Gosplan, the central Soviet planning agency that set targets for everything from the manufacturing of baby carriages to the opening of cemeteries, proved a poor prophet when it came to crane production. For the year 2000, the agency set a target of 10,000 overhead travelling cranes; in fact, only 521 were produced.
The planners can be forgiven. They were working in 1980, planning 20 years ahead. In fact they were forecasting crane production for a different country, the Soviet Union, and not for post-Soviet Russia. As with almost everything else in the country, the crane industry suffered near-total collapse during economic reforms.
Russia’s crane sector is slowly but steadily extricating itself from its crisis, which peaked in 1997-98. Recent economic growth has led to a marked increase in demand for cranes in the past two to three years. Although most crane manufacturers are boosting production, it seems they have abandoned hope of returning to the record high volumes of production that were possible in the mid-1980s thanks to the hothouse conditions of the planned economy. The 30-50% annual production growth of the past two years, while impressive, comes after 10- and even 50-fold production decreases at the factories over the previous seven or eight years. Directors of the leading crane companies forecast a more moderate production growth in the near term, but are generally upbeat and have started to concentrate on development rather than mere survival.
Russian mobiles
The upturn in Russian crane manufacturing is most vividly illustrated by the situation on the Russian market in mobile cranes. In 2001, the State Statistics Committee reported that 3,175 truck-mounted cranes were manufactured, compared with 1,112 in 1998. In 2000, production grew by 79% from the previous year and by 35% in 2001. The market is highly concentrated, with five leading manufacturers out of 21 accounting for 78% of the total truck crane output in the country.
A plant in the city of Ivanovo, OAO Avtokran, which was the major producer and supplier of parts for other crane plants in the USSR, remains the market leader. The plant, which manufactured more than 5,000 truck-mounted cranes a year under the Ivanovets trademark in the best of times, closely escaped bankruptcy in 1999. Maintaining hospitals, sanitoriums, clubs and other social infrastructure facilities inherited from Soviet times proved a heavy burden for the plant, located in an economically depressed region. A new team of managers got rid of some of these and managed to save the plant. Moreover, they have retained a leading position on the market, launched new models and maintained jobs for 4,000 people. Beginning in the mid 1980s, the plant manufactured mainly cranes with double-section booms and a load capacity of 9t and 12t on the basis of chassis from the MAZ plant (Belarus). Now the plant produces cranes with a capacity of 16t, 25t and 32t on MAZ chassis and the chassis from Russian manufacturers Kamaz and Uralaz. According to plant director Gennady Khnykin, the production of heavier cranes also looks promising. In 1998, Avtokran put into production a 50t KC-6973 crane on a chassis from the Minsk Plant of Wheeled Tractors (MZKT).
Since 2001, when Avtokran joined the Independent Association of Machine-Builders, which gained control over the Bryansk Plant of Wheeled Tractors (formerly, BAZ), a new chassis with an independent torsion suspension, BAZ-69098 (8×8), has been designed together with this plant. It is marked by greater dependability and all terrain capability than the equivalent model made at the Belarussian MZKT. The chassis from the Bryansk plant enables a 50t crane to travel on road at speeds up to 100km/h. As of this year, the 50t KC-6973 crane is mounted exclusively on the BZKT chassis. It has a four-section, 9m to 31m boom and a 9m to 15m extension. This year, a 32t crane on the BKZT chassis is also going into production. The plant has orders for these cranes from oil and gas companies, as well as from the army and rescue services.
Gennady Khnykin confirmed that the plant was developing a 100t KC-8973 crane. Plant management is looking for a foreign partner for this project. The new crane will be fitted with a special five-axle chassis (10x8x8) with an independent hydraulic and pneumatic suspension, a 13m to 41.4m boom, and a 16m extension. Khnykin said that Avtokran plans to double its output of pivoting mechanisms, which are intended especially for manufacturers of road machinery, and to mass produce a hydraulic hoist mounted on a Gazelle light truck. In 2001, Avtokran manufactured around 1,200 cranes and plans to build up output to more than 1,300 units in 2002.
In developing new models, Avtokran had to catch up with Galich Mobile Crane Plant (Galichanin trademark) which has been dynamically developing in recent years. Galich was the second largest producer of cranes in Russia (583 units in 2001). Located near Avtokran in the neighbouring Kostroma region, the plant initially manufactured excavating machinery and took up the production of truck-mounted cranes in 1982. From the mid-1990s the plant has been quickly reacting to market changes, releasing new models every 12 or 24 months. The Galich plant began manufacturing 25t cranes a few years before the Ivanovo plant and manufactured a 36t crane at the end of 2001. Nevertheless, the plant has no plans to increase dramatically the load capacity of its cranes, sticking to the 36t to 40t range in the next two years, says director Andrei Smolyanov. In the future, it could go up to 45t-50t.
