The impact of tariffs on the US crane industry

Rising crane prices, project viability, job growth jeopardy, and economic growth are just a few of the consequences of the §232 Steel Tariff as it applies to mobile cranes, according to Houston-based LiftHigh Crane and Rigging owner and president Mike Appling.

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Appling outlined these concerns in a letter he sent to President Donald Trump, the Trump Administration and members of Congress.

Appling, formerly president of TNT Crane & Rigging, one of the top five crane and rigging companies in North America, enumerated several negative impacts the tariff is having on the crane business and called on the president to exempt this tariff. He even offered to meet the president in person to discuss the impact of the tariff on small businesses like his and to bring crane industry leaders with him “to provide a better understanding that leads to better outcomes for all of us.”

“As part of our endeavor to be an industry leader, we are pro-American production and fully support fair trade,” Appling said in his letter. “However, as outlined below, §232 Steel Tariff on mobile cranes does not advance either of these objectives, is currently inflicting significant pain on crane companies, and in fact will have potentially dire consequences on both the crane industry and the US economy as a whole.”

He specifically cited the use of all-terrain cranes, which are manufactured with high-tensile steel.

“All-terrain (AT) cranes are required for capital and maintenance work on foundational infrastructure (e.g. bridge beams, hospitals, schools and apartments) as well as other commercial and industrial facilities that are critical to our economy such as power plants, refineries, petrochemical plants, cell towers, LNG plants, data centers and chip plants,” Appling stated in the letter. “With less than 3 percent of global AT cranes manufactured in the US, imports from Germany and Japan are not just necessary, but vital to support the demand for these highly specialized pieces of equipment.”

He said that the high-tensile steel required for AT cranes is not manufactured in the US and that “§ 232 imposition of a tariff on steel required for the manufacture of mobile cranes does not progress any buy-American or trade balancing objectives.”

“Projects that are not delayed or cancelled must compete for limited crane availability, driving prices and overall project costs higher.”

Mike Appling, president, LiftHigh

Appling said his experience, along with discussions with several of his industry peers and colleagues, indicate §232 will have many unintended and detrimental consequences. He contends the crane business is virtually unanimous in feeling the current pain the tariffs are causing and the only people saying the tariff is a good thing are those buying Chinese equipment.

“Imports of cranes to the US are basically shutdown because §232 tariffs make the cranes simply unaffordable,” his letter said. “Revenue projects relying on those cranes are being delayed or cancelled and the crane operators and supporting crew that would have worked on those projects are not being hired. Delays would subject projects to liquidated damages and other penalties, while impairing the timely support of customer ongoing maintenance and facility operations.”

He also cited rising inflation as a consequence of the steel tariff, saying projects costs and timelines are being inflated as a result.

“Projects that are not delayed or cancelled must compete for limited crane availability, driving prices and overall project costs higher,” he said. “Inflation is the unavoidable result. The crane market was already constrained by large-scale infrastructure build-out projects such as chip plants and data centers, and the lack of new equipment entering the country is now placing tremendous upward pressure on the domestic used-equipment market.”

He cited an example where his company was recently offered a seven-year-old, 200 US ton, 2018 model crane for a price more than what a brand new crane would have been a few months ago.

“The expressed goals of a great American infrastructure build-out and an American manufacturing renaissance inherently rely heavily on cranes,” Appling said. “However, the imposition of §232 and other tariffs literally take away the tools to achieve those goals, substantially delay completion and/or make them vastly more expensive. Additionally, despite thinking that the tariffs are simply a short-term impact, it is definitely a long-term disruption that will negatively impact the goals stated here for many years.”

He said the critical supply chain disruption will have long term negative effects on the American economy.

“With crane imports shutdown, foreign manufacturers who schedule crane production for global demand, will allocate less production for US sales,” he said. “In fact, currently Liebherr and Tadano the two largest manufacturers, are not sending any cranes to the US that we are aware of. Current inventory otherwise meant for the US will be redirected to other markets around the world. Together, this will create a literal gap in supply chain to the US for both short-term and long-term horizons.”

