While the European market braces for the European Commission's provisional ruling on dumping allegations against Chinese hand pallet truck manufacturers (Forkliftaction.com News #192), the western world is seeking ways to deal with "the monster we created". DAMIEN TOMLINSON reports.

Just a few years ago, the wider materials handling industry rejoiced as China, with its cheap manufacturing costs, labour and abundance of raw materials, joined the world economy.

But ask some manufacturers what they now think the biggest threat to their industry is, and they'll point to the East. It seems the very things the western materials handling industry campaigned for and eagerly embraced are now challenging it.

Previous perceptions were that, while Asian products were cheaper, their quality was inconsistent, and after-sales support was often ad-hoc. But the message has been received, and well-built machinery is arriving from China and other Asian countries and is being delivered through well-established dealer and service networks.

While quality and service questions have largely been addressed, the issue of price-competitiveness and import volumes remains. As a source in the US says, "we're now staring at the monster we created, and there's nothing we can do about it".

According to figures obtained by Forkliftaction.com News, the North American (including Canada) market for manual materials handling has been rapidly declining since a peak in the early 2000s.

North American manual materials handling manufacturers have lost one third of their business in the last four years.

Figures for 2004 show US producers booked 112,000 orders for hand pallet trucks and other manual materials handling equipment, compared to 108,000 in 2003, 124,000 in 2002 and 157,000 in 2001.

"The sharp drop in the figures indicates the impact Asian imports are having on the local industry," the source said. "The market isn't shrinking; it's that outside imports can't be tracked accurately, but the raw data suggests the US market is sustaining body blows from the east."

The European Union, a much larger producer and consumer of hand pallet trucks and other manual materials handling equipment, consumes about 450,000 machines a year, of which Asian imports account for about half, according to a source.

Jungheinrich closed its French subsidiary, MIC SA, last year, citing the "increasing dominance" of Asian competitors (Forkliftaction.com News #133). At the end of the year, it closed its Jungheinrich Producción hand pallet truck division in Spain.

"The fundamental changes in the world market for hand pallet trucks have led to declining levels of incoming orders and to losses ... as a result of the increasing dominance of Asian producers with the associated enormous pressure on prices," the company said.

The Fédération Européenne de la Manutention's (FEM) annual meeting last year in Dresden, Germany, was well attended, but one particular seminar, delivered by a lawyer on the subject of doing business in China, was standing room only.

CEOs at the conference, during a forum of business leaders, noted they were "concerned" for the materials handling industry's health in 2005, and said labour costs and raw materials spikes were forcing companies to look at China and Estonia as alternative manufacturing locations (Forkliftaction.com News #175).

And that seems to be the way forward through the murk. As raw materials, mainly coking coal and steel, continue to reach higher prices, materials handling companies must consider transplanting manufacturing facilities to the most cost-effective locations.

Many have done so, with Linde, Toyota and, most recently, Jungheinrich (Forkliftaction.com News #174) pitching tents in China.

As a US source says: "If we can't beat them, and we're not, we have to join them or be beaten by them."