18 July 2018

Lead- Cranes

Towing it up!!

 

The increasing amount of infrastructure projects, both residential and commercial has made the demand for cranes across application verticals a robust one. Cranes of all the type have been registering growth especially as the projects in the Tier II and Tier III cities along with the metro cities. Rohan Ambike writes about the current market scenario of the crane industry, the challenges involved and the tone of the market in the coming years.

 

 

Long gone are the days when cranes were simple machines that were used to transport heavy materials either up or down. Today, hoists and especially, cranes have grown to be devices far more sophisticated in nature and have been playing an instrumental role in simplifying the works for the manufacturing, mining, infrastructure, automotive and construction industries. It is a known fact that numerous industries and mainly the manufacturing, mining and construction sectors are always looking out for effective equipment for lifting or lowering the heavy loads at challenging destinations. It is due to equipment such as hoist and cranes that there is a significant reduction in the human efforts and processing time. Also, most importantly, the output has been increased.

 

Cranes now days, as a result of their expanded scope of usage are being run on internal combustion engines (ICE) or even electric motors and hydraulic systems. They also operate on advanced computerised systems. However, there are some companies that make use of manual cranes, where power supply is a concern. Cranes exist in an enormous variety of forms — each tailored to a specific use. Sizes range from the smallest jib cranes, used inside workshops, to the tallest tower cranes, used for constructing high buildings. For a while, mini-cranes are also used for constructing high buildings, in order to facilitate constructions by reaching tight spaces. Larger floating cranes are generally used to build oil rigs and salvage sunken ships. There are three major considerations in the design of cranes. First, the crane must be able to lift the weight of the load; second, the crane must not topple; third, the crane must not rupture.

 

Cranes illustrate the use of one or more simple machines to create mechanical advantage. Cranes, like all machines, obey the principle of conservation of energy. This means that the energy delivered to the load cannot exceed the energy put into the machine. Cranes can also get in chain reactions; the rupture of one crane may in turn take out nearby cranes. Cranes need to be watched carefully. Standards for cranes mounted on ships or offshore platforms are somewhat stricter because of the dynamic load on the crane due to vessel motion. Additionally, the stability of the vessel or platform must be considered. For stationary pedestal or kingpost mounted cranes, the moment created by the boom, jib, and load is resisted by the pedestal base or kingpost. Stress within the base must be less than the yield stress of the material or the crane will fail.

 

There are many types of cranes depending on their use. They include mobile crane, truck-mounted crane, sidelift crane, rough terrain crane, all terrain crane, crawler crane, aerial crane, fixed crane, tower crane, hammerhead crane, overhead crane, deck crane, jib crane, bulk-handling cranes et al.

 

The demand in the Indian industry has now shifted from simple mechanical handling of loads to complex processes and more automated equipment. The industrial cranes and intra-logistics industry has seen strong demand from infrastructure, energy, steel and automotive segments. Other than automotive, all other segments attracted investments even during the slowdown of 2008-09 and thus helped most material handling companies sustain the top-line.

 

This industry is highly fragmented with many small and regional manufacturers; e.g. the industrial cranes segment has more than 100 players in the country with top five companies having an aggregate market share of 50 per cent. The increasing need of sophistication coupled with expectation of higher growth rates has made India an interesting market for many multinational companies; this will also change the industry structure in medium run.

 

 

Finance And Rentals

 

Considering the recent prolonged recession in the real estate and infra sector, most contractors are cash strapped to buy new equipment. With stressed balance sheets, rentals offer a viable option for developers and contractors to complete their requirement for cranes. It also spares them the complexity of managing a fleet. Long-term rentals are likely to gain momentum in the next few years. It is estimated that revenue from tower crane rentals will account for 15 per cent of the total revenue generated by the tower crane industry in the next three to four years. Considering the urgency to execute projects in hand on time, those contractors who can't own machines will go in for the rentals option. Also, with builders and contractors cash strapped to buy new equipment and the urgency to acquire it, there is going to be a concomitant rise in equipment finance for purchasing new machines.

