West is not all wet, yet
By John Wyatt07 March 2008
Steady but cautious are the words being used to describe the economy in the Western United States. Crane and transport industry professionals in California, Nevada, Utah and Colorado are optimistic but realistic in their forecast for the region throughout 2008.
Essentially, smaller crane rental yards are being impacted by a poor housing market and several companies now seek to extend their businesses with larger cranes. The entrance into more industrial and commercial work, where the money is still apparently flowing, appears to be the route smaller companies need to take to keep their profit margins decent.
Housing work out West isn't entirely in shambles, but what residential work remains is in custom built homes, (“higher end”), and condos. There is even a patch of modular home work for the transport industry to move.
“In a single word: challenging,” says Boulder Valley Crane Service Inc. President Ward Coffman, describing how business has been for his company the last two years as a result of the residential market. Because of the poor housing market, Boulder Valley shifted into other markets such as light construction. “With this new portion of the business with self erectors the last two years, we've had some growing pains there making sure we had knowledge and the technical skills, and supplemental equipment that we didn't need before.”
He says residential building is about 30- 40% of what Boulder Valley experienced two years ago and he doesn't expect any significant improvements this year. “We're keeping the inventory on unfilled homes. We're keeping an eye on it. That's what we think will be a leading indicator ... if you take the number of sales divided by the number of homes for sales it's over six months. We hope that number gets cut in half for building to resume so we're optimistic and hopeful for late 2008 and 2009.”
Boulder Valley works primarily residential, multi-family and light commercial construction. The company has eight cranes in its fleet, including three small mobile cranes that range from 23 to 40 ton capacity and five self erectors that range from 28 to 45 meter cranes (92 and 147 feet, respectively).
“We have Koenig and San Marco cranes. We buy all our stuff through Eagle West in Vancouver, BC, a distributor for those two products,” says Coffman. He is happy with the Koenig and San Marco units he has in his fleet and says in the next 12 months he hopes to purchase two more cranes. He also says this year he would like to expand his current facilities. So, his outlook for business must not be too sour, is it? “I think for one year,  is moderate growth in overall revenue. I got a goal for this year and I probably will have staff about same size, with no hires or lay-offs.”
Obviously, expanding and buying new cranes is not an inexpensive proposition, but Coffman is happy about a couple projects on the drawing board. The company has established a good relationship with Trademark CM Corp., a construction management firm. Boulder has two of its cranes working on multi-family units in central Denver. “Th ey've been terrific to work with and see the value with these self erectors. I think we're going to demonstrate to a big builder that we can save them significant labor costs and increase productivity,” Coffman says.
Specialized transportation brokerage company Ohana Transportation Inc., of Thornton, CO, says business has been “very, very good” in Nevada, Utah and Colorado. But then again, he says all around the country business has been great for Ohana. “Everybody else has the truck, I have the plates,” says President Don Bouque. He attributes this streak of success to heavy construction being up and small construction being down, which the latter he doesn't deal in so much.
The company specializes in the transport of industrial fire protection systems, and plenty of these systems are being delivered to the west coast. Additionally, he says the company transports model homes, which he calls one of the company's niches. “We do that for one of the largest home developers. That market has not slowed down one I-O-dah. We are busy in the transport of model homes right now,” says Bouque.
In regards to any extended forecast, Bouque reports similarly to Boulder Valley. He says the trend is a smaller growth pattern for 2008, with maybe 2% less business. “A lot of that has to do with contracts not made yet. Sometimes, we have as much as seven to nine months lead time for jobs, so one of our customers will let a contract or get a contract that normally they would've signed by now. So, this year it seems to have slowed down a bit. That may have to do with the whole election so they can see what's going to happen this year.”
Does the work seem to slow up in the winter for the company? No, not at all, says Bouque. As Ohana is involved in work across the whole country, he says the pattern of good business in the west has moved across the country.
In Utah, A.B.M. Crane Rental in Salt Lake City reports business has been excellent and “busy, busy.” The company, which President Eric Johnson describes as a “taxi service,” has held onto the lifeline of its work in the commercial, industrial and mining sectors. Johnson remarks that housing is dead in the area, yet says that his range of work will be good throughout 2008.
Last year, A.B.M. had revenues at $1 million, a figure that Johnson hopes to grow by 50% in two years. The company also is looking into new cranes in the 60 to 75-ton capacity range. He has no specific brand in mind but says that currently he has proposals on his desk for this range for models from Terex, Grove and Link-Belt.
With offices in Tahoe, CA and Gardenerville, NV, Connolly Crane Service Inc. has been enjoying a very good business climate and what appears to be lower management costs. The company's president, Kelly W. Connolly, says there has been a lot of industry moving from California into Nevada. “In Reno, they have a railroad, workers' comp is lower, taxes are lower, so they're coming over the border setting into new industries. There are also major hubs for Kmart and various supply houses.”
Also serving as a taxi-service, Connolly Crane has found its market niche with small-to medium-sized hydraulic cranes in residential and small commercial projects. The company has especially found plenty of work doing hazardous tree removal. According to Connolly, the company has the only license with OSHA in Nevada to do this removal service. Furthermore, he says the company's license for tree removal has been used as a template for other companies to follow.
