US cranes get a lift

Pre-construction began in May for a new bridge planned to span State Route 520 in Redmond, Washington. The USD11m project is among 34 State of Washington highway projects funded by USD492m from the federal “stimulus package,” the American Recovery and Reinvestment Act (ARRA) of 2009. It is also one among thousands of highway and bridge projects funded nationwide by ARRA with USD27.5bn.

Like many of them, and like numerous other projects under ARRA’s total transportation infrastructure funding of USD48.1bn, it will employ cranes.

Even before the stimulus, a February 2009 market report by IBISWorld concluded that US bridge and tunnel construction “is growing strongly with healthy revenue, record employment and increased public and private funding for the construction of bridges and tunnels.”

Now ARRA has required states to assign their allotted funds to specific projects within 120 days of the bill’s signing by President Obama on February 17. Thousands of projects are already bid, contracted or even under way, and one can see long lists of projects in most states on their department of transportation websites.

As of the last week of April, for example, the State of Illinois had finished awarding contracts for all of its USD935.6m in ARRA transportation funds.

“The focus of the stimulus package is to get people working now,” says Mike Sturino, president of the Illinois Road & Transportation Builders Association. “This is immediate, a very tough timetable, and they are not going to have any delays in construction.”

In Illinois without the stimulus money, Sturino says, state funding of transportation improvements today is less than one third what it was in the fiscal years from 2000 to 2003.

“When you consider the soaring costs of fuel and construction materials, adjusted for inflation this year’s spending is less than one tenth of the 2000-2003 average,” he says. “The stimulus package is very significant.”

The fact that ARRA stimulus package jobs are already being let across the country is likely to increase the confidence of crane distributors, says Manitex president Scott Rolston. Manitex products could be seen any time during ARRA construction projects, Rolston says, but he does not anticipate seeing a significant ARRA benefit to Manitex until later in the year.

While crane sales, rentals and utilisation rates are down across North America, in some cases drastically down, and while such possibilities as a residential turnaround and a boom in nuclear power still look like happy visions on a distant horizon, some classes of crane are doing well. Some industry segments (such as wind energy, power transmission and public infrastructure) are doing quite well. And some companies, bolstered by their market positions, their geographic circumstance, their network of customers or other strengths, say they are doing just fine.

“There seems to be a fair amount of demand for everything right now,” says Dave Snyder, owner of Snyder Crane and Rigging, Newtonville, Massachusetts. “You can choose to participate in the negativity in the mainstream media and railroad yourself into a corner with no work. If you believe you’re not going to have any, your actions will support that. We’re somewhat steady, and the call volume hasn’t changed all that much. Of course, I do have the luxury of being six miles from Boston.”

Snyder says there’s still a fair amount of highway demand for work that was started during the Bush administration, as well as a fair amount of roofing and residential construction.

Across the continent, smaller cranes are being especially hard hit by downturns in areas such as residential construction.

“As for the knuckleboom and wallboard market, there is none,” says Steve Carlson, president of CCSI Cranes, the North American importer of articulating wallboard and knuckleboom cranes. “It’s gone from 12- to 14-hour days a few months ago to the phone not even ringing.”

John Bannes, sales associate for Fischer Crane Co., Bolingbrook, Illinois, which imports Amco Veba knucklebooms from Italy, sees signs of a turnaround. “We’ve had almost nobody calling for drywall booms, but we have people calling for drywall booms now,” he says. “I think some people have a degree of confidence that things are coming back and have enough cash reserve that they’re able to invest in their businesses while prices are low.”

A month ago, Scott Rolston, president of Manitex, says he would have agreed that the market for small cranes (in Manitex’s case, 17USt boom trucks used in housing and light construction) was virtually dead. Two major orders in the last month, however, suggest a rebound in that segment and indicates that rental companies are becoming more confident again, he says.

Palfinger’s medium-sized articulating cranes are finding steady work in construction, bridges and roads, and Palfinger’s larger cranes are doing the same in utilities, says Darrell Messman, national sales manager, cranes, for Palfinger North America, but “over the last 12 months, the building materials business has been nonexistent, just terrible.”

“I believe we are beginning to see the bottom of everything,” Messman says, “and I think everybody hopes that by the fourth quarter we’re going to see some increase in growth and construction requiring building materials. Realistically, 2010 is probably where we will really see this.”

