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A backlog of work and a shortage of tower cranes could mean project delays for Portland contractors heading into spring. Although suppliers warned of an impending shortage nearly a year ago, many contractors are just now starting to experience it firsthand as they plan for upcoming projects.

The lead time for reserving a tower crane – necessary equipment for condominium projects taller than five or six stories – has stretched from two to three months a year ago to more than six months currently, according to Morrow Equipment Co., the Northwest’s largest supplier of tower cranes.

“Suppliers are starting to get short,” said Bruce Turner, chief estimator at LCG Pence Construction, a Portland-based general contractor that’s building the Cambridge, a condominium project in Northwest Portland. “We got our last two cranes basically in time. We’d been warned by Morrow that availability is getting to be an issue, so we had our orders in well in advance.

“But we have a reservation in for another crane, and (the shortage) probably will affect us on that one,” Turner added. “And I would anticipate as we get into the spring and summer, if we come up with a project that needs one, we could face (project) delays.”

Nationwide, suppliers are coming up short on tower cranes larger than 200 meter-tons as the country experiences a building boom, brought on by low interest rates and an upswing in the economy, that Portland’s taken part in.

The construction industry in metropolitan Portland experienced a record 8.6 percent job growth in 2005. And while state economists expect the growth rate to slow to 2.4 percent in 2006, the city is facing some of the largest development projects in its history in the new South Waterfront District. And those low interest rates have brought numerous long-delayed projects back on line.

“There are a lot of projects that have sat dormant for a while that are being brought back to life,” said David Herr, chief estimator with Trammell Crow Residential, developer of the Vaux, an under-construction, four-story condominium project at 24th Avenue and Savier Street in Northwest Portland. “We’re seeing projects we looked at five or six year ago that are starting up again in the next year. The marketability of the projects has increased so much, developers can’t afford not to build.”

Crane owners have market advantage

Contractors like Trammell Crow, which owns its own cranes and can use them on the majority of its projects, have an edge in the current market, Herr said.

The Atlanta-based developer/ contractor, which develops multifamily projects out of 20 offices nationwide, hasn’t been affected by the shortage because it can easily know which stage the project is in and plan for equipment rentals far in advance, Herr said.

Portland-based Hoffman Construction Co. owns five tower cranes and is using one of its own to work on the 32-story John Ross, expected to be the first building to reach the 325-foot maximum height on Portland’s South Waterfront and the city’s tallest residential building.

“We’ve added to our fleet. Five is more than we’ve had in the past,” said Ryan Thrush, an equipment yard manager for Hoffman. “But if things keep going the way they’re going with condos on the waterfront, all those jobs (will) need a tower crane, and it could affect us.”

Rentals save money but take effort to acquire

Because the lead time on a new crane isn’t much shorter than it is on a rental – and because a contractor-owned tower crane can cost the builder upward of a million dollars – many firms are forced to rent tower cranes from dealers like Morrow Equipment, which rents cranes across North America and in Australia and New Zealand.

Contractors in Oregon and Washington have an advantage when they seek Morrow’s cranes because the Salem-based company has locations in Salem and Seattle, said Morrow’s president, Christian Chalupney.

But because “Portland is not the hottest market in the U.S. right now,” Chalupney said, many of Morrow’s cranes are being diverted to other markets.

About 50 or 60 cranes are currently being used in Portland, estimates Steve Funk, a rental dispatcher with Lakeside, Calif.-based Coast Crane, which has offices in five states including Oregon.

“Right now, we have 26 cranes out of this store and three in the yard that are destined to go out on Monday,” Funk said last week.

As the nation’s crane shortage continues, the best way a contractor can avoid a project delay is to plan ahead, Chalupney said.

“We don’t commit cranes based on a verbal agreement between contractors and project owners,” he said. “We need a signed contract.”

Faced with a project delay, a contractor often will substitute a mobile crane for work on the first few floors of a high-rise project, said Turner of LCG Pence. While a typical, midsize tower crane costs about $40,000 a month to rent and operate, a mobile crane costs an additional $10,000 to 15,000 a month to operate, he said.

But even as more builders seek mobile cranes to keep projects on deadline, dealers of tower cranes don’t see sales and rentals falling off anytime soon.

“We’ve bought over 150 new cranes in the last year, and we still don’t have enough of them,” said Morrow Equipment’s Chalupney.

“Based on the backlog we have and what we hear from contractors, there’s so much work in the pipeline we don’t see any signs of this cooling any time soon,” Chalupney said. “We see this going on maybe two or three more years.”

Said Turner: “There’s a lot of construction work getting started, and there are a limited number of machines out there. They will be a highly prized thing.”