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Forklifts in Scandinavia – punching above their weight


Wednesday, 28 Sep 2011 ( #533 )
Special Feature
Map courtesy of freeworldmaps.net
A list of Scandinavian forklift manufacturers reads like a who’s who of the materials handling world. For a region with a population of less than 25 million, Scandinavia has created some of the biggest and most respected forklift brands in the world. Melissa Barnett looks at the current state of the Scandinavian materials handling industry.


Background

Officially, Scandinavia consists of Denmark, Sweden and Norway but, for the purposes of this report, Forkliftaction.com News has also included Finland. Of the four countries, Finland, Denmark and Sweden are current members of the European Union, with Finland also being part of the Eurozone. Denmark and Sweden retain their currencies of Danish Krone and Swedish Krona.  Norway has declined to join the EU and trades in Norwegian Krone.

As Bengt Kristiansson, vice-president of sales and marketing at Swedish manufacturer Atlet, points out, Scandinavia is often seen as a homogenous market, but there are subtle differences between the countries. As in many developed regions, in Scandinavia the warehouse truck sector is larger than the counterbalance sector. The exception, according to Risto Niukkanen, sales manager for forklift dealer Öhman Trukit, is Finland where diesel counterbalance forklifts perform better in the cold climate as adequately heating the cabin has been a challenge for electric forklifts.  Electric trucks for indoor use are common though, particularly in Sweden, which has a large transport sector and relatively low electricity costs. Forklifts for heavy industry also see higher use in Sweden, Norway and Finland because domestic industries in those countries centre on logging, saw and paper mills, oil and gas, and steel production.

Atlet HQ, Goteborg, Sweden
In Denmark and Norway, the food and agricultural sectors are larger, which means the use of internal combustion (IC) forklifts is higher. Denmark also plays a role as a transit centre for Europe and Scandinavia and has stringent workplace health and safety regulations regarding the size of pallet loads, so the market for electric pallet trucks is strong. All the Scandinavian countries depend heavily on exports, resulting in high usage of forklifts in logistics and stevedoring.


Global Financial Crisis – strategies during and after

Dan Johansson, area sales manager for Svetruck and a veteran of 35 years in materials handling sales, says he has seen it all before: in the early 1990s, Scandinavia experienced a micro-economic downturn and the financial sector was close to collapse. In Sweden, unemployment rose to 12%; in Finland, it was closer to 20% and GDP dropped by 6%. Most of Scandinavia took three years to recover.

Heavy industry is always affected by economic downturns, Johansson( says, but it is also what drives the Swedish forklift industry. Svetruck’s strategy at the time was to consolidate its existing market and provide better service to existing customers - and it is the same strategy it has used to mitigate the effects of the most recent global financial crisis. Johansson also feels that the long lead times for Svetruck equipment works to cushion the effects of the recent downturn and sustain sales.

Svetruck at work in logging yard
Sweden’s third-largest industry, the timber industry (including paper and pulp), took a massive hit in the mid-1980s when the construction bubble burst and the region was left with an oversupply of timber; it has slowly recovered since. Johansson explains that the logging industry tends to hold onto equipment longer in times of economic uncertainty, but that the upside is increased service contracts. Furthermore, logging equipment needs to be turned over every 30-40,000 hours, so there will always be equipment on order. He adds that sales of logging forklifts are going well at the moment.

Toyota warehouse equipment
Toyota Material Handling Sweden (TMHSE) admits that during the economic crisis, its end of the forklift market (pallet lifts and 5 T counterbalance forklifts) suffered a rapid downturn across Scandinavia, but has since recovered strongly, with its order books showing an increase of 30% on new truck orders compared to the previous fiscal year. Toyota’s turnover for 2010 was just over SEK1 billion (USD147,640,126). Toyota concentrated on product and range development during the GFC and believes that this strategy has paid off with a number of large deals being closed in 2011. Per Was, managing director of TMHSE, says the company has a record number of machines covered by service contracts, as well as short- and long-term rental contracts which have given Toyota a solid base during the tough times.

Finland was the worst-hit of the Scandinavian economies during the GFC due to its dependence on exports. Exports of telecommunications, machinery and timber account for 29% of Finland’s GDP. Machinery manufacturing is the country’s fourth-largest industry, and Finland is the home of Konecranes, Cargotec, Mantsinen, Rocla and the newest materials handling equipment manufacturer, Noston. Patrick Lundbäck, director of sales and marketing for Konecranes, found that the first industry sectors to suffer during the GFC were saw, paper and steel mills - the sectors that usually purchase medium-size forklifts. Sales in these sectors saw a clear downturn but, Lundbäck says, they were also the first to see a turn-around and Konecranes has recently seen an increase in orders.

Niukkanen of Öhman Trukit says that the effects of the GFC were felt differently across Finland, depending on the main industry in an area. He explains that the paper mills and ship building were severely impacted but other sectors, such as telecommunications, less so.