 

 

Market dynamics

 

The shift in modernisation of construction methods to using precast technology, especially in the real estate sector is a major demand driver. Not only metros, but smaller cities and towns are growing rapidly with skyscrapers becoming the norm. With the demand for quicker time to market for projects, there is a concomitant rise in demand for tower cranes. Mumbai alone accounts for approximately 70-80 per cent of the demand for new tower cranes, and this is only expected to grow. According to some estimates, the domestic market size for tower cranes was around 700 units, annually. Even Tier-II towns are witnessing previously unseen level of development, and the skyline of cities such as Mumbai, Pune and Delhi are changing with skyscrapers becoming the norm. Mumbai alone accounts for approximately 70-80 per cent of the demand for new tower cranes. The tower cranes segment is expected to grow at 20 per cent annually over the next few years.

 

According to a report by Global Market Insights, Inc, the global Crane Market share will surpass USD 20 billion by 2024. The report states that, “The shipments exceeded 25,000 units in 2016. Rise in construction is the major factor escalating the crane market growth. Shifting government focus on infrastructure development along with increasing consumer preference for luxurious and aesthetic constructions will provide an impetus to the industry growth. Rising necessity for houses along with investment regarding infrastructure development such as smart city projects and increased construction expenditure particularly in economically stabilizing countries is expected to propel the crane market size. Population growth, environmental impacts and urbanization has up surged the need for smart and sustainable infrastructure solutions. Providing efficient building methods coupled with ability to offer effective integration, planning and designing, are major factors driving the crane market growth.”

 

 

 

Challenges involved

 

Every sector faces some or the other challenge and the crane sector are no different. Today, the crane industry in India is facing a lot of challenges and hurdles. The biggest drawback that the crane industry faces today is the higher product cost. This is because crane manufacturing requires a huge amount of investment. Also, it is a well known fact that the crane market in India is highly price-sensitive. Another major challenge that the industry faces is the lack of skilled manpower. Though it is a critical issue, but if addressed wisely through proper skill development, it will help companies in optimum utilisation of any equipment. Since a large proportion of the Indian lifting equipment sector is somewhat conservative in terms of adopting newer technologies, the Indian market still lacks presence of world-class companies. Recently, a number of international companies have started importing their technologically-advanced products in India through their Indian partners and distributors.

 

The mindset of the buyer is a major challenge that is faced by the crane manufacturing industry. This is because a majority of the PSU tenders and several consultants are not at par with the developments in the global crane industry. As a result, there is a high demand for the tenders that are low priced, even when the manufacturers are providing the bare minimum in terms of technical specifications as per the requirements of the tender. A price premium is difficult to demand even if the bidder proposes any extra features, which might be beneficial. The reason for this lies with the fact that the bidders are evaluated at the same level as per the specifications of the tender. To be precise, the latest technology available in the market might not be apt for the inflexible (and often obsolete) tender specifications. This in turn results in technical disqualification of the bidder and thus disadvantageous to both PSUs as well as consultants. Another challenge that the industry faces is the process of clearance. It is a known fact that the entire clearance process involves the collaboration of multiple agencies which make the entire process a time consuming one. This comes along with lack of co-ordination and thus ends up in cutting the pace of the entire process. Many players from the crane manufacturing sector also complain that the lack of co-ordination between the local, state and government bodies causes a massive delay in the documentation stage. The unfavorable laws and the taxes are another concern that bothers the industry. Many experts have registered a fall in the profit margins which are acting as potential deterrents for the investors.

 

 

 

Path Ahead

 

As the Indian market expands on the back of a rising tall building population and major infra projects, in addition to urban infra (especially road, rail and metro rail infra seeing a rapid buildup), the demand for all kinds of cranes is poised to rise rapidly. However the buyer has become very discerning and is now focused on the Total Cost of Ownership (TCO) rather than the initial cost. The Indian market for cranes is maturing up to global norms and only OEMs who can balance the cost-quality equation will garner maximum market share. Also there’s plenty of potential for this segment to contribute to Make in India campaign since many of these companies are exporting and have emerged global players .

 

 

 

Conclusion

 

After taking a heavy beating, the Indian economy looks to be on the path to recovery. The industry is witnessing some early signs of a turnaround in the economy and there are high hopes that this stream of recovery will eventually turn into a torrent of growth. Presently, there has been a rise in the levels of enquiries from different industry sectors. The times are changing and the market is set for a massive change, which is certain.

 

 

FAST FACTS

  • Crane Market share will surpass $20 billion by 2024.
  • Cranes illustrate the use of one or more simple machines to create mechanical advantage.
  • Revenue of tower cranes to grow by 20 per cent.
  • Mumbai alone accounts for 70-80 per cent demand for tower cranes.
  • Demand in India has gone from simple to more automated equipment.



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