The Mediterranean is Europe’s playground. During the boom, tourism development provided strong demand for hirers of small-tomedium mobile, rough terrain and tower cranes. When the bubble burst, many of these projects were cancelled or delayed. Spain saw residential construction drop 75% from 2007 to 2009, according to Euroconstruct. Italy, Greece and Portugal have all fared similarly. And housing booms and busts have affected the construction industries of more price conscious countries like Croatia, Romania and Malta.

With austerity measures sweeping across European governments, energy projects and work in Africa, the Middle East and South America are providing demand in the crane industry where public work and housing has dropped off. In Spain, notably, and in other countries to some extent, larger cranes are in demand. Often these are for specific projects like dams or work on power plants. Though Michele Mortarino, sales manager for Locatelli, explains that when people choose to buy a larger crane rather thanthe cheapest available, they purchase the highest capacity because “bigger machines can easily do jobs of smaller machines but the opposite is not possible,” he says.

Companies in the rental business and manufacturers are adjusting to the new, post boom market. Manitowoc announced this spring it would sell Grove mobile cranes directly in Spain. “Being closer to customers allows us to watch trends in the market, see how applications are changing and customer preferences are moving,” explains Orlando Mota, general manager for Manitowoc in Iberia.

And of course there are victims too. When times were good, new companies flocked to the industry and weren’t prepared to ride out the recession. Others expanded or have taken on debt. This summer it was announced that Spanish bank Banesto has taken over Spanish crane rental company Hune, formerly Euroloc Group, created through mergers with Homs, UMES and Nacanco. Acquiring 72% of its shares, Banesto has brought on consultant Noraction to help deal with Hune’s debts of €500m.

The Spanish market is struggling at the moment, says Mota, but there is strong potential for further growth in the all terrain crane sector and also for some smaller numbers of rough terrain cranes. With the first rays of sun showing through the clouds of recession, will demand return? Cranes Today has looked around the Mediterranean to get regional perspectives.

The construction industry and economy are suffering in Malta mostly due to the real estate slowdown, which happened before the financial crisis. With the residential market flooded, new sectors like alternative energy will emerge for the crane industry.

It’s a bad and slow market, says Ray Muscat, CEO of SR Services, a crane dealer located in Malta. “Our customers, which are building contractors, have been overbuilding the island. And the problem is, now, that sales and property are on a decline and that would mean their cash flow is bad. So the economy is suffering ricochet effects.”

That has left the country with a population of around 400,000 with oversaturated markets of unsold real estate and cranes. In the past, Muscat explains, contractors had a tendency to buy their own equipment rather than rent. Now that has reversed and people are renting rather than buying. The density of mobile and tower cranes for the size of the island is extremely high, he says.

The biggest demand is for tower cranes, followed by mobile cranes, truck loader cranes and very rarely for crawler cranes. “Malta isn’t a crawler crane market,” Muscat explains, “because of the size of the island. The roads are narrow. There’s not much space to keep crawler cranes with large footprints.”

Cranes of 40t to 50t are most commonly used because they are relatively small and can manoeuvre on tight roads and sites, adds Pio Vassallo, CEO of Vassallo Builders Group, which works on projects across all sectors and rents tower cranes. Much of Vassallo’s rental business used to be for real estate.

Tower cranes are mainly being used for small- to medium-sized apartment blocks built by private building contractors, says Muscat. These range from luxury to run-ofthe-mill apartments, which people tend to buy to rent or resell and make a quick buck.

Business in this part of the construction sector won’t increase, says Vassallo, because there are too many of these types of properties in Malta. In order for developers to sell they need to offer something that really sets them apart from the market. “The clients have become more choosey and intelligent. And to compete you have to produce something which is different from other developments.”

For the future, no more big real estate projects will start or continue in Malta, he says, but new work is cropping up related to waste management and alternative energy. This is where demand is going for Vassallo’s tower cranes.

In June, Malta’s prime minister, Lawrence Gonzi, announced the White Rocks Sports and Leisure Village project worth €200m of private foreign investment, which should create at least 800 full-time jobs.

“The government seems to be targeting a niche area of sports tourism,” says Vassallo, who estimates that tourism supplies about 40% of his business, sometimes up to 50%.

“At the moment there aren’t too many projects related to tourism going on. But in the future, with these new projects coming up, demand will increase,” he explains.

Dolenec Darko of tower crane rental company Intra Krane got his first impression that the Croatian construction market was slowing down in July 2008. “Slowly but surely I didn’t make as many contracts during the second half of 2008 for 2009, and in that time I knew that something was wrong. And in 2009 it definitely stopped everything,” he says.

From 2006 to that time in 2008 the market was exploding with apartments. Everyone thought accession into the European Union was very near, salaries were rising and the banks were offering excellent credit for young people to buy flats, he explained. Because the construction business looked so good, companies who had never worked in construction started entering the industry. Now, between 10,000 and 15,000 flats are on the Croatian market unsold and occasionally unfinished, he explained.

According to the Croatian Bureau of Statistics, in the first quarter of 2009 the number of dwellings completed by construction companies employing 20 or more people was up 17.9% compared to the same period of 2008. However, by the end of March 2009, the number of projects companies were working on dropped 16% from 2008. In the first quarter of 2010, the number of completed dwellings fell 49.6% from 2009 numbers, and in March 2010 the number of projects being worked on is down 44.7%.

