Growth ahead after patchy 2013

Local News
- 2 Jan 2014 ( #648 )
11 min read
Many in the forklift industry will be happy to see the back of 2013, hoping for better in the year ahead. This follows a year in which overall global activity improved, but with mixed performance in various sectors and different markets.

The North American forklift market continues on the path of recovery from a low in 2009, according to Brian Feehan, president of the Industrial Truck Association (ITA).

Brian Feehan
Brian Feehan
While final figures for 2013 are not yet in, ITA is tipping forklift sales of between 180,000 and 184,000 units - down from 197,000-plus in 2012.

Feehan describes the current trend as "stable".

In Europe, the market stagnated in 2013, according to Olivier Janin, secretary-general of the European Materials Handling Federation (FEM).

While final 2013 figures were not available when we went to press, Janin notes that judging from the first half, it "looked as though both imports and exports of materials handling equipment will be stagnating compared to 2012".

James Clark
James Clark
The UK market has been a bright light in Europe, with James Clark, secretary-general of British industry group BITA, noting a significant improvement in economic outlook. "It feels like the shackles have been removed and we are able to look forward with genuine optimism," he tells News.

"It has been a long road back from the dark days triggered by the banking crisis and, like many other industries, we have struggled to recover to pre-recession sales levels.

"The overall market grew very slightly (in 2013), but the fact that it grew at all is positive, given the difficult start to the year."

Wolfgang Degenhard, editor of European materials handling publication dhf intralogistik, attributes the falling demand of the past couple of years to the continuing uncertainty over the sovereign debt crisis in Europe. "I am thinking here especially of the southern European countries that (are) struggling with long-term recessions," he says. On the other hand, he notes strong performance in Eastern Europe and Russia, which has propped up overall European performance.

This view is reinforced by the results of the largest players.

The KION group boasts some of the biggest names in materials handling
The KION group boasts some of the biggest names in materials handling
Industrial heavyweight KION Group AG earlier released its market intelligence, reporting that the world market expanded by 5% in the first nine months of 2013 to 753,900 trucks.

For KION, the driving forces behind growth have been the United States, China, Eastern Europe and Brazil.

In Western Europe, however, the slightly negative trend continued in the third quarter, with demand for the nine-month period dropping by 2.8% to around 190,400 units.

This contrasted with a rise in demand in Asia (not including Japan) to about 248,900 vehicles (up 9.2%). Unit sales in the Eastern European market rose by 5.9% to 43,400 vehicles, while the number of vehicles sold in the Latin American market increased by 10.2% to 39,300 vehicles. In North America, around 147,000 vehicles were sold, an increase of 11.2%.

KION's Linde division has also benefited from its geographic diversity. Press officer Heike Oder tells News: "Despite the weakness of the western European market for industrial trucks, global markets are showing a solid development. Thanks to our global positioning, we were able to take advantage of this positive environment."

Jungheinrich trucks
Jungheinrich trucks
Jan Kaulfuhs-Berger, a spokesman for German giant Jungheinrich AG, notes a 5% growth in the global materials handling equipment market for the first nine months of 2013 to 752,000 forklifts. "However, demand in Europe, Jungheinrich's core market, was 1% lower year on year. Western Europe recorded a drop of 3%, whereas Eastern Europe's market volume grew by 6%. The Asian market expanded by 8%, to which China contributed a gain of 12%. The North American market continued to post strong growth, recording an increase of 11%."

The overall message for Doosan Industrial Vehicle (DIV) is that economic recovery is under way and "customers (have) decided to buy forklifts again".

Tim Waples
Tim Waples
Tim Waples, president of DIVUK, says the UK market has improved during the second half of the year "and a definite increase in order collection has been noticeable".

US counterpart Kim Parkinson notes that economic recovery started in 2011 with a strong improvement from 2010. "(In) 2013, an overall increase is once again expected for the industry. Customers are slowly deciding to buy ".

Global market fragmentation has also been evident in one of the fastest-growing manufacturing hubs, China.

