Construction Crane Market Overview
Cranes represent a unique sector within the construction industry, renowned for their heavy lifting capabilities on construction sites. This powerful machine category has exhibited consistent evolution year after year. Original Equipment Manufacturers (OEMs) are continuously making strides in innovation to overcome potential challenges and limitations faced by operators and to improve efficiency and safety.
The global crane market is estimated to be $40.13 billion (USD) in 2023 (Mordor Intelligence) and is expected to increase over the next five years. Mobile cranes account for approximately 35% of the market* and are popular on many job sites because they can be used in a variety of places and settings and offer a great deal of flexibility.
Driven by increased infrastructure spending after the COVID-19 pandemic, the demand for cranes grew. And like many industry segments, the manufacturing lead times for new equipment became extended, sometimes upwards of 12 to 18 months. Because of the increased lead times for new cranes, many companies were holding on to older, used equipment, which also put availability pressure on the used market. This increased demand and weakened supply pushed crane prices higher. But like the construction industry itself, the crane market is cyclical. And though demand may fall, cranes hold their value well and can be very good investments for a construction company.
While the market continues to grow, not every construction company needs to purchase a crane. However, if you are in the market for a mobile construction crane, this comprehensive guide offers valuable insights into the key considerations to keep in mind when making your purchase and determining how to pay for it.
Before You Shop for Your Mobile Construction Crane
Selecting the appropriate crane can be challenging. Businesses, regardless of their experience, must carefully evaluate their specific needs, as there are many options from which to choose. As you begin evaluating a crane purchase consult with your equipment dealer, but keep these vital factors in mind as you make your purchase decision.
- The type of crane you will need
- Support equipment needed
- Safety features required
- Rental vs. purchase
The Type of Crane Needed
The type of crane you need is dependent upon the type of work you plan to perform. Consider lifting requirements and work site terrains, as well as current and future needs. Your crane dealer can assess your needs, walk you through your options, and help determine the best machine for your business.
Support Equipment
Support equipment assists in crane operations, such as lifting heavy loads, transporting the crane, or reaching difficult-to-access areas. Support equipment should be considered as part of the purchase decision when you are looking to buy a crane since much of this equipment can be specific to the crane you purchase. Additionally, support equipment adds cost to the total purchase price, so must be considered when putting your budget together.
Support equipment can include:
- Boom Extensions and Boom Dollies
- Counterweights
- Lifting Accessories
- Outrigger Mats
- Rigging Gear
- Taglines
- Transport and Heavy-haul Trailers
Safety Features and Advancements
Maintaining safety is paramount in crane operations, and manufacturers have invested a lot in developing safety features and technologies. Some of these safety features include: enhanced automation, remote operation, load monitoring, and communication and data tools. And while these features help protect workers, job sites and equipment, they add cost to already expensive equipment.
Rent or Buy?
The decision to rent or purchase a crane depends on the nature of the jobs and the regularity of the work. The average cost to purchase a mobile crane can be anywhere from $300,000 to $3,000,000 (depending on the type of crane, lifting capacity, etc.). Given the high purchase prices, if the length of time required for use of the equipment is short, it may be a better option to rent the crane.
There are a couple of significant benefits to renting a crane. The first is that when you rent a construction crane, the rental can include a certified crane operator. This alleviates the need for your company to have a full-time employee dedicated to crane operation, and the rental company that employs the operator has the responsibility for training and benefit costs.
The second benefit to renting is that the ongoing maintenance and insurance costs associated with operation of the crane is the responsibility of the rental company.
However, if you anticipate a sustained and extended need for a crane in your fleet, there are advantages to acquiring one. Rental prices can be quite expensive, and if you need to rent for an extended period of time, a purchase might make more sense.
Purchasing allows you to build equity in the equipment, which could be used to secure working capital through refinancing at some time in the future.
There are tax advantages to purchasing equipment. With a purchase, as you depreciate the equipment over time, or use Section 179 to take advantage of accelerated depreciation, you reduce your taxable income, thus reducing the amount of taxes paid.
Buy New Equipment or Buy Used Equipment?
Once you’ve decided to purchase your equipment, now you need to determine if you will purchase a new or used crane. The decision to invest in new or used crane equipment depends on your goals and your budget. New equipment offers the latest technology, often with advanced safety features and improved efficiency, but at higher prices than purchasing used. On the other hand, used equipment can be more cost-effective while still delivering reliable performance, but specific features may not be available as you are at the mercy of the makes/models currently available for sale.
Construction cranes have relatively long lifespans and can hold their value quite well. Close comparison of pricing and features will most likely help you determine which is the best option. Additionally, cranes are very expensive, and therefore have large sales tax burdens (unless the company is tax exempt). Purchasing a less expensive, used crane also reduces the amount of sales taxes to be paid on the purchase.
If you decide to buy used equipment, ensure thorough maintenance records have been kept and that inspections are up to date. Ideally, you should also receive information on the crane’s operating, ownership, and accident history. This provides additional insight into how the machine has been used and the wear and tear on the engine and hydraulic components.
Understand The Equipment Financing Process
Construction cranes are renowned for their long-life cycle, making them valuable assets for your operation and a potential source of equity, or collateral for future financing. Many companies either don’t have enough cash on hand, or don’t want to use their cash for such a large purchase. So, when the moment arrives to acquire a crane for your operation, understanding the equipment financing process is crucial.
Once you’ve finalized your equipment selection and negotiated the price, the financing process includes the following steps:
- Complete a credit application
- Submit credit information – invoice, tax returns, financial statements, etc.
- The lender evaluates your information and, if approved, provides you with the loan terms
- You accept the loan terms
- The lender provides you with documentation to sign
- Once documentation is signed, the lender releases the funds to the seller and the seller delivers the equipment to you.
In some cases, the crane you purchase may need to be titled. The paperwork for titling the crane will be handled by the seller and the finance company.
Choose Your Financing Partner
You took a lot of time and effort to evaluate which crane you wanted to purchase. You should also put consideration into choosing an equipment finance partner. When making the decision to select a lender for your business, actively search for a financial partner who possesses a comprehensive understanding of the specific construction equipment you are purchasing. An industry-knowledgeable finance partner can help guide you along the way.
This is where CCG can help. Commercial Credit Group Inc. is not only an expert in equipment financing but in the equipment itself. With over 20 years of industry knowledge, we know the construction business and we’ve financed over $400 million worth of mobile construction cranes. Our team is well-equipped to finance the crane and any support equipment, including transportation equipment. And in many cases, can offer extended terms because of the value and life span of mobile cranes.
Additionally, because cranes are so expensive, the amount required for a down payment can be a lot. CCG is uniquely equipped to help companies with down payment needs. By using additional construction equipment as collateral, we can often refinance additional machines to provide working capital to be used as down payment, thus reducing the amount of out-of-pocket cash required.
This knowledge and flexibility results in an easier borrowing process for our customers. We offer many types of equipment financing, including new and used equipment purchases, debt consolidation, working capital loans, and existing equipment refinancing loans. If you are ready to get started, let us assist you with your equipment finance needs.
Resources
*Static/Mobile crane market share extrapolated from Fortune Business Insights and Research and Markets.
The Market for All-Terrain Cranes in North America
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