Forklift News - UK forklift survey paints gloomy picture

Analysis by Bill Redmond

Few of Britain’s forklift companies are fully in control of their overall business strategies, says Plimsoll Publishing’s latest annual survey of the UK forklift industry.

According to The UK Forklift Trucks Industry, most leading players lost money in 2005 or earned thin margins.

The report, based on the financial analysis of 400 companies, found 44 per cent suffered a fall in pre-tax profits and average returns on investment fell 4.5 per cent to 4.3 per cent less than the interest most UK building societies pay.

"Very few forklift firms planning to come out on top, in terms of profits and sales, will actually achieve their goals," the report said.

The 400 companies were scored on sales growth and financial strength to show which firms valued sales growth over stability and which were falling behind in both. Plimsoll claimed that provided insight into the companies’ long-term market strategies.

However sales growth, chosen by Plimsoll as a key indicator of strategic intentions, can be misleading.

Sales are recorded in money terms. A company’s sales may have fallen but forklift unit sales may have risen, reflecting a fall in prices owing to intensifying competition.

The report classified companies that have not raised financial sales as sleepers. In fact, they could be forging ahead in unit sales and in future could expect a rising stream of income from after-sales service support.

Readers should apply other caveats when assessing the Plimsoll model. For example, the report includes many large, diversified companies whose non-forklift operations dwarf the forklift divisions, so the figures give no inkling on how the forklift divisions have performed.

Finning, the largest company surveyed, is a good example. Its non-forklift divisions’ sales were several times those of its forklift interests, placing the whole group at 28th in terms of sales growth last year and an "excellent" second for pre-tax profits in the forklift industry. As events showed this year, Finning’s other interests in construction equipment masked serious trouble in the forklift division, forcing it to sell to Briggs Equipment for a loss of CAD33 million (USD28.7 million).

Despite the caveats, the survey is required reading for those doing business with UK forklift companies.

--
Bill Redmond, Forkliftaction.com News's UK-based journalist, has been writing about the forklift industry for UK trade publications since 1979.

Discuss Forkliftaction.com News stories in the Discussion Forums!