Cargotec's Kalmar DCG90 - 180
Cargotec’s Thomas Malmborg, vice-president of lift trucks, says that a focus on making forklifts even better was one of Cargotec’s strategies during the GFC. He cites the  launch of the new DCG90-180 forklift, a 9-18 T counterbalance forklift at CeMat this year, after three years of development. Konecranes also concentrated resources on R&D, launching three new products during the recession - NearGuard, Magic Watch and Truelift - but Lundbäck also believes that its investment in staff training was equally important. "We believe that trust in our people results in a better skilled and motivated workforce, who, in the end, will serve the customer better," he explains.

Hans-Olov Blom, managing director of forklift parts supplier TVH-Nordic, says that his sector wasn’t spared during the GFC, with a 30-60% decrease in sales, depending on country. He says that Sweden has recovered the 42% lost at the time but Norway, Finland and Denmark have been slower to regain losses. Blom says that spare parts usually grow during challenging economic times but not in 2009. However, he, like Johansson, is a survivor of the 1990s recession and the lessons learned then helped TVH-Nordic cope this time. "We learned one thing back then," Blom explains, "That was not to hold back on marketing activities, but to increase them, especially the travelling sales reps."


Market characteristics


Because the majority of forklift sales in Scandinavia are in the heavy equipment range, over 15,000 T, competition from overseas manufacturers has so far been minimal. Svetruck’s Johansson also believes that the brands that do have a presence in the region are playing outside their league, with Scandinavians preferring the quality build and known longevity of the local brands. "We have noticed that our customers prefer a product they know and trust," he says. "Furthermore, we can offer better after-sales service and faster and more reliable spare parts replacement." Lundbäck agrees and adds that customers of the SMV range also appreciate having the ability to have machines tailored for specific needs.

Rocla AWT at work
A direct assault on the Scandinavian heavy forklift market from overseas companies may not have occurred, but a number of established Scandinavian forklift companies have changed hands in the past few years. Swedish forklift manufacturer BT was acquired by Toyota in 2000 and Atlet by Nissan in 2007. Finnish company Rocla Oy will be fully integrated into Mitsubishi Caterpillar Forklift Europe (MCFE) by January 2012.

Competition from used forklifts has been noted over the past few years, although orders for new forklifts have been gaining ground since the second quarter of 2010. Robert Dolk, spokesman for Swedish forklift dealer Trucksäljarn, has seen a shift in demand from used equipment during the crisis back to new. He explains, "During the crisis, there was a surplus of used forklifts and the price was going down; now (there) is a shortage of used and sales are back to normal. We increased our stock of used and reduced numbers of new." He adds that from his experience, buyers of used forklifts in Scandinavia are more likely to purchase Chinese forklifts because they are more price-driven.

Cat at work
Malmborg says he has noticed recently that forklifts traditionally traded in when customers make new purchases are sold before Cargotec gets them back. Konecrane’s Lundbäck tells Forkliftaction.com News that his company has decided to be more active in the pre-owned forklift business and has established a pre-owned sales division that has shown very good results. Dolk believes that customer expectations have shifted since the GFC and that they are more ready to discuss mixed solutions of new and used forklifts in their fleets. An MCFE spokesman agrees and says that the fastest-growing group at the moment is small- and medium-sized companies which are in the market for high-quality used equipment. MCFE has also identified a growing trend in rentals by transport, third-party logistics and large international companies based in Scandinavia which require new forklifts with a high level of flexibility.

The Future

Many Scandinavian forklift manufacturers have taken the opportunity to invest in research and development during the GFC. Kristiansson of Atlet believes that future developments in Scandinavian forklift design and production will be influenced more by the needs of the European market than by other markets, particularly in the areas of ergonomics, safety and environmental requirements. Svetruck has been developing a magnetic clamp with a unique swing-chain action which it recently delivered on two 32 T heavy lift forklifts to an Italian steel manufacturing mill.

One of the issues facing Scandinavian manufacturing and logistics is the very high cost of labour. Stefan Engardt, sales manager of Rocla Oy, believes that automation in those sectors is one answer. His company is concentrating on sales in Western Europe, but in traditional IC and electric forklift territory such as warehousing, manufacturing, paper, print, packaging and the food and beverage industry. Engardt adds that Rocla went into an "extremely encouraging direction" during the GFC and that growth has continued into 2011 and is expected to maintain into 2012.

Cargotec’s Malmborg believes the Scandinavian forklift market has recovered well and says that Cargotec is moving towards pre-recession production levels. He adds that sales in more environmentally friendly equipment are forecast to increase and they have invested heavily in 3b installations and developing electric forklifts with greater carrying capacities.

Svetruck with magnetic lifts
Johansson sees the oil and gas industry as being central to Scandinavia’s economic recovery and the forklift industry’s sustainability. "I don’t have a crystal ball," he says, "but the industry looks positive." Lundbäck agrees but is more cautious in his predictions, believing that if there is a "double-dip", this will depress demand for new equipment. He also believes current economic instability in the Eurozone may have a short-term impact, but it is still too early to tell. Blom of TVH-Nordic says he is seeing a slow-down in future orders from OEMs and believes they are holding back, waiting to see what might happen.
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