There is great potential across the Central European region although much of that depends on the basic requirements for AWP growth typically found in emerging nations. Euan Youdale reports.
There can be confusion over which countries make up the region of Central Europe. For the purposes of this feature, we are including the commonly recognised countries of Austria, Croatia, Czech Republic, Germany, Hungary, Liechtenstein, Poland, Slovakia, Slovenia and Switzerland.
As one might presume, the size of the AWP sector can vary greatly from country-to-country, with the likes of Germany, Austria and Switzerland having far more developed markets than most of the rest, excluding Poland to some extent.
Nevertheless, nations in the eastern area of the region have been among the key beneficiaries of EU infrastructure project funding, including Hungary, for example. According to Eurostat figures, the country’s 14% growth was among the most rapid in Europe last year. It was boosted by a European Commission’s agreement in August that committed €21.9 billion (US$ 24.9 billion) to Hungary between 2014 and 2020. This is to be placed towards improving its overall economy, including infrastructure development.
There have also been positive trends in Poland, which has seen the continued development of a number of key motorway projects improving its infrastructure. The road network around Warsaw is among these schemes – with the city also experiencing positive growth in commercial construction. This includes work on the City’s Spire tower, which at 220 m high, will be the capital’s tallest building.
Yet the Eurozone still has growth constraints including a somewhat restrictive fiscal policy, high public and private debt levels, as well as the geopolitical tensions of the Russia/Ukraine conflict. In a bid to boost the region, the European Central Bank (ECB) announced a quantitative easing (QE) programme that will help to ease credit conditions, by buying € 60 billion (US$ 68 billion) of public and private assets per month from March 2015 to September 2016. Switzerland may have some struggles on the non-residential structures side as its current monetary policy hurts manufacturing competitiveness relative to Germany.
New partners
Certainly, from the perspective of the AWP industry, Poland is by far the most mature compared to its eastern European counterparts and is moving closer to the countries on the western side of Central Europe. Nevertheless, Poland is still an emerging nation as far as access is concerned.
Like many emerging markets, there is huge potential for growth in the Eastern section of Central Europe, and we will concentrate on this part of the region for this feature. Most manufacturers and rental companies in the industry say they are keeping at least one eye on the eastern countries.
For example, rental giants Riwal and Prangle have signed a five-year framework agreement across Austria and eastern Europe. Part of the agreement is a three-year rental deal for 79 JLG platforms and telehandlers. Prangl will rent the machines to custmers in Hungary, Romania, Bulgaria, Slovakia and the Czech Republic. (See News, page 6, for the full story). Turning to manufacturers, Co.Me.T, for example, is exhibiting in Poland and Romania. “We are trying to develop that market and looking for a dealer there,” says a spokesperson.
France Elévateur shares a similar story and has major plans for the region. The company has a presence in Austria through its sister company in Germany, France Elévateur Germany, which opened three years ago and covers all German speaking countries. However, the manufacturer is making a concerted effort in Poland with its new distributorship partner Kobcrane. “This part of Central Europe is not easy because of the price level,” says Laurent Leclerc, special equipment department manager. “So, the idea is to design machines for this market. The goal is not to sell French machines around the whole world as the price is too high. We have had so many requests for different features over the years from French customers we have many things on the machines we do not need and therefore can delete.”
This will culminate in a new range of van mounts on 3.5 tonne chasses aimed at Central Europe, but for France too. The company’s home country provides 95% of its sales and the plan is to increase its export to 35% of total business. Working heights of the new 3.5 tonne range will be between 12 m and 14 m, and they can be mounted on a choice of a short or medium-length wheelbase. The machine will also have a fixed jib and be flexible in the sense that it can be set up differently for each customer. The idea is to provide the platform in kit form to be mounted on a local chassis. “Van mounts were expensive in the beginning but there are now more-and-more requests for them, so we want to provide for those needs and offer something less expensive – with a fixed jib it’s easier and cheaper but offers the same payload.”
Room for growth
Despite such valiant attempts in the region, the challenge remains significant in the eastern area. Daniel Duclos, owner and chairman of French manufacturer ATN, uses Hungary and Romania as an example, where there are few sales of new machines. Although, as he points out, on the west side of Central Europe, countries like Austria and Switzerland are very similar to the likes of France and Germany, when it comes to requirements for AWPs.
However, there is a high level of potential. For example, a rental company in Romania sells ATN machines, and as Mr Duclos explains that can only increase. “What we produce is more for a mature market,” he adds, “It will take a few years for these markets to change, but it will take less time to educate these markets than it took to educate the established markets as the products already exist and can be seen to work.”
Expanding on the point, Mr Duclos says aerial work platforms are already being introduced in to such markets through construction companies that work globally and insist on using such machines on their worksites.
Skyjack says it has machines in Poland and Austria, but has no formal distributorship in place. Brad Boehler, president, explains Skyjack is looking to consolidate its position in established markets first. Considering the large market share the company has in North America, Mr Boehler believes there is still room for growth in the established European markets, before heading in to less assured territories. “There is still potential in western markets and once we are established there we will be looking at other parts of Europe. There is no reason why that same market share should not exist in Europe.”
Mr Boehler adds, “There has to be economic drivers in place to get into a new nation and where business is done differently, you need local knowledge there. “We are able to supply to these markets but it has to be the right time to set up subsidiaries or other entities there.”
