City of cranes

A skyline dotted with luffing jibs has earned Dubai unofficial status as the world's crane capital. Is it a reign that will last?

HanKook Tower Crane, ANALYSIS, PMV

The arc and swoop of a tower crane above a building site is one of the first things visitors to the city notice. It's a sight repeated in many of the growing cities around the region, from Doha to Abu Dhabi.

But while apocryphal figures about the percentage of the world's cranes that are in Dubai - usually 25-30% - abound, contractors have to deal with the day-to-day reality of long lead times and tight supply when it comes to getting hold of the equipment they need. According to information from Indusmarket, a research company, this problem is one Dubai shares with many other parts of the world.

"The outlook for delivery time of cranes in the US, Europe and Japan shows delivery times of between 6 months and two years plus," said Theo de Boer, managing director, Indusmarket.

"I don't have a solution, but I think people need to manage their project tenders so there is enough time to hire equipment and plan for a two year lead time."

De Boer recommends tracking projects region wide, to keep an eye on when jobs are coming to a conclusion, making cranes available. He also warns of the dangers of changes in currency value over a long equipment lead-time, making him in favour of shorter tenders and currency hedging.

"Two years waiting time means you should secure your currency for what you're buying," said De Boer.

Long waiting times don't just apply to traditional manufacturers from the US and Europe, it is also affecting emerging market producers from countries such as China. While De Boer thinks China is worth watching, there is a caveat.

"While China is also producing more equipment, it's facing problems too, because it can't get components on time," he said.

That said, there are local equipment companies doing a steady trade with Chinese-sourced equipment, as well as companies from other Asian countries keen to get their products into the UAE's booming construction market, either going it alone or through various partnerships.

HanKook, a South Korean company, and Modern Emirates Heavy Cranes Company are a case in point. HanKook set up HanKook Tower Crane in Dubai, in 2007.
"HanKook Tower Cranes started in South Korea in 1978," said Martin Park, regional branch manager. We found it relatively simple to adapt and enter the Middle Eastern market as crane products are in great demand with all the construction going on right now.

"There are so many companies in Dubai, that require our needs - and we have been supplying products to them directly and through the Modern Emirates Heavy Crane Company. Our partnership with Modern Emirates Heavy Cranes has also helped boost our company a lot," added Park.

There's no doubt there's plenty of business to be had. Rough figures from House of Equipment (HoE), a UAE-based construction equipment supplier, show the scale of the region's market, with this one supplier accounting for 160 tower cranes in a year. And, judging by HoE's experience, demand comes by the dozen.

"We are very busy and the volume of work we are executing in the market is tremendous, whether new deliveries, erection or dismantling, we're hardly covering our customer needs," said Waiel Manfalouti, general manager, HoE. "Actually customers are not asking for one tower crane, but for six or 12 and they all need the equipment right now.

HoE supplies tower cranes from a Chinese manufacturer Fushun Yongmao, a business formed in 1996. HoE deals with customers' need for speed by keeping cranes from the most in demand capacity range in stock on a speculative basis. As a result HoE can carry up to 30 tower cranes in the 6-12 tonne range in stock at any one time, avoiding the long lead times that can plague projects.

"Where it is a common size, we know the market is hot for it and we always keep it in stock," said Manfalouti. "We don't wait for customer orders to come in, but take stock ahead of time.

In other capacity ranges HoE still experiences some delays, but not on the scale of the two years De Boer warns of elsewhere in the world. It's 18 to 24 tonne delivery times are approximately four to six months and 16 to 24 tonne luffing-jib cranes typically take 6-8 months.

Cost-wise HoE's Chinese-manufactured cranes offer an attractive package and can come with anti collision systems and variable drive winches. Recently the company won a US $5.4 million contract to provide tower cranes for the construction of Dubai's US $1.3 billion Meydan racing, tourist and leisure complex.

The contract involves HoE supplying twelve, 80m jib Yongmao tower cranes, each with a lifting capacity of 18 to 24 tonnes.

"We were competing with six major suppliers and were judged on both technical and commercial aspects. The Yongmao tower cranes have CE approval, meaning they meet all EU requirements, and the CE mark was a key reason why we won the contract," said Manfalouti. "We have installed 8 out of 12 and this equipment has already been commissioned, tested and made operational.

The company has also had a good response to its launch of an anti collision system, made by Singapore-based SK Group.

"The market was hungry for it," said Manfalouti. "[People] have shown huge interest in system, knowing that it protects equipment and manpower and can cut down on time lost time due to accidents. The system has a remote maintenance and control module, so the managers responsible for tower cranes can use his laptop to verify what is going on with the equipment, which ones are due for service and how efficient utilisation is."

Looking to the years ahead, Manfalouti is confident that demand will continue to be strong. But unlike the idea that all cranes come to Dubai, Manfalouti believes much of the future lies further afield.

"2008 and 2009 will be even hotter for the tower crane market because of the new projects in Dubai and the new and extensive work in Abu Dhabi. Major development works have already started in Qatar and Saudi Arabia and of course Bahrain.

This expanding view of the regional tower crane market is one shared by other players in the industry. The potential for business emanating from Abu Dhabi is seen as significant, while the demand in Dubai may be about to stabilise thanks to the reuse of cranes from completed jobs.

Paul Austin Price, deputy general manager of Al Bakhit Construction Equipment, is one of those seeing more enquiries from Abu Dhabi.

"We seem to be getting a lot of enquiries in from Abu Dhabi at the moment, it's certainly picking up," he said. "Dubai seems to have stabilised quite a lot. The market is not saturated, but we wont get big peaks of sales in Dubai, because the market is matured and there are a lot of cranes already here. Instead, operators are actually moving them from site to site."

Al Bakhit is the local distributor for the Italian-made Raimondi cranes, which Austin Price describes as a ‘thoroughbred', because the cranes and all their components are manufactured in Italy, instead of contracted out around the world. While this has an impact on the pricing, Austin Price says it also results in a 20-25 year operational lifespan. A typical ‘city crane' from this manufacturer has a three month lead-time.

"Our cranes, along with those from Liebherr, are the only ones to have a grade 4 listing, which is a measure of safety and quality," said Austin Price. "Some of the lesser Asian cranes may not have a listing at all.

"This is probably the biggest difference between Asian and European manufacturers and the cranes that will last 5 years instead of 25 years. A lot of the big contractors here will take their cranes after five years on one site and move them to the next job, so you soon get into the 20-25 year lifespan. As a result you'll find that the larger developers tend to go for the more recognised names.

"We've been putting them into Dubai for 4 or 5 years already. Now those that come off site tend to cater for the growth in Dubai. We're hoping that the majority of business will come out of Abu Dhabi. I think that is where the growth market will be, along with the northern emirates."

So while Dubai will certainly keep a skyline full of cranes for several years to comes, for dealers and manufacturers the horizons of their businesses will have to expand further afield if they are to continue to enjoy their current level of success. Developments in Abu Dhabi are close at hand and will increasingly fuel the crane business, but there's also more business to be had in some of he UAE's nearest neighbours.

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