Newsletter #001 (View other news stories)
SPECIAL REPORT: TRENDS IN THE WORLD FORKLIFT MARKET
Brisbane, Australia
Friday, 2 Feb 2001
The forklift industry is undergoing radical change, as the once simple materials handling landscape turns into a global battlefield, according to a report prepared by Dresner Investment Services' vice president Joe Kacergis and managing director Joe Lunkes.
Mr Lunkes and Mr Kacergis say that, with large acquisitions being announced regularly across the globe, the corporate world of forklifts is "boiling".
Purchases by investors and current market players seeking to expand are prompting manufacturers, concerned over perceived losses of control over their distributors and all-important market share, to fight back, the report said.
Manufacturers "have selectively encouraged some dealers to grow, persuaded others to sell, and selectively blocked the transfers of others".
Investors were looking to consolidate the industry through aggressive acquisitions and merging local dealers into larger enterprises.
"The era of the mega-dealers is fast approaching," the report said, with the formation of large, regional dealerships offering one-stop shops -- sales, service, fleet management and equipment rentals.
Operating in an industry estimated at more than US$15 billion annually in new and used truck sales, parts and service revenues, industrial truck companies offer investors attractive options, despite the industry heading into a cyclical downturn, Mr Lunkes told forkliftaction.com.
The industry's attractions were the fact that it was consolidating, the number of privately held companies with owners coming to retirement age, its low-tech exposure, and the industry trends towards outsourcing and rental rather than purchase.
Mr Lunkes said the only negatives currently affecting the market were the approaching downturn and "recalcitrant manufacturers thwarting efforts of dealers to consolidate".
Forklift distributors have diversified customer bases, but are seeing an increasing trend for customers to rent and lease to offset servicing and maintenance costs, the report said.
A competitive advantage for forklift companies is their extensive servicing capabilities. They have teams of in-house and road mechanics, and are putting more mechanics full-time into customers' sites.
"Although sales are an important part of a forklift business, profits are generated primarily from service, parts, fleet management, and rentals," the report said.
Mr Kacergis and Mr Lunkes said forklift business owners, like rental company owners, had only four strategic options:
1. Compete. Aggressively expand by acquiring other distributors or opening new locations. By growing product lines and geographic presence, owners can maintain a competitive position.
2. Get out. Achieve liquidity and diversification by selling the business.
3. Sell, but stay in. Sell, for cash, a controlling interest in the business but retain a minority equity stake in the acquiring firm.
4. Ride the storm. Maintain the status quo, and wait to see how things shake out in the industry.
"The forklift sector is at a crossroads and is beginning to face the consolidation challenges that rental company owners have been experiencing for the past three years," the report said.
Dresner is a global investment and financial company offering corporate services including mergers and acquisitions, capital-raising and launching new public companies. www.dresnerco.com
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