When I told her I was joining a magazine called Cranes Today, my youngest daughter asked: ‘What about Cranes Tomorrow?’
It’s a good question. Every progressive company is focused on the future, and it clearly pays to plan ahead. But even the best planning and organising is not going to help businesses deal with macro-economic factors which are inevitably beyond their control.
As I write this, I have worked on Cranes Today for just five weeks so I can hardly pretend that I am familiar with all the issues that occupy the industry’s time.
However, some business issues are universal, and I believe that there are two overarching factors that will have a huge impact on the lifting industry in the coming decade – China, and how it is affecting raw materials prices.
Until somebody invents a practical plastic crane, steel will remain the one raw material that the lifting industry simply cannot do without. With China sucking in a massive 25 per cent of the world’s steel output, the pressure on steel prices is almost unbearable, and crane manufacturers have been among the first to feel it. China’s prodigious demand for steel has also caused a world shortage of this increasingly precious metal.
Several manufacturers have told me they have seen steel prices rocket by up to 60 per cent, and, since they are unwilling to pass on the entire price rise to their customers, their profit margins are inevitably squeezed.
But price worries don’t stop there. Concern about oil prices heightened as crude broke the $50 a barrel barrier last month amid increasing demand, again particularly from China.
These dramatic rises have so far failed to hit the global economy. According to the International Monetary Fund (IMF), the world’s economy should grow this year at its fastest rate for 30 years despite rising steel and oil prices.
However, it has downgraded its global growth forecast for next year, pointing to disquiet over oil prices, in particular.
So what about Cranes Tomorrow? China’s insatiable appetite for steel and oil is clearly having a dramatic impact on prices and a knock-on effect on the world economy. Its rapid growth could still tip over into economic crisis.
But China also offers a huge opportunity for new business. The IMF says: ‘China’s rapid growth, which may well be sustained for two decades or more, will result in a substantial reorganisation of global production, the more so if it is joined by India. Both these developments suggest the scope for substantial productivity gains in coming years, coming most rapidly in those countries that are sufficiently adaptable to take advantage of them.’
Big construction projects are powering the Chinese economic miracle. And there are signs that the country’s efforts to curb reckless lending for expansion projects by its banks are paying off.
Economic meltdown can be avoided if the country is able to apply the brakes to its runaway economy. But, more than that, it could result in a bonanza for the industry.
