‘Superheated’ scissor carry market spurs new entrants Pettibone, LGMG. Can they succeed?
Craig Paylor, former president of JLG, was trying so as to add some scissor lifts in 2018 as a further income stream to his truck distribution enterprise. However he couldn’t discover any to purchase.
“The market was superheated,” he says. “I couldn’t even get anyone to speak to me about promoting me scissors.”
He figured that as JLG’s former prime government, if he couldn’t discover scissor lifts, others had been having issues as properly. So he began trying round on the worldwide market, finally homing in on China, the place he knew some new merchandise had been being launched.
He approached Lingong Group Jinan Heavy Equipment, or LGMG, which let him take a look at out one among its scissor lifts. After he purchased about 24 lifts, LGMG representatives requested if he would assist begin LGMG North America as its president. The corporate additionally purchased again the lifts.
“The corporate purchased them again, and I went out and offered them to any individual else,” he says of one among his first acts as president.
So started LGMG’s entry into the North American aerial work platform market in 2019.
LGMG opened its first U.S. location in Chambersburg, Pennsylvania, from which it distributes totally assembled imported scissor lifts and different aerial work platforms for the U.S. and Canadian markets.
Paylor, together with associate Rusty Kaylor, LGMG director and proprietor of Alliance Rental of Dahlonega, Georgia, head up distribution and gross sales of LGMG merchandise in North America. The corporate retains 300 to 500 items of equipment in inventory in the USA, Paylor says.
Non-public label for Pettibone
Quickly after beginning with LGMG, Paylor met with representatives from Michigan-based telehandler producer Pettibone.
Pettibone needed to enter the aerial work platform market. A few of its sellers had been being provided offers by opponents to bundle telehandlers with aerial lifts at decrease costs, Paylor remembers.
The 2 corporations entered an settlement for LGMG to fabricate personal label aerial work platforms for Pettibone. Pettibone will begin with 13 scissor carry fashions, a few of which had been on the American Rental Affiliation’s present in February and in addition shall be at ConExpo 2020. Within the second half of the yr, Pettibone plans to develop its personal label LGMG choices to rough-terrain scissors and telescopic and articulating aerial increase lifts.
The deal is a part of Pettibone’s long-term technique, says Scott Raffaelli, Pettibone vice chairman and normal supervisor.
“The North American market could be very sturdy and is rising,” Raffaelli says. “And our present buyer base for our telehandler merchandise is basically, for probably the most half, the identical buyer base within the building sector for the scissors. So it simply made sense.”
He provides that Pettibone is seeking to develop its seller base, and with the ability to supply the aerial lifts ought to assist. It’s additionally benefitting its present dealerships.
“Loads of our sellers are at the moment shopping for scissors of some kind,” he says, “and a few of our sellers who should not at the moment within the scissor enterprise are literally inquiring about moving into it, primarily based on this partnership.”
Will they succeed?
The U.S. aerial work platform market has grown at a median tempo of seven % a yr for the previous 5 years and is predicted to develop at a compounded annual development charge of eight.5 % by 2025, based on International Market Insights advertising analysis agency. Scissor lifts have been the quickest rising section and make up 55.6 % of the market share.
The U.S. market can also be extremely aggressive, with such entrenched corporations as JLG, Genie, Skyjack and Haulotte making up almost half of the market share, based on IBISWorld, trade analysis agency. “This doesn’t preclude new entrants thriving on this trade, nevertheless it does imply good quantity of trade demand is already happy by bigger corporations on this trade, which can trigger Pettibone and LGMG to battle to compete considerably,” says Jeremy Moses, IBISWorld lead trade analyst.
He provides that LGMG “might not have the connection with suppliers and wholesalers that bigger corporations which have an extended historical past within the U.S. market might have.”
In its favor, Pettibone has model recognition from its different building gear and it does have a longtime, albeit smaller, seller community. Paylor’s long-term, high-profile background within the aerial carry trade additionally helps open some doorways for LGMG.
Preeti Wadhwani, assistant supervisor at International Market Insights, factors to the market’s development as boosting LGMG and Pettibone’s probabilities.
“The rising demand for aerial platforms among the many building, utility, rental and logistics purposes will assist the enterprise development of recent entrants,” says Wadhwani. “Nevertheless, the presence of sturdy corporations, their growth methods, and new product launches will affect the expansion prospects of recent gamers.”
LGMG hit a stumbling block early in its U.S. entry, getting sued by JLG for trademark infringement. The federal swimsuit, which has since been settled and dismissed, accused LGMG of copying JLG’s colour scheme on its scissors.
Paylor mentioned he had warned his Chinese language counterparts about trademark infringement, however they didn’t heed his warnings and didn’t perceive the U.S. authorized system. They thought he would really like the colours as a result of he used to work at JLG, he says. The aerial lifts continued to reach with JLG’s orange and cream colour scheme.
“Effectively, we acquired sued, and I don’t blame JLG for doing it,” Paylor says. “They had been respectable about it. It shouldn’t have occurred. They held our ft to the fireplace. We must always have recognized higher.”
LGMG modified to a pink colour scheme on its aerial lifts.
All of Pettibone’s new scissor lifts and future aerial work platforms shall be painted within the firm’s trademark yellow and bear the Pettibone identify, says Raffaelli.
