The depreciation of the Filipino currency and stiff competition in the market have weakened demand for materials handling in the Philippines.

Most companies are leasing used forklifts instead of buying new units, due to tight budgets, said Philippine Forklift Centre senior vice president Isidro Perez. The centre is Toyota's exclusive distributor for the Philippines.

"There are no signs the materials handling market will improve in 2003. (It has been depressed) since the financial crisis in 1997," he said. "Companies have a wait-and-see attitude, due to limited budgets."

Some companies had extended their fleet and parts rotations to more than seven years, reflecting the difficult conditions.

Mr Perez said large companies had outsourced logistics, trucking and warehousing operations "to the disadvantage of forklift vendors, since we have to negotiate with several firms instead of one company".

With more than 25 forklift brands in the Filipino market, competition was stiff, so only those which offered the best terms for after-sales support and service would survive.

"The materials handling industry is overcrowded, and clients are more demanding in terms of pricing, technical support and service," Mr Perez said.

Total industry sales would fall between 400 and 500 forklifts for 2002, far below sales before the 1997 financial crisis, he said.