Japan is booming. Witness July’s Conet show, which received two times as many visitors as in 2002, and garnered positive reports from domestic crane manufacturers, including Kato and Tadano.
The economic upturn is projected to continue through 2007, supported by improving labour market conditions and accelerating exports, with inflation positive, according to the Organisation of Economic Co-operation’s Economic Survey of Japan 2006, issued in July. It adds that the Bank of Japan should be careful not to raise interest rates too much or risk deflation.
In the construction markets, civil engineering such as bridges, and factory and industrial construction and development, particularly for environmental protection, is helping drive demand for cranes, according to Hironobu Uchimiya, sales manager of the crane rental company of the same name.
The increase of private investment, including expansion of factories and housing starts, are also important drivers, according to Yasushi Ishimaru, Kato overseas marketing executive officer and general manager.
Opinions differ about how the growth will affect the market for cranes.
Tadano reports very high growth of between 20%-25%. “This year we will be expanding to nearly double our production volumes (more than 2,100 units) compared with 2002. And we expect to see a continuous increase of demand over the coming years as well, maybe by up to 20%,” says Satoru Oyashiki, general manager of Tadano’s international planning division. Tadano claims to be the top player in Japan’s mobile cranes market.
Ishimaru from Kato estimates a market growth of 15%. “Although the total demand of the domestic market was around 1,700 units last year, this is expected to exceed 2,000 units this year. This trend shall continue next year.”
IHI reports the Japanese crawler crane market has grown at between 7%-8% per annum since it bottomed in 2002, and predicts the market peaking in 2010 or 2011. The current crawler crane domestic market size stands at about 240 units per year, and looks likely to grow over the next five years, according to another construction equipment manufacturer who did not want to be named. This is still a far cry from the 1,400 units per year during the boom times of 1991.
Hironobu Uchimiya agrees that the circumstance of the Japanese crane market have improved, but only because there are so many fewer cranes in Japan. “During the so-called bubble economy, the quantity of working cranes exploded suddenly. Now, more than ten years after the bubble burst, many cranes have been sold to foreign countries and many companies have gone bankrupt.
“Assuming that the index of working crawler crane numbers at 1999 was 100, it became 60 in 2006, and it is expected to fall to 48 in 2008. Equally, if working hydraulic cranes were at 100 in 1999, they are now at 40 in 2006, and will be 35 in 2008. Although the supply-demand balance has certainly improved, on the other hand the force of the crane lease firms has diminished so much.
“The crane lease price wars certainly seem to have stopped, and in fact attempts to stabilise prices by the leasing firms have appeared. But the crane lease cost still remains low in severe competition.”
Demand appears to be coming from domestic crane rental companies that are renewing their fleets. “They have been keeping machines years longer than normal because of the reluctant economy in Japan,” Oyashiki of Tadano says.
The early 90s boom was sufficiently far back that customers are now considering upgrades. And this has a knock-on effect for used machines. Demand for used machines is also rising from overseas, says Ishimaru from Kato.
Larger and larger
Customers have turned their eyes on larger and longer cranes. “In the market, there seems a trend toward big and foreign hydraulic cranes,” Uchimiya says, suggesting that some of the bigger units are intended for wind farm development. “We reinforced our fleet with new domestic 65t rough terrain cranes and 300t all-terrain cranes this year,” he says. Uchimiya has more than 100 RTs and more than 70 crawlers, according to the June 2006 Cranes Today Fleet File.
IHI has launched a 90t telescopic crawler, the NIK 900T, for the domestic market only
In crawlers, “Japanese customers tastes are changing to purchase larger cranes, above 80t capacity,” says Kazuyoshi Mukai, of IHI’s export department. Last year the company launched the NIK900T, a 90t capacity (at 3m) telescopic-boom crawler crane for foundation work. It has since sold five units in Japan, and would consider exporting it if there were sufficient interest. The crane has a 10m-long, four-section boom that extends to 30m. The 14m-long, 5m-wide vehicle has a turning radius of 4.4m on 6m long crawlers. At present, crane data is only available in Japanese. The Hino K13C-UV turbo engine generates a peak of 275kW.
