So much new equipment poured into the Asia Pacific region in the mid 1990s that given the subsequent downturn in work it will be a few years before demand picks up again. Large numbers of cranes, with not many hours on the clock, were sold back to Europe or the USA, but many owners have not been prepared to sell machines for a loss so quickly and are persevering with their businesses. There are still too many cranes, therefore, for the available work.
A notable casualty in Singapore was Piow Hong, which bought 45 Kobelco crawler cranes in 1996 and in 1997 placed an order for 57 cranes with various manufacturers in a single day. At that time there was no indication of the economic collapse just around the corner.
Despite a decline in utilisation and a decline in rental rates, money can still be made. Tiong Woon floated on the Singapore Stock Exchange in 1999. In the year to 30 June 2001, despite difficult market conditions, it made a pre-tax profit of nearly S$800,000 ($437,000) – down from S$3.7m the previous year – on turnover up 20% to S$40.4m ($22.1m).
Tiong Woon’s strategy has been to exploit the opportunity presented by the merger of those European heavyweights Van Seumeren and Mammoet and present a local alternative. The significant development for Tiong Woon in 2001 was the purchase, from Toyo Leasing of Japan, of a 1,000t-capacity Demag CC 6400 crawler crane and six 550t-capacity CC 2600s. The CC 2600s have been arriving in stages, with the last scheduled to reach Singapore in June.
These used machines, coupled with the two 500t and four 300t telescopic mobiles bought in 2000 from the defunct Piow Hong, make Tiong Woon a serious contender in the heavylift world. Although 70% of the business is in still in Singapore, Tiong Woon is aiming to be a global player and become less dependent on Singapore’s shrinking construction industry. So far, it has branch offices in Malaysia, Indonesia and the Philippines, and it is also active in Taiwan. It is the company’s strategy to downsize its fleet of smaller capacity machines and focus on the higher end where competition is less fierce. The Van Seumeren/Mammoet merger has made room in this niche market for a new player.
The total fleet comprises 300 units of lift, haulage and marine equipment, including tug boats and barges. Crane utilisation is at about 70% on the whole, and managing director Wilfred Tan says that the company is finding work for its new big Demags. The CC 6400, bought for 40% of the price of a new machine, is working on the Seraya power station extension on one of the islands off Singapore and there are further orders.
Tan is under no illusions about the state of the market. ‘It will be a very tough and challenging year for us,’ he says. There are, though, a number of projects coming on-stream in Singapore, including further extensions to the Mass Rapid Transit rail network, highway improvement work and a third terminal for Changhi airport.
Pressure from companies like Tiong Woon is being felt by Mammoet. As reported in News last month, Mammoet has moved its regional headquarters from Singapore to the lower cost Malaysia where 75% of its big crawlers are currently working. Mammoet is the sole equipment supplier to Kellog Brown & Root and Japan Gas Corporation which is building two LNG trains on the Petronas MLNG Tiga project in Bintulu, Sarawak. Mammoet has 30 cranes and 80 people on the project but this job is coming to an end. ‘It’s the last project of its kind,’ says regional director Ton Bakker. There are two other projects in Malaysia where Mammoet has some big cranes, but these two are close to completion.
In contrast, Asia Group, one of the biggest crane rental companies in Malaysia, with a fleet of 86 wheeled mobiles and 57 crawlers, says that the market will pick up around March after a slow 2001. Asia Group’s workload comes mainly from power plant construction, rather than the building sector, says executive director Ricky Seah Sin Huat. It has 15 cranes, for example, on a project in Manjung and 10 in Seragi, including a Liebherr LTM 1400, a 300t P&H lattice boom truck crane and a Manitowoc 4100 crawler.
Asia Group bought 10 units this year, all used, and sold or scrapped 20 machines. Utilisation is 65%, Seah says, and rates are down. The company took a bit of a hit on projects dismantling tower cranes and then not being paid.
Like many companies in the region, Asia Group has sought to expand internationally, moving cranes to wherever it can find work and become less dependent on a single market. Asia Group has a couple of 360t Sumitomo telescopic truck cranes and a Liebherr LTM 1400 in Singapore and a few 150t crawlers in Indonesia.