The downturn is a North American problem and not just a US problem, Messman says, although Mexico and Canada are behind in the cycle. “They went into the tank like we did but a little later, and as a result they may be slower coming out of it, but proportionately I think they’re in the same situation.”

Tar sands drive a lot of crane business in Canada, but with the fall in oil prices, some of the big tar sands expansion plans that were in the pipeline have been put on hold, according to Christian Chalupny, president of Morrow Equipment Company. Based in Salem, Oregon, and the exclusive distributor for Liebherr tower cranes for the US, Canada, Mexico, Australia and New Zealand, Morrow has big tower cranes at tar sands projects around Fort McMurray, Alberta.

In the big cities, however, something is always going on, Chalupny says. Morrow just finished a job in Vancouver with four Liebherr tower cranes on the new Golden Ears Bridge and has projects in Toronto as well. Morrow’s biggest sale of the year was of two very large Liebherr tower cranes which they were erecting in April as permanent installations on a new gold mine in Mexico.

AmQuip Corp., a Trevose, Pennsylvania, crane rental company with 12 offices across the eastern US and southwest, and cranes ranging from 6USt industrial cranes to 500USt all terrains and crawlers, is not focusing right now on the smaller crane market, says president Frank Bardonaro.

“That market is obviously getting pummeled right now,” he says. “The small boom truck and taxi crane markets are getting destroyed, and I would not want to be in the roof truss business right now.”

AmQuip’s fleet of RTs, ATs and crawlers is designed to meet larger industrial and infrastructure projects, and is maintaining a 70-90% utilisation rate, with about 60% of AmQuip’s book of business in the next two months being in ongoing projects. AmQuip has about 15 cranes and more to come at work, for example, on the USD2bn expansion now under way at Atlanta airport.

Georg Diesch, executive vice president for sales and finance with Liebherr Cranes Inc., says, “Right now, most of our customers talk about a utilisation rate of 40-60% of their equipment. Ordinarily, it’s almost

90-95%.”

While cranes doing residential housing and small commercial jobs are finding a good deal less work, Diesch says, customers report that Liebherr’s high-capacity cranes, 100-500mt, are still busy.

“We still see a good market in wind energy, a decent market in highway projects, refineries, all kinds of energy producing plants, maintenance shops for petrochemical facilities and heavy commercial buildings.”

Liebherr customers, mostly crane rental companies, still have jobs, but they do report that they are having to cut their rates due to much higher competition for each job, Diesch says.

Anson Harrington, president of Install Inc., an industrial contracting services company, Sanford, North Carolina, says his company is now getting up to 20% discounts on competitive bids for crane rentals.

“You can get a heck of a deal if you can get enough work to keep busy,” Harrington says. “The problem is that manufacturing has gone away. We used to bring in new equipment to change out old equipment, and that kept us busy for the last 30-40 years. Now it seems, percentage wise, most of it is putting it on a truck and shipping it to foreign countries. Mexico has been one of our biggest clients.”

As well as hoisting industrial equipment and assembly lines for shipment to Mexico, Brazil and China or plant consolidations in the US, Harrington says, the company has seen an increase in HVAC work for hospitals, schools and the military. Municipal work has picked up recently as well, possibly owing something to the stimulus package, he says.

Generally, big long-term projects funded before the downturn are keeping portions of the crane sector healthy, says Dan Mardian, president of Marco Crane & Rigging Company, Phoenix. Marco is keeping busy with a five-year project to build an underground copper mine in Arizona, for example, using a Link-Belt 348, 300USt lattice boom crawler, a 100USt rough-terrain Link-Belt and a 550USt Grove 7450.

Marco periodically sells cranes and parts to Mexican buyers, but has not been working across the border for some time, Mardian says. “Mexico has been very depressed, but we’re optimistic that will turn around.”

Sam Meyer, vice president of Marco Crane & Rigging Company in San Diego, says tilt-up concrete construction was about 25% of Marco’s business, but now it’s at a dead stall. “We were doing three to four buildings a day, and now we’re doing three or four buildings every six weeks.”

Natural gas is one of Marco’s active areas, says Meyer, laying pipelines and assembling plants, and Marco has recently moved into natural gas work in Utah and Colorado.

Public infrastructure is the mainstream of Marco’s business, however, and the company is also beginning a wind energy project in northern Arizona using a Link-Belt 298 lattice crawler. Probably the most important sector that keeps Marco going strong in California, however, is work for local utilities, Meyers says.