With 30 years of financing experience in industry, the crane industry’s ‘Prophet of Change’ Jeff Wilson, Senior Partner at Finlease, is well credentialled to comment on the ongoing winds of change impacting the industry. To date, his insights have been uncannily accurate.
“The industry has gone through a lot of change and there are still winds of change ahead. The main changes I see coming include the continued generational change within crane businesses and a change in the way the industry is viewing the available brands of equipment.
“We are seeing the emergence of international manufacturers adopting a different approach to the industry. They are coming to market in a different sense, they are setting up properly, investing heavily in property, spare parts and service, to show the end users they are here to stay, and their equipment is stacking up and performing making it a very different proposition,” said Jeff.
“We are continuing to see both labor shortages and pressure on labor rates, which is making it difficult for owners to navigate all the issues that lie ahead. Five years ago, we were speaking about the number of crane operators that would be retiring, and we are here now. The industry still needs to invest more time, energy, and money into today’s youth as they will become tomorrow’s workers. How many crane businesses are implementing training programs? Not as many as needed to ensure the youth can continue to develop. If every crane company looked at the youth as an investment in their future as opposed to a cost, it will have the potential to improve the labor issue,” he said.
The Crane Industry Council of Australia (CICA) has been focused on encouraging diversity within the industry and this is having a positive impact.
“The industry is certainly being viewed as a ‘destination’ for women and we are seeing increasing numbers of female operators, doggers and riggers which is a good thing, but I think there also needs to be a renewed focus on training to bring the workers of tomorrow through apprenticeship programs and schemes,” said Jeff.
“At the moment, there are question marks on what types of equipment crane businesses are looking to invest in, this is a short-term question driven by a couple of factors including the uncertainty of which political party will be leading the country in the next three to six months and the impacts this presents.
“Is it still going to be as heavily focused on wind and renewables as it currently is or are we going to start to see a slowdown in that sector as the alternate government looks to a nuclear generated energy future. Either way, both options involve major amounts of construction and cranes for that construction,” he said.
Jeff goes on to discuss his observations on the influx of emerging brands from the international manufacturers, and how they may change the industry’s traditional buying patterns.
“Right now, if an existing business is looking to purchase a 60t crawler out of Europe, they are likely to spend the best part of $1.1 million to $1.2 million and probably finance it over five-year term with a 30-40 per cent residual.
“We are seeing some businesses considering similar capacity cranes from alternate international manufacturers, at around 50 per cent or less of the cost of a similar European machine and although the permitted residuals at the end of five years may not be quite as high, the finance repayments would be almost 50% of the machines traditionally purchased.
“When you factor in the increased costs of doing business, the increases in labor costs, insurance etc, businesses appear to be now looking at how they can trim some of the costs including their machinery options,” said Jeff.
The generational change continues as larger crane businesses acquire “older” existing businesses as the founders don’t have a succession plan and are now looking to retire.
“This is in stark contrast to five years ago, where there was slim chance of those existing businesses selling, however having been through COVID and the way the industry is changing I’m sure many seriously contemplating if they still have the drive to conform, or is it easier to say ‘Hey, we are for sale,’” said Jeff.
Jeff is forecasting the potential of a difficult period ahead for crane hire businesses to navigate, not because of the amount of work out there but other underlining reasons.
“I don’t see interest rates dropping as fast as people are expecting, insurances are still going up, commercial property to either rent of buy continues to increase, which means the cost of doing business will remain high. Although the supply chain related issues are now easing, the actual cost of goods continues to increase and that is an issue every crane hire business will continue to wrestle with.
“I can also see some challenges for crane owners ahead relating to the unions and their role in the industry. Through the media we’ve heard that the unions have been getting a hard time, but they still have a role to play in representing employees etc. They are quieter at present and our next federal election results early in 2025 could help provide clarity to their way forward.
“The amount of infrastructure now needed for a business to even tender for Tier One work is considered to exclude most small to medium, sized businesses. You need a full-time draftsman, full-time OH&S personnel and other overheads that could be considered as not making a financial contribution to the business. Businesses are being forced to continue to invest in the required resources, so you’ve got to bite the bullet and expand if you do want to work on the Tier One job sites,” said Jeff.
But not every crane hire business sees the industry challenges in the same way. Many of the younger businesses don’t know any different, the obstacles which frustrate the older owners are what the younger businesses have been brought up with. They just see that as part of doing business and know no different.
“When you sit back and think about that, that’s where some of the change is occurring, the push to comply in todays’ industry is so much more virulent than it used to be,” said Jeff.
“Compliance is dictating everything, in every shape and form and in every industry. Not just safety, compliance, all of it. It’s all interrelated and it just makes the whole business of doing business more complicated, with increasing layers of complication and yes, the old-timers have had enough, and it is easier for them to look at the alternatives and in many instances, how to get out,” said Jeff.