“It took us a year to convince CAL-OSHA that this was the safest way to do it. They've taken all our engineering and they can do it as long as they follow our procedures. These trees were all killed by bark beetles,” he says.
The company has also been involved in a major residential rebuilding project as a result of the recent Angora Fire that took 165 homes in South Lake Tahoe. The company helped with clean-up work at site and is “very busy rebuilding those homes ... log homes to stick built to modulars” currently, Connolly says.
The winter months have been the slowest Connolly says that he has seen in 10 years. Historically, for the small hydraulic market, December and January are the busiest for the company Connolly says. Yet still, the slump doesn't seem to concern or impact the company too much. It has purchased a 75-ton capacity Link-Belt RT8675 and is pursuing the purchase of a 165-ton Demag for large hydraulics work the company needs for working on modular homes.
“We've been union since the day we opened and very lucky to have some of the best operators around. Right now, all my guys have 20 plus years experience,” says Connolly explaining the large part of the company's success.
Moving over to California, the business overall has been very well, according to most rental yard owners. The economy is still good and has been for five to seven years, says Greg Foster, vice president of Crane Rental Service in Orange, CA, and with a branch in Phoenix, AZ.
Foster says as far as he can see, the work and overall great conditions of business will probably last another year to a year and a half. “It's gone on too long,” he says.
Not that he is complaining: with a solid workload forecasted, Foster also says he is pleased with how his staff has helped make the company great and says everyone works well together. The company also sees itself as a taxicab player, with cranes mostly moving from jobs to jobs everyday.
The company is strictly all hydraulic cranes now, with 90% of those units Grove products, with a range that spans from 25 to 300-ton capacity machines. The company expects to receive a new Grove 9100 and a new Grove 5275 by mid-year.
The company's niche is that it has specific experience in refinery work, which includes day to day operations, shutdowns and 24 hour service for all major refinery and generating plants. Crane Rental Service staff members maintain their preparedness for this highly specialized work by regularly completing the Refinery Safety Overview.
Foster says the company also does some residential work, but “The residential work we do is probably $5 to 10 million homes that doesn't really affect the typical residential market.”
Up closer to Bakersfield, CA, Huddleston Crane Service Inc. has been enjoying its piece of the pie. The company has a fleet that includes small to large cranes and trailers. A factor of the company's strong work has been its proximity to Kern County, CA, “the largest oil producing county in the continental US,” says Dave Noerr. “It's no secret to anybody what the price of oil has done in the last few years.”
Noerr says the company is probably 80% plus oil affiliated. They company removes, transports and sets oil and gas tanks, some with capacities of up to 5,000 barrels. Noerr predicts the end is nowhere near and forecasts the company will see continued growth.
“We're going to enjoy a good business growth pattern for some time to come. The nation and the world's needs for petroleum are on the increase and from a domestic security standpoint, it is in the best interest of our country to develop all domestic oil and gas fields to the best of our abilities in order to lessen our dependence on foreign oil,” he says.
The company's latest purchase was a Grove TM91 20 crane, and this year Huddleston will get a 2008 Kenworth heavy haul low bed truck, as well as a 2008 10-foot wide Cozad trailer, which the company built to suit the needs of its customer base in the oil industry.
In the Silicone Valley, business remains good overall, says Steven Spence, president with King Crane Service Inc. The company does residential, commercial and industrial work, operating from its two offices in San Jose and Scotts Valley. Spence says residential work dropped off for the company about six months ago, though still says 2007 was the best year the company has experienced. Between the two offices, the company has 14 cranes that range from 5 to 265-ton capacity units. Because the company has made several purchases in the last three years, Spence says he will hold off on investing in new machines for the near term.
Lately, the company has been doing shut down work at a local power plant. “We're doing a power plant shut down where we've had two to three cranes in there 24/7”.
Dave Benson, president with Benson Crane Inc. in Santa Anna, Orange County, CA reports a slight hiccup in business. He says the last two years have been fantastic, until the easy qualifying mortgage crisis hit. This has impacted the company's role in residential, which Benson says slowed down about five months ago.
“I think commercial is picking up, so we're looking at getting more cranes,” Benson says. “We just got an 8690 Link-Belt 90 ton capacity. We're going to stay afloat by moving into larger capacity cranes and moving into larger projects.”
Even though Benson says to make money the company is moving into larger cranes, he still says that the customer home market has been good, reporting that it is always strong. Also, real estate has gone up in his area with all the high rise condominiums, which has opened up a new market for Benson with a lot of new water treatment projects, he says.
As far as his long term forecasts, he says it should balance out the same as last year: even though residential work is done, the larger cranes Benson is bringing in demand more money. He says there's a shortage of 90 ton cranes in the area, so the company's new Link-Belt won't be sitting idle.
Even though the residential river is near dry, commercial and industrial work seems to be picking up slack for workers in the west. Several of these contractors also know it is sink or swim to rely solely on one market, hence why so many have paved a niche for their company. And given this collective body of work in these markets, it doesn't appear the West will cry “game over” anytime soon.