06.07.2020

Crane import investigation moves ahead

The US Department of Commerce’s Section 232 investigation into mobile crane imports has reached the public comment stage. Interested parties can submit comments and views on the investigation and justification given up until Friday 10th July, either online or via email.

The investigation, initiated by crane manufacturer Manitowoc, has divided opinion in the US crane industry, with most of the crane companies we have spoken with so far being against it, although a large number also seem relatively neutral on the subject, having no strong views either way. Some are against the tariffs but feel that Japan and to a much greater extent China have a case to answer regarding the opening of their markets to American crane imports.

The biggest concern, and in some cases anger, over the petition and the resulting investigation, is the belief that it is purely intended to raise crane prices by adding the import tariff charge to imported cranes, thus allowing domestic producers to increase their prices. Associations such as the SC&RA and other crane manufacturers such as Link-Belt were almost certainly planning to remain neutral on the subject, but we understand that they are coming under increasing pressure to make a statement against the petition.

Domestic crane manufacturers have one very justifiable grievance, but oddly it has not, as far as we can tell, been cited in the petition. It is the fact that President Trump’s steel tariffs have increased the prices they are obliged to pay for the specialist steel that they import, as well as the local steel they purchase (see: US crane prices set to rise), whilst German, Japanese and other manufacturers are not subject to this penalty. That was why the 2018 imposition of steel tariffs never made any sense. And interestingly looking at employment levels in the US steel industry for 2019, it has had little to no effect. Employment in iron and steel foundries actually declined during 2019 from 65,200 to 63,000, while employment in blast furnace and steel mills increased from 82,100 to 83,000 – so a net reduction between the two of 1,300 jobs.

At the same time the steel tariffs almost certainly played a part in Terex Cranes closing or disposing of its North American crane production, while both Manitowoc, Link-Belt and Tadano Mantis have suffered from the move, along with thousands of other manufacturing companies, with the net effect that they are likely to have purchased less steel, leading to the job losses?

The petition cites the fact that imports of cranes between 2014 and 2019 increased by 152 percent, from 1,337 units to 3,375 units, and that at the same time the price per crane declined 13 percent. However a closer inspection of the available country by country break down data, which is highly detailed, shows that the two crane categories included in these numbers - import tariff codes 8426.41 - ‘Cranes on wheels’ and 8426.49 - ‘Other’, (Tower cranes, overhead cranes or marine /port cranes etc all have their own codes) appears to include spider cranes, pick & carry cranes, smaller loader cranes and mini crawlers, all of which have seen a surge in popularity in the US over the past few years. This, at the same time as sales of the very largest wheeled telescopic cranes have tailed off somewhat. The numbers also include imports from many countries that do not produce cranes that compete with Manitowoc.

Japanese imports have surged from 412 to 492 units, some of which will of course be Maeda and Unic spider/mini crawler cranes, while the average unit value have increased of the period. On the other hand Italian imports have jumped from 134 to 247 and German crane imports have leapt from 327 to 827 due to the increased popularity of All Terrain cranes built by Grove, Liebherr, Tadano and Demag, all of which are made in Germany. Prices are lower, but this might also be due to product mix and or exchange rate fluctuations. Sales of German crawler cranes, both lattice and telescopic have also increased. At the same time imports of the low priced Chinese built cranes plummeted from 131 units in 2014 to just 18 units last year – hardly a major threat.

There are also some confusing inclusions, such as 187 cranes imported from Denmark up from a single unit in 2014 - HMF loader cranes perhaps? 51 cranes from India? 28 Spanish cranes? 82 cranes from Thailand and even four from the UK? All of which have very low average prices indicating small loader type cranes.

Click here to access the full petition.

In summary imports from Japan have not surged much at all, while Chinese imports have collapsed. On the other hand German imports have increased substantially – but for high priced All Terrain cranes and sophisticated crawler cranes - including Manitowoc products from Grove and Sennebogen. As to the collapse in crane prices, this looks as though it might relate more to the changing nature of the market including the increased popularity of mini cranes, along with perhaps those Danish, Thai and Indian imports which are likely to be small loader cranes, all of which lowers the average prices.

If you are based in the USA you can add your thoughts and comments, supporting or arguing against the imposition of tariffs by following the link: www.federalregister.gov/documents/2020/05/26/2020-11144/notice-of-request-for-public-comments-on-section-232-national-security-investigation-of-imports-of.

Any comments must be submitted by Friday July 10th. The process then moves on the Rebuttal Comments stage, these must be submitted in response to issues raised in comments no later than August 10th.

What do you think about the imposition of import tariffs on imported cranes or other curbs? Have your say in our online poll on the home page or in the comments section below.