RIDING IT OUT

Just as last September’s issue of Cranes Today was winging its way from the editorial offices to the printers, the various economies of South America took a distinct turn for the worse. It was a downturn, prompted by financial problems across the globe in Asia, that we failed to predict in that issue of the magazine which carried our last overview of the region. We hope you will forgive us.

Mineral prices, particularly copper, remain depressed today and the crane business, like most others, is a tough one to do business in, hit by the decline in mining and construction activities.

“Generally Latin America is experiencing fallout from the Asian economic difficulties and the level of mining and construction activity has declined because of the drop in commodity prices,” says Frank Norris, international sales manager of US loader crane manufacturer Iowa Mold Tooling (IMT).

Grove Crane’s district manager for Latin America, Kyle Nape, agrees: “Business has been tough this year. With the price of copper at an all time low, the effects of El Niño/La Niña, economic conditions in Asia and the Brazilian crisis, business has been slow – in territories that were active over the last two years.” In spite of this, there are successes to report, and the bigger picture of economic restructuring, expansion of international trade and democratisation – as reported last year – remains valid.

  “We are expecting the price of copper, and the Asian economy, to stabilise a bit in the first or second quarter of next year,” says Nape, “and we will see business start to return to normal conditions by the end of next year – hopefully.

“Brazil will start to stabilise by the end of this year, but with the devaluation of the currency and a number of cranes that are financed, we will see a glut of available cranes and we do not expect to see this market return any time soon.” Link-Belt is particularly optimistic about the opportunities afforded in the region. “During the last three years Link-Belt crane sales throughout Latin America have soared,” says Corey Rogers, who represents the region for the Kentucky-based manufacturer.

Link-Belt’s market data suggests that there were around 175 cranes shipped to countries throughout Latin America in 1998. Rogers does not disclose how many of these were Link-Belt cranes, but the number appears to be rising.

“Though our sales in 1997 exceeded all expectations, 1998 sales more than doubled that of 1997. This year, it seems, we are on track to have another outstanding year,” he says.

“Though Latin America has traditionally been a rough-terrain and older, mechanical, lattice crane market, times are changing. During the past year Link-Belt shipped its first HC-278H (300 US ton hydraulic lattice truck crane) to Mexico.

“We also shipped several lattice crawler cranes, including one LS-248H II (200 US ton hydraulic crawler) to Aruba.” Aruba is an island off the coast of Venezuela in the Dutch Antilles; the crane is at work in an oil refinery.

Rogers continues: “Our telescopic truck cranes are also starting to capture the Latin American crane rental market as they have in North America. The HTC-8670, 70 ton truck crane, has been one of the most successful models sold in the Caribbean and South America. Like its larger predecessor, the new HTC-8650 has also become popular among Latin American rental companies. Our truck cranes, equipped with powerful turbo-charged Detroit Diesel engines, Jacob’s brakes and cruise control are ideal in mountainous areas like Puerto Rico and Chile where transporting heavy equipment can be cumbersome.” Link-Belt cranes spotted at work in Latin America this year include an HC-278H working at the Corona beer factory in Leon, Mexico and an HTC-8670 working for steel erector M&V Steel in Puerto Rico.

Central America has primarily been a used crane market, Rogers says, but recently more and more contractors and port authorities have been asking for quotations for new cranes. Among all of the countries in Central America, Rogers reckons, Panama appears to have the most potential for new crane sales over the next few years, while Guatemala and Costa Rica “show promise”.

Link-Belt has recognised the achievements of its Central and South American distributors by awarding “Outstanding Sales Achievement” awards to several of them: Ameco Argentina, Ameco Carribean, Ameco Chile, Distribuidora Yale of Guatemala and Mextrac of Mexico.

In spite of the evident economic problems of the region Liebherr is just as upbeat. It says that Brazil in particular has been “booming” over the past 12 months, while Argentina – where customs regulations allow used cranes to be imported – has also proved to be a “satisfying” market.

In Brazil, where Liebherr sells only new cranes, recent shipments include a 400t LTM 1400 all-terrain and a 400t LR 1400 crawler crane to Transportadora Locar of Sao Paulo. Messrs Irga also has taken delivery of an LTM 1400.