He additionally says he’s conscious of the challenges the corporate faces in getting into the U.S. aerial work platform market.
“We’re ready to see the place the market takes us,” he says, when requested about manufacturing targets. “We’re easing into this as a result of we perceive how lengthy a program like this takes by way of manufacturing targets for this coming yr. We need to be a participant out there, however we’re additionally being life like alongside those self same traces.”
He says, although, that the corporate’s seller community is happy in regards to the new merchandise and in regards to the scissor lifts’ high quality. Pettibone representatives traveled to China to go to the LGMG manufacturing unit and in addition felt safe with Paylor on the helm of the North American operation.
Raffaelli notes Pettibone’s 50-year historical past within the building gear enterprise:
“We’ve by no means provided scissor lifts up to now, however we’ve acquired a powerful legacy, a powerful service fame and aftermarket fame to associate with this. We plan to leverage that as a result of quite a lot of the identical staff that’s at the moment promoting and servicing this gear going ahead would be the similar staff on the scissor aspect.”
Coming into a crowded market
LGMG is a subsidiary of Lingong Equipment Group. The group additionally lists as a subsidiary Shandong Lingong Building Equipment, or SDLG, of which Volvo Building Tools owns 70 %. LGMG is within the prime 5 of aerial work platform producers in China and has a presence in over 30 nations, the corporate says.
Within the U.S. market, nonetheless, it’s not a widely known model.
Paylor says he doesn’t anticipate LGMG to turn out to be a family identify anytime quickly. Little by little, although, he’s focusing on impartial, small to mid-sized rental corporations that may need an alternative choice to the bigger scissor producers.
Regardless of 25 % tariffs on the Chinese language-manufactured merchandise, Paylor says, the lifts are being provided at a aggressive value.
“It’s not on the excessive finish, however I might additionally say on the similar time, the corporate want to be making extra margin on it that they’re now,” he says. “However in case you’re making an attempt to interrupt right into a market the place there may be already some superb opponents, you’re going to have a bit little bit of a pricing benefit to get folks to need to attempt the product.”
As to the tariffs, he says, “Should you can promote it when you’re nonetheless having the tariffs and your pricing remains to be affected by that, that needs to be very nice in the event that they get to the purpose the place they don’t have that tariff anymore.”
However, he provides, “You’re not going to win simply on value. It’s a must to have a high quality piece of apparatus.”
He says the LGMG lifts are rugged and sturdy. “They’re simply good stable items of apparatus. I take calls from clients on a regular basis who’ve seen them on jobsites and puzzled how they may get them.”
One other promoting level is that the lifts are already compliant with the forthcoming ANSI requirements, whereas some producers are nonetheless engaged on their product releases to fulfill these tips. The requirements govern most points of aerial work platform operation, service, manufacturing and possession. Underneath the requirements, the lifts at the moment are referred to as cellular elevating work platforms, or MEWPs.
Although lifts constructed earlier than the requirements take impact shall be grandfathered in, Paylor predicts many rental corporations will overhaul their fleets within the subsequent few years. That’s as a result of the specter of authorized motion ought to somebody get injured or killed in a non-compliant machine will lead many to make the change.
“There’s quite a lot of alternative for machines to be offered over the subsequent couple of years,” he says.
Paylor gained’t disclose LGMG North America’s gross sales figures, however he says he’s pleased with the corporate’s first-year efficiency.
“It was begin,” he says. “It wasn’t something that may even present up on the market-share graphs, however I’ve acquired machines out in about 29 totally different states and quite a lot of impartial rental corporations have them, and lots of people checked out them and mentioned they favored them.”
The brand new yr can also be off to begin, he provides. “I’ve in all probability offered 25 % of what I offered all of final yr in January. I feel we’re doing simply high-quality.”
To this point, he says, the coronavirus outbreak in China has not affected LGMG North America’s provide of aerial lifts. Its factories should not situated within the provinces the place the outbreak began, and staff are in a position to get to work. Completed merchandise are awaiting cargo. “So in brief,” he says, “we now have stock for now and a few to be despatched shortly, but when the disaster will get worse or spreads, then I feel the world and all companies will see a serious difficulty.”
Extra entrants on the way in which?
Paylor believes extra corporations, notably these primarily based in China, will quickly enter the U.S. aerial work platform market.
Quickly after his Tools World interview for this story, LiuGong introduced in February it was getting into the U.S. scissor carry market, beginning with two new merchandise. Paylor predicts different entrants will embody XCMG, Sinoboom and Zoomlion.
“A few of these corporations will certainly attempt to are available in as a result of they already construct another sorts of merchandise that they’re already promoting in North America,” he says.
China’s aerial work platform market can also be rising quickly, that means extra gamers desirous to export their merchandise to the USA and presumably forge relationships with Western corporations. As an example, Chinese language aerial carry producer Dingli owns a 25 % stake in U.S. aerial carry producer MEC, and the 2 corporations have designed scissor lifts collectively which might be offered in the USA. Dingli additionally owns 20 % of Italy-based Magni.
“I feel when one Chinese language firm decides they’re coming,” Paylor says, “there shall be three or 4 others that determine to come back, too.”
The brand new entries won’t simply be from China.
“If you see a market the scale of aerial work platforms in North America,” he says, “any good producer anyplace else on the earth isn’t going to let that move.”