Impact of COVID-19 on crane market in Western Europe

As some western European countries grapple with a third wave of Covid-19 and new variants of the virus emerge, the global pandemic continues to dominate economic and business activity.

The European Commission’s Winter 2021 Economic Forecast, published in February, suggests the EU’s economy will recover more quickly than initially expected but now we will have to see what effect, if any, Europe’s latest wave of infections and lockdowns has on economic growth.

The EC forecasts that the eurozone economy will grow by 3.8% in both 2021 and 2022, after falling an unprecedented 6.8% in 2020. The EU economy as a whole will grow 3.7% in 2021 and 3.9% in 2022 after a 6.3% drop last year.

Some EU countries, including Latvia, Lithuania, Luxembourg y Polonia, are expected to recover fully this year, while others will recoup losses but not recover fully until 2022. However, España, Greece y Italia, whose economies fell by 11%, 10% and 8.8% respectively in 2020, will take longer to bounce back.

The Covid pandemic national lockdowns and restrictions of the past year have undoubtedly impacted on hoist manufacturers too, as their customers have delayed investments or are working at reduced production, and disruptions along the supply chain have posed challenges.

But it is not all bad news. Since December last year some markets have started to recover and the industry recognises that, Covid aside, the Western European market is fundamentally stable.

“All over Western Europe you see the same situation: large projects are on hold or decisions have been postponed,” says Knut Stewen, managing director, Kito Erikkila. He adds, however, that prospective activity is very good and in most countries smaller projects are going ahead as usual.

The Covid pandemic has dominated thoughts and actions for more than a year but Stewen says US/EU relations during Donald Trump’s presidency had also caused some disturbance and he is looking forward to “new stability” now Joe Biden is in the White House, in Washington DC.

At Kito Europe, executive officer and managing director Martin Rothe says during the pandemic there has been “restraint” in the automotive sector and in areas with tougher lockdown restrictions, such as Francia and Iberia, while in contrast, Alemania and the Nordic countries are particularly strong.

There was a sharp downturn between April and June last year, but this was followed by a quick recovery so at the end of the financial year in March 2021, Kito Europe’s performance will be on a par with the previous fiscal year, says Rothe.

GH Cranes has also noted reduced demand and investment slowdown in its ‘domestic’ markets of Spain, France and Portugal but Javier Jimeno, in charge of Spain, France and Portugal, says it is clear that Covid is the cause, rather than any structural weakness in the market. He adds that although the company’s turnover in terms of new cranes and equipment renewal has declined during the pandemic, its strong penetration in Spain and Portugal has enabled it to maintain a good level of service activity.

As business slowed from March last year, crane manufacturer Kuli Hebezeuge expected an increase in demand for service and spare parts to keep older production facilities running but that didn’t materialise.

“In fact, more production companies closed their doors partly, or completely, because of falling turnover and for some, this has continued,” says Oliver Riese, export manager, Kuli.

Since the end of last year, however, Kuli and other hoist companies have seen the first signs of recovery, bringing the prospect of a return to more normal business soon, but these comments were made before the possibility of Europe suffering a third wave of Covid.

In March, Kuli assembled and installed a double girder EOT crane at Luxport SA in Luxembourg. It is located in a factory partly open to the outdoors, and covers the whole area from welding fabrication, truck way and railway to the River Moselle, where it is used to load and unload vessels. The new crane, which replaces an old 20t structure, has 2 x 16t to give a 32t total capacity on a rotating crab and a 24m span. The hook path is also 24m and it can hoist at up to 22.5m per minute.

A special crab with a hook distance of 4m allows rotation during loading and unloading of long steel parts that often exceed 30m. The working area is lit by six LED lights, each with a 5 x 37W cluster.

“Compared to the old crane, the hook approach was also optimized, allowing the load to be lifted closely up to the main girders of the crane,” explains Riese.

A single-sided walkway on the crane, as well as platforms on the crab, provides access for service. In addition, remote access allows quick response times.

Control is via a belly type remote control. Each hoist can be controlled separately or at the same time in a synchronised operation for use with a traverse.

The crane uses Kuli’s latest smartER inverter technology, which the company says saves up to 57% of the energy in hoisting motion compared to conventional inverter technology.

