At some point every crane will need expert servicing and replacement parts. When delivered, cranes are better than ever. But that’s not the whole story. If a rented machine breaks down and can’t be fixed double-sharp, it’s off the job. Construction and maintenance projects cannot afford lengthy hold-ups created by crane and construction machinery downtime. The cost of downtime has never been higher and users’ tolerance of machinery problems has never been so limited.
Providing fast, efficient product support isn’t rocket science. But it does demand systems, processes and people. Firstly, in respect of the original equipment manufacturer, it is impossible to provide effective product support for cranes that might have been built 10, 15, 20 or even 30 years ago, unless every single piece part of the original design is properly-documented at ‘birth’ – meaning its source (if purchased) is known and if that source or component is no longer around, then alternatives have already been identified as replacements. Manufacturers are expected to support cranes well after they are no longer in production. That takes a serious investment in back-room work for manufacturers. A global market is nothing new for most of the established manufacturers. The leading companies have had global distributor networks for fifty years and in some cases, much longer. Local support means local knowledge, local technicians personally-known to their customers and literally speaking the same language, as well as local stocks of genuine replacement parts that can address most day-to-day needs. The problem is that in most parts of the world there are fewer, far fewer, qualified distributors than ever before.
The final, and most difficult challenge, is finding the right people. In many respects, through the use of high tech diagnostic systems and cleaner working environments, the technician’s job is easier. But still, around the world, there is a substantial talent gap.
In summary – fewer qualified technicians, fewer distributors, higher customer expectations and higher downtime costs. The challenges are similar for manufacturers who choose to involve independent distributors in their supply chain and for those who sell and support their products through wholly-owned ‘distributors’. In reality all of the major manufacturers employ a mix of whollyowned and independent distributors with all of the leading manufacturers employing company subsidiaries in the larger European markets and other selected markets. However, whereever practical, US and Japanese manufacturers prefer to use independent distributors, such as in the Caterpillar distribution model, and for the most part European manufacturers prefer to own their distribution network.
This is not simply a matter of philosophical differences. Yes, the key factors — having qualified people, good facilities and adequate stocks of parts — can be met by either approach. But there are important pros and cons of the alternate systems (see table).
As the maxim goes, the salesman sells the first crane, service sells the second. With the emergence of low-priced Chinese cranes, customers are again being reminded of this. To further consider the latest developments in product support, I visited two of the leading proponents of the alternative approaches: on the independent side Manitowoc and on the owned network side Liebherr.
Manitowoc was the first crane company, in recent times, to divisionalize its product support business and brand it: "Crane Care". Launched 12 years ago, the division built upon the already exemplary image for product support of the manufacturer. In the early days after its inception the concept was viewed by some with skepticism and indeed over time the business approach has been massaged and improved. By 2003, with the consolidation of Grove, National Crane and Potain into the program, Crane Care had approximately 600 company employees in its product support operations. Today the success of the business is clearly reflected in its broad geographic footprint, increased revenues and a headcount that’s grown by almost 100% to around 1,100 staff.
When I visited the Crane Care centre in Langenfeld, Germany where approximately 50% of the more than 500 European Manitowoc Crane Care staff are employed, I was able to also see an example of Manitowoc’s EnCORE product refurbishment programme in the shape of a GMK 7450 all terrain being substantially rebuilt following an engine fire. There I interviewed Crane Care executive vice president Bob Hund.
Visits to Liebherr facilities anywhere are always impressive. It is no exaggeration to say that Liebherr continues to set the standard for facility investment in the entire crane business. My visits to Ehingen, Germany and Nenzing, Austria did not disappoint. This real-estate investment and facility development strategy has been a hallmark of the company virtually since its very foundation by Dr Hans Liebherr. As Dr Liebherr once said "Our principle of decentralization with compact, independent, autonomous company units is particularly important. That is why we have always preferred lean, low-cost organizational structures. Customer proximity, flexibility and efficiency are the particular advantages of this."
Dr Liebherr’s investment philosophy coupled with his firm’s adoption of a Swissdomiciled holding company some 30-years ago rank as key strategic decisions that have been of enormous benefit to the company. When the second generation took the reins after Dr Liebherr’s death in 1993, they immediately confirmed that the successful structures and principles of the company would be preserved. And so it has been and remains as now, the third generation moves into the management of the business.
