The crane industry is in the middle of an extremely dynamic period where there are significant ‘disruptors’ changing the landscape for crane hire companies. As always, the team at Finlease has its collective finger on the industry’s pulse. Senior Partner, Chris Burke provides insights into the challenges the industry faces.
It is fair to say the industry is facing a few disruptions which are adding complexities to decision making processes for crane owners. As a result of this dynamic environment the future is not clear around new purchases, for example.
“A significant disruptor is the continual advancement of technology. Increasingly we are having conversations around driverless cranes and being able to sit in one state and operate a crane in another. As we saw at Bauma, this technology is here and already playing a role in the tower crane sector locally.
“The second disruptor relates to supply. No longer do we have a concentration of European-dominated cranes, we are seeing cranes from all over the world, and the Australian market seems to be a real ‘pocket’ for this activity.
“The third significant disruptor relates to wealth transfer within family businesses. In the past 12 to 24 months, we have seen the second generation in a family-owned crane business looking to step up and take the reins. Although this succession planning is viewed in a positive light, the process causes significant disruptions to the normal everyday crane business operations,” said Chris.
Technology disruption
Remote control technology has been around in the construction and mining sectors for many years, said Chris.
“The adaptation of technology is probably best demonstrated in the Australian mining sector. I have seen mining operator’s room, where you have everyone lined up in chairs, operating the dump trucks and other equipment servicing the mine. The work environment is comfortable, more efficient with the management of staff more streamlined, which helps the mine operate at optimal levels.
“The technology is already here for tower cranes. It was displayed at Bauma and looks like a simulator, but it’s a remote-control cabin. You can operate the crane from anywhere at anytime. This technology opens employment markets.
“You can employ experienced operators that perhaps can no longer climb the ladders, you can employ disabled operators that may have issues with the lower half or even the top half of their bodies. The technology is here, I just don’t think we’ve seen it applied in practice just yet. Change is always slow to be adopted,” said Chris.
“This technology probably, for now won’t work in the taxi crane space where operators are moving from site to site, but you would think it is coming to applications where operators can be in one place and operate the crane somewhere else. People I speak to about this technology are most excited about the employment opportunities it opens.”
Supply disruptions
The supply of cranes has never been more competitive. Crane owners, who in the past have said they would never move away from recognised European brands have done just that and the emerging brands are making considerable inroads. Chris has interesting insights into how this plays out.
“The emerging international brands are increasingly ‘being considered as a viable alternative’. The machines are proving to stack up, with investments in support networks being established across Australia including after sales service and spare parts support. These were all considerable concerns five years ago and now they are being addressed.
“The financing of cranes has also changed with a vast majority of banks no longer preferring brands but now focusing on the borrowers’ financial capabilities. Some banks historically had concerns about financing certain brands with concerns about the value of the secondary market. There used to be some risk parameters in place, but with the fullness of time these are now diminishing.
“Banks are becoming more comfortable in supporting a wider range of brands because the financing is becoming more frequent and there are more buyers. The secondary market is becoming more established and as such the banks can be more aggressive with their funding structures”.
Wealth transfer disruption
Two years ago, Finlease’s Jeff Wilson wrote an article entitled The Winds of Change which highlighted a significant disruptor for family-owned crane businesses. He identified how succession plans were being implemented with the second generation taking over the business.
He also highlighted scenarios where the business founders didn’t have a succession plan and were realising the value in their assets by auctioning them off. The article generated high levels of interest which continue to this day said Chris. “I blame Jeff. The Winds of Change article has been the catalyst for numerous conversations about succession plans and wealth transfer. It is not a simple process of saying to the next generation ‘here are the keys and off you go,’ it can get very complicated.
“You have the younger generation that is working in a business, gently pushing for the next move and often thinking about taking over the business from Mum and Dad and what does that actually look like?
“There is never a one-size-fits-all model when it comes to taking over. There are different ways for this to be assessed and executed. We have the experience to discuss several different options with families and often look to include accountants, financial advisers ect – to ensure the best outcome,” said Chris.
“The younger generations bring a fresh outlook on how business should be done. They’re talking about different technologies and different suppliers. If you’re a family business that’s been trading for 30 years and you don’t have succession lined up, that’s a risk. You might have to think about a sale and there are two ways of doing that, someone buys your business, or you auction the assets.”
2026 and 2027 a brighter horizon
“For me, indications highlight a straighter road for 2026. Interest rates and currency have stabilised, which always helps. If you examine the bank data, we are going to see modest growth over the next two years, so conditions are improving.
“Works for the Brisbane Olympics will be released in due course and there are several, long-term projects being released across the country. We think crane businesses have navigated the tougher times, and we are now pushing onto a brighter horizon.”