Tat Hong is another company that rents cranes to projects across the region. Sales engineer Francis Lye says that its rates are down 10% (‘we wouldn’t go any lower,’ he says) although prices in Malaysia (which is ‘surpassing our expectations’) are better, he says.
Excluding Australia, Tat Hong has about 200 crawlers and 100 mobiles in Southeast Asia. Most of the fleet is in Singapore, where it has about 80 of its crawlers at work and up to 40 lying idle. In better years it would have had about 100 units out on hire in Singapore.
When workload dried up in Hong Kong in 1997/98 Tat Hong moved out all but 18 of its cranes, but has since moved more back. It now has about 50 crawlers in Hong Kong, but only half of them are at work. Other countries where Tat Hong has been active include Thailand, but that market is slow these days, so it has just half a dozen cranes there, says Lye. Malaysia and Hong Kong are the main target markets for this year.
Tat Hong has met its target of replenishing about 10% of its fleet each year and last year brought in a mix of new and used Sumitomo 50t crawlers, both the old LS 118 RH5 models and the newer Pax series SC 500s. It is also the Sumitomo dealer in several countries and in 2001 it sold two SC 1500s (150t crawler) to Nippon Express in Singapore and a 200t SC 2000-3 to Continental Equipment in Hong Kong.
In general, sales of new cranes across the region have been slow. Demag, for example, took no orders at all in 1999 and 2000. Things picked up in 2001 with two new cranes sold in Hong Kong, and four AC 80s sold to German contractor Hochtief in Taiwan where it is working on a new high speed railway project. Over the years, Demag has sold more than 50 mobiles into Taiwan.
Liebherr seems to have found a market in Vietnam. In 2001 it delivered four new ATs to customers in the petrochemical industry in Vietnam, one each of 80t, 100t, 120t and 160t. Liebherr has also sold port cranes and container cranes there. ‘We have strong partners there,’ explains Albert Chua, general manager of Liebherr-Singapore’s mobile crane division. Besides these sales, Liebherr’s Singapore office last year relied on dealing in reconditioned units, including two to Malaysia and one to Brunei.
Chua is optimistic for 2002, though, and believes that he will sell more mobile cranes than last year. In particular, he is confident that he will sell a 500t LTM 1500 in Singapore this year, rationalising that with Tiong Woon owning the only two 500 tonners in Singapore (a pair of old Demag AC 1600s previously owned by Piow Hong), someone will be wanting to offer some competition. It won’t be Tat Hong, however, according to Francis Lye, who says that Tat Hong feels no need to go bigger than its current biggest mobile, a 200 tonner.
Truck loaders
Demand for truck loader cranes is also in decline. According to Ahti Salonen, regional president of Partek Cargotec (Hiab), demand for loader cranes in some Asian markets, such as Indonesia, Malaysia and Thailand, has gone down by as much as 90% since 1997. Singapore, a small market, has remained comparatively steady, although it has fallen from a total of about 250 units a year to about 120.
In Korea, Salonen says, the market is ‘fairly good’ and Malaysia has picked up again. But in both countries truck sales are predicted to fall, so those markets will probably drop back again.
In Hong Kong and Singapore, demand comes from haulage companies, who mostly want 20tm to 40tm cranes. In Korea and Japan there is demand for 9tm units with hydraulic attachments such as grabs. Salonen says that scrap handling in these countries is one of the biggest markets for knuckle boom loaders in Asia.
Demand in Japan has fallen from about 1,000 units a year to around 300, and Korea has fallen from around 1,600 to 1,000.
In Malaysia, about 20 to 25 of the 80 to 90 units sold each year are for the palm oil market, where the crane is used in the harvesting process.
Salonen reckons that Hiab has about 40% of the Asian market, with Fassi and Palfinger as the biggest competitors. Hiab is aided by a steady flow of military orders which account for about 30% of its business. But whereas the Asia Pacific market accounted for 20% of Hiab’s sales in 1996/97, it is now down to 9%.
Looking forward to the year ahead, there are varying degrees of optimism and pessimism. Overall, however, it seems that a fair prediction that 2002 will be no better than 2001 for crane companies across Southeast Asia, but – with any luck – not much worse either.