With future demand continuing to be characterized by evolving complexities, amidst persisting demand retrogression, crawler cranes manufacturers in India brace up for future showdown as overall sentiment prevails over demand fundamentals remaining stable, P. P. Basistha
takes a look.
Preceded by demand slump in the past three years, 2012 was not exceptional for crawler cranes manufacturers in India. With rental rates remaining under pressure, led by extended financial closures of projects, especially in power, as well as other core sectors of infrastructure, demand of units was reportedly down by 50% during 2012 as compared to previous two years. However, manufacturers refrained from remaining dormant during the phase. Future preparedness remained on stream through strengthening of business structure, carrying out improvisation in products, increased focus on localization among others.
The preparedness was and continues to remain based on the cue from the rental sector, the primary demand segment. It foresaw and continues to believe that bottoming out of the slump cycle should happen soon. “The present slump has actually been much due to tardy awarding of contracts. However, subdued demand is also due to negative sentiment prevailing in the market, which should soon get tapered as number of new projects are lined up.” according to
Mr. Arun Mahajan
, Director Appolo Cranes, crane rental behemoth. However, he warns, “financial support to the projects planned for execution has to be the key for stimulating units demand which has lost its earlier momentum, as financial institutions are now evaluating the bankability of the projects at hand in greater detail.”
Notwithstanding, that has not altogether shelved projects from being executed. NBM&CW has learnt that there have been indications of rental rates notching up from November 2012 onwards. The upward rate movement is unlikely to gain exceptional momentum as it happened during 2008-09 or 2010. This is as because utilization levels of fleet across the class (150-250-400-650-700 tons crawler mounted) remained at modest levels of 25-30% during December 2012 and further, however little better, as compared to 20% in October during the same year. Nonetheless, manufacturers view the development quite significant, yet complex as an opportunity for business development.
The current inching up rental rates are primarily believed due to announcement of new projects guided by firm clauses in deployment of newer cranes, guided by newer construction methods and vitally safety considerations. New projects and guiding clauses are well likely to bring fresh orders for manufacturers. Based on safety considerations, for its 120 km third phase construction, DMRC has stipulated the usage of technologically-advanced cranes to enhance safety and performance. Informing NBM&CW, DMRC, MD, Mr. Mangu Singh
says, “The new cranes have built in safety features and better stability for undulation which may be encountered at sites. Our new tender documents strictly prohibit the use of old cranes which have already been used in phase-1 and 2, covering 190 kms. The newer cranes are balanced and more adept at working on uneven terrain, which may be encountered at sites at times. Sizeable numbers of hydraulic crawler and duty cycle cranes were deployed at DMRC’s 1st and 2nd phase for reducing and lifting of tunnel boring units beneath the surface, pouring of concrete at sites being constructed through cut and cover method, erection of superstructure, erection and positioning of precast concrete structures among other jobs.
Newer construction methods (to minimize construction schedules) and safety are also the yardstick behind procurements of newer crawler lattice boom cranes for LNG receiving terminal projects in India. LNG terminals are believed to be one of the prime demand segments for crawler cranes in near future in the country. At least nine new receiving terminals have been planned on India’s west and east sea coasts, encompassing complete setting up of large scale storage facilities, regassification units and supporting utilities. “There would be requirements of crawler lattice boom cranes with fixed boom and long luffing jib arrangements for newer storage facilities and also those for planned brown-field expansion. Crawler cranes will remain to be the favourable option owing to their ability to move with heavier loads as compared to ring cranes and jacks. However, safety and advanced operational features will be the prime consideration behind selection of the cranes.” says, Mr. Bishnu Panda
, Senior Engineer, LNG Petronet. LNG Petronet will set up a new mega world class LNG receiving facility at Gangavarm. The Public Sector Undertaking (PSU) is presently carrying out expansion of its Dahej terminal.
However, the newer developments which will characterize future demand of crawler cranes will require more than product offering. According to Mr. A. K. Somani
, Director, Liebherr India, “The new evolving demand order is more about offering technical support and after sales support supplementing product offering. Our focus will be on after sales service support by strengthening our training, timely parts support through sizeable inventory backup.”
The company which foresees increasing revenue generation through sales of higher capacity units involving 400-600-750-1,350 and 3,000 tons will not cut down on manpower. On contrary, Mr. Somani says, “Hiring few more qualified service engineers are on the radar. Our intention is to keep offering value to our customers through our reliable products, superior after sales support, by inducting additional service engineers in our team. Valued customer support is important for us, as most of our new businesses in India will keep coming from existing customers.” Liebherr is planning to expand its service centers in Mumbai, Chennai, Hyderabad and Bangalore apart from the existing one at Kolkata. Liebherr markets its two class variants of crawler cranes in India. The first comprises capacities of 300-3,000 tons from its Germany plant whereas the second consists of 100-300 tons from its Austria plant. Liebherr also supplies cranes for duty cycle segment from its Austria plant.