In 2001, the Galich plant began manufacturing a 36t crane, the KC-55721, on a Kamaz chassis with an 8×4 drive. The crane is fitted with a four-section, 9m-29m boom and a 9m lattice extension. The most popular model of the Galich plant is the KC-55713, rated at 25t. Galich is ahead of Ivanovo in terms of production of cranes of this capacity, and accounts for roughly 50% of this market segment.
In third place in truck-mounted cranes (242 units in 2001) is the plant in Klintsy (Bryansk region), a partner of the Galich plant (the plants produce parts for each other). This plant, which earlier specialised in the production of 6t to 12t rated machines, added the 15t/16t rated KC-35719 to its model range in 2001 and boosted production by nearly 150% compared to 2000.
The plant in Kamyshin (Volgograd region), which was the second largest manufacturer of mobile cranes in the former USSR (1,970 units in 1990), has sharply cut production to fewer than 100 units per year. Since 1998 the plant has been controlled by the Russian gas monopoly Gazprom and is now known as Gazprom Kran. Its emphasis is on heavy cranes of over 50t. Plant director Vladimir Mokrov told Cranes Today that the plant would discontinue manufacturing light cranes this year. In 2001, Gazprom Kran cut production to 80 units from 97 the previous year, but increased the share of heavy cranes (50t and higher) from 45 units to 57 (including three 70t cranes). It has production plans for 100 units in 2002. According to Mokrov, Gazprom fitted the crane plant with up-to-date foreign equipment valued at $25m and invested more than $40m in the plant in total. Working in two shifts, the plant can produce up to 500 units a year, but it is unlikely to realise this capacity in the near future. It is preparing to manufacture 63t and 160t capacity cranes on special chassis of the Minsk Plant of Wheeled Tractors (MKZT). Gazprom Kran is designing its own chassis for a 32t model. Mokrov said that the company controls roughly 80% of the market of Russian-made heavy mobile cranes. Last year it exported 11 units to countries outside the CIS.
Fifth place in the market is occupied by the Uglich Crane Plant, or Uglichmash (Yaroslavl region), which produced 200 units in 2001. Its model range is small and includes several modifications of the 14t KC-3577 model.
The BAKM plant in Balashikha (Moscow region) leads the way in the Russian market of light truck-mounted cranes with a load capacity of up to 3t. By the 1998 crisis, output at the plant had fallen to 65 units from 2,700 in peak years. Over the past two or three years the plant has built up production to 300 units in 2001, but, presumably, has reached its limit at current demand. No steep rise in production is forecast for this year, chief engineer Mikhail Tolchin said. The most popular model is the BAKM-890 manipulator with a load moment of 8.9tm and a 5.4m boom. The plant abandoned attempts to introduce a more powerful model with a 25tm load moment due to lack of demand.
Other Russian plants manufacture several dozen truck cranes a year. It is likely that they will be priced out of the market in the future. The majority of them regard crane production as a non-core activity, which they undertook at a difficult time when managers agreed to anything in order to preserve their plants. An attempt to manufacture cranes at Motovilikhinskiye Zavody, a major defence-related plant in the Perm region, also failed. Unlike other new producers of mobile cranes, it preferred to create its own model on the basis of foreign samples, rather than introduce a Russian-made model. By 2001, the output of mobile cranes (mainly 25t ones) had fallen to 20 units at this Ural plant.
Despite the general trend to increase load capacity, Russian mobile crane manufacturers are unlikely to compete with Western producers of heavy cranes in the 80t range and above. A sharp increase in the load capacity would require a technological leap for which most Russian crane makers have neither the human nor material resources. Major investors have yet to come to this sector, and there are fewer designers in the profession. The average age of designers in machine-building is over 50 years. In this context the experience of Gazprom Kran, which has found investors and is attempting a technological breakthrough, will be a litmus test.
Imports
The heavy mobile crane sector is dominated by foreign manufacturers such as Demag, Liebherr and Grove. Grove entered the Russian market only in the early 1990s, but now accounts for about 30% of imported mobile cranes. According to Lina Sokolova, executive director of Kwintmadi, Grove’s Russian distributor, 65 Grove cranes were imported to the CIS by contractors in 2001 and Kwintmadi sold 19 in Russia. Grove’s largest contract in 2001 involved the supply of ten 100t GMK 5100 all terrains for the Surgutneftegaz oil company in Siberia.
Since December 2001 Kwintmadi has also represented Sennebogen crawler cranes and delivered a 1600 HD to a bridge contractor in February this year.
According to Russian press reports, Liebherr and Gottwald cranes were purchased by ports at Dudinka, Murmansk, Vladivostok and Novorossiysk. Many Russian ports have recently received serious investment from major industrial groups and are currently purchasing new cranes as part of an overall modernisation. The purchase of powerful foreign-made mobile cranes in particular helps ports at major northern rivers deal with floods, which destroy the rails of tower cranes.