Barry Su, deputy general manager of Zhejiang Maximal Forklift, observes that in 2013, "overseas markets remained volatile due to economic and political reasons. North America, Australia and Russia are hot markets (which are) full of potential; Africa, South East Asia and the Middle East are emerging markets. European markets remain in the doldrums, while South America is a turbulent market."

Antonio Martínez, managing director of Bomaq Industries, also points to a new focus on external markets: "For Europe, it has been a year of increasing exports. Many companies are putting all their sales forces in new emerging economies that are now increasing again sales and production."

Bo Maslanyk
Bo Maslanyk
Clark representative Bo Maslanyk notes that activity has varied across forklift classes. "The materials handling market has had a good year in 2013, but mainly due to increased activity in the class 1 through 3 areas. The IC market was flat."

Reflecting the growth in electric forklifts, Clark last year purchased Evergreen Electric vehicles and moved manufacturing to Lexington, Kentucky.

One of the big success stories of 2013 has been the growth of driverless automated guided vehicles (AGVs). "At Seegrid, we have seen a 350% increase in 2013 orders of our flexible AGVs," says marketing director Amanda Merrell. "This obviously points to economic recovery. The majority of our customers are manufacturers, and our sales increase when consumers begin to increase their purchases, which drives increases in manufacturing and distribution."

Issues and trends

As exports play a bigger role for manufacturers, there is a growing focus on levelling the playing field. FEM's Janin anticipates that exports may already account for over 50% of European production.

"This is a significant development as it would mean our companies are more than ever exposed to foreign competition on non-EU markets. This is very relevant to FEM: we must ensure that our companies' competitiveness is not hampered by compliance costs which (may not apply to) other markets. Whereas EU domestic demand is still not recovering and more and more business is made outside Europe, companies find it increasingly difficult to use large R&D resources to comply with EU-only obligations. Meanwhile, competitors can invest the same amounts to increase their competitiveness."

BITA's Clark echoes these concerns: "At an industry level, the EU's Proposal for a Regulation on the Market Surveillance of Products (2013/0048(COD) has stimulated a concerted response from the European Federation of Materials Handling, of which BITA is an active member. FEM has joined forces with its counterparts in the construction, machine tool, agricultural, plastics and rubber machinery industries to highlight specific areas where the proposed regulation could add 'more confusion and legal uncertainty, ultimately going against the very purpose of the initiative'.

"In 2014, the industry also has to address some important compliance issues. At the product level, for example, lift truck manufacturers need to ensure their larger capacity diesel engines comply with Stage IV emissions legislation."

Across the Atlantic, ITA's Feehan has free trade on the agenda.

"The US and EU formally entered into bilateral trade negotiations in July (2013) - known as the Transatlantic Trade and Investment Partnership or TTIP. An aggressive timeframe has been established for these negotiations, with the US government stating its intentions to conclude talks by the end of 2014 or the first quarter of 2015. We will continue to work with our European colleagues to engage governments on both sides of the Atlantic to ensure our position is well known," he tells News.

Growing environmental legislation, alluded to by Clark, is already impacting on manufacturers.

A Doosan spokesperson confirms that "the dominant issue in 2014 would be environmental compliance".

"Doosan has developed the G2 engine to fully satisfy the standard," he says, adding that the company hopes to capture more marketshare with these engines.

UK division's Waples confirms that Euro Stage 4 emissions regulations will require most manufacturers to fit new, compliant engines, pushing up prices and increasing maintenance costs. "Doosan's G2 engine, although higher in price than the current engine, avoids the need for DPF and so will provide a more efficient and less expensive maintenance regime than most of the others," he explains.

Maximal is looking for growth.
Maximal is looking for growth.
Maximal's Su agrees that "environmental compliance (through the) T4 engine will be the most important transformation for the European and American markets".

Meanwhile, US-based Parkinson sees a major issue in EPA regulations for diesel products. "The iT4 and T4 products are in the spotlight and Doosan is in the forefront of this activity with (the) G2 engine," he notes, adding that electric products will continue to grow in demand as products being offered are similar in performance to IC trucks. "It's the real 'green' option for many customers."

Maslanyk tells News that Clark has introduced the tier 4 Deutz diesel engine in its forklift range. "This engine is environmentally friendly, has a diesel oxidation catalyst, exhaust circulation and requires no regeneration cycles."