The growing cost of debt servicing for new purchases owing to underutilization of fleet is the major challenge before rental companies, thus making the rental companies look for succor from equipment manufacturers through better support. According to Capt. Sandeep.R. Anand
, Vice President-Business Development, All Cargo Logistics, “Falling rental rates has made the situation further complex for us. This is because the machines actually work for eight months within the whole year when the obligations of monthly bank instalments are met as for the remaining four months the units have to go through their maintenance schedules or are involved in transportation to various job sites. Earlier with decent hiring rates, we had comfortable reserves position to meet our debt even when the machines were lying idle. However, in the present situation, we yearn for cost competitive, yet quality services, from manufacturers to avoid grounding our fleet as our reserves position remains tight.”
Though the situation is a silver line for manufacturers not without its set of competitive challenges. As because the development is likely to provide scope for business retention however, marginal market expansion as overall demand scenario remains bleak.
According to Mr. Nilesh Bhorkar
, National Sales Manager, Kobelco Cranes, “Our long-term strategy to counteract the evolving competitive and complex situation will be through sustained focus on product indegenisation to insulate our product offering from ongoing variations in currency exchange rates.”
Kobelco has set up its new plant at Sri City near Chennai to manufacture 100-260 tons crawler cranes. Mr. Bhorkar foresees minimal demand variations in crawler cranes during 2013 as compared to 2012.
He says, “Supplemented by indegenisation, we will ensure in making our products akin to the requirements of the Indian customer. Based on the strategy, we will roll our new 260 tons CKL 2600i series shortly following our ongoing production of 100 and 150 tons, CKL 1000i and CKL 1350i. I stands for Indian series. Mr Bhorkar informed that 60% of the crane’s component involving engines from Hino Japan, hydraulics, pumps is of imported origin. While counterweight, undercarriages are sourced locally. To ensure timely support, Kobelco will shortly set up its own warehouse in Chennai. The Japanese entity reported sales of 32 units in 2012 as compared to 33 machines in 2011.
Growing complexities in projects based on newer construction methods by EPC, contractors are also being sensed by crawler cranes manufacturers to promote their products in the subdued, yet competitive market. “We will fully utilize our wide technical and valued experience to address the newer construction methods. Based on total knowledge with our R&D engineering deptt, we are able to suggest products that will be suitable to the specific job site requirements. We are capable of undertaking modifications in boom and its attachments and heights, counterweights and other necessary value engineering in order to make the products suitable for the required application,” says Mr. T. R. Badarinarayan
, CEO Sany India. He adds, “To ensure that our crawler lattice boom cranes function reliably at the jobsite with minimal downtime, we render direct technical support to the products.
Sany will not resort to outright price cuts in response to slow demand. According to Mr. Badarinarayan, “We will not compromise with our premium positioning, this is when volume sales of crawler cranes for us are modest. We will pass value to the customers through sustained localization of our products, modifications in the products by carrying out improvements in metallurgy, electronics and other features. The broader idea behind the strategy will be to make available a reliable product to the customers.” The company manufactures in its well laid out facility at its Pune Plant- Booms, Counterweight for its mid and small range crawler cranes.
Acknowledging better services support for customer relationship building during the competitive times, Sany gives significance to customer support. “Our support package is back-to-back in its entity. This involves onsite and factory training support to operators, maintenance training pre- and post- delivery, timely availability of spare parts, recoverability and marketability of used cranes.”
The company which perceives market to remain flat during 2013 is likely to displaying crawler cranes at bC India 2013 show.
Slowdown in demand has made Manitowoc look for deriving better returns by looking to address the requirements of complex jobs through its product offering. According to Mr. Prem Nathani
, Manitowoc, “our crawler cranes offer a variety of different boom and jib combinations, and the modularity across the range means that boom and jib components from different models can be interchanged. This offers better value for owners. Rigging and de-rigging is made easier through Manitowoc’s unique FACT connection technology for smoothing the assembly of our crawler cranes.”
