‘Superheated’ scissor lift market spurs new entrants Pettibone, LGMG. Can they succeed?

Editor's Note: Since this article published, LiuGong has also entered the U.S. scissor lift market. You can read about that here and the Chinese manufacturer's deepening involvement in North America here.

Craig Paylor, former president of JLG, was looking to add some scissor lifts in 2018 as an additional revenue stream to his truck distribution business. But he couldn't find any to buy.

"The market was superheated," he says. "I couldn't even get anybody to talk to me about selling me scissors."

He figured that as JLG's former top executive, if he couldn't find scissor lifts, others were having problems as well. So he started looking around on the international market, eventually homing in on China, where he knew some new products were being launched.

He approached Lingong Group Jinan Heavy Machinery, or LGMG, which let him test out one of its scissor lifts. After he bought about 24 lifts, LGMG representatives asked if he would help start LGMG North America as its president. The company also bought back the lifts.

"The company bought them back, and I went out and sold them to somebody else," he says of one of his first acts as president.

So began 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 fully assembled imported scissor lifts and other aerial work platforms for the U.S. and Canadian markets.

Paylor, along with partner Rusty Kaylor, LGMG director and owner of Alliance Rental of Dahlonega, Georgia, head up distribution and sales of LGMG products in North America. The company keeps 300 to 500 pieces of machinery in stock in the United States, Paylor says.

Soon after starting with LGMG, Paylor met with representatives from Michigan-based telehandler manufacturer Pettibone.

Pettibone wanted to enter the aerial work platform market. Some of its dealers were being offered deals by competitors to bundle telehandlers with aerial lifts at lower prices, Paylor recalls.

The two companies entered an agreement for LGMG to manufacture private label aerial work platforms for Pettibone. Pettibone will start with 13 scissor lift models, some of which were at the American Rental Association's show in February and also will be at ConExpo 2020. In the second half of the year, Pettibone plans to expand its private label LGMG offerings to rough-terrain scissors and telescopic and articulating aerial boom lifts.

The deal is part of Pettibone's long-term strategy, says Scott Raffaelli, Pettibone vice president and general manager.

"The North American market is very strong and is growing," Raffaelli says. "And our current customer base for our telehandler products is really, for the most part, the same customer base in the construction sector for the scissors. So it just made sense."

He adds that Pettibone is looking to expand its dealer base, and being able to offer the aerial lifts should help. It's also benefitting its current dealerships.

"A lot of our dealers are currently buying scissors of some sort," he says, "and some of our dealers who are not currently in the scissor business are actually inquiring about getting into it, based on this partnership."

The U.S. aerial work platform market has grown at an average pace of 7 percent a year for the past five years and is expected to grow at a compounded annual growth rate of 8.5 percent by 2025, according to Global Market Insights marketing research firm. Scissor lifts have been the fastest growing segment and make up 55.6 percent of the market share.

The U.S. market is also highly competitive, with such entrenched companies as JLG, Genie, Skyjack and Haulotte making up nearly half of the market share, according to IBISWorld, industry research firm. "This does not preclude new entrants thriving in this industry, but it does mean that a good amount of industry demand is already satisfied by larger companies in this industry, which may cause Pettibone and LGMG to struggle to compete somewhat," says Jeremy Moses, IBISWorld lead industry analyst.

He adds that LGMG "may not have the relationship with suppliers and wholesalers that larger companies that have a longer history in the U.S. market may have."

In its favor, Pettibone has brand recognition from its other construction equipment and it does have an established, albeit smaller, dealer network. Paylor's long-term, high-profile background in the aerial lift industry also helps open some doors for LGMG.

Preeti Wadhwani, assistant manager at Global Market Insights, points to the market's growth as boosting LGMG and Pettibone's chances.

"The increasing demand for aerial platforms among the construction, utility, rental and logistics applications will support the business growth of new entrants," says Wadhwani. "However, the presence of strong companies, their development strategies, and new product launches will impact the growth prospects of new players."

LGMG hit a stumbling block early in its U.S. entry, getting sued by JLG for trademark infringement. The federal suit, which has since been settled and dismissed, accused LGMG of copying JLG's color scheme on its scissors.

Paylor said he had warned his Chinese counterparts about trademark infringement, but they didn't heed his warnings and didn't understand the U.S. legal system. They thought he would like the colors because he used to work at JLG, he says. The aerial lifts continued to arrive with JLG's orange and cream color scheme.

"Well, we got sued, and I don't blame JLG for doing it," Paylor says. "They were decent about it. It shouldn't have happened. They held our feet to the fire. We should have known better."

LGMG changed to a red color scheme on its aerial lifts.

