09.07.2020

Crane Import Tariff Debate Heats Up

More associations and companies are making their positions known on the petition regarding the imposition of tariffs or quotas on crane imports into the USA. Click here to see Crane import investigation moves ahead

The Texas Crane Owners Association (TCOA) and its members are the latest to come out against the petition. Executive director, Glenn Rex, said in a letter to
Richard Ashooh, the assistant secretary of state for export administration: “In sum, based upon the input of its members the TCOA opposes any tariffs being imposed on mobile cranes imported into the United States from Austria, Germany, and Japan.”

“The TCOA does not believe the domestic mobile crane industry has been harmed by the import of mobile cranes from these countries and has significant concerns about the potential negative impact tariffs on such imports would have on our member companies and their customers, the construction industry and a variety of critical infrastructure sectors including the Energy sector and the Transportation Sector.”

“TCOA opposes the imposition on the importation of mobile cranes because tariffs are an artificial imposition of a tax, that will inevitably lead to higher crane rental costs. These costs will negatively affect the economic welfare of the mobile crane industry, its customers, the construction industry, and critical infrastructure sectors.”

“TCOA respectively requests the Secretary of Commerce not recommend any action that would negatively impact the mobile crane industry and its customers”

Manitowoc clarifies its position

Manitowoc has also written to its customers explaining why it launched its petition. The full text of which is published below:

"How Do We Revive Fair Trade?

Dear valued Manitowoc customers,

Over the last few weeks, we have fielded several questions, so we wanted to reach out directly to explain why The Manitowoc Company filed our petition asking the Department of Commerce to look into imported mobile cranes. As the last major American manufacturer of cranes, we value our role in the industry and our partnerships with you, our customer, so we think it is important for you to hear from us directly that Manitowoc continues to support free and fair trade around the world. We support this investigation as an effort to boost the entire industry and foster fair competition, not hinder the customers we depend on for our business.”

“American manufacturing has been under attack for a generation. One out of every three manufacturing jobs in the U.S. has disappeared in the last 20 years. Many of these jobs migrated to countries with lower wages. Our industry has not been immune to those cuts. Anyone who has worked in crane manufacturing for the last three years can probably recall the names of a dozen American producers that were forced to shut their doors, be consolidated, or move production to another country: Bucyrus-Elie, American Hoist, P&H, Lorain, Northwest Engineering, Pettibone, Galion, Drott and, most recently, Terex, who exited its US crane operations, to name just a few. The deterioration in our industrial base has certainly taken a toll on Manitowoc. We employ half as many people in the US as we did 12 years ago. In 2016, we took the painful step of closing our Wisconsin crane factory to consolidate operations in Pennsylvania. About 600 loyal Manitowoc employees lost their jobs in that move.”

“Despite those difficult steps, the playing field remains heavily tilted against American manufacturers. Currency fluctuations make our exported cranes about 20 to 25 percent more expensive than those made by foreign rivals. Also, foreign manufacturers can avoid steel tariffs by importing entire cranes into the U.S. These dynamics give those same rivals an enormous pricing advantage here in the U.S. As a result, mobile crane imports to the US have skyrocketed a whopping 152 percent since 2014, while prices have declined significantly.”

“The imbalance does not stop there. Many markets are closed to American manufacturers. Some countries impose tariffs on cranes made in the US. Others just block or close our products from their markets. For example, you will not find an American made crane in Japan, but you will see their cranes all over the US. These uneven trade relationships help explain the continued decline in prices for used equipment, an unfavorable trend for many of our customers. Also, a new generation of Chinese manufacturers is taking major liberties to expand market share globally. We were recently the victim of patent infringement by one Chinese producer, and these low-cost manufacturers increasingly sell cranes in other markets at prices far below domestic production costs along with uneconomic financing terms. These predatory practices should concern the entire industry.”

