With the slow yet steady return of infrastructure and construction in the UAE, sellers of cranes are finding that the mobile crane market is regaining strength.
While in the porous market for construction machinery in the GCC, the large numbers of tower cranes in the region means that sales will remain depressed for some time, mobile cranes are in demand.
Common wisdom in the aftermath of the collapse of the construction market in Dubai was that oil and gas sector was the strongest buyer of mobile cranes.
But David Semple, Manitowoc’s VP of sales Middle East and Africa says that while that was true perhaps 12 months ago, more recently the market has shifted.
“Oil and gas – one year ago I would have said it is very important. In the last six months we’ve had more requests from mass housing, villa construction projects, placing of precast concrete into villas. The beauty for us of oil and gas is that it’s a back bone, or background activity.
“The feeling is that infrastructure and residential work is picking up – some projects that have been frozen are again getting put back into movement – and that’s really good.
“Volumes in O&G are pretty steady, so that’s a base, but depending on the construction you start having the peaks and valleys.” The shift in the business has seen the company mobilise resources, cross-training staff from the tower crane business into mobile.
“We are trying to be flexible in the allocation of our own internal resources to try and cope with these changes in the centre of gravity between towers and the mobiles.”
One factor causing the sales growth is the natural working life of a mobile crane. “There is the natural fleet renewal – the difference between a tower and a mobile crane is that mobile crane is a vehicle – after a few hundred thousand kilometres you can’t drag it any further, whereas a tower crane is a steel structure and can continue being used forever,” says Semple.
The oil and gas sector is the main market for Tadano, the Japanese crane manufacturer, accounting for approximately 70% of their sales. In Saudi’s Eastern Province, where major companies such as Saudi Aramco and SABIC have significant projects, the company sees good sales, major rental companies in the region, such as Bin Quraya, who provide a significant volume of rental cranes to Aramco.
Arihito Kabasawa, Tadano’s general manager for Tadano Middle East, says the company monitors the price of oil, knowing that if it drops that projects will slow down, or stop completely.
When oil prices have fallen previously, contractors have seen payments become delayed. The trigger price for a slow down may be around $90 a barrel for oil, says Kabasawa, though in Saudi this may be as low as $75-80, in Bahrain $80.
Another company that has benefited from the industrialisation of the Eastern Province is Al Faris, who expanded its rental business into Saudi Arabia in part due to the drop off in construction in Dubai.
More so than any other sector in the construction equipment market, crane sellers have an intimate relation with rental companies. UAE-based Al Faris has long had an association with Liebherr, and Liebherr has benefited from Al Faris’ expansion into the Saudi market.
Brian Green, technical director with Al Faris, says that despite a heavy concentration of cranes in Saudi Arabia, it remains a strong market. “The Saudi market is beginning to become saturated with lifting equipment, however new upcoming projects are cropping up in remote locations.
“Mobilisation of equipment to such areas is becoming increasingly difficult due to Saudi laws and infrastructure limitations. There is however plenty of work, and we are continuously striving to cope with the demand from the regular customers and hence, the new orders [of cranes].”
According to Green, the operating environment differs from Dubai where cranes were often utliised for short contracts. In Saudi the contracts are often longer lasting. “Saudi Arabia is a large market, but it does have considerable drawbacks due to slow governmental procedures and lack of infrastructure,” he added.
“We have a hope that it will come back. I think it is going through the correction phase. In some other industries they have already corrected, but this industry is still going down. Maybe in a year or two the market will pick up.”
Another shift in the market, that has been underway for the past six-seven years, is that Chinese brands have replaced the purchase of second hand premium models.
“Ten years ago the Middle East was mainly a premium brand market, and the people that didn’t have the resources to invest in a brand new premium crane would go and buy the same crane as a used machine,” says Semple.
“Chinese brands starting coming into the market 6-7 years ago, and clearly today we have to cope with more low-cost competitors than previously,” he said.
Towered out
The tower crane market remain “quite depressed”, says Manitowoc’s David Semple, due to the large number of tower cranes left over from the boom years. In Saudi Arabia, Manitowoc had notable success on mega-projects including the Princess Noura University, and the King Abdullah Finance District.
“We are still lacking some of these really mega projects, that we had in Saudi Arabia particularly in 2009, 2010. We have not seen projects of that magnitude come back on to the market,” said Semple.
Unlike some markets, it is hard to pick what the ‘base market’ for tower cranes is in Saudi, since much of it is driven by major projects. A project on the scale of Princess Noura can require 150-250 cranes on a single job site, and out of this, in all likelihood more than 50% will be purchased brand new.
Other markets that are public sector driven include Algeria, Pakistan, some projects in China, and formerly Egypt, where large orders can come in for single projects.
“But besides these public sector markets, to really say that there are places in the world where you can for one project or jobsite have a need for as 50-80-100 cranes in one go, I think that’s pretty unique to the Middle East,” said Semple.
