Global crane community responds to Manitowoc’s petition for tariffs
18 July 2020
As the U.S. Department of Commerce begins its investigation of unfair trade and national security issues in the crane market, the industry weighs in with public comments.
Companies, trade organizations and governments from around the world have vehemently responded to Manitowoc Cranes’ petition to the U.S. Commerce Department to levy tariffs on cranes imported into the United States.
The Department of Commerce launched a Section 232 investigation into Manitowoc’s claims that the import of mobile cranes from Europe and Japan have impaired the domestic crane business and are a threat to national security. Manitowoc contends that foreign cranes damaged its business, forcing layoffs and a plant shutdown. Manitowoc said government intervention is needed so that the company can continue to produce cranes for the U.S. military and infrastructure projects.
Fifteen entities that commented to the Commerce Department are in full support of Manitowoc, including Maxim Crane Works and Lampson International. Maxim is the nation’s largest crane-owning company with an estimated fleet of 3,265 cranes, according to the June 2020 American Cranes & Transport ACT 100 list of top crane-owning companies.
Maxim COO Frank Bardonaro wrote “The reality is the Europeans and Japanese are actually flooding the U.S. market with foreign products via third party brokers and agents and have been for years.”
He said that although the new equipment shipments are definitely a concern, the amount of strategic and specialized equipment that is currently working in the U.S. as a direct result of shipments from European brokers, traders, dealers and rental companies far surpasses the actual dollar value and national defense concerns as compared to new sales.
Bardonaro wrote “we estimate that there are currently over 500 machines that are working at strategic facilities throughout the country that are owned by foreign trading companies, most of them based out of the Netherlands. This represents several billion dollars of lost sales and thousands of jobs to U.S. companies. These suppliers, dealers, brokers and rental agents have strategic alliances with the European, Japanese and Chinese manufacturers. They get extremely heavy discounts from the foreign OEM’s as well as financing packages which allows them to “dump” equipment into the USA and unfairly compete with U.S. companies in the strategic end markets such as Power, Infrastructure, Renewable energy, military and the Petro-chemical sectors.”
Lampson International, based in Kennewick, WA and founded in 1946, has a fleet of 454 cranes, according to the ACT 100. The company also produces its own Transi-Lift line of heavy lift cranes.
William Lampson, president of Lampson International, said “Lampson agrees that American manufacturing has been under siege for many years as the playing field is tilted towards foreign entities dealing with limited regulations and paying very low manufacturing wages. When that is coupled with unequal tariffs for imported equipment we are at a major disadvantage when selling our goods in our own country and abroad. It is easily recognized that American manufacturers have been relegated to ‘second chair’ so that our market can be flooded with cheap, and often patent infringed, equipment from other countries. This has caused long standing American companies to cut production, eliminate jobs and even completely close up shop - not because they have inferior equipment, it is in most cases superior, but because the market is unfair to them.”
He said the “tentacles of unfair trade” stretch into every aspect, from defense to agriculture to infrastructure.
Lampson continued, “When the U.S. or any country is forced to rely on essential goods from other countries because those goods cannot be economically and fairly produced here we become beholden to another master. This is a slippery slope to be on in any industry including ours. We must have the ability to control our own destiny on all fronts including this one. Lampson International is not at all fearful of fair competition. We truly believe that we, and many other American companies, produce the best equipment anywhere in the world. We are simply asking for true, fair competition between us and our foreign counterparts. They have governments that are looking out for their best interests and rightfully so. We are simply asking you to do likewise and put American crane manufacturers first so that we can compete globally on a fair and level playing field and succeed on our own merits.”
Some 45 of the public comments did not support Manitowoc’s petition and the investigation. On the flip side is Mike Liptak, president and COO of the ALL Family of Companies. ALL is the nation’s third largest crane company with a fleet of 2,144 cranes, according to the ACT 100. Liptak said, “As the largest privately-owned crane rental and sales enterprise in North America, we were surprised and disappointed to see the allegations Manitowoc has made in its petition requesting tariffs on mobile crane imports. The petition itself is perplexing, and we strongly oppose the imposition of any such tariffs, which we believe are both unnecessary and unlawful.”
