Second-hand news

With more than 400 cranes sold last year, Liebherr-werk Ehingen is the largest all-terrain crane dealer in the world, boasts Hans-Georg Frey, the company’s managing director. ‘You always get good money for a Liebherr,’ he says.

Frey was speaking at the opening of the company’s new £15m (Euro 22m) UK facility last month. Although its primary job will be technical service, it will also be used for refurbishing some of the 800 Liebherr cranes estimated to be on the UK market, according Liebherr UK director David Milne.

‘It’s not something we have done in the UK – we haven’t had the facilities,’ Milne says, adding that he does not expect to begin refurbishments for a year or so.‘It’s a major growth market,’ says workshop manager Shaun Manning.

If the right equipment is for sale, demand can outstrip supply. Liebherr Ehingen marketing manager Wolfgang Beringer says: ‘We could have sold more, if we had had more used cranes available.’

Selling on used cranes traded in under part exchange may be good business, but it still supports the manufacturers’ main business, which is selling new cranes. Crane rental companies and specialists also trade used cranes.

‘I must get a hundred e-mails a week from the Middle East looking for Tadano and Kato truck cranes,’ says James Ainscough, who runs the crane trading operations of UK rental company Ainscough Crane Hire.

Buying and selling continuallyAs a large fleet owner, Ainscough is always buying new machines and selling its older ones. It is a continual process. Apart from trading in about 30 cranes a year with manufacturers, Ainscough sells about 70 itself on the used equipment market. In rough terms, four out of five of these will go direct to end users, and one in five to independent dealers.

‘We have had such success in selling our cranes that we are getting lots of inquiries for stuff we haven’t got,’ James Ainscough says. Maybe it is time for Ainscough to start buying old machines simply to sell them on again, he muses. ‘The market is good at the moment,’ says Rob van Oorschot of the Dutch trader Vema Cranes. ‘We sell a lot of cranes to the UK and to the south of Europe. We also ship a lot of cranes to the Middle East, and get a lot of enquiries from east Europe.‘The only problem we have at the moment is to buy young, good condition equipment in the Far East. People are using them longer.’

Many of the most active independent crane traders are Dutch. While Ainscough gets most of its revenue from hiring out cranes, those companies that rely on trading are having to reassess their strategy. Hovago, one of the major traders in the Netherlands, has already addressed this. ‘There are fewer cranes available on the market,’ says Hovago boss Doron Livnat. ‘My business is becoming more and more long-term rental rather than just buying and selling used machines.’

Other traders have also gone down this route – if you don’t want to buy the machine, you can lease it.Hovago even offers financing for those preferring to lease a crane, to provide the complete package. ‘I need to supply finance, and I need to supply rental. It is definitely my business strategy,’ Livnat says. Companies like Hovago offer a solution to those many companies that cannot otherwise get financing. ‘Banks are very cautious in supplying money for used machinery,’ he says. Specialist crane houses are better placed to understand the risks involved.

It is hard to point to a single reason for the reduction in the number of used cranes available on the world market. Livnat attributes it to a combination of possible factors. Maybe it is because the quality of cranes has improved in recent years so owners are keeping them longer, Livnat suggests. (The counter argument is that today’s cranes are so finely engineered that they lack the resilience, sturdiness, and hardiness of their over-engineered predecessors.)

Prices coming downAnother factor may be that, until recently, the price of new cranes was coming down, either actually or at least in real terms. The impact this had on residual values made it difficult to achieve a viable return when selling off older machines. However, this year has seen the price of new machines go up, and maybe that is persuading some owners to hang onto the machines rather than to renew. The dynamics are not easy to pin down.

There are other factors that might be considered, such as manufacturers’ long lead times. This means that new machines are not always readily available. These long lead times are attributed to steel shortages and reduced output by tyre manufacturers, but can also be partly attributed to the fact that manufacturers have ceded control of the supply chain.

Ten years ago, they would have hundreds of suppliers, all delivering components from which they built cranes. Few ‘manufacturers’ actually do much fabrication anymore, and have reduced even the amount of assembly work as much as they can. A small number of core sub-suppliers now have to manage many, maybe most, of the supply chain issues and deliver much larger, ready-built packages to the crane manufacturer.

Then again, maybe the undersupply of used cranes is simply directly paralleling the reduction in sales of new cranes around the world (China excluded, since it is an exceptional market that cannot yet really be considered part of the world market).

Another factor may be that the clear-out of machines from Asia, which began in the wake of the 1997 currency crisis, has ended. Japanese manufacturers are no longer producing in the numbers they used to. The population of cranes in Japan now matches the country’s needs, more or less, and owners are not so swift to renew their fleets.

It is not just the mechanics and dynamics of the used equipment market that have changed – the geography has too. There used to be certain countries that bought new cranes and others that took their cast-offs. ‘It used to be that I knew I could sell any crawler to Korea and any 70t telescopic to Spain,’ Livnat says. ‘Those days are over.’

Spain, as has been well documented in this magazine, is a prominent new crane market now.

Today there is ‘a bit of demand everywhere,’ Livnat says, apart from North America, where he says there is ‘absolutely no demand’.

James Ainscough agrees. ‘We have sold to Africa, the Middle East, Australia, New Zealand, Korea, Greece, Mauritius – all over the place. It’s amazing really.’Mid-size all terrains in the 50t to 90t range sell well, he says, and truck cranes from 25t to 50t.

Eastern Europe developing wellThe countries of eastern Europe have developed very well, but also the UAE and Scandinavia were good markets for used cranes in 2004, says Liebherr Ehingen marketing manager Wolfgang Beringer.

If there is a hot market for used cranes today, it is probably the Middle East, led by traders such as Big Equipment in Dubai, the Emirates that is seeing a spectacular construction boom. Big Equipment’s website lists nearly 200 machines – truck, rough terrain, and crawler crane – and all of them Japanese.