IHI’s new 250t-capacity CCH2500
A more mainstream crawler from IHI is the 250t capacity CCH2500. Maximum lifting capacity is 250t at 5m with 16 falls of rope. Maximum boom length is 90m, or 109m with 37m jib. With 87t of counterweight, operating weight is about 210t, yielding an average ground bearing pressure of 1.06kg/sq cm on its two 4m-long crawler tracks. It uses the same Hino K13C-UV engine as the NIK900T. Since it launched in July 2004, fifty units have sold, mainly to Asian customers.
Tadano has decided to sell its 160-G in Japan as well as the export markets it was originally launched for
In mobile cranes, customers are looking in particular for longer booms. Tadano has recently begun selling its 60m boom, 160t capacity ATF 160G-5 into the Japanese domestic market. The crane was launched in 2004 as an export-only model, and has since sold in Europe, North America and the Middle East.
Ishimaru of Kato says that customers want mid-range rough-terrains, from 13t to 65t, and also city-type RTs.
Although the growth of the Japanese market is welcome news for its manufacturers, the lean times appear to have turned their eyes to other markets. That task is easier for some than others.
With its smaller export business (24.5% in fiscal 2005), the domestic market takes first place for Kato. “Our production quantity is not enough to satisfy overall demand both in domestic and abroad,” Ishimaru says.
“The export market is growing more than the Japanese domestic market, says Kazuyoshi Mukai, of the IHI export department, who says that IHI is exporting between 60%-70% of its production. “In this sense, export is very important for us, but we want to balance the domestic and export market in good harmony and want to keep our domestic market as well.”
Tadano plans to continue to expand its export operations, while it maintains its market position in Japan. “We are managing to balance these at the present moment,” Oyashiki says.
Road regulations
Most countries limit the transport of heavy loads, and Japan is no exception. But according to Hironobu Uchimiya, enforcment of the regulations has been tightened recently.
“Originally, crane lease firms were meant to dismantle and transport hydraulic cranes that weigh more than 100t. This was neglected for a long time, but the regulation has been enforced by the public office from about the beginning of last year,” he says, making it much more difficult for crane rental companies to move material – and making their work much more expensive for customers.
“To be exact, usually we have to take out a special vehicle passage permission to run 25t capacity cranes and over on any road in Japan. Overall, the permission regime for vehicles over a gross weight over 45t means they can hardly be taken out,” he says. “For example, a 100t-capacity hydraulic crane’s weight, including carrier, upper, boom, and counterweight is approximately 72t. So, cranes of 100t capacity and over must be dismantled and transported. In addition, the gross weight of a transport vehicle carrying the loads must be under 45t too. This is our big problem,” he says.
Uchimiya says that although his company has taken this rule on board from last year, he does not think others have: “The actual fact is almost all other firms remain conventional and run illegally under the cover of the darkness.”
Unlike Europe and the USA, which set maximum vehicle weights by axle loads, the Japanese Ministry of Roads sets limits based on wheel, axle and truck weights. If a truck is over 20t, an axle over 10t or a wheel over 5t, then the crane is classified as a special vehicle and must apply for a permit, according to Hiroyuki Okada of the Japan Crane Association.
Uchimiya says that manufacturers are adapting 100t-capacity cranes to meet the regulations. “These products are made dismantable for traveling on the public roads,” he says. But the company has done its own modification work as well: “We have adapted to make some parts of cranes as lightweight we can.” Manufacturers are now seeing domestic demand for dismantling, even in truck cranes, according to Oyashiki of Tadano. IHI’s Mukai says that IHI is making self-disassembly systems for cranes on a case-by-case basis.
Emissions
In October, the government is reducing the maximum limits of engine emissions for large engines (between 130kW and 560kW power output). These new emissions regulations are “almost the same” as the US’s Tier 3 and Europe’s Stage 3A categories, according to Kensuke Mizuhara, of the Japanese government’s environmental transport policy division of the ministry of the environment. The government is rolling out stringent regulations for smaller engines (but still above 19kW) over the next two years. The regulations set maximum amounts of nitrogen oxides, hydrocarbons, carbon monoxide, particulates and smoke.
Opinion differs in the industry about how much this will affect the crawler crane business. One manufacturer who did not want to be named says that it might turn off potential buyers: “ I think that this will affect the demand in the coming several years.” Mukai of IHI is more sanguine. He says that the new rules only make life more complicated for IHI. “The difficulty is that we have three regulations, USA EPA, EU and Japanese regulations, and we should always take care to apply all the regulations in a timely manner.”