Liptak also pointed out that “Manitowoc cannot satisfy the demands of the full U.S. market because it does not manufacture mobile cranes above 550 tons. Almost all cranes over 550 tons are imported into the U.S. Additionally, these larger cranes are used for critical infrastructure projects including clean energy projects like windmills. Without these larger cranes these projects could not be fulfilled.
ALL has been a longtime partner with Manitowoc Cranes and Liptak put it succinctly: “The petitioner, Manitowoc Cranes, has been ALL’s longest crane vendor and partner. ALL has been buying from Manitowoc and its predecessors for 50 years. We currently own more Manitowoc cranes than any other company in the U.S. I only say this to show that we don’t have any type of adversarial interest against Manitowoc, quite to the contrary, but the position they have taken is just wrong.”
One of the many issues that has drawn ire from crane manufacturers and crane owners is Manitowoc’s assertion that cranes imported into the U.S. forced it to close its historic factory in Manitowoc, WI and lay off workers.
Kobelco, a Japanese OEM that has been selling crawler cranes into the U.S. market since the 1980s, wrote in its comments that “the truth is that in 2016 Manitowoc told analysts that the company had too much capacity and intended to consolidate its footprint. Manitowoc followed through with the closure of the Manitowoc, WI manufacturing complex in 2017. In doing so, the company did not eliminate 638 manufacturing jobs; it moved them from Wisconsin to Shady Grove, PA. Notably, Manitowoc’s financial statements reflect essentially no change in total employment between 2016 and 2019. One thing did change. By moving operations from a unionized facility in Wisconsin to a non-union facility in Pennsylvania, the company went from dealing with five labor unions to zero.”
Manitowoc produces crawler cranes, boom trucks and rough terrain cranes in the United States. It manufactures rough terrain cranes, all terrain cranes and tower cranes in Europe. Manitowoc asked the Commerce Department to exclude two categories of mobile cranes, telescopic boom crawler cranes and all terrain cranes, both of which Manitowoc imports from Germany.
Buckner HeavyLift, a crane company based in Graham, NC, wrote to the Commerce Department that the imposition of tariffs on cranes creates “significant concerns about the potential negative impact on our company, our customers and the communities they serve. Our position is that this petition will have negative impacts on the industry as well as direct impacts to many American-owned crane providers such as ourselves. Buckner HeavyLift Cranes is an American, family-owned crane rental provider of both fully operated and bare cranes that has been in business since 1947.”
Buckner, with a fleet of 159 cranes, took issue with several points in Manitowoc’s petition, including the assertion that foreign competition impacts the economic welfare of the mobile crane industry and weakens the national economy. “The U.S. mobile crane industry is far more encompassing than just that of the Manitowoc Company and their roughly 1,400 employees. There are over 37.000 employees of the top 100 crane companies that depend on the financial viability and success of the respective companies. These companies own and operate fleets of various manufacturers to service the needs of their clients. Fleet make-up and ownership is not purely a ‘best cost’ decision but rather a ‘best value’ decision. It is our stance that if Manitowoc focused on best value and were truly an innovation leader for the mobile crane industry, they would not need to have the U.S. government protect their financial success.”
Buckner Heavylift went on to say that “tariffs placed on foreign manufactured cranes sold into the U.S. market could also create an opportunity for foreign crane owners to purchase cranes outside of the U.S. and bring them into the U.S. to perform work at an advantageous rate in comparison to solely owned U.S. crane companies. This would have an ‘unintended consequence’ to the same U.S. companies that these measures are supposed to protect.”
Jennifer Gabel, owner of JK Crane based in New Jersey, said she doesn’t begrudge Manitowoc for reaching out for help, but that she disagrees with their method, which negatively impacts many other domestic businesses, both big and small.