Eurokran, a Liebherr agent for tower cranes, has had cranes working on a shopping centre, but there is no work for apartments or flats, says its financial director Igor Balija. Other projects included the Arena Zagreb, built for the 2009 World Men’s Handball Championship, on which construction started in 2007. “[The market] is not good because the financial situation is very bad,” he says.

And that’s true for Croatia’s Balkan neighbours, says Darko, who is ready to open a company in Bosnia and Herzegovina. But, he says, “it’s very unstable and the government, it’s near bankrupt. Serbia’s situation, it’s also not nice for us. Macedonia, for me, it’s too far and the GDP there is too low. They cannot pay and cannot cover the cost of hiring the service people.”

It will take at least three to five years to return to 2007 and 2008 levels in Croatia, says Darko, but the 2010 tourist season will be a big indicator of how soon until the construction market improves. “If this year we have good results, we think the second half of the year will be good and investments will start. If not, in that case I think before the second half of 2011 or the official announcement that we will be a member of the European Union: let’s say 12 months from that announcement,” he explains.

Rising government deficits captured the world’s attention this spring as debt levels in Greece raised alarm throughout Europe and abroad. In May, the IMF finalised a €110m package of financing with the European Union over three years in exchange for austerity measures.

Periclis Voutas, CEO of transport and lifting company G. Voutas, is uncertain how government budget cuts will affect the construction industry in Greece. “Because business dropped down, we are still working on last year’s projects,” he says. “In a few months it will get worse because projects are not going around for the moment in Greece.”

Prior to 2010, the market had already seen a decrease. In Q4 of 2009, construction output in Greece was down 30.2% from the same time in 2008, according to Eurostat.

With a range of cranes from 20t to 650t, Voutas is finding work on petroleum refineries, including a large expansion, and windmill projects, because people want to be green, he explains. All his 15 cranes are in use for now, but he thinks demand will be down for another three to four years.

Trade association Assodimi estimates tower crane manufacturing in Italy produced on average 3,000 to 4,000 cranes per year. “But last year (2009) they have not produced more than 500 pieces,” says general director Franco De Michelis. “It was a disaster.”

Sales for small machinery, such as city cranes have stopped. Bigger machines are still needed for large job sites like the Venice Port, electrical stations or other big projects.

Rental companies are suffering because residential construction and public work are both very poor, and investments by these companies have stopped, he explains. “We consider that we are at the end of the crisis. But the recovery will be very slow, very quiet.”

His stance is that Italy is not in a crisis, but rather a new world where demand will generate from new energy, waste management, ecological manufacturing and specialised building. But the industry “should not wait for the recovery of big jobs or investment because the government doesn’t have money,” he says.

Though in March this year, Italy’s Ministry of Economic Development allocated €420m introducing a series of tax incentive programmes to replace old equipment and increase demand. The programme covers various consumer goods and industrial products including tower cranes 25 years or older.

Everyone is talking about the incentive but it’s not very helpful, says Dario Mantovani, export manager for tower crane manufacturer Benazzato Gru SpA. “In the end, the problem is there is no work,” he explains. “If you’re not working, it’s useless to pay to change the crane. What for? To keep it in storage? To keep it in the yard? To get rust?”

While he has seen inquiries from customers, he still has yet to do one sale through the incentive. “It’d be nice if there were more jobs, more work,” he says.

Outside of Italy, Benazzato is supplying cranes for housing projects in South America and North Africa. That is, at the moment, where work can be done, he says but the company is “going day by day.” The situation is similar for rough terrain manufacturer Locatelli SPA, who is mainly selling cranes in Central America, the Middle East and Africa. These areas are generating demand from oil and gas projects, says sales manager Michele Mortarino.

In Italy, Locatelli has been dealing with contractors for the bridge connecting Sicily to the mainland, a €6.3bn project, but after the financial crisis, it had to leave the project. “It is a major project that should move the economy, involve all main Italian and worldwide contractors,” says Mortarino.

He thinks within two years the project could be making progress again, but it depends on the investment put forward in 2011 by the government. “A lot of things should be done in Italy, speaking of infrastructure,” he says.

With many government projects on hold, and residential construction in 2009 down 43% from 2007, according to Euroconstruct, the lifting industry in Portugal looks to the private sector and abroad for work.

Government budget issues in Portugal haven’t had as much of an effect on demand, says Carlos Cariano, director of services for Cariano SA. The heavy lifting and transport company has a fleet of 54 cranes ranging from 25t to 750t and works across several different sectors in both Spain and Portugal. “We do not work on a regular basis for government and that means we can survive without their own investments on the Portuguese soil,” he says.

“On the other end it might affect some of our regular national customers because if they don’t receive the resources from banks or government they cannot invest in a wide range of works.”

The future of transport projects like high-speed rail and a new airport in Lisbon are unknown. And these are two of the biggest investments in the nation, he explains. In the meantime energy sectors in Portugal are providing work, particularly at Porto and Sines refineries and wind farms.

In the next few years, Cariano expects to accompany some of its wind power customers as they plan to expand beyond the Iberian region to emergent markets like Brazil and Eastern Europe.

Director of marketing for crane rental company Eurogruas, Manuel Mateo Guisado, observes a similar situation. Based in Spain with nearly 400 cranes, Eurogruas normally works in Spain, the south of France, Portugal and Morocco, but that market is suffering and projects are on hold he says. One of his biggest projects at the moment is for a wind farm in Brazil, another at the Porto refinery.