“This imbalanced market and the resulting surge in US mobile crane imports threaten Manitowoc’s ability to deliver cranes to the US military. Our company has been a valued American military supplier since we built submarines in Manitowoc, Wisconsin, deployed in World War II. We started supplying cranes in 1961 and now manufacture mobile cranes for every branch of the military. We were honored when Vice President Mike Pence referenced that relationship during his tour of our crane facility in Shady Grove, Pennsylvania, last year. We have been and continue to be the lead supplier of mobile cranes to the US military, including several models that we retrofit to operate in a warzone. This relationship is core to our identity, and we are genuinely concerned that the US military could soon become reliant on foreign manufacturers if we are forced to further curtail our crane production here in the US.”

“As it relates to the US Infrastructure, US rental companies, and contractors, who supply cranes to build US infrastructure, work at power plants, refineries, and all other essential services, expose the risk to our national security if we continue to increase our dependence on foreign products, parts, technology, and services.”

“We love competition at Manitowoc and, just like you, we are confident we can beat anyone when the game is fair. The existing trade dynamics make for an uneven playing field and unfair competition in our home market, a market that is critical to the success of our whole company. We asked the Department of Commerce to investigate this market to restore fair competition, not create an unfair advantage. Our workforce is the backbone of our entire company. We hope you will support our effort to re-establish fair competition and level the playing field for free and fair trade.”

Sincerely,
Les Middleton, SVP Americas
David Hull, VP Americas Sales

See also Link-Belt comes out against tariffs

Vertikal Comment

With so much information circulating on this issue, this is probably not the time for us to be adding our comments to the debate - we will leave it for companies on both sides of the argument to make their points, which we will happily publish in full.

However, there are a few small clarifications that simply need to be made to help stem a growing misunderstanding regarding imports of Rough Terrain cranes to Japan. While it is true that exporting to Japan is extremely challenging and not for the faint hearted, it is perfectly possible to sell imported equipment into the Japanese market if you are willing to build products that they want and at the quality levels they expect. The absence of Rough Terrain sales has nothing to do with any bans or tariffs, both of which have been mentioned by individuals we have spoken to regarding this debate.

American Rough Terrain cranes are not banned from Japan, it is true that they cannot be driven on main roads which, as in parts of Europe, have minimum speed limits. Japanese companies tend to drive their cranes from job to job, which is why Japanese RTs are equipped with suspension and higher travel speeds. For this reason, American models simply do not meet minimum customer or market requirements, although they can be used on job sites if companies are prepared to transport them by trailer.

Looking at this matter from the other way around, when Japanese manufacturers first attempted to entered the US market in the 1970s, they found that American buyers did not want Rough Terrain cranes with suspension, as it compromised pick & carry work and appeared overly complicated. The cranes were also expensive in fact we laughed at them. One or two Japanese manufacturers eventually decided that it was a waste of time trying to sell their cranes to US customers, so they decided instead to design American specification Rough Terrain cranes, and the resulting products gradually gained market share, in spite of carrying a premium price tag. This is a lesson that American automobile manufacturers learned more than 80 years ago after struggling to sell their large cars with big engines to European consumers, where smaller streets and the higher cost fuel made them impractical and so they began building cars that suited the local market, with GM and Ford becoming dominant suppliers. When it comes to cranes none of the key western markets are closed to American imports. China however is another matter altogether and, while not closed, there are obstructions and the playing field is far from level. However Chinese imports to the USA are making negative progress.

The subject of vanishing crane manufacturers on both sides of the Atlantic is a fascinating one. Europe has suffered significantly more than the USA in terms of the number of crane companies lost. However, for each company that has failed, there is usually an individual cause, often relating to mismanagement or lack of investment, but mostly to strong local competition and acquisitive crane groups. It is a subject that could easily fill a whole book, and this is neither the time nor the place to pursue that.

If any other manufacturers, associations or crane companies wish to let their views be known on this matter, we will happily commit to publishing them in full.