“Perhaps it’s because I’m an American woman, but I like my freedom to choose what and who suits my needs best (also known as free and fair trade),” Gabel said. “Let’s not threaten that by supporting one company at the expense of many others.”
Several organizations that represent the interests of crane-owning companies, ports and global manufacturers also took issue with the investigation and Manitowoc’s assertions.
Joel Dandrea, president and COO of the Specialized Carriers and Rigging Association, said members of his association are the “backbone of the economy.” SC&RA (a trade association for buyers and providers of mobile and other types of cranes in the United States, including domestic producers such as Manitowoc, and U.S. importers of mobile cranes) supports free and fair trade.
“SC&RA members include U.S. domestic producers, U.S. exporters and U.S. importers of cranes and specialized transportation equipment,” Dandrea wrote. “SC&RA therefore supports U.S. laws and policies that promote free and fair trade. Free trade strengthens bonds of friendship, cooperation and economic productivity among the United States and other countries. It has the power to expand economic opportunities for U.S. companies by opening markets and creating jobs. Free trade promotes competitiveness in U.S. and global markets which leads to greater freedom of choice and economic efficiencies. Free trade is based on well-established rules that promote fairness, innovation and a predictable commercial framework for trade and investment.”
Dandrea went on to say that “SC&RA members are not servicing a market where one-size-fits all. The economy and the national security of the United States require more of their transportation and logistics solutions. The market demand for mobile crane solutions in the United States cannot be satisfied by domestic production alone. Many SC&RA members rely on foreign cranes from Germany, Austria, Japan and other countries to execute the work necessary to support government and private purchasers. The U.S. economy is already in a precarious position of the pandemic. Tariffs on mobile cranes would do further harm to the transportation and logistics sector and other critical infrastructure sectors in the United States.”
Entities from several countries, including the European Union, China, Japan and Canada, voiced their opposition to tariffs. A decision by the United States to impose tariffs on cranes would further hurt relationships with many important allies, according to these comments.
ACT has been pursuing an interview with Manitowoc leadership to discuss their motivation and intent with this petition. While the management team has not been available, the company did submit additional comments to the Commerce Department to clarify several points in its petition.
Thomas L. Doerr, Jr., senior vice president, and general counsel and secretary of The Manitowoc Company wrote “where appropriate, Manitowoc is also providing updated data that we believe further warrant an affirmative finding that mobile crane imports threaten U.S. national security and support the imposition of appropriate remedies.”
Doerr said that the global mobile crane market is tilted against American manufacturers while in the U.S. there are no barriers to access the market.
“In contrast, certain foreign markets are effectively closed to American manufacturers through non-tariff barriers,” Doerr wrote. “That there are no American-made or branded cranes in Japan while cranes produced by Kobelco, Sumitomo Link Belt and Tadano are visible across the United States demonstrates the lack of reciprocity. Foreign government policies, including currency imbalance, industrial subsidies and preferential treatment, make U.S. exports to foreign markets less competitive. Manitowoc estimates that currency imbalance alone creates a 20-25 percent price advantage for foreign producers.”
Kobelco took issue with this point, stating that Japan is not a closed market.
“That is simply untrue,” Kobelco wrote. “Other non-Japanese producers, such as Liebherr, a high-quality German producer, is a top supplier of cranes to the Japanese market. Indeed, the vast majority of all-terrain cranes sold in Japan are imported from Germany. The Japanese market willingly accepts high-quality cranes, but Manitowoc’s decline in product quality in recent years has simply made it unable to compete. In the U.S., Japan and other markets around the world, a mobile crane product must perform well in order for it to be successful. Manitowoc cranes simply do not meet the quality standard of other mobile crane producers.”
For several years Manitowoc had an agreement with Kobelco, rebranding and selling several models of its crawler crane line.
