Market blossoms for Brazil towers

20 June 2008

São Paolo, Brazil's housing market is booming, in contrast to the situation 4,000 miles northeast in Miami, and local companies are scrambling to keep up with demand, reports Will Dalrymple

A cause-or perhaps a symptom-of the heat of the housing market in Brazil is the ferment amongst construction companies. Formerly privately-owned housebuilders Gafisa, Cyrella, Tecnisa, Rossi, Inpar, Even, and others have floated on the stock market in the hopes of raising cash.

"There are lots and lots of buildings, and they are in situations with jobs that need to use tower cranes, but the market doesn't have enough," says Julico Simões, tower crane department commercial director of Brazilian crane rental giant Locar.

The market situation attracted the company to the civil engineering business. And when it decided to go into tower cranes, it was a natural decision to go with Liebherr, says Julico Simões, because the company is Liebherr's biggest customer in Brazil.

Locar's new tower crane division was set up six months ago, but operations only really started in May. The company has ordered 26 Liebherr tower cranes, in a variety of models, for delivery in 2008, and the same number again in 2009. The company expects to buy between 100 and 200 units in the next five years - not necessarily all Liebherrs, though. But as of mid-June the company had only six cranes, two of which were working out of its São Paolo, Brazil depot.

The biggest Liebherr models to arrive are two 250tm-class 280 EC-H. And large cranes will always be in demand for bridges and infrastructure work, as well as tall apartment or office blocks. In fact, Potain dealer and rival rental company Locabens supplied large towers during construction of five Petrobras oil platforms.

But the most dynamic sector of the Brazilian market in the next few years may be at a much lower scale.

"Big buildings need tower cranes," says Julico Simões. "With little buildings, sometimes they need tower cranes, but sometimes they use hand work, and spend one or two months more, without a crane. We believe that it will change, and because of this we are investing."

Locabens commercial director Paulo Carvalho argues that the smaller end of the market today faces more competition from material hoists than manual labour. "There is a strong culture of using hoists and small material derricks," he says. "It did use to happen five years or more ago, but nowadays you don't see old and cheap equipment as often. Most hoists in Rio and in São Paulo are rack and pinion and there are several new tower cranes in operation."

Simões estimates the tower crane population at about 500 units in total in Brazil, but says that most are very old. Carvalho disagrees, saying that Locabens and a few other competitors at least have been investing in new cranes in the past few years. Carvalho estimates that there are 14 major players in Brazil. Chile is the second-largest tower market, he adds, followed by Argentina, Venezuela, Uruguay, Colombia and Peru.

In Brazil, Carvalho says that tower cranes are used for a fairly standard mixture of jobs. "We have high residential and commercial buildings, some infrastructure and industrial job sites. The average capacity remains between 40tm and 120tm."

It is at the lower end of this scale that the greatest opportunity for tower cranes exists. "There is a big potential for low income residentials with less than 40m height, but it is not a reality yet," Carvalho says, adding that it is not clear whether self-erectors or city-class tower cranes (which are erected at their final height by a mobile crane) will win over the market. "I cannot predict how long it takes to increase the market for city cranes and self erecting, but I strongly believe in this growth for the next years," he says.

The biggest stumbling block, according to Carvalho, is cost. "Most of the builders see tower cranes as cost, especially the small companies. There is little interest in city type, because most residential buildings are more than 40m high." Simões echoes these sentiments, saying that most apartment blocks are 50m-70m high.

Locar's Liebherr 132 EC-H in Brazil Locar's Liebherr 132 EC-H in Brazil
Locar father and son Locar father and son