News from the used crane sector

By Alex Dahm06 April 2009

Aerial view of a Ritchie Bros. auction site

Aerial view of a Ritchie Bros. auction site

Shorter lead times from the manufacturers has increased the availability of new cranes and reduced their prices as demand has fallen. Similarly, used cranes are more plentiful and a more attractive proposition price-wise. Euan Youdale reports.

Reinhold Bräuner is general manager at used tower crane specialist MTI-LUX, in Luxembourg, otherwise known as Machine Trading International. One of the countries to be hit hardest by the economic downturn is the UK, where sales have stopped, says Bräuner. The rest of Western Europe has also seen a substantial drop in business.

Most enquiries for used equipment are coming from Asia, the Middle East and Eastern Europe. In the latter region Poland is one of the countries bearing up in the current climate, although trading is reduced. Russia is similarly strong, but again is feeling the global financial crisis.

As a result rental companies the world over are unsure of how the used crane sector will develop over coming months, comments Bräuner. "A year ago everything was positive but now a big portion is negative and down - everyone is waiting."

The uncertain times have also led used crane companies to be increasingly cautious of sharing information about how many cranes have been sold in different regions.

For example, the Korean market is still relatively strong, but Bräuner prefers to hold back on specific figures. "The competition is very stiff. We are not afraid of that because there was always stiff competition, but the market is less than half what it was last year."

Up in the East

Cranes built by the big established manufactures, for example, Potain and Liebherr, are proving to be more popular than ever in the used market, says Bräuner. The reduced lead times and prices for new cranes, has led some customers to choose new products over used ones. In turn, used cranes from the well-known Western manufacturers are topping the list of many buyers.

In some countries, the requirement for used cranes has not changed, adds Bräuner. Buyers in north Africa, for example, generally seek big self-erecting tower cranes but the overriding factor for them is price, while Iran also looks to "cheap cranes" but has a tradition of buying old Potains, that are still in good shape.

Despite Eastern Europe's continued interest in used cranes, it is still feeling the affect of the credit crisis. In Romania and Bulgaria, among other countries in the region, the search for credit is tough and it has meant the region's traditional interest in small to medium capacity cranes has been curtailed.

"The problem is that we cannot say what will happen next week. You cannot plan or foresee when you will sell a particular crane."

Mi-Jack select sales and leasing is a US equipment dealer based in Illinois specializing in mobile cranes, including crawlers, as well as a range of other construction equipment. Some sales are direct to infrastructure and power plant projects, but its principle buyers are from rental companies.

Looking overseas

Sales for used cranes have dropped in the US and Mi-Jack's main markets are now overseas. They include the Middle East and South America. Barry Tutin, general sales manager, says he is now seeing an upturn in enquiries from these regions, compared to a reduction in sales of new cranes. This, he says, is down to the poor availability of money which is attracting customers to used machines.

Most of the demand is for rough and all terrains in the 30 to 150 tonne capacity range. Enquiries for crawlers are increasing, says Tutin, but there is still a limited availability, especially when it comes to big capacity models. "We saw a dip in August but an up-turn in December and we are now up to where we were before August in sense of enquiries, and maybe slightly less deliveries. Customers are trying to save their money."

While the drop in US sales is notably down, enquiries have, again, increased considerably in the first two months of 2009. The trend, Tutin says, is for companies to hold on to their money. In many cases, however, buyers are now looking for used cranes because they held off buying a machine last year and now, suddenly, desperately need one.

Another US-based company, Empire Cranes, has a similar experience to Mi-Jack. It sells a range of mobile cranes, including crawlers, and says business is brisk, compared to the third quarter of 2008. Paul and Luke Lonergan, president and vice president, respectively, say that in the last 30 days (to mid-February) there has been a significant increase in orders from around the world. "Business is strong, everyone is looking for cheap cranes."

