While there are no official statistics gathered for worldwide sales of knuckle boom truck loader cranes, it is clear that 2006 has been a golden year for manufacturers, with production running at record levels.
Lammerts Kraanverhuur uses a Fassi F900A/1000AXP.27 with 4t winch to load wind mill parts in the port of Ijmuiden, Netherlands
Buoyant economies in key regions have strengthened sales of commercial vehicles equipped with loader cranes, but there have been other drivers of demand for new commercial vehicles too. The primary ones are the introduction of compulsory digital tachographs in the European Union this year and the tightening of emissions regulations in both the EU (from autumn 2006) and the USA (from January 2007), with new Euromot and EPA engine standards. To some extent, there has been a rush to beat the deadline.
There has also been a dramatic increase in road traffic across Europe, particularly of commercial vehicles travelling between east and west. Two key reasons for this are the eastward expansion of the European Union and, even before that, the growing trend for west European companies to outsource or procure in lower cost countries of east Europe.
Loader crane, truck and steel for the subframe come together in Terex-Atlas’s UK headquarters in Bradford. It takes the company about 10 days to fit crane to truck
The result is record demand for truck loader cranes.
“We are facing a strange period of time where almost all countries worldwide are increasing demand,” says Giovanni Fassi, chief executive officer of leading Italian manufacturer Fassi Gru.
Giovanni Fassi has further explanations for the current boom, including the health of the construction industry in Europe, investment in equipment by the military sector, and the growth of new markets such as the Middle East and Eastern Europe. Germany has also re-emerged as a market after many years of stagnation, says Fassi. There is also continued growth in the knuckle boom crane sector in the USA, where stiff booms are usually preferred in most applications.
The US market for knuckle boom cranes in recent years has averaged in the region of 1,600 units a year, but demand rose strongly in 2004 and 2005 to perhaps 2,300 units, Giovanni Fassi estimates.
Søren Them Kjær, export director of HMF, says that global demand for loader cranes has grown by at least 15% a year since 2004 and he estimates that, including some forestry cranes, total global consumption passed 50,000 units in 2004.
Growth has been even higher in 2006, he says. “We are monitoring worldwide markets, looking at import and export statistics. We have seen a dramatic increase on 2005 and we think it will continue into 2007,” he says.
The first-half results of the two market leaders, Palfinger and Hiab, confirm that the market is growing this year. In the first six months of 2006, both companies saw their crane revenues rise by 11%.
With demand running so high, manufacturers’ lead times have lengthened. Giovanni Fassi says that, depending on models, 12 to 22 week lead times are currently typical for the industry.
“We have a pretty big backlog. We can’t keep up,” admits Terex-Atlas sales director Ron de Vries. Normally the factory in Delmenhorst, Germany, is closed for three weeks in the summer, but this year it had to stay open.
Order intake in Germany “exploded” in the first quarter, says de Vries, which he attributes to the introduction of digital tachographs. The IAA exhibition in Hanover in September, where all the newest commercial vehicles and equipment are shown, also traditionally gives a boost to sales, he says.
In the past, Terex-Atlas has been very dependent on Germany and the UK but it is now broadening its export horizons. It now has 22 active distributors around the world, de Vries says. In 2004, 60% of sales were in Germany. Now, although its sales have risen 25% in the domestic market, he says, Germany accounts for just 25% of Terex-Atlas’s sales.
Increasing capacity
Many of the leading manufacturers have increased their production capacity in recent years to meet this upturn in demand. Foremost among these is Palfinger, the world market leader in knuckle boom loader cranes with a claimed share of more than 30%. In 2002 it launched its RAP Rapid Process Manufacturing system, moving away from building to inventory, to assembling cranes only once an order has been taken. The promise was a guaranteed delivery time of 15 days for cranes up to 32tm and 20 days for larger cranes. Hand in hand with this, to make it feasible and economic, production of components was relocated to new factories in Bulgaria and Slovenia.
With everything now fully in place and strong world demand, the benefits are now being shown. Last year was a record year for Palfinger, with revenue from cranes up 26% by value to EUR36m and crane output up 15% by units.
