Mobile Crane Trends
COVID-19 INDUSTRY BRIEF
Effects of the coronavirus pandemic on the mobile crane industry Updated August 26, 2020
- Market Dynamics: 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 and gas markets also having a material impact.
- COVID-19 Impacts: Beginning in March 2020, the response to the COVID-19 pandemic included widespread lockdown mandates and travel restrictions. As a result, the primary external factor affecting the mobile crane market – construction (both residential and private nonresidential) – experienced an abrupt and significant decrease in activity as many projects were paused, postponed, or canceled. Industry projections updated as of May 2020 for construction output anticipate a 6.6 percent drop for 2020, as compared to the slight (0.6 percent) rise that was expected prior to the COVID-19 pandemic, according to information published by American Cranes and Transport.
- Stimulus Bill Status: Growth for the industry is partially dependent upon passage of the “Moving Forward Act,” which is a $1.5 trillion infrastructure and stimulus bill. After House passage on July 1, the bill moved to the Senate where it faces an uncertain future. The Executive Office of the President’s Office of Management and Budget issued a Statement of Administration Policy on June 29 asserting that the Trump Administration opposes passage of the bill because it “is heavily biased against rural America,” “appears to be entirely debt-financed,” and “fails to tackle the issue of unnecessary permitting delays, which are one of the most significant impediments to improving our infrastructure.” If passed, it would likely have a positive impact on public construction spending related to roads and bridges, schools, housing, and other public transportation projects.
- Valuation Outlook: From a valuation perspective, the impact on mobile crane values will depend on how the construction marketplace weathers the ongoing pandemic in the medium to long term. In states that have experienced a second wave of shutdowns due to rising infection rates, the market will likely remain 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 snapback in this industry in all regions except the oil patch once the COVID-19 pandemic passes.
Date October 2021
- The North American mobile crane market has rebounded in 2021 after experiencing a pandemic-driven depression in 2020.
- Demand for mobile cranes increased by the end of 2020 and remains strong as of the third quarter of 2021.
- Truck-mounted crane manufacturing revenue dropped 3.4% for the five-year period ending 2020. However, experts project revenue will grow 5% annually for the five-year period ending 2025.
- All-terrain cranes are in the highest demand, particularly those in the 100- to 250-ton range. Crawler cranes, which had decreased in popularity in recent years, are experiencing a resurgence in 2021 because of an increase in wind energy and industrial plant projects.
By the numbers
Back to Business: Decreased construction and oil and gas activity resulted in a substantial decrease in mobile crane market performance from mid- to late-2020. However, the market began to rebound by the end of 2020, proving the pandemic was more of a speed bump than a roadblock for the industry. Construction activity has been increasing throughout 2021, and the often-volatile oil and gas industry has stabilized since hitting historic lows in April 2020.
The $1.2 trillion Infrastructure Investment and Jobs Act passed by the Senate in August 2021 would add over $550 billion in domestic infrastructure spending, helping to spur the industry over the next five years. The $3.5 trillion Congressional Budget Resolution for 2022 passed by the House in August would further increase infrastructure spending.
Lingering effects of the pandemic like supply chain challenges and labor shortages continue to plague the industry as of the third quarter of 2021. Truck-mounted crane manufacturing revenue dropped 3.4% for the five-year period ending 2020. However, experts project revenue will grow 5% annually for the five-year period ending 2025, which aligns with early 2020 expectations.
Demand Trends: Supply chain challenges, labor shortages and increased raw material costs drove up pricing for new cranes. As a result, the demand for used cranes has increased significantly, as buyers appreciate the lower prices and immediate availability. Cranes Today magazine reported that demand for secondhand cranes was at an all-time high as of late June 2021.
All-terrain cranes are in the highest demand, particularly those in the 100- to 250-ton range. Crawler cranes, which had decreased in popularity in recent years, are experiencing a resurgence in 2021 because of an increase in wind energy and industrial plant projects.
Mobile Crane Outlook: xperts predict the U.S. truck-mounted crane manufacturing industry will improve through 2025 with increased construction activity and continued economic recovery from the pandemic.
Additionally, data suggests demand from energy sectors will rebound as the price of oil returns to growth. West Texas Intermediate crude oil prices stabilized from July to September 2021, averaging around $70 per barrel. This represents an increase of over 69% from $41 per barrel for the same period in 2020.
Industry experts anticipate the global mobile cranes market size will reach $18.2 billion U.S. dollars by 2027, expanding at a compound average growth rate of 5.9% for the period. Contributing factors to this growth include international governments’ emphasis on infrastructure investment and the refurbishment of existing infrastructure across both developed and emerging economies.
Data suggests mobile crane demand will continue to grow through 2027 with continued deployment of mobile cranes across power, building construction and hydropower projects, aircraft manufacturing, and automotive and mining applications.
Additionally, the market will benefit from a growing preference for rental cranes. Rental companies are driving demand for new equipment as they seek to fulfill customers’ preference for renting versus owning equipment. This growing demand will likely boost sales worldwide; however, continued pandemic-related shutdowns may affect these projections.
Mobility Makes Selling Easier: Mobile cranes generally have wheels and can be driven on roadways. These features make 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 crawler cranes are not road ready and need to be trucked. Costs to tear 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 that tend to stay in one location, rough-terrain cranes can navigate uneven terrain on work sites. Designed to travel on roadways, all-terrain cranes can reach speeds of up to 40 miles per hour and are able to 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, but low travel speeds typically restrict driving these cranes to job sites.
In addition to its type, a crane’s age, capacity and accessories all drive value. 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 because limitations may narrow marketability. For example, crawler cranes used in the oil and gas industry typically have a limited amount of boom and other features a civil contractor may need. As a result, the civil contractor would pay less for the crane knowing they would need to modify the equipment for their purposes.
Note: THIS PUBLICATION IS PROVIDED FOR INFORMATIONAL MARKETING PURPOSES ONLY. THE MATERIAL CONTAINED HEREIN SHOULD NOT BE REGARDED AS ADVICE, NOR RELIED UPON TO MAKE FINANCIAL, OPERATIONAL OR OTHER DECISIONS; NOR SHOULD IT BE USED AS A SUBSTITUTE FOR AN ASSET APPRAISAL. ACTUAL RECOVERY VALUES MAY VARY FROM TRANSACTION TO TRANSACTION AND THE RECOVERY VALUES REFERENCED HEREIN ARE FOR REPRESENTATIVE TRANSACTIONS WITHOUT REGARD TO SPECIFIC KEY FACTORS. THIS MATERIAL MAY BE REDISTRIBUTED ONLY IN ITS ENTIRETY, INCLUDING NOTICE OF COPYRIGHT. ALL RIGHTS RESERVED. ©2021 GORDON BROTHERS, LLC.
Reference sources: CRANES TODAY, AMERICAN CRANES AND TRANSPORT, IBISWORLD, GRANDVIEW RESEARCH, DOTDASH/INVESTOPEDIA, U.S. CENSUS BUREAU, THE WHITE HOUSE, BLOOMBERG