China crane summit opens in Shanghai with 250 delegates

22 November 2010

Eric Etchart, president of Manitowoc Cranes, at the International Crane Summit in Shanghai, China.

Eric Etchart, president of Manitowoc Cranes, at the International Crane Summit in Shanghai, China.

The second International Crane Summit opened yesterday (22 November) in Shanghai, China, with around 250 delegates from over 90 companies and 25 countries.

The audience heard from a wide range of speakers from China, the US and Europe. Mr Su Zi Meng, secretary general of the China Construction Machinery Association, said the rapid growth of the Chinese crane market was creating competitive pressures; "As the Chinese crane market production capacity has been increasing at a more rapid pace, and since some enterprises are fixed on ‘generic' products, market risk has increased", said Mr Su.

Bryan Pepin-Donat, director of international business at Lampson, painted a downbeat picture of the US crane industry. Although there are opportunities in sectors such as wind power and the nuclear sector, he said that the crane industry was facing "reduced rates, increased costs of ownership, reduced utilisation and return on investment." He said "excessive" regulations, such as crane testing requirements, were also adding costs.

He said uncertainty over the economy and tighter credit conditions meant that many crane companies remained "reticent" over fleet investments. "Even those companies who do have access to capital are being reticent on spending because of uncertainty about economic recovery and potential return on investment...Some companies can take advantage, [but] the majority will take the conservative approach and only buy equipment that can be amortised over existing projects. We must continue to be prudent."

Eric Etchart, president of Manitowoc Cranes, reporting on current challenges to the crane sector, identified costs of ownership of cranes for rental companies as a key issue. He said rental companies were facing economic pressures; "Rental rates and utilisation is a big issue, especially in the US and Europe. Utilisation is improving, but rates are still lagging behind."

Mr Etchart, who spent 10 years based n China with Manitowoc and opened his speech speaking in Chinese, echoed other speakers' views on the potential in the Chinese market. In nuclear power alone, he said, China aims to increase its nuclear power capacity from the current 9 GW to between 70 and 80 GW. He said Chinese investment in infrastructure would reach RMB 24 trillion over the next 10 years, with RMB 16 trillion alone on nuclear power plants.

He argued this meant that, for crane companies, "If you aren't successful in China now, you can't be successful in the crane market."

David Philips, managing director of Off-Highway Research, gave a presentation on the Indian crane market - a topic of great interest to the Chinese and western crane manufacturers in the audience.

He highlighted in particular the growth of the Indian ‘pick and carry' crane sector - with sales expected to grow from 6000 units per year in 2009 to more than 12000 units by 2014.

Mr Philips also forecast very rapid growth in sales of truck mounted cranes, all terrain cranes, rough terrain cranes and crawler cranes - with a doubling of sales likely between 2010 and 2014.

Ted Plafker, China correspondent for The Economist magazine - who chaired the Summit - provided an overview of the global economy, drawing attention to "tentative recovery" in the US; "Until the US recovers, the global recovery will be spotty, touch and go."

Mr Plafker, has been based in China for over 20 years, said he remained optimistic about the Chinese market, with annual growth in the 8-10% range likely to continue. He said investment in infrastructure would be sustained at a high rate, with China spending around 9% of its GDP on infrastructure compared to 2% in the US.

The Crane Summit - the first to take place in China - was organised by KHL Group, International Cranes & Specialized Transport and American Cranes and Transport (ACT).

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