Western crane manufacturers continue to invest in India's booming economy

There are concerns over regulation and planning procedures, but western manufacturers continue to make the most out of India's booming economy. Euan Youdale reports

India's Twelfth Five-year Investment Plan is due to be submitted in 2012 and infrastructure is expected to be at the forefront of the government's agenda. Investment in the sector will almost double to US$ 1 trillion, compared to US$ 514 billion spent under the Eleventh Plan. It will add to mining, sea port, airport and power generation applications, including wind energy and the next generation of nuclear power stations, planned in the country.

While the Indian government is relying on the private sector to facilitate the investment - at least 50% of the investment under the new five-year plan is expected to be privately generated - a gap remains between the demand for construction and the regulatory structure necessary to support new builds.

Raman Joshi, managing director, Manitowoc Cranes India expands on the challenges. "Planning can often take time so this affects the speed with which projects get started, which obviously impacts our customers, who are supplying cranes to the job. We also think more regulations are needed regarding the sale of older equipment in the country, much of which does not meet the quality standards that are needed for modern job sites."

Concerning cranes, the material handling equipment segment is still dominated by pick and carry cranes, which make up some 27% of the market, according to Escorts, which claims to be the country's leading manufacturer of these machines. Of the rest, forklifts have a 12% share, while wheeled slewing cranes account for 11% and crawler cranes 8% share. Sales of mobile cranes in 2009 were 6,050 units, said Escorts in its most recent full year report, but that represented a drop from sales in 2008 of 7,870 units.

From the west

Western manufacturers are investing in research and development to increase their foothold in the country. Palfinger, which represents a threat to the traditional pick and carry with its truck mounted loader cranes, spent the last 12 months expanding its sales team and its 20-strong dealer network. Recent products aimed at the market include the 8 tonne-metre rated stiff boom PS 8000 4.0 launched in February 2011. This is followed by the PS 13000 6.3, a 13 tonne-metre model, in November this year.

Liebherr has established a new production facility in Pune. It was set up to manufacture products from the tower crane and mixing technology segments, again designed specifically for the domestic market. Inauguration will be in 2012. Liebherr has about 150 employees in India, with a sales and services hub in Mumbai and the manufacturing facility in Pune. According to David Griffin, director of sales and service, tower cranes, at Liebherr India, the trend is for tower cranes with internal climbing configurations and maximum working loads to five tonnes, with maximum radii of about 50 m.

"In India, especially Mumbai, there is a huge amount of high-rise construction. The footprint is often quite compact, which means that by placing an internal climbing frame with a 50 m radius you can get a good coverage of the building and material yard," Griffin says.

The Liebherr LC tower internal climbing kits were developed with the Indian market in mind. "Our towers are so compact and fit in openings of 1.95 x 1.95 m. We find common residential buildings have small footprints with two to four lift shafts. The cranes that we are developing have major advantages. They are equipped with hoisting gear for achieving very high hook heights, for example, our 71 EC-B 5 can achieve a maximum hook height of 278 m."

Potain continues its tower crane production in Pune, as the Indian market keeps growing, and has now moved to lean manufacturing. By focusing on continuous improvement in safety, productivity, and strengthening the operations team in Pune, the manufacturer aims to maintain its market leadership, says Raman Joshi.

"We have a solid dealer network. Our Grove and Manitowoc cranes are sold by TIL, which is one of the largest and best-known names in the Indian construction equipment industry." For Potain tower cranes, the company has added three new dealers over the past 12 months and a further four outside the country, in Bangladesh, Bhutan, Sri Lanka and Nepal, demonstrating the growth of residential complexes.

"Generally customers are looking for the same requirements in terms of reach and capacity. We are seeing some increases in working heights as buildings get taller," comments Joshi. "We are also seeing other tower crane technology in India, which we haven't seen previously. For example luffing jib and self-erecting cranes are now working in India, with the first Potain units arriving over the course of the past year."

Historically labour was available at low cost in India and buildings were realised without the use of tower cranes, explains Griffin. "But, as India develops dramatically economically and culturally, we see the demand for sophisticated machinery increasing steadily, not only in the tower crane sector but in others. When it comes to the highest high-rise, you need sophisticated machines, for example, the tower cranes going to the Minerva project are state-of-the-art Litronic tower cranes."

High technology

Palfinger also has an observation concerning technology levels when it comes to the traditional pick and carry crane in India. "With increasing awareness about safety hazards associated with traditional pick and carry cranes, many corporate companies have now discontinued using them on their premises," says Harald Böhaker at Palfinger. "Even crane owners are finding safe loading, transportation and unloading being an attractive proposition for their businesses' profitability and they can use the truck loader crane in multiple ways as and when required. Demanding timelines for project completion and increasing safety awareness also has pushed industry towards the automation."

Joshi, however, is not so quick to forecast the demise of the pick and carry. "Traditional pick and carry cranes are still very popular and will most likely remain so for many years. But gradually, we expect customers will look to larger cranes that can handle a wider variety of jobs, to get a better return on their investment. From our perspective, this will probably mean Grove truck cranes or small rough terrain cranes."

For larger-scale applications, there is a growing interest in larger wheeled mobile and crawler cranes to help with the next generation of industrial and infrastructure projects. "There are a number of Manitowoc 18000 cranes in the country, and we have also just supplied our first 16000 with wind attachment," says Joshi, "although the challenge will be moving them around the country as the road network is not yet able to accommodate the regular movement of heavy equipment."

Liebherr's focus on quality will continue to be a major concern and customers will be sought on this basis, says Griffin. "We have no problem identifying customer segments in India that have a certain quality consciousness and they are prepared to work with us to identify the right products for them."

Continuing in this vein, Manitowoc is expanding its Crane Care services in the country too. "We are in the process of opening a contact centre in Pune, where our customers can call a toll-free number to get immediate telephone assistance to help with the running of their crane," the company says.

Liebherr forecasts growth will continue for the next five to seven years. "The demand for machines is increasing with all sorts of projects: residential, energy, and infrastructure," says Griffin. "India's cities will also grow as the economy blossoms so more commercial and housing projects will require tower cranes in the short to medium term," adds Joshi.

Global Insight summary

Over the next five years, India will offer the strongest growth of any major construction economy, including Brazil and China, says Scott Hazelton from Global Insight.

Key to the improving construction outlook is the evolution of India's economy. The GDP growth trend has been around 8% for the last 20 years, compared to 3.5% to 5.5% in the mid 1980s and, at the same time, the volatility of economic growth has subsided.

The most recent complete annual data shows that by the end of 2009, India had a rapidly expanding US$ 1.3 trillion economy - the third largest in Asia, after Japan and China. The available evidence suggests that India's real GDP grew close to 9% in 2010. Yet, per capital GDP remains fairly low by regional standards and is less than half of China's.

But there are considerable pockets of wealth and India also enjoys a rich spread of natural resources and has a large population that could be employed more productively to put economic growth on an even higher path. Key institutions, however, such as the education system, are not yet up to the task.