Revival gains momentum

After several difficult years, it seems things are looking up for Japan’s major crane manufacturers. Kobelco leads the worldwide crawler market, the first fruits of the Hitachi-Sumitomo tie-up have been shown to the world, Tadano and Kato are seeing sales and profits rise, and Furukawa Unic is finding new markets for its mini crawlers.

Many of these crane manufacturers have taken steps to improve efficiency in the industry. Kobelco Cranes is now an independent company within the Kobe Steel empire, and not wrapped up as part of Kobelco Construction Machinery. With its new autonomy, it seems now to move more quickly to make deals such as the OEM agreement with Manitowoc. Manitowoc sells Kobelco crawlers (branded as Manitowocs) in the Americas and now Europe; Kobelco
sells Grove all terrains in Japan.

Hitachi and Sumitomo pooled the engineering, marketing, sales and service operations of their crane businesses in 2002 to form Hitachi Sumitomo Heavy Industries Construction Crane Co. Ltd. Hitachi and Sumitomo also both have a co-operation agreement with Tadano. Tadano, for example, supplies Sumitomo’s US subsidiary Link-Belt with Tadano Faun all terrains on an OEM basis. Sumitomo has stopped AT production in Japan, and Tadano supplies Hitachi Sumitomo with 100t, 200t, and 360t AT models for sale as Hitachi Sumitomo branded ATs.

Tadano also has an OEM agreement with Kobelco, supplying the undercarriage for Kobelco’s 25t and 50t rough terrains, and complete units of the 12t and 16t RTs that Kobelco sells in its own colours.

Marketing deal on RTs

Tadano also has a marketing deal with Komatsu, which has ceased manufacturing its own RTs. Komatsu’s dealer network now offers Tadano RTs (branded as Tadano) to its customers.

In addition to these rationalisation measures, there has been an improvement in market conditions. Japan’s construction equipment manufacturers in general are experiencing an upturn, with shipments increasing every month since mid 2002 and exports up every month since the beginning of 2002, according to CEMA, the manufacturers’ association.

Crane manufacturers have contributed significantly to these results. As previously reported, Kobelco reckons that its crawler cranes now account for one in three that are sold around the world. Its biggest single customer is probably Manitowoc, under the OEM agreement. Kobelco is also taking orders in China, which is a growing source of revenue for Kato and Tadano as well. Last year saw production begin at Tadano’s new factory in China, a joint venture with Beijing Crane Works.

The mobile crane manufacturers are benefiting from a rising domestic market. In the nine months to 31 December 2004 Kato Works saw its sales rise 7.5% to Yen 24.68bn ($232.5m). Its operating profit was Yen 1.25bn ($11.8m) and net profit was Yen 558m ($5.3m). In the same period, Tadano’s sales rose 5.6% to Yen 72.84bn ($685.3m), while operating profit rose 4.3% to Yen 3.96bn ($37.3m) and net profit was up 40% to Yen 2.77bn ($26.1m).

In the year to 31 March 2004 (fiscal 2004 for Japanese companies) demand for wheeled telescopic mobile cranes in Japan rose 10%. In fiscal 2005 it rose a further 15%. It is still a long way below where it should be, however, according to Tadano president and CEO Koichi Tadano. He estimates that the telescopic mobile crane population in Japan is between 40,000 and 41,000 units. If the life expectancy of a crane is 20 years, then the replacement market should be around 2,000 units a year, he continues. However, in fiscal 2005 it was only around 1,350 units. “So we are thinking that demand will improve further, even if the construction industry continues to decline slightly,” he says.

Include exports, and the total output of mobile cranes by Japanese manufacturers in 2004 was 4,115 units, says Kato Work’s acting general manager Yasushi Ishimaru. A 33% rise in global demand for truck cranes has helped both Kato and Tadano, and both have seen a steady rise in sales in the Middle East and Australasia. “This trend shall be continued at least up to the end of this year,” says Ishimaru.

Sales of stiff boom truck loader cranes, a market in which both Tadano and Furukawa Unic are active, have been dampened for the past couple of years because the truck market is down.