As one may expect, Genie is well catered for in the region, with an official dealer HDW based in Rotterdam, owned by TVH. Phil Graysmark, vice president of sales at Genie Industries, says there are two main issues in the eastern area. Firstly, it is not used to the rental model, and, more fundamentally, there is a lack of understanding about aerial work platforms and their use.
“Over the last five to six years it has gradually improved as the market is getting more mature,” says Mr Graysmark. That has partly been the result of the manufacturer’s active attempt to educate end users there into what the equipment does and, for example, explain what types of AWPs might be needed on any particular jobsite and how many units of each are required to achieve the desired return on investment.
The second major issue is funding. Again, finance companies in these countries often do not have the knowledge and understanding of the equipment from a rental and asset perspective and therefore don’t want to fund them. In addition, while Poland and Hungary have well established rental companies, other countries in that area have none to speak of. Often dealers also become rental companies, in many cases because they can’t operate on an income from a single source. This blurring of the edges between dealers and rental companies is fine up to a point, says Mr Graysmark, but as the markets become more mature they will need to move to the model found in established markets.
“I think it will take some time but the region will change dramatically,” adds Mr Graysmark. “And as the economies mature capital will become available and so established rental companies based in mature markets will show an interest and invest in the region.”
As we know, Poland is by far and away the most developed in this eastern cluster of countries and its rental sector is growing some 20% to 25% a year. New equipment sales has its up and downs, however, and may go up 10% one year and 30% another year.
Another element is the huge amount of used equipment in the region. As Mr Graysmark says, “You need infrastructure to support the fleets and spare parts. If you do not have this you get a lot of equipment sitting in yards and people do not trust the equipment. But it’s about getting more new equipment into the market.
“Plus the safety culture has to change on jobsites. Most of them are in the European Union (EU), so ultimately they have no choice, but it’s about the enforcement of that – when that happens it will make a big difference.”
Looking in
One might think Chinese manufacturers of AWPs are taking advantage in these areas due to their products’ relative lower cost compared to some products produced elsewhere. But according to Mantall’s general manager, the China-based manufacturers are experiencing the same issues. “It’s not a great market. We have some cooperation in Hungary and Poland but it is slow as the AWP market is still developing there.”
In addition, the relative youth of Chinese manufacturers is also a factor. “There are not many Chinese machines there. Chinese equipment has only been around for five to 10 years so there has not been much time to build up a used equipment base.”
Kerem Bayrak, board member at Turkey-based ELS, told AI it has very little sales activity in Central Europe, with its main markets being in its home country, where it finds 60% of sales. Its main export markets are in the Middle East and, he says, Germany. However, there have been recent sales in Lithuania which is a new market for the manufacturer. ELS began producing booms last year and has manufactured platforms since its formation in 2010, so, it is a young company with great ambition. It doubled its revenue in 2014 to €20 million, compared to 2013, says Mr Bayrak, and plans to continue in a positive trajectory in 2015. And with a new dealer in France, named Metaloc, ELS is certainly skirting round the edges of Central Europe and will no doubt make a landing soon.
Italy-based Airo is also skirting around the edges with sales in France and Germany, but fewer sales in the Central Europe country of Austria. Again, the likes of France, Germany, UK and Italy are its main markets. When it comes to the countries based to the east of the region, there is little or no sales, says Laura Oliva, Airo export manager. “We have sales in Austria although not that many, as well as Turkey and Israel but not in Eastern Europe; we only have contacts there but we are hoping to expand.”
Jerry Kist, sales director export at Italian truck mount specialist Multitel Pagliero, confirms the big issue surrounding the eastern nation is that together they make up a very young AWP market. “In a young market people expect cheaper products to do the same job. “After a while, with more experience, they will buy more sophisticated machines. We are the most expensive manufacturer in Italy so it doesn’t make life easy in that part for the world.” The manufacturer does see sales there, says Mr Kist, but it is mostly used equipment.
Concerning Austria and Switzerland, Mr Kist says they are both ‘decent’ markets, but he adds his company is taking it easy there. “We do not want to inundate the market with equipment; we would like to be at 10 – 15% of the market.” He explains, “The days of some manufacturers dominating a market are over because you set yourself up for failure in one to years’ time. If you plug a market up with machines it becomes saturated and that market is dead. “People get hold of machines easily and rental rates go down – there are too many machines for a limited market.”
Stros
Stros is a mast climbing and hoist specialist based in the Cezch Republic, yet just 5% of its sales our found in its home market. Petr Filip, sales manager, confirms the biggest market in the eastern part of the region is Poland. “The demand on price is very strong. People do not buy new and Hungary and Slovakia are very quiet, so their budget is limited anyway.”
“And in the Czech Republic we do not have high rise buildings and our equipment is designed for that sector; for example, in Prague you are not permitted to build higher than the existing buildings’ height.”
An area where work is being found is in power plants, however. “Poland’s economy is rising a lot. But other countries are problematic in the region at the moment. Chinese competition is very strong due to cheaper prices.” Mr Filip explains that a used Stros unit costs about the same as a new Chinese unit, so he says, in that case, the used Stros is chosen. “In addition, these countries have been hit by the Ukraine/Russia crises. So, longterm, thes countries will remain flat. “Poland will grow,” adds Mr Filip, “as the country is building power plants and renovating them, and construction growth is improving.”
