A New Chapter Starts For Construction Crane Markets
What manufacturers and rental firms say about signs of rising demand for mobile cranes
Looking for the bright side of the construction crane market has taken considerable effort in the last few years, but an uptick in sales in the first half of 2017 and an increased level of interest from customers has crane manufacturers reevaluating their product lines and rental firms shoring up their distribution channels.
“We’re not out of the woods yet, but we’re getting out of the woods,” says Chuck Yengst, president of equipment industry analyst Yengst Associates. “Setting last year aside—because that was really not a good year for anybody in the crane business—I can say that things are going to improve, and I see them improving from a psychological standpoint already.”
But it’s more than just the power of positive thinking, Yengst notes. Real sales for major manufacturers have shown some life this year so far, and companies said they were surprised at how many customers came to the CONEXPO-CON/AGG show in March looking to spend money on cranes. “My plan going into CONEXPO was wait and see,” says Pat Collins, director of product marketing for Link-Belt Cranes. “But it was much better than that—it was a buying show. Usually we’re just settling pre-arranged sales and handing over the keys, but this year it was come-and-buy, right at the show. The momentum since has been excellent for us.”
Link-Belt has worked through a few lean years, relying on longtime users cautiously refreshing their fleets, but is starting to see activity beyond that. “I think it’ll be hit-and-miss going forward, but I expect it to be a slow, steady rise out of a slow market,” Collins says. “There’s still some used equipment out there that needs to be digested.”
Link-Belt launched its TCC-2500 crawler crane at the show with high expectations, and sales have been in line with what they projected. But what caught the team off guard was the strong performance of other, less-promoted models. “I thought the 2500 would be a clear hit, but the biggest surprise was the 228,” says Collins. The 228 HSL is a 130-ton lattice crawler with a maximum tip height of 281 ft. “In the case of the 228, the chart is really the driver, and that the tracks can stay on or not,” says Collins. “It was a surprise hit at the show—one customer bought three of them right there.”
Link-Belt’s experience at the show was not an isolated event. “I know what I saw at CONEXPO, and the real enthusiasm of people putting in orders and willing to drive business was there,” observes Yengst. “And I don’t think it’s a big puff of smoke that’s going to go away.”
Any jump in demand this year is welcome, as it comes at a time when several major crane manufacturers are in a state of transition. Terex Cranes is working through its parent company’s abandoned merger with Konecranes that shuffled some divisions. Earlier this year it shifted production of its truck cranes to its Oklahoma City facility responsible for its crawler cranes, a consolidation expected to strengthen crane production in the U.S. In addition, Terex’s Demag brand—available since it was relaunched at Bauma 2016—has provided a new platform for the company’s all-terrain and rough-terrain cranes. In a press statement, Bigge Crane and Rigging Co. cited the consolidated manufacturing and related streamlining of Terex’s U.S. operations as one reason the rental firm placed an order for 27 Terex cranes at CONEXPO.
A Leaner Manitowoc Retools
Terex isn’t the only crane maker dealing with reorganization headaches. Manitowoc Cranes is still coming into its own since splitting off from its longtime food-services business in 2016. A new team has been setting ambitious goals for the crane manufacturer, led by the company’s new CEO, Barry Pennypacker.
“When I came on I saw our customers had been kept in the dark,” says Pennypacker. “We had lost our way a bit there, when we went from being a crane company to a food-and-crane company. We had to bring back that focus on customer needs.”
Pennypacker began promoting what he calls “The Manitowoc Way,” a spin on the famed Toyota Production System, a precursor to many lean-production manufacturing approaches. “I learned it 30 years ago in Japan working for Danaher,” Pennypacker tells ENR. “It’s all about the relentless pursuit of the satisfaction of the customer.”
Pennypacker’s first opportunity to implement the concept occurred after Manitowoc asked major customers and dealers for feedback in late 2015 about the firm’s Grove truck-mounted crane line, which was due for a revamp.
Early feedback was lackluster. “The machine they had proposed at that time was very unimpressive in my opinion,” says Cary Burr, senior vice president for cranes at H&E Services, one of the largest dealers of Manitowoc’s Grove cranes in North America. Burr voiced his concerns to Pennypacker during a meeting in early 2016, and the gears began turning.