Sales of imported cranes are also promoted by leasing companies which solicit low-interest credits from Western banks. For example, Grove secured guarantees from German insurance agency Hermes for the credit line to finance supplies of its cranes to Russia. The guarantees make it possible to credit crane purchases at a 7.5% to 9% annual interest for up to five years. A contract on the delivery of a 300t GMK 6300 to Russia has been signed as part of the credit line. Russian leasing companies cannot offer similar beneficial terms of credit for domestic manufacturers, a fact which can hamper, in the long term, the sale of expensive heavy cranes made in Russia. If the payback period of a 25t Russian truck-mounted crane is 18 to 24 months at present, the use of leasing schemes extends that period by one year at minimum, according to Kudesnik, the distributor of the Galich plant.
Whereas Grove supplies mainly new cranes to Russia, Finland’s KCI Konecranes, manufacturer of harbour and industrial cranes, is mainly refurbishing its old cranes, most of which were sold here in Soviet times. Even though Russia now accounts for only around 1% of Konecranes’s total sales, the company regards Russia as a promising market, said Seppo Hoppu, director of cranes and services at Konecranes VLC. Recent major contracts of Konecranes in Russia include the modernisation of four container ship-to-shore cranes in St Petersburg and about 30 slewing crane modernisations in other Russian ports.
Tower cranes
The tower crane sector, which was hit hardest by the country’s economic slump, has the largest growth potential for the next few years. According to official data, 80% of tower cranes in the country have outserved their useful life and need to be repaired. However, while the catastrophic ageing of cranes has led to a rise in accidents over the past few years, it has not resulted in a sharp rise in orders for new cranes. Crane consumers still rely on the repair and modernisation of existing equipment. In 2001, Russia more than doubled its output of tower cranes to 77 units from 36 a year earlier. Nevertheless, these figures are small, compared with the figure of 2,526 cranes for 1990. Many Russian tower crane manufacturers will live to see an upsurge in demand. For example, Moscow’s Bakra (formerly Severyanin), a major player in that market segment, stopped crane production in 2001. Two years before that, the plant, bought by Wirtgen of Germany to manufacture road-building equipment, tried to begin making tower cranes with Liebherr, but did not progress beyond the assembly of samples. One cause is the large price gap with equipment from Russian plants, which offer obsolete, but cheap and well-known models that do not require retraining of crane operators.
The remaining four or five manufacturers of tower cranes produced roughly 13 to15 units each in 2001, just enough to keep the most essential specialists at the plants.
Tower crane producers have raised the working heights of their cranes in response to the demands of construction companies in large cities, primarily Moscow, where elite housing construction is booming. Generally, these are high-rise buildings in the centre of a city, where land is at a premium.
According to Anatoly Indenbaum, deputy director of the Moscow Tower Crane Design Bureau, the Vysota crane plant in Rzhev in the Tver region, which in Soviet times was the largest producer of high-rise cranes, began making a crane in December 2001 with a lift height of 222.4m, a 50m reach and an 8t load capacity. St Petersburg’s Mechanical Works placed an order with the design bureau for a crane with a 90m maximum lift height – 15m more than the previous model. Moscow’s Karacharovsky Plant also intends to produce a crane with a large height and capacity. Of the new models, Indenbaum singled out the first Russian top-slewing crane, KB-373, also known as Kran City, made by Chelyabinsk’s Stroimash. This 4t SWL model with a 40m jib can be set up with the help of a mobile crane within one day.
Mass producing new models of tower cranes is difficult due to sluggish demand, although theoretically the demand should be strong. The KB-578 timber-loading tower crane, developed two years ago, was put into production only at the end of last year at the Chelyabinsk Stroimash plant. This improved model is intended as a replacement for the obsolete KB-572 made by the Nikopol Crane Plant in Ukraine. According to a marketing study, the market capacity of the new crane is 500 to 600 machines, but orders have been few and far between.
Western conspiracy
The lack of joint manufacturing projects in Russia with leading Western firms can primarily be attributed to poor selling prospects, according to Russian experts. Using imported motors or hydraulic equipment would significantly increase the price compared to Russian cranes, scaring off the majority of Russian buyers, for whom price is the primary factor in purchasing decisions. On the other hand, those companies that can afford to pay more prefer imported cranes.
Some Russian engineers contend that there is a ‘conspiracy’ on the part of leading Western manufacturers to boycott joint projects in Russia in order to keep the country technologically backward and avoid creating a competitor on the international market. Managers of the Moscow Tower Crane Design Bureau gave this explanation for their failure to find a foreign supplier of motors and other parts for a joint project they had been hoping to launch.