Mr. Nathani perceives, demand for crawler lattice boom cranes will continue to be lukewarm during 2013 at par with previous year. That is likely to make competition stiffer for the US crane manufacturing entity. To hedge the fallout of slowdown, Manitowoc will continue to rely on its ‘Crane Care’ support made available by the company across India, providing . Availability of OEM parts, technical support, back up service and professional training will continue to under focus. Making available crane care support is significant for the company as it can look to generate business through service rendered for its good number of cranes working in India. Notwithstanding, Mr. Nathani mentioned, “ fresh business gains will be looked by us through continous interaction with potential clients along with focus on customized products for various sectors.” He informed, “one good recent example is the customized barge-mounted Manitowoc crawler crane for use in an offshore energy project.”
Manitowoc markets general lift crawler cranes to the Indian infrastructure sector with capacities range from 80 t to 2,300 t. Cranes sold in India include Manitowoc 18000, Manitowoc 16000 with wind attachment, Manitowoc 8500 and Manitowoc 999.It sees future demand of crawler cranes for 250 tons and above from Indian infrastructure sector.
Though there are shift in demand patterns of crawler lattice boom cranes towards higher capacities, the market will remain heterogeneous with demand segments remaining well demarcated between the lower, medium and higher capacity range based on applications.
Fushun Cranes and Equipments India pvt ltd that sells Fuwa brand of crawler cranes will look to encash the demand position accordingly. According to Mr. Sanjay Vasudeo
, Director Fushun Cranes & Equipments India pvt ltd, Fuwa cranes’ product offerings are quite wide involving capacities from 30T to 1250T. The models from 35T to 150T are available with a free fall on the main & the auxiliary drum, making them highly versatile making them suitable for lifting application as well as for grabbing, piling etc. They are most suited even when working for break water, piling, ports, under water dredging among others.”
He says, “FUWA has cranes which are specially designed to suit for windmill application from 250T onwards. These cranes can be easily dismantled and moved from location to location which is the prime requirement when erecting windmills.”
Mr. Vasudeo points out, “ FUWA 250T Crane is most preferred for power and, cement Plant & other erection applications because of its lifting capacities. With 61m boom & 61m jib combination, the crane – can lift 13.5MT at 30m radius as against 7 -10MT of other makes. The basic capacity of the 250T crane at 5m radius with basic boom is 260T as against as low as 240T of other manufacturers.”
Wide product portfolio suiting to various applications, according to Mr. Vasudeo has allowed the company expand and retain it position in the Indian market, even when demand for crawler cranes has been down. He says, “we have highest population of crawler cranes in India involving more than 450 equipments as compared to any other manufacturer.”
However, Mr. Vasudeo also feels that Fushun’s efficient product support has also been the other reason for its wide market presence in India. He mentions, “Strong product support has allowed us to bag repeat orders from Reliance, L&T, Adani, Essar.” According to Mr. Vasudeo, Our 36 service engineers and 10 dedicated personnel for spare parts support has allowed us to draw business. Further, a dedicated and focused inventory worth US$ 1.75 million US$ at our warehouse at Sanpada at Maharashtra, stocking critical items like undercarriage parts, engines and electronics allowed us to make business.” He mentions, “despite the volatile market conditions, we have remained focused in our business by choosing not to retrench single personnel from our team. Rather our choice has been to provide sustained and assured support to our customers through our skilled personnel.” Fuwa entered Indian market in 2005. The company claims to have around 5000 cranes working in the other International markets.
Tapping heteregenous demand with its multiple product offerings will also be the continued business strategy for ABG Cranes India Private Limited. ABG has recently completed testing of its 100 MT and 160 MT crawler lattice boom cranes and are now looking for the products to be marketed. Accordingly to Mr. R. B. Pandey
, General Manager, ABG Cranes, “Manufactured through premium quality components comprising imported steel from Germany/Japan, Hydraulics from Germany, the cranes are ideal for power projects construction, industrial / infrastructure projects and host of other erection jobs.” The new cranes have model configuration of ABG 1100 – 100 MT and ABG 1160 – 160 MT. ABG manufactures 40 MT Model 1040 and 80 MT Model 1080 crawler lattice boom cranes and now has extended range up to 160 MT capacity.
Crawler cranes manufacturers will keep looking at niche markets for future sales. Manufacturers look at increased sales of duty cycle cranes as foundation as construction projects having substantial element of piling and foundation components viz metro railway and port projects are planned in a big way. They argue that even though the duty cycle crawler cranes are available at a higher premium as compared to hydraulic crawler cranes for erection and lifting applications, the cranes have their competitive positioning as they are capable of undertaking multipurpose jobs ranging from foundation and piling application (based on stronger line pull, grab and casing arrangements), erection and lifting. Suitability for multipurpose tasks also to an extent makes them competitive to own and operate dedicated piling rigs. According to the industry estimates, share of duty cycle crawler cranes in India constitute 10% of the total crawler cranes market.