Oder notes the thrust for energy efficiency in a number of new Linde products. "Sustainability of the products is becoming more and more important and Linde is able to match these requirements of the customers with its product range. For example, Linde proved the diesel engine forklift trucks with a load capacity from 2,5 to 3,5 T to be the cleanest and in the other load-bearing capacity classes of up to 2.5 tonnes and from 4 to 8 T, to produce some of the lowest emissions."

2014 and beyond

Germany's Jungheinrich expects the worldwide economic environment to improve in 2014, and along with that growth, "the global materials handling equipment market should continue to grow ... albeit displaying regional differences", says Hans-Georg Frey, chairman of the board of management. "The European market may well remain slightly smaller than last year. Jungheinrich prognosticates that Asia will post a significant rise in market volume ... driven above all by the strong recovery of the Chinese market. The North American market should continue to expand significantly.

According to Clark, BITA members anticipate economic activity will increase in 2014. "The next step on from current activity levels will be for a greater proportion of enquiries, of which there's no shortage, to be translated into firm orders that push us back to sustained growth. On this point, the ... predictions from Oxford Economics are good for 2014, forecasting overall orders to grow by more than 4% in 2014, rising to steady growth of 6% or above for each of the three years to follow," he explains.

George W. Prest, CEO of US industry body MHI, notes that the materials handling industry has seen a solid recovery since the recession of 2008/2009 and expects that growth to continue into 2014. "Using MHI's Material Handling Equipment Manufacturing (MHEM) forecast as a proxy, materials handling equipment orders are forecasted to grow 11% or more in 2014," he tells News.

"The fundamentals for solid growth in the US economy are in place for 2014 and 2015," he adds. "Risks certainly remain, but these risks are not new. We expect these fundamentals to favourably support MHEM expansion through 2013 and 2014, setting the stage for continued expansion into 2015."

Patrik Lundbäck, sales manager of port equipment exporter Konecranes, is uncertain about the outlook for the year ahead.

"The growth in industrial production and container traffic is moderate and below the historical averages. Leading macroeconomic indicators in Europe and China improved slightly in the third quarter of 2013, and many purchasing managers' indexes have developed well in the last months, and, should this trend continue, it would most likely start to support our rather late cyclical demand. However, thus far, these signs are only scattered at best and our customers' investment outlook remains uncertain," he says.

Doosan's Overseas Sales Division is upbeat about 2014. In the UK, Waples expects continued improvement as confidence in the economy builds and deferred orders are placed. "However, because the UK market is a lease market, predominantly over a five-year period, and because the number of leases signed in 2009 was very low, any increase in new activity is likely to be tempered by the effects the low activity in 2009 will have on the normal five-year cycle."

Meanwhile, Parkinson is tipping "a slight increase" in the US market "as customers gain some of their confidence back and feel that some stability has taken place in their businesses".

Maximal's Su believes "economic activity will stay the same in 2014". However, he anticipates ongoing regional differences in growth rates.

Vision Lift executive Manuel Rock is anticipating stability in his key market (Europe), but notes that "there is a clear open window on African markets". Vision is aiming to improve sales in the region thanks to growth in the oil industry.

Attachments maker MSE-FORKS is expecting growth in its telescopic fork and mast extension markets as general forklift sales increase.

It also anticipates growth in the palletless handling market, according to sales and marketing manager Folkert de Graaf. "We foresee the biggest growth within the OEM business segment as many global manufacturers have come to appreciate our quality and the fact our products complement their equipment. This business has more to do with our core strength in logistics solutions rather than forklift truck attachments," he adds.

While there are many variables and regional factors, the mood is generally up-beat, typified, perhaps, by Seegrid's Merrell:" Many companies have survived the past several years by leaning out their organisations and working smarter. I see this trend continuing even as manufacturing increases. This trend should lend itself to more purchases of equipment that will increase productivity by increasing efficiency of the people that are hard at work today."

As MHI's Prest sees it, "the supply chain has never been more important to the global economy and innovative supply chain solutions have never been so essential for companies of all sizes."
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