Otto Systems, a distributor of material handling cranes based in Santa Fe Springs, California, sees sales off some 30% compared to 2007. In 2008, sales were already off maybe 20%, says owner Paul Otto. “January was horrible. We’re slowly starting to make numbers back now, but 2009 won’t be close to 2007.”
“The quote activity remains as high as it’s ever been,” says Jeff Baker, global category manager for ergonomic handling products at Ingersoll Rand. “But the conversion rate to orders has not been as high as one would expect based on those quote levels.”
“A lot of folks are asking for quotes, but the number of them willing to place that order is smaller,” says Al Spencer, vice president of ASE Systems, Cypress, Texas, a material handling solutions and integration company with sales concentrated in enclosed-track monorail. “A lot of folks are in a hide and watch mode right now.”
“Hopefully that will change as summer wears on, but I guess we’ll see, I don’t think anyone knows what the future holds in this current economy,” says Mike Evanko, marketing manager for Spanco, Inc., Morgantown, Pennsylvania. “The hope is that if the economy starts picking up, these quotes will turn into orders. We’ve seen a bit of a perk-up in the past few weeks.”
Spanco is not the only company registering early signs of possible improvement. Three months in a row have seen “decent” activity, says one manufacturer, “while six months ago nobody was asking for anything.”
According to Wayne Flury, sales manager of the patented track production line for another manufacturer, TC/American Monorail, Inc., St. Michael, Minnesota, “I was talking to a dealer the other day who mentioned that the last month was one of his busier months lately, because one of the companies he was quoting to was continuing to upgrade his equipment. There are pockets of the country where we see that.”
“Taken as a whole, the industry is down,” says Flury. “It’s a reflection of the general economy, yet in some areas of the country, some dealers are doing maybe not well but okay.”
J. Herbert Corp., Kissimmee, Florida, a custom manufacturer of monorail cranes including bridge cranes, started 2009 down maybe 25% from a year earlier, says sales manager John Beckman. But that follows great increases in the company’s business in the past four or five years, he says, and he expects the company to be year-over-year down by just some 10% by the end of 2009.
“We don’t find business to be devastated; we find it to be strong right now,” Beckman says. “There is a slowdown, but we’re not listening to politicians or newspapers. We’re going out there and attacking. We hired two new salesmen just four months ago, and we’re going to hire another one. We just hired another serviceman, and we’re looking for another one.”
One key to J. Herbert’s strategy is to keep in touch with the weaker markets but go strong after the stronger markets.
“Some industries are down; the boating industry, some of the mining industries,” Beckman says, “but a lot of the industries like power companies and military, paper manufacturing and the citrus industry, are doing well.”
A lot of the slowdown is in manufacturing, says Joe Gibbs, director of sales and marketing for Acco Material Handling Solutions, York, Pennsylvania. “Every one of those places has cranes, light rail, carts. That’s the part I see that’s slowing up, what I used to call the normal business, orders coming in ones and twos because people are adding on a section. And the money issue. I hear from many distributors and customers that budgets have been cut and they’re not spending money right now.”
Construction is one of the big drags on monorail and light crane markets. For one thing, the construction downturn means welding and fabrication shops are a down market as well as companies that do service work for construction equipment, says Paul Otto.
Housing and construction downturns do not much affect the jib and workstation cranes, says Peter Blanchet of the JOMA Machine Company, Mohnton, Pennsylvania, but it may have hurt some of the light cranes, the lighter gantries, for example.
“We had seen commercial construction that held on longer than residential because a lot of people expanded coming out of the good times,” Blanchet says. “So we were spec’d on a lot of jobs and still selling cranes, but once that was washed up, we were in the same boat.”
Aerospace has been off, though still providing some work, Otto says, but plating and stamping industries and others that served auto manufacturing have slowed.
“Anything that has to do with motor vehicles now is down as much as 50%,” says Jeff Baker. “If you have a good solid base in general manufacturing, even to a certain degree in aerospace, you’re probably doing better than that. But the MVI portion, the largest portion for many monorail manufacturers, is clearly suffering greatly. The GM bankruptcy is one of the better things to happen to us.