Another contentious point made by those commenting against tariffs on cranes is that Manitowoc’s sales are hurting. Liebherr Cranes, which is based in Germany but has invested significant monies in the U.S in terms of facilities and employees, stated that “the U.S. mobile crane industry is highly profitable and not demonstrating any vulnerability to imports. Manitowoc’s own financial statements readily confirm that it is thriving: its 2019 profits far exceeded any reasonable profitability benchmark, and sales – including North American sales – expanded to record levels. Even as Manitowoc’s sales and profitability surged, imports from the target countries (namely Japan, Germany and Austria) were flat or decreasing. Manitowoc’s petition repeatedly invokes the frightening prospect of a massive import “surge,” but the truth is that there was no such surge. To obfuscate the simple fact that import volumes remained unchanged, Manitowoc relies entirely on over-inclusive and misleading import data.”
One of Manitowoc’s distributors, Lanco Company, said that foreign made cranes have hurt the domestic market.
“Over the last five years we have struggled to be competitive with foreign made cranes and now our country has only one real U.S. made crane company. Link-Belt out of Kentucky is located in the U.S. but owned by a Japanese company. In representing Manitowoc over the last 15 years, we have seen the pricing structure from our foreign competitors put us at a disadvantage of 15 to 20 percent. The strong dollar versus foreign money as well as our competitor’s intent to dump cranes into North America will continue until a more level playing field is created by our government. Over the last 40 years I have seen 15 U.S.-based crane companies go bankrupt and now, we have only one, Manitowoc. In summary, these companies can sell in the U.S. but try to sell a piece of equipment in their country. Most other countries charge import duties, whereas we charge nothing. Duties on raw steel has helped our steel mills but a crane, which is 90 percent steel, has no import duty.
Lanco said that historically the U.S has been an industrial powerhouse.
“Our country has been known over history to be an industrial powerhouse,” Lanco said. “Needless to say our country has gone from what has made it a great economic engine to a secondary service consumer.”
Link-Belt, which is owned by Japanese construction equipment OEM Sumitomo Heavy Industries, supplies mobile cranes to the U.S. government, including the U.S. military. Link-Belt Vice President William Stramer wrote that it has no difficulty meeting the terms of its government contracts, including those related to national defense.
Stramer wrote: “Link-Belt is proud of its partnerships with the federal government and cannot, in good faith, agree with the notion that imports of mobile cranes threaten our ability to maintain these partnerships- or, more broadly, threaten the ability of the domestic mobile crane industry to supply product to the U.S. military.”
Link-Belt also took issue with Manitowoc asking for exclusions for cranes it makes in Europe and imports into the U.S.
“In other words, rather than generally exclude all-terrain cranes as a category, Manitowoc drafted a product exclusion designed to apply exclusively to their imported all-terrain cranes.
Taken together, Manitowoc’s two exclusions in a Petition that otherwise broadly covers mobile cranes suggests that Manitowoc is attempting to use the federal government to manipulate the market, and protect its own imports,” Stramer wrote.
Tadano America also provided copious comment and information, and also stating that there is no threat to national security and that the investigation was initiated based on Manitowoc’s petition that is “at best exaggerated and at worst, misleading information.”
Tadano America President Ingo Schiller told ACT that its comments include the verifiable information that the Department of Commerce needs to understand the U.S. mobile crane market and the entire industry.
“We appreciate the Department of Commerce’s interest in this question, but we strongly believe mobile crane imports from a diverse range of trusted suppliers, based in the U.S. and in allied countries, bolsters rather than threaten US national security,” Schiller said. “If the tariffs are imposed, it will have a long-term negative impact on the U.S. mobile crane industry, its customers and the American industries they support.”
As for a timeline by the Commerce Department, it is generally believed that if the investigation takes the normal amount of time, it will be completed before the end of the year and land on the president’s desk in early 2021. However, the decision could be fast tracked.
To see all 60 public comment documents please visit https://www.regulations.gov/docketBrowser?rpp=25&so=DESC&sb=postedDate&po=0&D=BIS-2020-0009