As consolidation gathers pace in the USA the gap is widening between a small group of large rental houses and the rest of the pack. Anthony Crane & Equipment, for example, which as recently as 18 months ago did not really stand out as the largest, has increased its number of branches in the last year from around 30 to nearly 50 and its fleet now stands at around 3,500 units. The most frequently heard question at the moment seems to be “who’s bought who this week?” Recent acquisitions include Tidewater Equipment by Pennsylvania-based AmQuip Corporation, and Carlisle and Dunn by Anthony Crane.
AmQuip is “actively pursuing” an acquisition strategy and Anthony is “acquiring strategically” under its majority shareholder Bain Capital. Venture capitalists have recently started pushing a lot of money towards the crane rental houses. AmQuip has seen Anthony sell majority control to these venture capitalists but general manager Gerry Couch says he doesn’t envisage AmQuip giving up control in a similar fashion.
AmQuip’s rate of growth has been such that it has doubled in size in the last three years. Founder and owner Joseph Wesley has given Couch the task of doing the same again over the next three years. This would mean raising current turnover of around $50m to $100m by 2002. Couch predicts that half the growth will come from acquisitions, and half from organic growth of the business. Acquisitions to date include Markim Transportation, Dallas Equipment, Hutchinson Crane Rental, Supor Crane & Rigging and City Crane Corp. A new depot was opened in June this year across the Delaware river from Philadelphia in Carteret, New Jersey. A depot to be opened in Washington DC will soon raise the total to eight. To meet its expansion requirements AmQuip ordered about 100 cranes at the Conexpo show last March (Takeovers speed consolidation… May 99, p3).
Wesley, an ex-Marine and crane operator, started AmQuip in 1967 aged 29 with a $68,000 American hydraulic crane. Today AmQuip has about 250 employees and more than 400 cranes across its depots. Equipment ranges from 6 US ton carrydecks right up to 500 US ton hydraulics (Demag AC 1200 with superlift). There are rough terrains to 90 US ton, truck cranes to 200 US ton and crawlers to 330 US ton.
While AmQuip is selling 18 of the 20 cranes it bought as part of the Tidewater deal, it has mainly been purchasing. In the last two years it has bought 75 new rough-terrain cranes, at least 20 of which are 30t to 50t Terex and Grove models bought this year. Demand has been generated by an increase in federal government road and bridge work projects which are expected to run for the next two years or more.
As much as 50% of AmQuip’s hydraulic truck and all-terrain rental business is in the 80 US ton to 175 US ton range and ATs are a major part of this. AmQuip recently ordered 20 four-axle 110 US ton LTM 1090/2 Liebherrs which are arriving at a rate of about two a month. Six have already arrived and some of this order might be changed to the new five-axle 100 tonner, the LTM 1100, which Liebherr launches next year, although Couch says the four-axle is road legal everywhere AmQuip operates. Load charts were the deciding factor in choosing Liebherr over Demag, he says.
Prefabricated components in the construction industry are increasingly popular and loads are getting heavier. Demand for larger cranes is growing and AmQuip is interested in 200 US ton all-terrains. Anthony’s largest crane, a Liebherr LG/LTM 11000 which it calls Samson, is marketed as the biggest mobile crane in the USA.
Mobile cranes with more than 500t capacity are difficult to make road legal in the US and Couch, explaining AmQuip’s lack of such a heavylifter, says: “AmQuip is really not driven on ego”. However, as circumstances change and as the company grows to cover a larger area, he sees a large AT such as a Demag AC 650 as an appealing prospect. For now, dual lifts are common and AmQuip claims higher utilisation from two smaller cranes.
When it comes to crawler cranes, the Manitowoc brand dominates most US fleets, complemented by various Link-Belt models. Ohio-based All Erection & Crane Rental’s fleet, for example, is dominated by Manitowocs and by Link-Belt’s LS 138 series. Anthony also has the first-built unit of the Manitowoc 21000, which recently completed a job for Dow Chemical in Houston, Texas. The only other 21000 delivered to date, owned by All Erection, started its first job last month. All Erection has ordered a second unit, which went into production at Manitowoc’s factory in September.
AmQuip, however, does not believe there is enough work in its area to justify buying a 21000. It did buy two 300t crawlers last year, but perhaps surprisingly did not plump automatically for the Manitowoc M250. Instead it commissioned an independent study to compare the M250 against the Demag CC 1800. The result came down in favour of the CC 1800, with a 25% to 30% advantage in the load chart, says Couch.
Anthony has also got a couple of Demag CC 1800s, both if which have been “in constant use”, the company says.
Bare or operated
The crane rental business in the USA is predominantly bare rental, but increasing the number of contracts which include an operator and maintenance is a common strategic aim, as greater value is added and the profit margins are higher. It is a more attractive business for the crane specialists, even though the costs are higher. Jack Swan, vice president at All Erection, which has 240 operators on the payroll, estimates that operator costs can be nearly a third of turnover. Swan says that although he is pushing hard for operator rentals, at least 75% goes bare. This figure includes aerial access platforms, which are between 10% and 11% of overall business and are almost always rented without an operator. (Canada is a different story though, Swan says. Here almost all his rentals include an operator and maintenance). Anthony has more success in this direction, with 60% of its business on an operated basis and at AmQuip already more than half of its rentals include an operator.
Availability and utilisation
AmQuip’s expansion strategy is to keep each depot within about two hours travelling time of at least one other branch and to concentrate operations in the north east corridor rather than spread thinly over the whole of North America. AmQuip is forming a network of depots down to Washington DC. A branch in Connecticut is on the agenda which will link the Boston branch but there are no plans for upstate New York or Ohio. Flexibility is the key – it wants all its cranes to be available to all of its branches rather than having cranes tied to specific locations.
On a larger scale, Anthony tends to keep its cranes in one of its four regions rather than restricting them to one branch. These regions are the southeast, northeast, central and western, and one or two more might be added.
Utilisation rates are critical to success and software to analyse levels is an increasingly important tool. AmQuip’s AS400-based system calculates rates on demand.
Rates vary by machine, product group and region but AmQuip says its 75% to 85% utilisation is a typical industry average. Jack Swan claims 90% plus utilisation for most of All Erection’s cranes. He says that All Erection does a lot of moving to boost rates, which is where the company’s 170 tractors and trailers come in. Utilisation rates for large ATs are at about 75%.
Dealing
Many US rental companies are also distributors. AmQuip, Anthony and All Erection are all major Terex dealers. However, says Swan, “All’s business is firmly rental first and sales second.” The others would surely share that view.
Anthony is Terex’s largest dealer, yet AmQuip still expects to sell about 100 cranes for Terex this year including some overseas. All Erection sells about 35 Terex cranes a year and also sells Broderson and Shuttlelift. It is also the Link-Belt dealer for Wisconsin.
Crane sales account for between 8% and 12% of All Erection’s business and last year it sold 140 units.
Though Grove models number more than 850 units in All Erection’s 1,900-strong crane fleet, Swan still uses the local dealer. Of these 850-plus cranes, Swan says, fewer than 125 are older than 1990, and out of the 35t to 70t Grove rough terrain models, he says that more than 450 units are seven years old or less.