It will free them from debt and free up some cash that will hopefully allow them to renovate product lines. In some cases, it’s not cost effective to transfer equipment from one facility to another and piece it together. The money’s going to be better spent buying new equipment.”
Light overhead cranes, the single girders, are probably off 40% or more, according to one source. Yet business from the food handling industries remains healthy, says Paul Otto. “I would say anything that has to do with manufacturing for consumption—food, vitamins, even some of your hair care products, things you can buy out of grocery store—is still going pretty good. A lot of the breweries are doing okay, always revamping their products.”
Otto Systems, with the benefit of being located near the entertainment meccas of Southern California, also supplies a lot of lifting equipment to movie studios and stage shows, another market that remains strong. Some say that lighter cranes stand to benefit over more expensive heavy cranes when dollars are scarce.
“One large manufacturer of mobile cranes—and we sell quite a few cranes to them—I was looking at their production line recently,” says a source who asks not to be identified. “They have a large overhead crane they use to move crane chassis down a work line. At the start of their fiscal year, they were contracted to build 81 cranes. When I talked to them, those contracts had been slashed to 30. If a big company like that has had their business slashed that greatly in one year, do you think they’re in the market to buy a USD2 million overhead crane?”
“Some of the major industries that use our equipment are doing expansion or rehabilitation,” says Wayne Flury of TC/American Monorail, Inc. “The last few years have been good for us from companies such as Boeing, which has been introducing the 787 and doing upgrades to their existing plants.”
One aspect of patented track that has recently proven a particular economic advantage, Flury says, is that the company manufactures its own rail, buying plate steel without having to buy shapes, then stripping the sheets to the size needed for a particular run of rail.
“So we’re not dependent on structural shapes from a mill,” Flury says. “A few months ago, when steel was going through the roof, that was quite a serious consideration for anybody trying to use structural shapes, and quite a benefit for us. We were able to provide deep, long beams that were very economically priced compared to large structural shapes that a customer might not have had available.”
TC/American Monorail’s patented track gets as light as its two-inch line, or 200 series, which competes with enclosed track systems in the 500-1,000 pound range and is used in laundries, for example. “In general, the 200 Series has probably been affected by the economy just like the demand for larger cranes,” he says.
TC/American Monorail’s monorail systems are finding work in wastewater treatment plants, and sources generally say that public infrastructure remains active.
“We do expect a certain recovery in other industries that want stimulus money,” says Bernd Forwick, Demag product manager for overhead cranes. “Stimulus funds are taking hold in the market and are being spent, but it will take a while longer until that happens. I’m specifically talking about industries involved in improvement of infrastructure. If you take sewer improvements, for example, then plants that make products like pre-cast pipes and concrete products need cranes.”
The federal stimulus package, the American Recovery and Reinvestment Act (ARRA) of 2009, could also boost crane and hoist sales with business investment tax incentives for purchases this year. (Find details in ‘Economic Recovery Packages Extends Incentives for Material Handling & Logistics Equipment Investment,’ a February 24th industry news story on the Material Handling Industry of America website). And among other possible impacts is ARRA’s extension and enhancement of federal tax subsidies for renewable energies.
“We still see projects going on in the wind energy industry,” says Forwick. “Demag products are being used in two ways for wind energy installations. They are being used to build the wind generators, from tower structures to fibreglass blades to mechanical assemblies. Others are used for maintenance of these generators and to hoist parts and supplies to where they need to go for repairs.”
A growing awareness of the value of safety and health is one of the positive trends for the lighter end of material handling where light-rail cranes with attachments, and other ergonomic equipment familiar from the auto industry, are increasingly being embraced by other industries.