Liftket has also seen business pick up since December 2020, says CEO Jürgen Dlugi, although its sales to the entertainment sector have halted as venues are closed and events cancelled because of the pandemic.

“There are no major differences in the European markets; only the Reino unido is possibly slower than the rest,” says Dlugi.

For SWF Krantechnik, however, the picture is different.

“Covid has set back recovery in Western Europe,” says sales director Gerald Körner. “Due to differences in the breadth and timing of national restrictions the economic performances have varied. Demand from Germany was rather restrained. Italy’s unstable political situation created uncertainty and made buyers reluctant, and Spain and Portugal performed better than expected.,” adds Körner.

There’s no doubt, though, that customers have postponed projects because of the pandemic and fewer projects mean increased competition and a downward push on prices.

The pandemic pressure has been felt in other ways too, says Körner.

“There have been disruptions in the supply chain throughout the pandemic. Fuel price pressures and a shortage of containers, which has reduced the ocean shipping capacity, are all big challenges to be solved,” he says.

On the plus side, Körner adds, although many customers have been hit harder by the second Covid wave, most are at least better prepared than in the first wave.

The Covid pandemic continues to grab the headlines, and no doubt will for a long time to come, but Dietmar Nussbaumer, head of technical sales at Kuenz, says there have been other factors at play too.

“It is not only the pandemic that has changed the market or made the effects very difficult to assess,” he says. “Trade obstacles such as duties, Brexit and other political uncertainties are also slowing down the free movement of goods.”

Riese also says that since the UK left the EU on January 1, 2021, there has been a noticeable impact on trade, partly because UK customers built stocks last year and the uncertainty as new customs requirements bed in. He does, however, expect trading to return to normal later this year.

Liftket has also noted the UK market slowing. “The UK is clearly struggling due to Brexit and customers are moving to Ireland or increasing production at their sites outside the UK,” says Dlugi.

The experience of different customer sectors varies too. The aeronautics, automotive and entertainment industries are pretty much at a standstill but Kuli says the construction sector has been largely immune to the pandemic.

“The building sector is still a growing market all over Europe,” says Riese.

The trend towards prefabrication and preassembly, coupled with the building boom in some countries, has resulted in a “remarkable” increase in demand. “There is demand for higher capacities – 25 tons and up to 50 tons, and in single cases even more,” says Riese.

Prior to the pandemic there was a well-established trend towards greater digitalisation, smart products and energy efficiency and hoist manufacturers expect this to continue once business returns to more normal levels.

“Customers are demanding the increasing digitalisation of assets and the incorporation of technologies that facilitate energy recovery,” says Jimeno. “We are incorporating elements that allow our equipment to regenerate the energy it consumes, as well as the application of Industry 4.0 for the remote control of our equipment and an intelligent service that anticipates key element breakdown scenarios or unexpected stoppages that affect our customers’ production processes.”

Nussbaumer says the Internet of Things (IoT) and 5G are becoming increasingly popular and Kuenz is already using them as a “technology frontrunner” on projects.

Kuenz has also noted growth in enquiries for customised crane systems, says Nussbaumer.

It’s a similar story for Liftket. “Since we built our new factory in 2018, we have been expanding our customisation and producing more special devices which use an electric chain hoist,” says Dlugi.

He believes it is Liftket’s in-house design and production process that gives it the flexibility to provide customisation.

“We are probably the only company that does everything in-house. We design, develop, engineer, machine, manufacture and assemble the complete product ourselves,” says Dlugi. “We can tell you which colleague built which hoist and what material they used.”

Kuli’s customers are also investing in green technology, which reduces customers’ costs and lowers CO2 emissions from production. “Especially for higher duties we now offer more and more of our inverter controlled drives, including energy recuperation units,” says Riese. “This means with every braking process you ‘produce’ energy, which is fed back into the grid while at the same time you are able to resign from the need for bulky brake resistors which only convert energy into heat.”

At the other end of the technology spectrum, Kuli also supplies spare parts for hoists made more than 50 years ago.

“Our business is supplying complete cranes as well as single hoists or crane components, but another essential part of the business is supplying spare parts to service old equipment, manufactured in the 1960s or even older,” says Riese. “Many of these older cranes and hoists are still running only because we are able to supply parts and services for them. An investment in our products is a real bargain in terms of life cycle costs.”