In addition to these, reports Helmut Rohloff, who is responsible for Liebherr-Werk Ehingen’s sales to South America, a further 15 ATs were shipped to Brazilian customers between July 1998 and June 1999: seven LTM 1050/1s, three LTM 1090/2s, two LTM 1120/1s and three LTM 1160/2s.

Rohloff says that the currency turbulence had only a temporary impact on crane deliveries in the early part of 1999.

Liebherr-Werk Ehingen and Liebherr Brasil are exhibiting an LTM 1030/2, whose data bus technology revolutionising the electrical system of the crane is new to Brazil, at the M&T Expo from 9 to 14 August in Sao Paulo, Brazil In Argentina demand for Liebherr’s reconditioned used cranes is strong, the manufacturer reports. Rental company Coamtra of Buenos Aires has just received a rebuilt LTM 1300 and Carmelo Pulice HNOS has taken a rebuilt LTM 1120/1. Four other used Liebherr cranes, ranging from 40t to 300t, have been shipped to Argentinian customers over the past 12 months, Rohloff says.

Liebherr’s exclusive agent in Argentina is Idesa- Ingenieria de Equipos. After sales service is currently provided by Liebherr Brasil and by Ehingen itself, though Idesa is soon to establish its own facilities for servicing cranes.

Kyle Nape says that while business has been tough, as mentioned earlier, Grove has seen “steady business” in Mexico, Venezuela and the Caribbean.

“Due to the markets, there has been little in the way of major projects,” he says. “Our cranes have been sold to contractors working for people like Pemex, Pdavsa and the like. We continue to quote a broad range of equipment from small RTs to the large ATs.” A key sales success for Grove was delivering its first GMK 6250 (GMK 6300 in the Americas) to Gruas Cortez Hermanos in Monterrey, Mexico. The 250t-capacity GMK 6250 all-terrain crane is Grove’s largest product and its flagship model.

“This was a great opportunity for the customer and for our dealer Ameco as well as Grove, allowing us to put the most modern and largest crane in Grove Crane’s line-up, with a well known crane rental company in Mexico,” says Nape.

“We hope that we will be able to put some more units into Mexico in the coming months,” he adds.

Demand for cranes across the region varies greatly from country to country. Frank Norris says that in the stronger economies – Mexico, Chile, Argentina and Brazil – there is an established demand for loader cranes, such as those sold by IMT, particularly in government sectors such as the power and water industries. “Purchases of articulating cranes in these areas often involve substantial quantities and are normally handled under competitive bidding procedures,” he says.

In more volatile economies such as Peru, Colombia, Venezuela, most of Central America and the Caribbean, there are not really established markets for significant quantities of articulated cranes. The market may be as small as 20 to 50 cranes per year, Norris estimates. The more common machine is a 25t or 30t RT which will be used by construction contractors and double as a general purpose loader.

In the private sector, crane sales are normally tied to particular jobs, he says, which are often financed by international agencies and which have specific lifting requirements. “It is unusual to find customers with requirements for general material handling applications,” says Norris.

Norris finds that the principal consideration in Latin America is cost. “It is difficult to sell safety or operating features such as load limiting devices, remote controls or jib booms. Brazilian manufactured cranes have gained market share in the Mercosur countries for this reason.” Because of the difficult economic climate, sales of material handling cranes are down significantly from 1998 levels, says Norris, but as the market is cyclical IMT has no long term concerns.

“We feel that the trend toward democratisation in many countries in the region has, if anything, improved the overall economic activity level, resulting in significant opportunities,” he says.

And the company has maintained sales levels to its traditional customer base in the region, Norris says. Models include articulated cranes designed for handling large tyres used on construction and mining equipment, and both telescopic and articulated cranes that are designed for use in the maintenance of this equipment. “We offer these industries equipment packages engineered and designed specifically for the intended applications.” Norris gives a further reason for optimism at IMT – a deal with Caterpillar that was announced earlier in the year. IMT will make service and lubrication vehicles available to Caterpillar’s worldwide dealer network.

“Interest among the Cat dealers in Latin America has been positive and we expect that the heavy equipment dealer market segment of our business will grow,” he says.