Date August 2018
By the numbers
- The North American market for mobile cranes is stabilizing
- Values for most mobile cranes have increased over the past 12 months
Market stabilizing: After declines in the market in 2015 and 2016, the mobile crane industry has seen a slight increase in demand and value since 2017. This trend is expected to continue for the next few years. The downturn in the oil and gas industry from late 2014 to early 2017 led to an influx of used equipment into the market as well as a decrease in construction and infrastructure projects, which weakened demand for cranes. With the price of oil having risen from a low of $36 per barrel in January 2016 to the current $70 per barrel range, there has been a corresponding increase in the use of and demand for mobile cranes within the oil and gas industry. Additionally there has been a proportionate increase in general sentiment regarding the economy, which has led to an increase in construction and infrastructure projects.
While the market is trending in a positive direction, original equipment manufacturers are proceeding with cautious optimism. There are still many unique risk factors in this industry. Oil and gas prices, activity in the construction and infrastructure sectors, and foreign trade agreements – all of which can be highly volatile – can cause sudden and significant swings in the mobile crane market.
Demand trends: Due to their versatility, all-terrain cranes in the mid-size class are currently experiencing the greatest demand. With an increase in the use of all-terrain cranes of all sizes, crawler cranes and smaller rough-terrain cranes, which have decreased in popularity in recent years, are currently experiencing very low demand.
Mobility makes selling easier: Generally, mobile cranes have wheels and can be driven on the road. This makes re-marketing easier because equipment can be readily relocated and, in some cases, grouped with similar assets to attract a larger pool of buyers. However, lenders should be aware that crawler cranes are not road ready and need to be trucked. Costs to tear them down and trailer them will increase recovery expenses.
Equipment specifications are important: The most versatile types of equipment are typically all-terrain and rough-terrain cranes. Crawler cranes tend to be put in one place and not moved extensively. In addition to its type, a crane’s age, capacity, and accessories are all major value drivers. What kind of boom does the crane have (i.e., jib or luffing)? Does it have auxiliary or standard drums? Which counterweights are included? Does it have auxiliary winches? Lenders should expect appraisers to list these detailed specifications and auxiliary equipment in a valuation. The specifications included are important and may narrow a crane’s marketability. For example, many crawler cranes coming out of the oil and gas industry have a limited amount of boom and other features a civil contractor may want, meaning that the civil contractor will pay less for the crane knowing modifications will be needed to make the equipment productive.