SWF Krantechnik says another continuing trend in Western Europe is less demand for high payloads and a move to individual workstation solutions.

Körner says changes in the energy markets are noticeable. “Due to the general development in the oil and gas sector, demand for ex proofed equipment is rather stagnating. Investments in renewable energies are still relatively stable,” he says.

During the pandemic hoist manufacturers have maintained production – albeit with a lower order volume – but of course Covid measures have forced them to work differently, and the additional measures have time and cost implications. Some manufacturers have changed shift patterns in their factories, trade shows and company events have been cancelled, meeting customers on video calls, rather than in person, has become the new norm, and travel restrictions have affected field staff involved in assembly and commissioning. This has been made more difficult by each country having different regulations, which have also changed during the pandemic.

For some manufacturers, the pandemic has delayed the launch of new products. SWF Krantechnik will soon launch the VECTO jib crane, which Körner says should have been revealed earlier.

SWF is offering the VECTO jib as walland pillar-mounted slewing jib cranes and in three different designs: an over braced Profile Master PLUS light crane profile made from steel; under braced I profile; and over braced I profile.

Körner says the jib is quick and easy to assemble and the series can be equipped with all ATHLO chain electric hoists and CRAFTster manual chain hoists.

“The VECTO jib can be used in numerous industries and work environments,” he says, and adds that further models with ProfileMaster PLUS light crane profiles made of aluminium will follow in the near future.

Kito Erikkila also has a product launch in the wings – a new portal crane which it says is a flexible solution for situations where lifting is required at several different workstations. The portal crane is not fixed to any structure, so can be moved easily from one workstation to another, and has a 500kg maximum lifting capacity for single girder and 1000kg for a double girder.

The company is also launching an articulated double suspension solution as a standard product for its cranes, allowing higher suspension forces and more flexibility when configuring a crane.

In the past 18 months, Kito Erikkila has invested in new equipment and in improving its internal processes, giving the company more control of the whole production process and therefore quality. The investments include a new powder coating line, a bagging machine, which allows Kito Erikkila to bag parts itself, and it has taken in-house part of the manufacturing of a push trolley.

Stewen says the investments also support the company’s objective of making its processes and production more sustainable and environmentally friendly. It has made energy-saving production changes with the load trolley, as well as moving more production to its own facilities, which streamlines logistics and reduces lorry movements.

Now it is turning its attention to a new, energy-efficient office building at its base in Masala, in southern Finlandia. The old offices were demolished in January and construction of the new building, which will use geothermal heating, is due to start in the spring.

“Our decision to invest in processes, production and a new office building is based on our belief in the future, the good partnership we’ve built around the world and the positive feedback about our products,” says Stewen.

Despite the uncertainty and volatility that Covid has created, and which will continue to ripple around the world for a long time to come, and the problems with Europe’s vaccination programmes, hoist manufacturers are confident that better, easier times are ahead.

“Business will gain confidence in the recovery’s durability and move forward with new investments,” says SWF Krantechnik’s Körner. “The vaccination rollouts are progressing, there was a widespread easing of containment measures in the second quarter, and subsidies from the EC that are pumped into the markets should lead to a growth spurt in mid-2021. Inflation, led by energy prices, is also picking up.”

GH Cranes believes this year the industry will get its breath back before a firmer footing in 2022, but there will be commercial casualties.

“As the pandemic is brought under control, the markets will regain their pulse, although we expect a U-shaped recovery, not a V-shaped recovery, with a longer bottom than we would like,” says Jimeno. “We see 2021 as the year of recovery that will have a greater impact in 2022 with the activation of the European recovery funds. As it is not a structural crisis, we hope to return to pre-crisis levels soon, but we feel that many of our clients will fall by the wayside.

“Policy decisions by governments to protect jobs affected by the pandemic have helped sustain industry, but we don’t know if it will be enough for all of them to survive.”

Kito Europe agrees that the European market is fundamentally stable and it does not expect any shift in trends once recovery is established.

“Modern sales and communication tools will be a key success factor. In addition, we expect the market for customised product solutions to grow strongly,” says Rothe.

Kuli is also looking at the positives. “Since the beginning of February we have seen a significant growth in markets and, as far as we can see, we expect to be back to our normal, pre-Covid levels soon,” says Riese.

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