Hiroshi Mino of Furukawa Unic’s sales promotion department says that new engine emissions regulations that came into force in certain areas two years ago brought in some special orders, but since then sales have declined. Exports, on the other hand, were up 30% on fiscal 2004, with truck-mounted crane sales across Asia and the Middle East and mini crawler sales up in Europe with new distributor Unic Cranes Europe making quite a successful start.

New from Unic is its smallest mini crawler to date, the 094 model, which lifts 995kg at 1.5m radius and is now with UK-based Unic Cranes Europe for CE certification.

Other new products from Japan include Kato’s NK-550VR, a 55t truck crane on a Nissan carrier. This was exhibited by Kato at Bauma China last year.

Tadano’s Beijing factory produces truck cranes on Nissan carriers and also uses two types of Chinese carrier. Koichi Tadano reveals that the company is planning to produce its own chassis before too long, one that could be used for world markets, not just China. “We would like to develop our own truck crane carrier,” he says.

The first crawler model developed jointly by Hitachi and Sumitomo was exhibited at Conexpo on Las Vegas in March by Sumitomo’s US subsidiary Link-Belt as the 218 HSL. A notable feature of this 100t (110 US ton) capacity crawler is the use of wet brakes on the winch, as used by Kobelco and Liebherr, and a hydraulic counterweight removal system.

Telescopic boom crawler launch

Also new from Hitachi-Sumitomo, and being exhibited in the UK at the SED show this month, is the SCX400T, a 40t capacity telescopic boom crawler. It is being promoted in Europe as an alternative to 45t all terrain and rough terrain wheeled cranes, and follows on from last year’s launch of the smaller Hitachi ZX160LCT tele crawler.

At 3.35m wide, 12.47m long and 2.92m high, and weighing 44.8t it can be transported on a low loader within most countries’ transport regulations. The base machine is the same as the established lattice boom SCX400HD, powered by an Isuzu BB-6HK1T engine. The four-section telescopic boom, which extends to 32m, is supplied by Link-Belt.

New from Tadano, as reported in the April feature on RTs, is the GR-300EX,
a 30t RT.

As with heavy equipment manufacturers elsewhere in the world, the Japanese crane producers have faced a challenge in sourcing components at the right price. “The problem with steel is not availability,” says Koichi Tadano. “It’s the price. With tyres, there is a shortage, especially wide tyres for all terrain cranes in the North American market.”

Lead times have increased. For a typical rough terrain, the lead times used to be two months, but it is now three or four months.

Tadano has been able to pass on some of the extra costs that it is now facing. In the past year, its prices have gone up by an average of 5%. Further increases may be expected. “We have to increase our sales price,” Koichi Tadano says.

On 1 April this year Kobelco added 15% to the price of its cranes sold in Japan – in line with the increases they faced with raw material costs – but it has added just 5% to the prices paid by overseas customers.

Within days of Kobelco announcing its price increases, Hitachi-Sumitomo announced that it too was raising its prices from 1 April, with between 10% and 15% going on the price of domestic shipments and a 10% price increase overseas.

Aside from supplier issues, a challenge facing Japan’s manufacturers of rough terrain cranes has been the massive recall of RTs to retrofit an alarm to warn the operator if they forget to switch back to road travel mode when they drive off site or accidentally knock the switch. Alarms have been fitted as standard by Komatsu since 1996 and by Tadano since 1998, but after a fatal road traffic accident in August 2004 it was decided that older models should be retrofitted with alarms.

For Tadano (the most affected since it is the market leader) the recall notice applied to 15,278 cranes that were made between 1983 and 1998, although with many now out of service the company says that the total to be retrofitted is about 9,000. It has 60 service engineers working on this project, often visiting the cranes on site at night and at weekends, so as not keep the cranes from working. “We started work in January and we will finish before the end of June. Our target is to finish before the end of May,” says Koichi Tadano.

Tadano expects to make a provision of $1.3m in its fiscal 2005 accounts. “We can absorb this figure for this year,” says Koichi Tadano.