Manitowoc president Eric Etchart speaks about the global crane market
By Alex Dahm18 September 2012
Eric Etchart, president and general manager at Manitowoc Cranes, gave Alex Dahm an insight into his company and the crane market worldwide from the perspective of a truly global manufacturer
Despite a continuing poor economy in many parts of the world the situation for manufacturer Manitowoc is better than last year, Eric Etchart begins on a positive note. "We have a very contrasting situation by geography and by product line but, overall, the business is better than last year. The guidance that we gave for the full year was that sales in 2011 should be up by even 10 to 15% and that is very realistic."
The lowest point in the market was 2010, while 2011 was a kind of transition and 2012 is showing improvement. "By geography, this year we have seen strong activity in North America and Latin America for all our product lines. The Middle East continues to be very good for mobile cranes but very slow for tower cranes. We have seen growth in Africa and Scandinavia and CIS is picking up now." In contrast, especially for tower cranes, China and southern and central Europe are down. "Mobile cranes are still quite okay but tower cranes are suffering a lot," Etchart explains. Overall, he says, the two product lines that have struggled the most are probably towers and crawlers.
Compared to previous cycles, in 2004 right after the acquisition of Grove when Manitowoc and Potain were put together, the recovery cycle now is very different. "This time it is very much about infrastructure and energy. Residential and commercial construction is still pretty much down. In Singapore it is good, in India it is picking up but, in the grand scheme of things, this recovery is pretty much about infrastructure and power. We are not feeling a lot coming from residential and commercial construction."
In Europe activity is very slow for tower cranes but it is interesting that the utilisation rate overall is quite okay, at least outside of Spain and Italy, Etchart says. "If you take away the big rental tower cranes I think that the utilisation rate is probably back up to the low eighties [%], which is quite good. The problem is that rental rates are not, and are very far from what they were in 2008. That really has an impact on profitability and the confidence to increase the rental fleet."
"Of course we hope that Europe will be a little bit better than it is now. Spain is in a very dramatic situation, sales are at a very low level, it is extremely tough. It is a country where Manitowoc has always been very strong."
Self erecting tower cranes are particularly badly affected by the situation in Europe as 80% of sales come from Italy, France and Germany. The first two of these are very slow. "We are close to the lowest level that we have seen, although it is a little bit better than last year. Germany is a market where we have seen good activity and where our presence and brand is very well established."
"Our tower crane operation is pretty much in a slow mode in Europe. In previous years we have been very fortunate to have large dealers in Saudi or UAE placing very large orders for mega projects but now the orders are not there."
The situation is different in, for example, India where there is a Potain tower crane factory. "Although we have seen some headwinds in India, due to a slowdown, we continue to grow in India and have a very strong market share." Much of the business is with new customers who are first time users, "which is good because it means that mechanisation is really taking hold in India."
Latin America is still good, Etchart says, "We have had some nice projects - the Panama Canal, with about 20 tower cranes." Production of two or three models of tower crane will begin at the recently opened factory in Brazil. Etchart is confident that expansion will be sustained in Latin America. "Like everything it will have a growth trajectory and, sometimes, it will be bumpy but I think the trend is up. Our decision to go and set up in Brazil was not driven by the World Cup or the Olympic Games, it is all the other infrastructure projects and oil and all these other things that we believe are going to drive demand.
In China tower crane sales have gone down but Etchart describes the Asian market overall as pretty good. On the subject of China, where construction equipment manufacturers' sales are down this year by up to 50%, Etchart continues, "China caught me by surprise because I thought that the government would help to sustain the construction activity much more, like it did in 2008, although not to the same extent. The government is ready to put in more investment, especially in railways, and so on and I think it is probably necessary.
A good news story is the RT market. "We have seen very strong demand for our rough terrain cranes. Our new product, the 160 [US] ton 9150, is really doing very well. We have a very strong position in the Americas and a strong distribution network."
Having worked through their inventories in 2010 and 2011 dealers are now adding stock again. Rental fleets were cut back and are now being rebuilt. "For RTs we are almost back at the level that we were at during the 2007/2008 peak. We are pretty busy in Shady Grove, driven by The Americas and Latin America where Grove is also very strong and also in the Middle East, countries like Saudi Arabia, where demand for RTs is fairly good. Also in Asia and Australia."
In the boom truck market on one hand it has been heavily impacted by the slowdown in residential construction but there is a lot of activity in utilities and oilfield work, Etchart says. "National has a very good position in the USA. It is a product line where we have some work to in terms of production, to meet demand. The mix has changed in that demand is now more for the larger models, 40 tons and up."
It is a mixed picture for the company's AT and crawler lines. "Activity in the mobile crane sector has sustained better than we thought, given the market outlook. Crawler activity, especially the large ones of 400 tonnes and above, has been pretty slow overall this year. We anticipated it. It is challenging."
On the subject of products outside the existing portfolio, Etchart says that Manitowoc has no plans at the moment to enter the market for mobile folding tower cranes or the dockside lifting sector. Articulating, or knuckle boom, hydraulic cranes is another matter, however. "This is a product line that is very compelling to us. I guess today we need that product line." He says that the way into this market is not to start from scratch at the design stage. "The articulating crane is definitely a void and we would consider an acquisition."
Organic growth is a focus and major investment resources have been directed towards two other major areas. "We believe we have a lot of opportunity to continue to grow organically, at least in the next three years." Resources are not unlimited and large amounts have been invested in establishing Manitowoc infrastructure, most recently in India, China and Brazil, which is crucial, Etchart says.
The other major area of investment is deployment of a company-wide SAP software system. "It is Manitowoc's largest ever internal project in terms of commitment of capital expenditure and people. The goal is to create a global common process across Manitowoc."
Consuming the majority of the engineering resource at the moment is the effort to repower the mobile crane series to comply with the next round of engine exhaust emission regulations for 2014. "I look forward to the time when we are done with the repowering, when all the machines have Tier 4 engines, because that will free up a lot of resources that we can allocate to more product development."
Innovation remains a key strategic focus. "We want to continue our new product development because that is critical. We are looking at larger new models in all capacity ranges because that is a trend. We have launched the 300 tonne Grove GMK6300L and the 400 tonne GMK6400 all terrains. These are products containing a lot of innovation." They have been through the new product reliability system. It is from the new product verification centre at Shady Grove, another big investment and part of the new product reliability programme. "It is essential to keep us at the forefront of the industry."
Another key initiative is to develop service. "We want our Crane Care to be a differentiator and we want to excel in after sales, which is also part of the Manitowoc strategy."