The use of lift-assist devices is starting to move toward lower and lower weights, says Jeff Baker of Ingersoll Rand, “down as low as 25 pounds if it’s a repetitive lifting application. You don’t want somebody to lift 25 pounds 15 to 20 times an hour. As recently as just a few years ago, if somebody had a product that weighed 30 pounds, one operator would pick it up and take it to where it needs to be. But somebody doing that every day, at the end of the day the balancer or hoist can move it better than he can.”
“Technology is taking over from manual labour,” says John Beckman. “Safety is becoming a big issue. The cost of medicine today has gone up so high that ergonomic equipment pretty much pays for itself.”
On one recent J. Herbert sale, Beckman says, an Ingersoll Rand one-cup vacuum handling device picks up a 150-pound slug of brass from the horizontal, rotates it 90 degrees and inserts it into a machine tool.
“That way you don’t have some guy trying to pick up 150 pounds and turn it sideways and load it into a machine tool,” he says. “The facility I put it in, one young lady runs the machine. She probably weighs 100 pounds herself, but with this attachment she picks it up like it’s a feather.”
“For fabrication of all kinds, workstation bridge and jib cranes are ideally suited to increase productivity and reduce worker injury,” says Al Spencer, “especially in medium to small work cell areas and in progressive assembly line applications. Plus, the pricing typically comes in at a fraction of what an installed I beam based system costs.”
Often cited as an important influence in the role of safety awareness in the light lifting industry is the so-called OSHA Alliance between OSHA and the Monorail Manufacturers Association (MMA), the Hoist Manufacturers Institute (HMI) and the Crane Manufacturers Association of America (CMAA). In place since October 2005, the OSHA Alliance is now in a second two-year period to end in October 2009, but the product councils have been invited by OSHA to extend the alliance for another two years, a development now in planning.
The OSHA Alliance has promoted a much higher awareness in the user community of safety and health advocacy by the hoist, crane and monorail groups, industry sources say.
“The product councils, especially HMI, are supporting this very actively by providing literature, guidelines, instructions and so forth, little memo sheets that can be distributed to OSHA inspectors of things to do and not to do, how to maintain the equipment, what to look for and so forth,” says Bernd Forwick. “The input to the OSHA inspectors helps them do a better job and to look for the right things as far as safety, maintenance, etc., so it’s been mutually very beneficial.”
And of course the product councils continue to work toward better standards that give users more confidence in the quality of lifting equipment. The MMA, for example, recently introduced an MMA-Certified Program “to promote confidence in the product bearing” the MMA-Certified mark “and in the licensee providing that product.” Certification indicates that a product meets or exceeds ANSI Standards MH27.1 or MH27.2.
Another trend is toward equipment longevity, with “customers being a little more educated about the equipment within their own facilities,” says Ruedi Van Coppenolle, Demag manager for wire rope hoist products. Van Coppenolle compares it to the familiar auto industry technology where a light goes on to indicate a need for service and, in the shop, a CPU brings up a history of the car.
“There are more and more demands on our industry to be able to supply tools to customers that better monitor equipment usage so they can determine what they need to do with their equipment as far as preventative maintenance is concerned,” he says. “Our hoists are becoming smart hoists. There are major signs from the other big players as well to get in the game to offer such tools to their customers.”
Demag’s Bernd Forwick notes that there is also a trend, at least from the lower end of the overhead crane market, away from nationally recognised crane manufacturers to local fabricators or local assembly shops who use large component kits to build small cranes.
How much of this trend to take fabrication closer to the end user is a response to a tighter economy is unclear, according to Wayne Flury of TC/American Monorail, Inc. “Some of our dealers are looking to do a more economic package and use local labour, but this is a trend that was already taking place before the recent economic issues, people trying to be more competitive,” he says. “One of the things we’ve noted is that more and more of our dealers are buying components—bridge beams and trolleys and so on—and doing more local assembly, so we see less complete cranes in our shops.”
Also in the recent economic environment, there is a lot more re-use of equipment as plants are consolidating, according to Jeff Baker. “We’re not seeing people starting from a clean sheet of paper when designing assembly lines,” he says. “We will probably start to see a lot of markets for used equipment that we never saw before.”