Liebherr is not only unique amongst the top-ranks of the crane business in its 100% family-ownership but also in its approach to engineering, building as much of the component base of its products as feasible. By manufacturing many of its own diesel engines, hydraulic and electronic components, Liebherr not only has a broader control of the entire design and production of its product, it also has control of the valuable and profitable parts and service business for these components. Especially in the ever-more influential area of electronics this is particularly beneficial. To control such tools as remote diagnosis through telemetry from its own rather than shared efforts, affords the manufacturer important advantages and protections that will only increase in years ahead.
Liebherr has an advantage over many of its crane competitors in that it has greater critical mass thanks to its broad range of machinery. Many of Liebherr’s whollyowned distribution companies around the world are supported by revenues from this broader base. But Liebherr has avoided the potential pitfall of arbitrarily managing all of these businesses as if they were the same. In every country where they have a local subsidiary with mobile crane responsibilities, there are specialist crane salesmen, service technicians, etc.
A manufacturer’s involvement in the used crane business is also part of its ongoing commitment to customers. The better repaired or refurbished a used crane, the better the image, the higher the resale value. Liebherr’s commitment to the used mobile crane business is without parallel. Liebherr Werk Ehingen is the largest used crane seller in the world and has thus far sold approximately 8,000 cranes, the vast majority of which have been Liebherr telescopic boom mobile cranes with many of them passing through Liebherr’s facilities for a second time. The investment Liebherr has made in its network of repair facilities is equally impressive:there are now full repair factories (for Ehingen and Nenzing built cranes) in Germany (3), France, UK, Italy, Spain, the US, Australia, Hong Kong, Singapore, Brazil and Thailand.
During 2012, Liebherr continued to extend its network of wholly-owned distributors with new operations in Argentina, Denmark and Mexico. The latest facility we visited is the new soon-to-open 7,000 sq m, $30m facility in Sydney. Meanwhile Ehingen’s new Heavy Parts Logistic Centre provides a facility for the storage and loading of counterweight blocks, lattice boom and jib sections, hookblocks, etc. Ehingen’s vast parts facility carries a stock valued at approximately €100m, while Liebherr Werk Nenzing’s robotized boom tube welding facility affords vastly improved boom manufacturing times which can be of vital importance to customers either requiring to replace damaged sections of change configurations. If one were to wish for one change at Liebherr it would be to those policies that keep many of the operations of Liebherr Nenzing and Ehingen separate.
Recent changes in Terex’s senior management and in its approach to product support have the potential to be very far reaching. Terex Cranes president Kevin Bradley will become CFO when incumbent Phil Widman retires in March and will be replaced in the top crane job by Tim Ford who moves over from running Terex Aerial Work Platforms (Genie).
This announcement comes hard on the December 2012 organizational change that combined Terex Equipment Services (TES) and Crane America Services (CAS0, the North American service segment of Terex Material Handling and Port Solutions (MH & PS) to form a new service provider, Terex Services North America to be aligned under the Terex Aerial Work Platform business segment.
The new operation is being led by Siva Balakrishnan, Terex Aerial Work Platform Vice President and General Manager, Terex Services North America. This will provide service for industrial cranes, port cranes and equipment as well as Terex Tower Cranes and Genie Aerial Work Platforms. It will have two headquarters operations based in Columbus, Ohio and Denver, Colorado.
Tadano recently decided to drop the ‘Faun’ name as a brand and simply use the Tadano brand on all its products. The leading Japanese manufacturer has continued to strengthen its domestic and international product support organizations. In Japan Tadano now operates 13 service workshops in support of its 330 service dealers. Internationally Tadano is also rolling out the "Hello Net" telemetry system that it has been running successfully in Japan for the past 2-3 years. Meanwhile in at its Lauf, Germany, operation the company has substantially strengthened its product support team and now has 17 service technicians in Germany as well as a team of six international service engineers specializing in its all terrain and truck-mounted cranes. Sennebogen’s new manufacturing plant in Straubing has facilitated many positive developments in terms of product quality and product support.
In truth, crane customers are wellserved by these and the other leading manufacturers. Achieving a consistently high standard will remain challenging unless and until the talent fulfillment challenge is met. But for new entrants to this business, the bar is set very high indeed.
