Due to the current oil boom and historically speaking, Texas, along with California and Michigan, is pushing the overhead crane and hoist market to the limits, even to the point in some cases that it’s creating a worker shortage.
Mike Bunnel, president, OMI Cranes, of Royse, Texas (a suburb about 25 miles due east of Dallas), tells OCH that all this good business is due to the current strength of the Texas economy.
“It’s as good here as anyplace else,” he said. And better than some.
Bunnel says that due to booming market conditions, including steel warehousing, pipe manufacturing, fabrication, oil and gas, the overhead crane market is being pushed to the limit. For OMI, business is up from last year. Bunnel says “for the first half of 2007, we’re up 30%. I don’t know if I’ve ever seen a market like this one.” OMI’s business is spread out wide, Bunnel says. Most recently, the big numbers have come from manufacturing such as the iron industry, heavy equipment manufacturers, with oil and gas a close second. “Right now,” he said, “we’re barely keeping up with demand.” A nice problem to have.
Bunnel does not anticipate a slowdown. “My gut tells me any slowdown will occur in the next two to two-and-a-half years. I say this because of history, if you look at the history, we’ve had slowdowns in 1980, 1990 and 2000.”
Bunnel feels the market has already peaked, and while there’s still growth, it is slowing down, but he attests, “these slowdowns don’t happen overnight.”
Gene Buer, president of Crane Equipment & Service (CES, a subsidiary of Columbus McKinnon) says business is being heavily driven by the oil industry. “The entire [oil] supply chain actually,” he says. He adds that his business is touching many sectors in the market including offshore cranes, maintenance cranes in refineries, production cranes, “virtually all of them are tied to maintenance or production in one shape or another,” he says.
CAS business is also up on last year. “We’re pretty consistent compared to this time last year,” says Buer. “We had a record year last year and we’re up on top of that. We grew 20% last year and in Texas alone, we’re up 15% this year.”
Buer, as well, does not see any slowdown in the near future. “Our business is very strong,” he says. “We deal with a lot of global customers in addition to exploration companies and we don’t see softness in any of those markets, every aspect will grow because we see our customers growing as well.”
Buer sees rapid escalation in prices that might dampen (oil) demand. He says oil companies are throwing every dollar they can into the production of oil and gas.
In fact, Buer says business is booming across the whole CAS product range: “We design, manufacture and service overhead cranes including jib, bridge and gantries that are associated with maintenance and production.”
As a subsidiary of CM they are also a distributor of a number of its brand names including Yale, Shaw and Chester. The company retrofits, repairs and makes complete modifications to hoists as well. “Anything from modest repair or complete cut down and rebuild,” he says. He adds that his company can come in for a reinstal as well. In fact, “we do it all.”
Another driving factor in the Texas hoist market, Buer says, is power generation and his company is booming on that end of the business with lots of maintenance work since all the fossil and nuclear markets are currently driving business.
All this work is creating some challenges for the company since so much business is stretching the workforce. “We are having a problem acquiring qualified labor,” Buer says. He says it’s pretty universal in the business, however. “We just don’t have enough bodies,” he said. He says there is a primary difference between the available workforce and finding and maintaining the right people. “Welders and techs we’re suffering the most,” he says. “Crane technology is almost a skill in itself.” In those areas, he says, it is going to develop its own internal training program in addition to working with trade schools and colleges.
Meanwhile, James Kowalik, president of Industrial Hoist Services, LP, located in Brazoria, a man with 24 years in the business, tells OCH that while he agrees that Texas is the largest hoisting market along with California and Michigan, he attests that Alabama is quickly becoming the Detroit of the south and that is driving business as well. “They’re making a lot of cars in Alabama right now,” he says.
All this manufacturing is calling for a lot of overhead and bridge cranes, “and that all has to do with manufacturing,” Kowalik says. This all bodes well not only for Texas but the entire southern region of the USA. “There are a lot of friendly tax incentives down there,” he says. “Additionally, the Carolinas are very strong and we’re getting calls for a lot of hoists of 2 ton capacity and below.”
Kowalik, similar to others who do a lot of business in Texas, says much of his business is being driven by the Texas energy market. In fact, “by and large, 90% of the business in Texas is being driven by the energy sector,” he says.
Driving factors include the off and on shore petroleum drilling and nuclear power plants and things are going to get even busier he said due to two slated projects to create additional power plants in San Antonio and Austin, slated for a 2008 ground breaking.
“Currently, Austin is where the population is expanding in Texas,” Kowalik says. He said electric overhead chain hoists are currently very much in demand.
All of this adds up to robust business for Industrial Hoist Services and Kowalik said he sees no slowdown in sight. “Steady as she goes is what we see in the next year,” Kowalik says. He says that he is hearing from his sales force that for the foreseeable future they see business continuing to be robust. He says he does not anticipate any slowdown in the market until 2010. “Sooner or later, the supply will catch up with the demand,” he said. “We also rent hoists and that business is very strong for us right now.”
In addition to selling JD Neuhaus products, it is also the single largest distributor in the USA and also sells Harrington, Liftech Intl., Duff-Norton and Yale brands.
Like Buer’s CES, Kowalik’s business is also suffering the effects of all this business with labor issues of their own. “It’s extremely difficult finding quality people,” he says.
After hurricanes Katrina and Rita, other service businesses are offering more money and that is also taking workers away from the hoisting business.
Kowalik says he anticipates the current boom to last a few more years and will mirror the supply and demand of the market, but he already has a plan in place to meet the changing needs of the market.
“Once we have market saturation, the money
making will switch from sales
to service.”
he says. “We’re already being asked by customers to train and assist with service.”
There is also a call for record retention, maintenance and the like. “They’ll [customers] still sub out for a rebuild or other big ticket repairs,” he says. “These are unprecedented times right now, we’ve had times like this and it’s the wise person who watches the market and plans how to react to it, but sooner or later, it’s going to decline.”
A JD Neuhaus 75 ton hoist being positioned in an Industrial Hoist Services, LP, load test rack texas two James Kowalik, president of Industrial Hoist Services, LP, located in Brazoria, a man with 24 years in the business, tells OCH that while he agrees that Texas is the largest hoisting market along with California and Michigan, he attests that Alabama is qutexas one A 130ft span 50 ton crane needing mobile crane assistance to get out of the parking lot. Too big, even for Texas! texas three An 80ft span 75 ton coil handling crane with rotating hook and motorized grab at work in Houston texas four Stooled up end trucks on a 75 ton crane to maximize headroom texas five