All of Pettibone's new scissor lifts and future aerial work platforms will be painted in the company's trademark yellow and bear the Pettibone name, says Raffaelli.

He also says he's aware of the challenges the company faces in entering the U.S. aerial work platform market.

"We’re waiting to see where the market takes us," he says, when asked about production goals. "We’re easing into this because we understand how long a program like this takes in terms of production goals for this coming year. We want to be a player in the market, but we’re also being realistic along those same lines."

He says, though, that the company's dealer network is excited about the new products and about the scissor lifts’ quality. Pettibone representatives traveled to China to visit the LGMG factory and also felt secure with Paylor at the helm of the North American operation.

Raffaelli notes Pettibone's 50-year history in the construction equipment business:

"We’ve never offered scissor lifts in the past, but we’ve got a strong legacy, a strong service reputation and aftermarket reputation to go along with this. We plan to leverage that because a lot of the same team that's currently selling and servicing this equipment going forward will be the same team on the scissor side."

LGMG is a subsidiary of Lingong Machinery Group. The group also lists as a subsidiary Shandong Lingong Construction Machinery, or SDLG, of which Volvo Construction Equipment owns 70 percent. LGMG is in the top five of aerial work platform manufacturers in China and has a presence in over 30 countries, the company says.

In the U.S. market, however, it's not a well-known brand.

Paylor says he doesn't expect LGMG to become a household name anytime soon. Little by little, though, he is targeting independent, small to mid-sized rental companies that might want an alternative to the larger scissor manufacturers.

Despite 25 percent tariffs on the Chinese-manufactured products, Paylor says, the lifts are being offered at a competitive price.

"It's not on the high end, but I would also say at the same time, the company would like to be making more margin on it that they are now," he says. "But if you’re trying to break into a market where there is already some very good competitors, you’re going to have a little bit of a pricing advantage to get people to want to try the product."

As to the tariffs, he says, "If you can sell it while you’re still having the tariffs and your pricing is still affected by that, that should be really nice if they get to the point where they don't have that tariff anymore."

But, he adds, "You’re not going to win just on price. You have to have a quality piece of equipment."

He says the LGMG lifts are rugged and durable. "They’re just good solid pieces of equipment. I take calls from customers all the time who have seen them on jobsites and wondered how they could get them."

Another selling point is that the lifts are already compliant with the forthcoming ANSI standards, while some manufacturers are still working on their product releases to meet those guidelines. The standards govern most aspects of aerial work platform operation, service, manufacturing and ownership. Under the standards, the lifts are now called mobile elevating work platforms, or MEWPs.

Though lifts built before the standards take effect will be grandfathered in, Paylor predicts many rental companies will overhaul their fleets in the next few years. That's because the threat of legal action should someone get injured or killed in a non-compliant machine will lead many to make the switch.

"There's a lot of opportunity for machines to be sold over the next couple of years," he says.

Paylor won't disclose LGMG North America's sales figures, but he says he's happy with the company's first-year performance.

"It was a good start," he says. "It wasn't anything that would even show up on the market-share graphs, but I’ve got machines out in about 29 different states and a lot of independent rental companies have them, and a lot of people looked at them and said they liked them."

The new year is also off to a good start, he adds. "I’ve probably sold 25 percent of what I sold all of last year in January. I think we’re doing just fine."

So far, he says, the coronavirus outbreak in China has not affected LGMG North America's supply of aerial lifts. Its factories are not located in the provinces where the outbreak started, and workers are able to get to work. Finished products are awaiting shipment. "So in short," he says, "we have inventory for now and some to be sent shortly, but if the crisis gets worse or spreads, then I think the world and all businesses will see a major issue."

Paylor believes more companies, particularly those based in China, will soon enter the U.S. aerial work platform market.

Soon after his Equipment World interview for this story, LiuGong announced in February it was entering the U.S. scissor lift market, starting with two new products. Paylor predicts other entrants will include XCMG, Sinoboom and Zoomlion.

"Some of these companies will definitely try to come in because they already build some other kinds of products that they’re already selling in North America," he says.

China's aerial work platform market is also growing rapidly, meaning more players wanting to export their products to the United States and possibly forge relationships with Western companies. For instance, Chinese aerial lift manufacturer Dingli owns a 25 percent stake in U.S. aerial lift manufacturer MEC, and the two companies have designed scissor lifts together that are sold in the United States. Dingli also owns 20 percent of Italy-based Magni.

"I think when one Chinese company decides they’re coming," Paylor says, "there will be three or four others that decide to come, too."

The new entries will not just be from China.

"When you see a market the size of aerial work platforms in North America," he says, "any good manufacturer anywhere else in the world is not going to let that pass."