Pennypacker gave his team an ultimatum: shrink the nearly two-year-long cycle to bring a new crane from initial design to production by almost 75%. “In February 2016 a competitor in the truck crane market made our TMS9000 noncompetitive,” Pennypacker says. “I decided to utilize lean principles to develop a new crane in only six months.” The edict was a major shift in Manitowoc’s development processes, but it was a welcome challenge for the design team.
“In the first weeks and months we saw a major increase in the velocity of the project through concept design as well as the detailed design,” says John Benton, senior engineer at Manitowoc. “We didn’t remove any of the valuable activities, we just made decisions on a real-time basis as data became available instead of waiting to convene meetings. It radically altered the speed and frankly the quality of the product.”
Benton says that the focused development cycle also allowed the team to incorporate feedback from users at a more regular pace, without having to worry about late feedback requiring major changes down the road. With such a short timeframe, the team focused on the key goal of the machine: increasing boom length without adding significantly to the operating weight. The resulting crane has a six-section, 169-ft greaseless boom while keeping the machine in the 100-ton class.
“We were able to drastically shorten the time it took to put in design changes,” says Benton. Previously, design-review meetings were scheduled a week in advance, and it could take days to implement changes. “Now it took a couple of hours to assemble key decision makers—we could run a lot of design decisions in parallel compared to the past,” he says.
“Everyone in the team thought I was crazy,” recalls Pennypacker. “But what they understood was if you take a core group with the competencies needed and put them on it for six months without worrying about the day-to-day parts of the business, it gets done.”
Six months later, Pennypacker and the team watched the new TMS9000-2 go through lift tests at Manitowoc’s verification center. “It was a very successful effort, but they’re already on to the next product,” he says. “Product development has to be a never-ending cycle since customer needs will evolve over time.”
“Manitowoc can’t be all things to all people, but we can focus our efforts rather than have our team too spread out,” says Les Middleton, Manitowoc senior vice president for North America. “The TMS9000-2 had strategic importance for us in one class. It also gave us a chance to try new things. We brought the design to manufacturability much earlier.” Manitowoc worked with suppliers to simplify the design for easier manufacturing, and created common-rail components and software that could be used in other crane lines. “With this approach, we’re developing muscle memory in our design teams and supply chain,” says Middleton.
“They hit a home run with TMS9000-2—longer boom, stronger lift chart than the competition. It gets back to their roots of building the best in class,” says Burr.
Crane Rentals Consolidate, Expect Steady Growth
While crane manufacturers are positioning themselves to be able to meet an expected recovery in sales, the crane rental market isn’t showing overwhelming demand just yet. Most new mobile cranes go to rental channels, and Maxim Crane Works is one of the larger players in that space. Purchased earlier this year by venture investment group Apollo Global Management, Maxim is now in the same corporate family as equipment rental firm AmQuip. Maxim itself also recently completed the acquisition of Coast Crane, expanding its rental footprint along the west coast of the U.S.
Maxim told ENR that while there are some positive indicators this year so far, there’s no clear sign of a thundering clamor for new cranes. “We feel general market conditions are improving, but there are still some competitors that are more focused on just keeping fleets busy rather than generating returns in order to reinvest in the future,” says Frank Bardonaro, chief operating officer at Maxim Crane Works. “Those are not sustainable models, but we do have to deal with them in the short run.”
Despite the near future looking a bit slack, Bardonaro says Maxim still sees hot spots. “Even with [these] tough conditions, we are experiencing double-digit growth in many regions and product classes.”
Rental firms have also had to cope with a glut of used mobile cranes from the oil and gas downturn, but according to Bardonaro the effects of this excess iron is fading in the rearview mirror. “We have seen some of the equipment from the upstream oil and gas markets try to migrate into other sectors,” he says. “However, it has really leveled off over the past 12 to 18 months with less impact today than a few years ago.”
Yengst thinks Maxim’s capitalization from its new owners is driving its recent tactical acquisitions. “I think Maxim’s done a pretty good job of gobbling things up,” he says. “They’re taking advantage of the situation in a way that builds for the long term.”
But looking to the future, analyst Yengst remains positive on the outlook for the crane market. “I think business is going to be a little better this year, then better by 10% to 15% in 2018,” he says. “But you don’t get giant strides when these things get started, you get gentle steps. Right now, everybody is waiting for that other shoe to drop. But we’ll know for sure by the end of the year if this recovery is real.”