The consensus for the outlook of the crane rental sector is that there is no consensus.
A global pandemic and a severe oil and gas industry downturn have left the world and North American economies in a tenuous state. The construction industry is expected to rebound better than other sectors, as the “essential business” designation allowed for construction to continue on most jobsites in the United States.
Still, the economic shutdown due to Covid-19 and the resulting unemployment has made a deep impact. ACT talked to four crane rental executives – John Rowe, Mammoet; John Anderson, NessCampbell Crane + Rigging; Jenna Gabel, JK Crane; and Scott Wilson, ML Crane Group – about the state of their business and operations.
How do you characterize the crane rental market in North America?
ROWE: Diverse. As many different sectors of our traditional customer based have changed, the needs of rental services we offer will need to adapt and change as well.
ANDERSON: The North American crane rental market is an incredibly diverse market where the type of work performed is predominantly based on the region where the company or division is located. Over the last 30 years of my career, it’s been noteworthy to witness the industry growth from primarily regionally based, family owned businesses to a mixture of some very large international and national companies, regional based crane providers, along with the American Dream companies, which are the hard working crane operators that have the passion to start with one crane and seek to build a company from the ground up. The market as a whole is very diverse, competitive and full of companies with top-notch talent and equipment. This high level of expertise is literally responsible for lifting and moving our country forward on a daily basis.
GABEL: I would say right now that it’s uncertain, and the days seem “stop and go” (and stop again). For the Northeast specifically, companies are postponing projects that aren’t considered essential, and that definition is constantly changing. On the bright side, there are opportunities coming out of this, such as plans to build more hospitals.
WILSON: Confusing, I have been in the crane business since 1981, and this seems to be a very unusual time in the crane industry. When the oil, gas/energy sector was booming it created crane owners out of crane operators. The crane market was overwhelmed with too many crane owners without experience. Without experience, these owners performed work at rates that would not support a business plan, and now all of those cranes have flooded the used crane market. These actions have impacted the rates for services in a very negative way, as well as crane owners taking on contract risk exposure for items beyond their control. This same type of action was also done by private equity owners, and now those companies are flooding the market with cranes. All of this has lowered our crane values, caused the crane business to be just a commodity service instead of high value specialty service.
How has the energy/oil and gas sector downturn affected your markets?
ROWE: Like most in America, we are dependent upon a portion of our business in the oil and gas sector. Although we’re very well positioned in the oil and gas market for projects and crane rental, we have also diversified our business over the past few years as part of a strategic growth plan. We have some very long standing relationships with several of our major clients in oil and gas, so we look forward to the improvements in the market. We’re also looking forward to our newly developing business partnerships in renewable energy, and new market ventures.
ANDERSON: At this point NessCampbell Crane + Rigging has not been affected by the downturn based on the energy/oil and gas sector. Some decline has been based on the shutdown of major commercial and manufacturing being postponed because of the mandatory state shutdowns, which we are hopeful to see lifted soon.
GABEL: We haven’t seen an impact from a construction standpoint on our end.
WILSON: All of the locations we have with oil and gas business are impacted with lower than expected utilization and employee losses. A lot the employees were travelers and now with reduced hours, they can’t afford to stay away from their primary residence. Some of the crane companies around us have filed bankruptcy, closed shop or left the service area. We, however, have permanent locations and will weather the oil storm for a brighter day.
What are the biggest challenges in crane rental in North America in the realm of the Covid-19 crisis?
ROWE: The biggest challenges in the first phase of Covid have been understanding how to adapt and position. We, like many of our partners and clients, had a very quick slowdown of short-term work. This was due largely in part of society, industry, and our local and federal governments moving to understand how we deal with the safety concerns and Covid spread and exposure to our people. In the time it took to develop social distancing guidelines, and safety policies, much of the country simply paused. Our work, and industry, was affected in that pause. Many of our existing projects were pushed out until later in the year, or if possible, until next year in extreme cases. This presented a challenge in scheduling and business continuity. We’ve handled that challenge well, as we’ve stayed extremely busy in servicing our clients in different ways while attempting to reconfirm dates for projects.
The next challenge we will face, I feel, will be a spike in demand once our society, country and industry find stabilization from the health and safety concerns of Covid. Because of the delay and rescheduling of work in the first and second quarter of 2020, this could push demand into a smaller window of time later in 2020, therefore, causing a spike in demand for machines and capability in some areas or markets. Flexibility, diversity and the ability to service new market conditions will be the challenge we prepare to face in the coming months.
ANDERSON: The Covid-19 crisis came on so rapidly there was no other option but to be reactionary. We knew that if we were going to continue essential work and service the jobsites of our customers, the safety of our employees was going to be our Number One priority. Daily and at times, hourly, things were changing. As the experts communicated their safety recommendations, we adopted them immediately, but found ourselves having to improvise because of the lack of PPE and cleaning supplies available in the marketplace. It was very impressive to see our employee’s response and innovative ideas emerge to meet the safety requirements that were being implemented by the government and our customers.
Our team has worked rigorously at communicating, training and providing a safe work environment for our employees and customers. Moving forward we continue to struggle with the ability to purchase enough PPE and cleaning supplies to meet the recommendations and requirements for employees to perform work on essential projects. We continue to develop our safety procedures implementing best practices, communicating and training all of our employees of the existing hazards of Covid-19. As the federal and state governments develop their restart programs, NessCampbell is implementing these new requirements into our daily processes and navigating into our new world, keeping our employees safe from an invisible enemy.
GABEL: This is uncharted territory for everyone. New York and New Jersey have been hit the hardest, and it’s very difficult to navigate how to keep everyone safe while also keeping them working. In a sense, our industry is lucky to be considered essential, but I know that this may put stress on families as a result.
I don’t take that lightly, and I certainly don’t envy our leaders in government for having to make these calls on a large scale. That being said, we have to remind ourselves that this is largely out of our control, we are in this together, and we can only do the best we can with the information we have that day.
WILSON: There are many challenges.Trying to keep our employees and customers safe. Working with customers on rapidly changing work schedules due to employees either being exposed to the virus or possible exposure to the virus. Projects placed on hold or cancelled as a result of the Covid-19 crisis.