This year looks even better, with crane revenues in the first six months up 11% on the first half of 2005. In its results statement, the company said that “bottlenecks in materials supply impeded even better results”.
Hannes Roither, head of investor relations, says that the shortage of certain components, notably Weldox 11000 steel, had pushed lead times out to 15 weeks for some models.
To ease bottlenecks, Palfinger has doubled the capacity of one of its plants in Bulgaria and is now doubling its other plant there. This will not only bring lead times back to 3-4 weeks, Roither says, but also increase production capacity from 58 units a day to 65 units a day.
Italian manufacturer Effer is another company that has invested heavily in increasing its production capacity. Like Palfinger, it also embarked on a strategy of assembling cranes only after orders are taken. To do this, it had to reduce lead times from five months to 4-6 weeks. Effer redesigned its large crane fabrication processes at its two factories in Minerbio and the assembly processes at its head office site in Castel Maggiore. It also built a new factory at Taranto in the south of Italy.
The reforms seemed to work. In 2003 Effer bucked the industry trend of the time and registered a 2% increase in crane sales over 2002, which was itself 4% up on 2001. This success prompted the company to invest in further plant modernisation. In December 2003 plans were announced for a third factory in Minerbio, near Bologna. The 5,000 sq m facility, called Minerbio 3, was designed around a new automatic internal logistic system, where the cranes are handled on computer-controlled magnetic tracks to minimise handling requirements.
Effer invested EUR20m in production facilities over four years, both for cranes and for the Bizzocchi aerial work platform line it had acquired in 2000. However, its ability to finance the loans was hit by dealer problems in Germany and Switzerland. Revenue continued to rise but profits fell to the point where Effer, privately-owned by the Monti family, ran into trouble with its banks. In October 2005, before the Minerbio 3 facility had been completed, the administrators of Effer Holding agreed a EUR30m deal to be taken over by SOL.GE, a company set up for the purpose that is 80% owned by CTE (an Italian producer of truck-mounted work platforms) and 20% by Altri, an investment consortium. This transaction completed in June 2006.
Despite its financial troubles, Effer’s crane production capability is perhaps 50% greater today than it was at the outset of the big spend.
Autogru PM’s production line
Autogru PM of Italy has also increased its manufacturing capacity since it was taken over by investment group B&S Private Equity in 2002. The labour force in PM’s workshop in Modena increased from 100 to 150 employees in the period 2003-2005 and the covered production area was expanded by 25% from 40,000 sq m to 50,000 sq m. In August 2004, PM opened a facility in Romania for component production, with a workforce of approximately 100 employees.
Others, too, are increasing output capacity, including Denmark’s Højbjerg Maskinfabrik (HMF). “We are investing heavily in production capacity,” says HMF export director Søren Them Kjær. “We have been building up our capacity to meet the critical volume necessary to make new product development feasible.”
At Hiab, although there have been no new factories or extensions, senior vice president Mikael Anthoni says: “We are investing all the time to meet demand.” New machinery for cutting and welding has been added, and more work has been outsourced to improve flexibility, he says.
Amco Veba of Italy was just a minor player with a small 2,000 sq m workshop, when it was bought in 1996 by Dr Giancarlo Perego, who remains the company’s president and largest shareholder. A new 10,000 sq m factory was built in 1999 and a further 6,000 sq m assembly plant was opened last year, significantly improving its ability to compete internationally for market share in loader cranes.
The most dramatic and ambitious growth in the industry, however, has been at family-owned Fassi. In 2004 it produced 5,800 cranes and in 2005 it produced 6,800. This year, says Giovanni Fassi, it is planning to deliver 8,000 cranes. “The forecast for next year is about 9,000 cranes if the market continues as it is now,” he says.
To meet this growth of 60% in three years, Fassi has increased its covered production area, introduced new automated machines and robots, added an extra 150 employees and has parts of the group working on two or three shifts. Fassi’s goal is to overtake Hiab as the world’s second largest producer.
If demand does indeed continue on its current upward trajectory this year and next, global demand in 2007 could pass 57,000 units, it is suggested. Then in 2008 will be the next wave of EU engine emissions requirements, but surely growth couldn’t continue for yet another year, could it?