However, despite the potential it offers, manufacturers are countering hardships towards promoting the product owing to the present slump. For Tata Hitachi, the market leader in the segment through its ‘Tata Friction Cranes’ (TFC) selling 25 and 75 tons class units, demand for friction cranes are on the rise due to its versatility in foundation and project erection applications. Company sold 30 units in 2009-10 that went up to 41 units during 2010-11 and 60 units during 2011-12.
Notwithstanding, future demand potential has not deterred TATA Hitachi to carry out improvement in the product to retain its foothold as competition is likely to intensify in the segment in the near future. According to a senior company spokesman, improvements have been carried out by added electronic features comprising digital safe load indicators, tower light assembly and sophisticated hydraulic controls, replacing mechanical controls. Adding heavy duty rims has been other improvisation.
TATA Hitachi expects to counter competition in the class through its ability to offer cost competitive products, longer maintenance cycles and strong brand positioning. The company also expects to retain its position through its 32 branch offices, 37 dealers having 200+ parts depot across the country enabling it to cover equipment working within 80-90km radius of the parts depot.
Liebherr India pvt ltd, also having offerings in the segment looks at the potential of duty cycle cranes through a wider product offering. According to Mr. Gunter Seebacher
, “We offer seven models of heavy duty cycle crawler cranes in India which are called as the HS series. The HS series crawler cranes start with 43.5t and go up to 200t capacity. The cranes are versatile as they can be used for various operations like dredging, dragline, material handling, clamshell, slurry wall grab or cutter, casing oscillator, dynamic soil compaction, deep vibrating equipment, carrier for drilling rig/piling rig, demolition work, and lifting applications.”
He informs, “Liebherr duty cycle crawler cranes also draw its competitive positioning owing to their LiDAT system. LiDAT is a data transmission and positioning system for Liebherr machines. The main features of LiDAT are: automatic recording of machine data, data transmission via GPRS or via data carriers according to availability, predefined reports on machine use, warnings and operating parameters, fuel consumption information, efficient machine operation, planning, machine management, defining work areas for machines, analysis of machine utilization, global positioning of machines, among others.”
Liebherr sells and services the HS series of cranes directly through its sales and service office in Navi Mumbai with representative office in Delhi. Based on enquiries received from clients, Liebherr expects to have demand for 120t and 200t capacity in India. To strengthen its position further in the segment, according to Mr. Seebacher, “At Bauma Munich 2013 we will introduce our new HS 8300, the 300t duty cycle crawler crane will be the largest heavy duty crane available in the market. This will set new standards for crawler crane in marine construction and dredging.”
According to Mr. Seebacher, the competitive positioning of Liebherr’s duty cycle cranes is also based on their unique advanced features. He says, “Robust and durable components with low fuel consumption and minimal product maintenance ensure economical operation. Extremely flexible boom configurations – using Liebherr’s family of booms increases the fleet value. The advanced duty cycle cranes are supported by our qualified service team stationed at Navi Mumbai. All our service engineers are trained at our factory in Nenzing, Austria. Back up support to the cranes are provided by fast moving spare parts stocked at our Navi Mumbai facility.
Scope for Evaluation
With demand fundamentals remaining stable, there is a room for crawler cranes manufacturers to shed gloom. There is silver lining on the horizon based on the fact that purchase prices are expected to remain at least stagnant for the new builds allowing manufacturers to have a decent margin on sales. Manufacturers can expect purchase price to remain static levels based on improving demand for reconstruction work in Japan along with market recovery in North and South East Asia.
According to market reports, US rental heavy weight Essex Rental Corporation has witnessed crawler crane utilization increase by 39.4% in the second quarter of 2012. The total revenue of Essex has risen to $ 27.2 million for the three months ended 30 June 2012, a 21.7% increase from $22.3 million for quarter 2, 2011. Improving demand in other parts of the world may allow manufacturers with leg room to stretch delivery schedules, thus allowing arresting price fall. Stipulations by project developers for newer cranes may further work to the advantage. However, the caution remains from used equipment fleet, many of them not so old in the Indian market. Manufacturers will require to carefully examine the situation and package future product sales accordingly. Further, issues for evaluation for future business will address availability of skilled manpower, making equipment available with accurate load charts linked to exact lifting capacities, much in conformity to the requirements of the ‘technically informed’ rental users in the country having elaborate work experience gained over the years.