EOT joint ventures
At the same time there are examples of successful cooperation with foreign manufacturers. Kaliningrad’s Baltkran, for example, has cooperated with Noell of Germany for several years on overhead and container crane projects. Noell is also a shareholder of Baltkran.
Baltkran managed to survive the domestic crisis with export orders, which accounted for 75% in 1999. According to plant director Oleg Yermolayev, the export share declined at Baltkran recently to 40% in 2000 and 18% in 2001, which did not create problems for the plant as there was a sharp rise in domestic demand. As a result, Baltkran’s sales grew year on year by 60% in 1999, 30% in 2000 and 46% in 2001.
Among new major projects of the plant are a long term contract for the supply of overhead cranes for Liaoning nuclear power plant, under construction in China with Russian participation. Between 2001 and 2003 Baltkran plans to manufacture 63 anti-seismic cranes with load capacities ranging from 32t to 50t.
Yermolayev also pointed to a new line of portal cranes with a capacity of 15t to 30t, a rail-mounted transtainer with a load capacity of 35t for use at cargo terminals and a 32t overhead crane with a 40m span. He noted the growth in demand for special cranes for specific industrial processes and loading cranes for use in heavy climatic conditions and for work in several shifts. All cranes intended for export are fitted by Baltkran with foreign-made electric equipment, mainly by Germany’s Siemens. Despite a sharp rise in sales over the past years, Baltkran’s turnover remains modest by international standards at around $7m in 2001.
Export successes
Only a few Russian crane plants can boast a large number of foreign orders. In addition to Baltkran, they are St Petersburg’s Podyomtransmash and Krasnoyarsk’s Sibtyazhmash. The latter traditionally specialises in manufacturing super-heavy cranes (up to 1,000t) for power plants and metallurgical mills. The Krasnoyarsk plant occasionally wins tenders for the supply of cranes to energy facilities in Asia and northern Africa. In December, for example, the plant landed an order for the delivery of six heavy cranes for a Chinese nuclear power plant. In 1999, the portfolio of export orders was valued at roughly $9m and accounted for around 30% of total sales. Export destinations included Algeria, Bulgaria, Egypt and India. Among major domestic contracts of Sibtyazhmash in 2000-01 were long-term orders by the Krasnoyarsk and Bratsk aluminium smelters for the supply of crane manipulators at a rate of three or four units per year to each smelter. These anode stacking cranes were previously not produced in Russia and the smelters got them from NKM in the Netherlands.
Podyomtransmash planned a 140% rise in sales in 2001 to roughly $16m by increasing export orders, which should rise tenfold to about half of total sales. According to the Prime Tass news agency, the biggest export contracts were concluded with Morocco, Iraq and Vietnam. The target for 2001 was 43 cranes, including gantry cranes of 80t, floating cranes of 250t and mine cranes with a 600m lift height. Although information about Podyomtransmash’s year-end results was not available, press reports indicate that targets were not fulfilled because of external management imposed at the demand of creditors fighting for control over the plant. The latest developments of Podyomtransmash include railroad cranes with load capacity of 80t and heavy crawler cranes.
Trade figures
Judging by national customs statistics, Russia exports more than 10% of its mobile cranes, of which 50% is exported beyond the CIS. In 1999/2000, leading importers of Russian cranes (in value terms) were Greece, Vietnam and China. Within the CIS, the main customers are Kazakhstan and Ukraine. According to representatives of mobile crane plants, most exports pass through ‘grey channels’ via intermediaries.
In the mid 1990s crane imports by far exceeded exports. In 1999 the gap narrowed as exports rose. In 2000, crane exports grew in value by more than 50%, primarily from exports of truck cranes. With imports steady, exports exceeded imports for the first time in recent years.
According to customs statistics, in 1999 Russia exported 287 mobile cranes with a total value of $13.8m (including $8m worth of cranes to countries outside the CIS), and 319 other cranes (except light hoists) valued at $16.8m (including $13.9m to countries outside the CIS). There were 67 mobile cranes imported in 1999, with a total value of $5.7m ($5.1m from outside the CIS). There were 814 other cranes imported, with a total value of $30.4m ($27.3m from outside the CIS).
In 2000, 310 mobile cranes worth a total of $21.7m were exported. Of that amount, $14.4m was to countries outside the CIS. Exports of other cranes (except light hoists) equalled 356 units, worth $19.8m in total, including $15.4m outside the CIS. In 2000 Russia imported 110 truck cranes, worth $12.9m, mainly from Germany. There were 909 other cranes imported with a total value of $22.6m. Here the main suppliers were Poland and Germany.
Russia, which is bidding for membership of the World Trade Organisation, slightly lowered the import duty on mobile cranes with a capacity of less than 80t as of 1 January 2002 to 15% of the customs value. Previously the import duty was 20%. The import duty on heavy mobile cranes of over 80t remains at 5%. The duty on other types of cranes is 10%.
