Backlog blues

25 April 2008

An exhibition is the closest many potential buyers could be to a new crane for a while as delivery t

An exhibition is the closest many potential buyers could be to a new crane for a while as delivery times of more than a year for some machines are being quoted

Crane backlog is an expression often encountered when reviewing and reporting financial statements from manufacturers. A high backlog figure is undoubtedly a positive for a company, as these machines will have already been sold and paid for, either in part or whole. The shareholders are happy, and the sales staff have done their job but what does the expression mean to those buying, or thinking of buying a crane? The answer is simple- it means a long wait before a crane appears in a yard.

At the recent Intermat exhibition in Paris, delivery times of up to a year or more for new cranes were mentioned by both manufacturers and buyers of wheeled mobile and crawler cranes.

The waiting time means that buyers are snapping up any used cranes on the market almost immediately. Cedric Jandet, marketing coordinator at international auctioneers Ritchie Bros., says that cranes at the company's auctions are one of the best sellers, with customers logging on through the internet to join the bidding. “Most of the buyers are from India or the Middle East,” he says, “and they are buying any cranes that we have available.” Jandet added that Ritchie Bros' new French operation had been launched partly due to demand for used cranes. The first auction in France was held at the end of May to coincide with five other large scale auctions in Europe.

An indication of the levels of business done at auctions was the April event held by Ritchie Bros. In Rio Vista, California, US. Among the lots that day was a 2001 model Liebherr LR 1800 crawler, billed as the largest ever crane to go up for auction. For almost a month leading up to the event, the crane had created interest among potential buyers around the world, according to Denis Prevost, vice president of Ritchie Bros. “We had people from Holland, Malaysia, Indonesia, the US and Canada interested in this crane.”

By the end of the day, it had been sold to rental house Bigge Crane & Rigging for a reported $3.7 million (€2.9 million), the largest sum a crane has been sold for at a Ritchie auction.

On the web

As well as being used at auctions, the internet has become a powerful tool for buying and selling used cranes. Stock lists can be updated instantly for potential buyers around the world and cranes have even infiltrated e-bay, the online auction site, where at the time of writing, several cranes were available for between US$10,000 and $40,000. The emergence of the web search engine Google as a first port of call for information of any kind has also made it easier for buyers to locate any available cranes to buy, as well as to gauge prices.

This hunger for any available cranes has led to a change in the way some of the major manufacturers in recent years, with more emphasis being placed on selling used machines. In the UK, for example, Liebherr has invested heavily in the repair and refurbishment facilities at its new headquarters in Biggleswade. Liebherr has also just celbrated the sale of the 1000th used mobile crane in ten years from the Alt-Bork facility (see box story).

George Frey, managing director of Liebherr Werk-Ehingen, says that his company has handled between 600 and 800 used cranes over the last year. “It is a nice amount,” he says, “which gives us a good feeling for the market. Right now there are hardly any machines available. Market demand is so strong that most of our customers sell their machines directly so that is why we are more at the 600 level whereas in other years we are more at the 800 level.”

“A lot are going to the Middle East and Asia” says Frey, “The Middle East - Emirates, India, some to Latin America. It is a big market for these machines now.”

Wolfgang Pfister, head of marketing at Liebherr Werk-Nenzing, has noticed the increase in demand for new machines, “As soon as a crane becomes available,” he says “it is sold almost immediately.” This is echoed by Tom McCallum, director of industrial crane sales and crane remarketing at Manitowoc, “The market for used cranes is the best I've seen it in 10 years or more. Everyone is selling everything they can get their hands on.”

Mark Phillipi, asset manager at Terex Cranes, said that the reason his company got involved in the used crane market is the high demand for new cranes. “Virtually every manufacturer is working off a backlog - there are a lot of new crane sales but not a lot of new crane deliveries,” he says. “Production is stretched out so far that availability is driving the prices up of used cranes. Most customers can't wait six months for a crane. So they start looking for something used.”

Rental companies have traditionally sold surplus machines from their fleets, but a look at the classified section of this magazine shows exactly how many crane users are turning into crane sellers. Ainscough, the UK's largest crane rental house, is an example of this. The company had previously sold old cranes from its fleet or excess units from acquisitions, but is now branching out into dealing used cranes. Director James Ainscough, who is responsible for this part of the business, told IC that the company sold more than 150 used cranes last year. “We sell as many as the dealers,” he says, “maybe even more.”

Renters to sellers

Companies around the world are now turning to Ainscough to buy used machines, “People are approaching us for cranes” James Ainscough explains, “We are getting a lot of enquiries so we are actively looking for stock to sell.”

Between 60 and 70% of the used cranes sold by Ainscough are to companies outside the UK, with India, Pakistan, Australia and Eastern Europe cited as the major export destinations. Customers from India, according to Ainscough, are showing a particular interest in cranes from the early 1980s and companies in the Middle East are predominantly looking to buy truck mounted cranes.

“The problem is,” Ainscough explains, “finding good quality used equipment to sell.” Despite this, the company's used crane sales operation is flourishing, “Normally we would have around 50 cranes for sale. Today we have less than 10.” •

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