What a strange industry we work in today! There I was, at Intermat, on the day that Manitowoc Crane Group announced first quarter revenue up 33% to nearly half a billion dollars, and operating profits up 150% to more than $50m. The industry is clearly in good shape. Commodity prices, whether it is oil, tin or coal, continue to surge to record levels. Extractive industries are steaming ahead, so even traditionally smaller market regions like Africa and South America take on a new significance. The Middle East has gone construction crazy with ridiculously extravagant and glamorous projects. The USA has rediscovered the importance of investing in its infrastructure. Japan is in growth mode once again and its construction machinery manufacturers have seen their share prices rise two – or threefold in the past year. Europe is going well. China is roaring.

From a global perspective, whether you make construction cranes, sell them or own them, 2006 is a vintage year.

Are we happy? Of course not.

The issue that seemed to be generating most conversation in the aisles at Intermat last month was not the health of the industry, nor was it the wave of new product development riding on the back of it , nor was it those fantastic revenue and profit figures that Manitowoc (and everyone else) is racking up.

We prefer to accentuate the negative in this industry. Ignoring all that is right with the world, instead the focus seemed to be on the single great problem of our time – availability.

Despite more mobile and tower cranes being produced and sold than ever before, there is a worldwide shortage of them. So what did I find at Intermat, a place where millions of dollars are spent to bring together vendors with purchasers? Crane manufacturers who have no cranes to sell and purchasers not able buy anything.

“I wanted one of them Potains but Arcomet have bought them all” was a typical comment. (Echoes of Monty Python’s Cheese Shop sketch? You do sell cranes here, don’t you? This is a crane shop?)

Manitowoc has nearly a billion dollars of unfulfilled orders on its books. A billion dollars! It is extraordinary. Manitowoc is not alone, of course. It is a similar story with all the big guys. Liebherr’s mobile crane factory building in Ehingen increased its theoretical capacity by 50% to about 1,400 units a year in 2001 – just in time for the collapse in worldwide demand. Despite having plenty of spare capacity even as recently as last year, Liebherr plans to produce the full 1,400 units for the first time this year (mostly all-terrains, but also 30 to 50 crawlers). For the first time this new facility is at full capacity. Despite a big step up in output, Liebherr is still quoting lead times to customers of up to a year for many models and in some cases even more.

Across the board, lead times are excessively long. One regional sales director for a leading manufacturer told me that he has customers knocking on his door offering to pay extra if he can jump up the queue for a new machine. On the one hand it makes his job the easiest in the world, and he is getting plenty of opportunity to work on that golf handicap, but on the other hand he worries that he is losing friends (and future customers) by being simply unable to meet their demands any longer.

The restricting factor

The supply side problems are not primarily because of lack of production capacity, at least not in wheeled mobile cranes. Several manufacturers say that they could produce more units except for the fact that rubber tyres are still in worryingly short supply. Tyres remain the restricting factor. Michelin and Bridgestone are simply not keeping pace. Productivity improvements are promised, but no one seriously expects the situation to improve for at least a year, if not two, by which time there’s no doubt we will be onto the next downturn. It is so bad that, in exceptional circumstances, brand new

all terrains have been delivered with second-hand tyres, on the promise of new replacements as soon as they become available.

With inadequate quantities being made available to the OEM market by Michelin and Bridgestone, the manufacturers are turning to the aftermarket where they must pay more. Meanwhile, this exacerbates the difficulties faced by fleet owners looking for new tyres to replace worn ones on their machines. If the manufacturers (with their billion dollar order books) are scrabbling around for new tyres, little XYZ Crane Rental is finding it ten times harder.

This causes me considerable concern. I have no direct evidence for this but it seems that the inevitable consequence must be that there are mobile cranes out there that are being driven on the highways with dangerously bald tyres because replacements are simply not

available. I foresee a tragedy.