Mobile Crane Trends
COVID-19 INDUSTRY BRIEF
Effects of the coronavirus pandemic on the mobile crane industry Updated April 9, 2020
- The primary external factor affecting the mobile crane market is construction—both residential and private non-residential, with steel prices and the state of several key industries such as Oil & Gas markets, also having a material impact.
- As of March 25, 2020, construction had been considered an essential service in roughly 45 of 50 states, but labor, travel, and supply issues have slowed activity in the sector. A survey released by the Associated General Contractors of America on March 22, 2020 in response to the COVID-19 outbreak noted that 28% of member firms in the U.S. had already halted or delayed work on projects due to COVID-19. The number of delayed projects is expected to increase in April.
- From a valuation perspective the impact on mobile crane values will depend on how the construction marketplace weathers the current crisis in the medium term. In the short term, the market will likely be depressed or simply impacted by the logistics of trying to liquidate a crane while travel is limited. However construction fundamentals and demand for mobile cranes will likely be stable in the aftermath of the crisis as there is an expectation that there will be a quick snapback in this industry in all regions except the oil patch once the COVID-19 crisis passes.
- It is possible that an infrastructure bill may be part of the multiple stimulus packages being considered in Congress to alleviate the economic impacts of the crisis, which if passed, would likely have a positive impact on secondary equipment market fundamentals.
Date August 2019
- The North American market for mobile cranes is currently stable
- Values for mobile cranes have stabilized over the past 12 months
- Through 2023 the truck-mounted crane manufacturing industry is projected to experience slight growth
By the numbers
North American market stable: After declining demand in 2015 and 2016 followed by slight increases in 2017 and 2018, the North American mobile crane market has reached a point of stability. From 2019 through 2023 the truck-mounted crane manufacturing industry is projected to generate slight growth of 0.7 percent after a decrease of 2.4 percent for the combined five-year period of 2013 through 2018. The primary external factor affecting the mobile crane market is construction—both residential and private non-residential. These industries are anticipated to grow steadily over the next five years, reversing the trend of the previous five years.
Two of the more volatile external factors affecting the mobile crane market are the energy and oil industries and the price of raw materials, primarily steel. Over the next five years, the world price of crude oil and the price of steel are expected to increase, leading to more stability in downstream demand from energy and oil companies. Another promising factor is an anticipated increase in government funding for infrastructure, which would also increase demand for mobile cranes.
Terex exiting some crane businesses: As reported by Globe Newswire, Terex Corp., one of the largest global heavy equipment manufacturers, recently announced the completion of the sale of its Demag mobile crane division to Tadano Ltd. on August 1, 2019, for an enterprise value of approximately $215 million. The Demag Mobile Cranes business manufactures and sells all-terrain cranes and large crawler cranes worldwide.
Terex also announced plans to exit the North American mobile crane product lines manufactured in its Oklahoma City facility. The Oklahoma City operation will continue to produce telehandlers and re-manufactured units for Terex’s aerial work platforms segment, sell parts, and offer service and support to customers.
Equipment demand trends: Due to their versatility, all-terrain cranes with lifting capacities of less than 150 tons 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 much lower demand.
Crane mobility makes selling easier: Generally, mobile cranes have wheels and can be driven on the road. This makes remarketing 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 drive value: The most versatile types of equipment are typically all-terrain and rough-terrain cranes. Unlike crawler cranes, which tend to stay in one location, rough-terrain cranes can navigate uneven terrain on work sites. All-terrain cranes are designed to travel on roadways reaching speeds of up to 40 miles per hour, and they can also maneuver the rougher terrain found on construction sites. Rough-terrain cranes have a single cab located on a rotating superstructure and drive on two axles; however, low travel speeds typically restrict driving these cranes to job sites.
In addition to its type, a crane’s age, capacity, and accessories are all major value drivers. Lenders should expect appraisers to list detailed specifications and auxiliary equipment in a valuation including boom type, such as jib or luffing, and drum type, such as auxiliary or standard, as well as any included counterweights and auxiliary winches. The specifications included are important, as limitations 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 need, meaning that the civil contractor will pay less for the crane knowing modifications will be needed to make the equipment productive.
Manufacturing outlook: Through 2023, the Truck-mounted Crane Manufacturing industry is projected to generate modest growth, as construction activity is expected to continue expanding, albeit at a lower level for residential construction than in the previous five-year period. Demand from energy sectors is also projected to increase, driving additional industry growth. As a result, industry revenue is forecasted to increase at an annualized rate of 0.7 percent to $1.8 billion over the next five years based on research conducted by IBISWorld.