavian crane industry’s several success stories. Yli-Niemi says that the company has grown at an average rate of close to 30% a year for the past 10 years. As well as cranes, Havator is active in heavy transportation and concrete and steelwork assembly. Net sales in 2006 were €55m and are expected to reach €70m in 2007, Yli-Niemi says.
Fleet renewals and additions
Buying a hire company that has a young fleet must seem an attractive option these days for companies stymied by the long waiting lists for new cranes from the manufacturers. But although demand far exceeds supply, sales of new cranes are at unprecedented levels across Scandinavia.
Terex-Demag’s Thomas Wolff says that in normal times the market for German telescopic cranes in Scandinavia, including Finland, is about 80 units a year. In 2006 it was close to 120 units and this year will be somewhere between 130 and 150 units, he predicts.
In general, the all terrain crane market in Scandinavia and Finland is usually split one third to Liebherr, one third to Demag and one third between Grove and Tadano Faun, Wolff says. This year he expects to deliver close to 50 Terex-Demag cranes.
In Sweden there is a great need for fleet renewal. “In Sweden there are a lot of older cranes, more than 20 years old,” says Kenneth Nilsson, the Grove dealer.
It seems that now the market is hot, this is now being addressed. “We have bought quite a lot of cranes in the last three years but we have sold the same amount. I think we have one of the newest fleets in the south of Sweden,” says Radendal, the Kranenexpressen boss.
In Denmark too there is demand for renewal. There are generally enough cranes to meet demand but there is pressure to dispose of cranes before they reach 10 years old. There is a regulation Denmark, dating back to the early 1990s, that when a crane reaches 10 years old it must be thoroughly overhauled. Crane owners tend to take that as their cue to replace, rather than go through this rigorous process, says Thomas Wolff.
In Norway and Finland, however, crane companies have been expanding their fleets, and few more rapidly than Norway’s Vest Kran.
Vest Kran is another of the region’s numerous success stories. Vest Kran was set up in 1992 by managing director Trond Emblem, whose experience of cranes dates back to the 1960s. Headquarters are in Bergen and it has depots ranging from Hammerfest in the far north of Norway to Kristiansand in the south. Its speciality is heavy lifting and transportation, particularly in the oil and gas industry. Vest Kran says that it has been involved in “practically every large project onshore in Norway in the last 15 years”.
Vest Kran has a fleet of approximately 40 all terrain cranes, mostly Demags, up to 600t capacity. Its AC 600 is a beefed up version of the standard AC 500-1 and is currently the largest AT in Scandinavia. The average age of the fleet is less than five years old, the company says.
The Demag AC 200-1 on the Terex stand at Bauma was in Vest Kran colours and the company also placed an order at the show for an AC 1000, Terex-Demag’s forthcoming 1,000 tonner with 100m boom. With delivery scheduled for 2009, this is likely to be largest telescopic crane in Scandinavia when it arrives.
Vest Kran’s current projects include Statoil’s Snøhvit LNG project in Hammerfest, the northernmost LNG plant in the world, and Bechtel’s Elkem Mosjøen anode plant for the chemical industry.
The company’s turnover in 2006 passed €17m, which was almost double the 2005 figure, and further rapid growth in 2007 is already taking place. In April Vest Kran signed a 50/50 joint venture with Belgian tower crane rental giant Arcomet to set up a new tower crane division, which has secured the Terex Comedil agency for Scandinavia. It already has 25 cranes at work, a mix of top slewers and self-erectors, and has ambitious expansion plans.
Another new entrant in the tower crane market is Edins Kranar, based in Stockholm, Sweden. It began adding Liebherr and Comansa tower cranes last year to it fleet of 18 mobile cranes last year and to date has seven of them. Christer Edin says that the company has grown from a workforce of 47 people to 63 over the past two years, a 34% growth, and adds that that this has been mirrored by a corresponding growth in turnover.
Scandinavia has not traditionally been a big market for crawler cranes. However, with all the wind power work going on and other large projects, this seems to have changed. “Demand for crawlers is quite strong,” says Thomas Wolff. He says that Liebherr dominates in sales of crawler below 300t capacity, while Demag dominates in larger classes.
Danish wind turbine erection specialist KR Wind, which was instrumental in the development of Demag’s Narrow Track feature on the 600t CC 2800 for wind farm work, has a further two more CC 2800s on order.
There is also a lot of wind turbine construction in Sweden. Kynningsrud bought a CC 2800 last year specifically for this market and has a second unit scheduled to arrive by August this year, bringing to five the total number of its crawler cranes. Both machines will be dedicated to wind turbine erection, Mats Pernhage says, as is Kynningsrud’s 500t telescopic Demag. Both of the CC 2800s were bought specially configured for wind power work, with 12m luffing jibs.
The largest crawler crane in Scandinavia, however, will be the 1,000t Demag CC 6800 that Havator has on order for delivery in 2008/09 – another tangible result of its 20% stock sale.
Meet the president of Finnish crane rental group Havator, Erkki Hanhirova, in person, and learn about the Snow White project in detail, at the Crane Safety conference in London, 4-5 June 2007. For more information, go to www.cranestodaymagazine.com/craneLearn more at Crane Safety The Swedish Work Environment Authority has published new crane regulations that come into force on 1 July 2007.
The regulations are based on EU Directives for the safe use of tools, equipment and machinery and introduce for the first time specific reqNew rules in Sweden Geography We are like the farmers in France, complaining all the time. Actually business is very good and rates have gone up Farmers
Christer Edin, managing director of rental company Edins Kranar
Every year the old Dalhalla limestone quarry in Sweden is the spectacular venue for concerts and operas. To place the tented roof structure, local firm Mora Mobillyft uses its Liebherr LTM 1220 and the LTM 1060 all terrains. The LTM 1220 is one of three nDrawn to Dalhalla Kynningsrud deploys six cranes (three Liebherrs shown) to lift a 2500 sq m roof in Halden, Norway Kynningsrud deploys six cranes to lift a roof Vest Kran moves a mobile in a Norwegian winter Vest Kran moves a mobile in a Norwegian winter Mobil-Lyft AB, based in Oskarshamn, Sweden, recently took delivery of this Tadano Faun ATF 220G-5 Mobil-Lyft AB, based in Oskarshamn, Sweden, recently took delivery of this Tadano Faun ATF 220G-5 BMS places the gate of a dry dock using a Liebherr LTM 1400 with Superlift (right of picture) and a Grove GMK 5160 positioned on the bottom of the dry dock BMS places the gate of a dry dock with two cranes The pedestal crane lifts the mobile on to the platform The pedestal crane lifts the mobile on to the platform In a tandem lift, the mobile helps the pedestal crane lift a new boom section. Mobile assist The mobile removes an old pedestal crane, piece by piece The mobile removes an old pedestal crane, piece by piece