Auction success

February's Ritchie Bros. auction in Orlando, Florida, is a case in point, say the Lonergan brothers. Prices were down 10 to 15% compared to six months ago, however, there were 98 cranes for sale, about 10% more than the February 2008 auction. All of them sold, say the Lonergans, who had their eye on a few machines. In the end the prices went higher that they were prepared to pay for them, but this is another sign of the strength of the used crane industry, they add.

Foreign interest at the auction came from Colombia, Brazil, Mexico, the Middle East and India, among others. Interest from Europe has dropped due to the devaluation of the Euro, compared to the US Dollar, explain the Lonergans.

Empire Cranes is also receiving increased orders from Africa, particularly the northern region, including Nigeria and Libya. Theses countries are mainly buying rough terrains across a range of applications.

The result of cancelled projects, resulting from the uncertain financial times, has also brought many almost-new cranes onto the used equipment market. They include higher capacity mobiles in the 400 tonne and upward range. In many cases, rental companies overspent during 2008 and now have to offload a couple of their acquisitions.

In turn, the Lonergans have also noticed a dip in interest at the lower capacity level. This is due to the recent drop in construction projects but also because there is an increasing need for higher capacity cranes.

Positive

Despite the interest at the Ritchie Bros. auction, however, sales have tailed off to the Middle East, say the Lonergans. The drop in oil prices has not helped the situation, and it is hoped the price per barrel will rise soon to reignite sales.

The Russian market is also very slow due to oil prices, say the Lonergans, along with Eastern Europe. "The Eastern European financial crisis has slowed down capital expenditure and availability." A large number of cranes have become available in Spain, they say.

The company is positive about the future and hopes to make more sales in 2009 than in 2008, but notes that overall business is likely to be down between 5 and 9%. "It is difficult to say. It could be a couple of quarters away, or it could be a year away, before we start seeing the affects of the stimulus package."

Michielsens Trading in Belgium, part of the Michielsens group, also specializes in all types of used mobile cranes. They are sold abroad to avoid competition with its 200-strong rental fleet it operates in Belgium.

Glenn Adreaenssen, branch manager, says the Eastern European countries are emerging as strong markets. Most of the company's sales to the region, however, involve lower capacity all terrains, as there is still not enough capital in the region for bigger capacity models, says Adreaenssen.

The big change, says Adreaenssen, came when the European Union expanded and investment became available to its new members. "In the past they were interested in older machines but now they are interested in newer ones."

Focus on Russia

The company sells about 100 cranes to the region each year, amounting to about half of yearly global sales. Most of them are in the 15 to 400 tonne capacity range and destined for the construction industry.

A big market for the future, projects says Adreaenssen, is Russia. "They are also suffering from an economic crisis but, just before the crisis, we saw a rise in demand."

That demand came in the form of 100 to 300 tonne capacity all terrains, mainly due to the fact that the country almost solely produces truck cranes. "With more money coming from the government they started to invest in new machines."

The difficulty in gaining credit is affecting the whole sales chain, says Adreaenssen, in that potential buyers will visit the company for a demonstration, effectively sign a contract, but then are unable to find credit for the purchase. "A lot of banks have been funded by their governments, but they are still careful about giving credit to other parties. It is not a good situation because it will not start the economy."

The economic crisis has also seen a shift in the average age of used cranes being bought and sold. "People used to be interested in buying older cranes but now there are a lot of very young machines coming on to the market. We see some big capacity machines coming in that are only one to two years old. This is a new situation because a year ago you couldn't buy these machines. Companies lose projects and money and have to do something with the big investment that they made, and they are getting rid of their machines."

Prices are, as a result, also changing. "A lot of machines are coming in so prices are under fire. It depends on the type but, on average, they have come down about 20%."

Adreaenssen forecasts that the industry will not pick up again for some time. "For me, I think it will be a longer period than optimistic people who say it will happen in six months. I think the next two years will very difficult and, in 2011, it will start to pick up again a little bit."

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