Some like it hot
20 March 2008
Those who know the rough terrain crane market's “temperature” describe it differently, but one word finds a place in nearly everyone's description: “Hot.”
One observer calls the RT market “the hottest I've ever seen” and speculates that high demand might sustain for a decade. Another sees the RT in the first year of a five year, high demand cycle. Another takes a company view instead of an industry view. He says candidly, “I wish we had at least 20 more RTs. We have that much work for them.”
According to Wally Jones, senior vice president at Richmond, VA-based Stafford Equipment, “I've been in this business 38 years, and this is the hottest I've ever seen the RT market. There are three reasons for this hot market: Energy, energy and energy.
“We're quoting (rental) business forward to 2010, and right now, our rental demand is fantastic,” says Jones. “We rent to sell, and our rentals are up 50 or 60% over the last 12 or 18 months.”
The RT has been around for 50 years - since Grove invented it in 1957. Exact Equipment's Jack Swan has been in the crane business for all but 15 of those years. He believes RT demand has always been cyclical. Today, he speculates, is the first year of a five-year demand cycle for RTs.
“There's a vast amount of work for the RT to do,” Swan says in his Cleveland-area office. “Power. Commercial. Petrochemical. It's all out there for the RT until about 2010 or 2011.
“The RT is built for sitework, and there's a lot of sitework waiting in many areas of the world.”
Exact Equipment has been selling to India and South America. Most sales are in 20- and 30-ton RT class. Swan says, “The bigger they are, the more popular they are.”
According to Manitowoc's Doyle Bryant, director of product development and marketing, the RT market is nearly always hot in North America. “All aspects of plant maintenance - petrochemicals, paper mills, etc. - are helping to drive the market,” he says. “Also construction, including building roads and bridges.”
Bryant added, “RTs handle tough, of road conditions with four wheel drive and with various types of steering. They have simple, two axle configuration and a single cab. They excel at pick-and-carry operations.”
Bryant also cited the “relatively inexpensive” cost of RT operations, noting, “Their design does not require the horsepower or transmission to handle highway travel, nor do they need additional axles. RTs do not require transport between jobs. The RT is the first crane to arrive at a jobsite and the last to leave.”
According James Lomma, president of New York Crane, the RT market has never been more heated during his two decades in the business. But the dynamics include more than a growing workload.
“We're seeing a lack of new equipment we need,” Lomma says. “The demand for new RTs is so high that manufacturers can't keep up with it.
“The older equipment is wearing out and, at least in the Northeast, demand for 65 ton and above RTs is still high. We just can't get them. If we could get them, we would want 25.”
Lomma's crane operations now include more than 200 cranes, including more than 40 RTs.
“I've never seen this much demand for the RT in the last three years,” he says. “I wish I knew how long it will last, but I don't. We have lots of different projects. Power plants. Windmills(for electric power) in Pennsylvania, upstate New York and other places in the northeast. Condos in New York. As demand keeps going up for the RT, supply has not kept pace.”
Ron Dogotch, vice president-general manager at Houston-based Tadano America, has kept a keen eye on that demand, “Th is is the best it has ever been for the crane business,” says Dogotch. “And I mean ever. Excluding China, which is the busiest market, Japan, North America, Europe and Middle East all are experiencing huge booms.”
The boom is similar, but less global, than the 1978-1981 boom driven by the oil industry, Dogotch says. “Back then, the crane industry was opening and expanding plants while working three shifts a day,” he recalls. “Then the boom ended. By the second quarter of 1982, crane companies were considering closing some of those new plants. For the most part, our industry spent the '80s consuming inventory built up during those four boom years.
“Th at period following the boom had a long-lasting impact on our industry. We had 35 crane-makers during the 1970s’ oil boom. A decade later, we were down to four.”
Dogotch says a gradual market peak in the late 1990s, followed by a five year decline, affirmed the crane industry's cyclical nature. Then demand for RTs and other cranes began inching up again in 2004. By the second quarter of 2005, order books were reaching forward for a year or more. He attributes climbing demand to nearly every area of the energy business - not just oil, but petrochemicals, coal-fired plants, windmill farms, et al.
“When we hear about the market needing more RTs, we understand,” Dogotch says. “We want to supply those cranes. Right now, crane makers are facing a shortage of components. Steel. Tires. Bearings. We need them all, and we continue to try to get more of what we need.”
Dogotch and his company toil to acquire needed components to meet customer demand. At the same time, he hopes the component shortage might produce an unintended, but valuable, consequence. “By not getting all the components we need to produce RTs,” he says, “we might smooth out some of the peaks and valleys that have always been part of our business.”
According to Rick Curnutte, a Link-Belt project manager, current high demand results from large, industrial development, such as ethanol plants, petrochemical expansions and maintenance work, coal-fired plants and highway expansion.
Curnutte explains that in his company, “The market is hot from the smallest [RT] we make to the largest. Our RTC-8050 Series II [50 ton], RTC-8065 [65 ton] and new RTC-8090 Series II [90 ton] are the most sought. There has also been an upward shift in volume of the tonnage classes. Twenty years ago, the 18- to 22-ton class was the largest market. Ten years ago, it was the 30 ton class. Now, it's the 50-to 65-ton class.”
The significance in this shift is the development of more capacity and reach while still maintaining transport capability, Curnutte says.
Bryant, Swann, Lomma and other industry leaders have confirmed that rising demand for more RTs has been accompanied by demand for higher RT capacity.
Today, Bryant says, “The 50- to 60-ton RT is our most popular.”
Swann has observed other competitive areas, including boom length. “You'll see a new RT come out with a longer boom,” he says. “Then, not long after that, another company comes out with a model that matches the boom length.”
With the longer boom length has come other advances. Curnutte says that Link-Belt pays close attention to safety, simplicity, serviceability, accessibility and transportability as it improves RT design.
“By simplicity, we mean making the crane easy to operate because RTs are usually bare rentals,” he says. “We also make serviceable items easy to reach. For example, Link-Belts have large engine hood doors that expose the entire engine. Th at feature makes a service person's life a whole lot easier. The maintenance job gets done faster, and the crane is back to work. After all, a crane is only making money when it's working.”
Link-Belt, Curnutte says, also provides six access points - all four corners and two on the sides - to the operator's cab. Access also is better with a full-length flat deck, which has front and rear steps integrated into the fenders.
Pricing in what Swann describes as the first year of a high demand cycle has risen sharply. New RTs are up 25 to 30% in the last two years, he says.
Where does the RT market go from here?
A weather forecaster might look at it this way. “Right now, we're in a heat wave. And there's no sign of a cool spell headed our way.”