The §232 Steel Tariff gives a benefit to China, Appling contends.

“US companies under pressure to maintain projects and keep their businesses running will be forced to purchase cranes manufactured in China, which will result in further aggravation of the trade imbalance with China,” he continued. “Chinese cranes were previously available at a 50 percent discount to models from competing manufacturers, but due to the safety and quality concerns were not gaining a large amount of market share.

But this sentiment is rapidly changing because the U.S. crane industry doesn’t have a choice, Appling explained.

“The steel and aluminum tariff is having unintended consequences on our industry, potentially jeopardizing essential projects, jobs and economic growth.”

Joel Dandrea, CEO, SC&RA

As a result of no new cranes coming into the market, Appling said safety suffers, and injuries and casualties are the result.

“Significant amounts of new cranes supply the US market annually,” he said in the letter. “Aging US crane equipment, without the affordable option to replace with new equipment, will result in safety issues that cause injuries.”

Appling reiterated that the impact of §232 Steel Tariff is “real and personal.”

“My company has had to cancel orders on four cranes because the cost of those cranes at conservatively $12.5 million would turn into $17.5 million assuming that 80 percent of the cranes are steel and a 50 percent tariff,” Appling said.

“We had jobs and people ready to be hired that relied on those cranes and now we are in limbo. We are scrambling to find assets, and they are either unavailable or have prices that have gone up substantially. This is a loss of jobs which affect hard working American families.”

Appling respectfully urged the Trump Administration to reconsider the application of Section 232 tariffs on mobile cranes and related equipment.

“Exempting these tariffs on this specialized equipment would not only prevent small businesses like mine from losing critical opportunities, but also strengthen our ability to serve domestic projects, create jobs, and contribute to the US economy,” Appling said.

In Appling’s offer to travel to Washington, DC, he said he would bring with him crane industry leaders (manufacturers, distributors, trade associations and owners) who are willing to talk about this issue and work on solutions.

Association perspective

The Specialized Carriers & Rigging Association (SC&RA) has been closely monitoring the impact of tariffs on the crane, rigging and specialized transportation industry, keeping its industry advocacy efforts front and center. SC&RA has met with USTR representatives in May and activated a grass roots campaign with members and their respective representatives in June. Additionally, SC&RA communicated with Commerce Secretary Howard Lutnick in July and will be providing additional input, according to Joel Dandrea, CEO.

“The steel and aluminum tariff is having unintended consequences on our industry, potentially jeopardizing essential projects, jobs and economic growth,” Dandrea said. “The staff and SC&RA Board keep a close watch on these developments and continue to weigh in with Secretary Lutnick and other key Administration officials.”

In terms of Appling’s letter, Dandrea said this type of advocacy is extremely important, and he applauds his letter and those of other SC&RA members to the President and the Trump Administration.

Doug Williams

“Our company has already spent significant extra money on cranes we contracted for well before the tariffs, yet based on the delivery dates, we had to pay unbudgeted tariffs.”

Doug Williams, president, Buckner HeavyLift Cranes

“We encourage members to do just this, write directly to the President and their representatives, about how they are being impacted,” said Dandrea. “We want to make sure the President and his Administration, the Department of Commerce, USTR and Congress know how our industry and the US economy is being severely disrupted by the extenuating circumstances of this tariff.”

Doug Williams, president at Buckner HeavyLift Cranes, based in Graham, North Carolina, also weighed in on Appling’s letter.

“Mike Appling is dead accurate in his assessment of the situation and i hope his offer to sit with the President is accepted,” he said. “The tariffs truly do have the opposite effect… instead of helping the USA businesses we are directly benefiting the Chinese crane manufactuers. Tariffs of this magnitude have caused our company to severely reduce any planned purchases, and there simply are not alternative US manufactured cranes of the type we require available. Our company has already spent significant extra money on cranes we contracted for well before the tariffs, yet based on the delivery dates, we had to pay unbudgeted tariffs.”

Click below to download a copy of the letter to read for yourself.