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Industry poised for modest growth in 2016


Saturday, 19 Dec 2015 ( #750 )
Special Feature
The start of another year PHOTO: FOTIFIREWORKS
While final sales figures for 2015 are not yet in, it is expected that the market will at least equal last year’s million-unit level.

German giant Jungheinrich noted that sales were well on the way to seven digits, with 827,900 units delivered globally in the first nine months - 1% up on the September 2014 cumulative tally of 818,600.

The largest forklift manufacturers have held onto their relative positions in the market, still dominated by Toyota which, according to Modern Materials Handling notched up 2014 revenues of USD7.712 billion. Germany’s KION remains in second place with revenues of USD5.314 billion, with Jungheinrich third.

Acquisitions accelerate

In the middle of the year, it looked like KION was about to challenge Toyota by purchasing UniCarriers, but in early August, Mitsubishi confirmed that it was buying all shares of UniCarriers Holdings Corporation held by Innovation Network Corporation of Japan (INCJ), Hitachi Construction Machinery Co., Ltd. and Nissan Motor Co., Ltd.

Mitsubishi is set to close its purchase of Unicarriers
Mitsubishi and UniCarriers are ranked sixth and seventh, respectively. The latter is the product of a 2012 merger between Nissan Forklift and TCM.

The sale, worth JPY110 billion (USD887 million), was scheduled to close on December 30.

A few days later, Forkliftaction.com News was among those reporting another mega-deal – the merger of Konecranes Plc and Terex Corporation.

The merger is on track for completion in the first half of 2016. Konecranes Terex Plc will maintain headquarters in Hyvinkää, Finland and Westport, Connecticut, USA.

KION, which missed out on the UniCarriers deal, did manage one significant purchase during the year. In May, KION bought Belgian automation specialist Egemin Group’s Handling Automation division for around EUR72 million (USD80.6 million).

KION recently announced a restructure aimed at sharpening its focus on the specific customer and market requirements of the key regions of the world.

The group will be organised into group functions such as research and development, procurement, quality management, finance, HR and IT, plus four operating units: Linde Material Handling EMEA and STILL EMEA (which will each concentrate on Europe, the Middle East and Africa) and KION APAC and KION Americas, which will hold cross-brand responsibility for the Asia Pacific region and the Americas, respectively.

The new structures will be put in place at the beginning of 2016 as part of its Strategy 2020.

Wheeler dealers

Hyster-Yale Materials Handling, Inc. is also undergoing changes, renaming its wholly owned operating subsidiary which designs, engineers, manufactures, sells and services a comprehensive line of forklifts and aftermarket parts marketed globally primarily under the Hyster and Yale brand names, NACCO Materials Handling Group, Inc., as Hyster-Yale Group, Inc. on January 1, 2016.

Lift Systems will drop rival brands and focus solely on Yale and Hyster equipment
In the United States, the Hyster and Yale dealer networks underwent significant changes in 2015, with a series of deals in June that saw Gregory Poole Equipment Company acquiring Yale dealer Dougherty Equipment Company’s dealerships in North Carolina, South Carolina, Virginia and Georgia.

Poole also picked up Hyster dealer VBS Materials Handling Equipment with six branch locations across Virginia, West Virginia and North Carolina, and certain assets and facilities of Briggs Equipment, a dual-brand Hyster and Yale dealer.  

LiftOne also picked up some Yale territories of North Carolina, South Carolina and Georgia, while Briggs Equipment, Inc. was appointed as the dual-brand dealer in South Florida, adding to its substantial Yale and Hyster representation.

In the latest move, the Papé Group bought southern Californian Hyster dealer Johnson Lift, increasing its California locations from eight to 14. Earlier, Modern Group dropped the Hyster range, replacing it with products from Hyundai, Clark, Big Joe, Terex and Konecranes.

Belgium’s TVH Group will remember 2015 as a year of acquisitions, picking up French taillift parts distributor France Hayon Développement and three of its divisions. That followed hot on the heels of the purchase of Rentaclamp, a UK-based company that offers new and refurbished attachments for forklifts, and workshop or onsite repair and parts service.

TVH has acquired France Hayon
In late 2014, TVH mopped up a number of machinery spare parts players: Latec Ersatzteil-Vertriebs GmbH, Tail Lift Parts Europe GmbH, L3 Service Pro SASU and parts of IPS France SARL.

TVH Group also acquired the assets of C-Tech Industries, LLC, a US-based company that manufactures electronic joystick controllers and components for the industrial equipment industry, while TVH Australasia Pty Ltd took over Independent Parts and Service Australia Pty Ltd in September.

In UK dealer developments, CorpAcq bought United Forktrucks which has eight depots across the Midlands and southern England. United Forktrucks is now operating as part of Carrylift Group, which is owned by CorpAcq. The investment group also owns Hessle Fork Trucks and is reportedly looking to expand its materials handling portfolio.

Also on the accelerated growth path is aerial work platform and telehandler rental specialist Riwal, which kicked off the year with plans to invest EUR80 million (USD87 million) in its rental fleet. This was double the company’s 2014 capital expenditure budget.

The plans covered more than 3,000 new aerial work platforms and telehandlers, including JLG, Genie and Holland Lift, among other brands.

During the year, Riwal was appointed as the sole distributor for JLG Industries Inc. and Magni Telescopic Handlers in Poland, and this month opened new depots in Belgium, Denmark and Sweden.

The Year Ahead

As the industry awaits final sales figures for the last quarter of 2015, there is some expectation that performance will be soft – although some regions will perform better than others.

Hyster-Yale Materials Handling earlier predicted that consolidated unit shipments in the fourth quarter of 2015 will be lower than the fourth quarter of 2014. In addition, as a result of a shift in sales mix to lower-priced lift trucks and currently weaker foreign currencies, the company also expects revenues to be down on last year.

Global markets are expected to remain roughly stable in 2016, driven primarily by the Western European market, with a moderating Americas market and weakening Asia Pacific market, according to Hyster-Yale.

Jungheinrich, meanwhile, identifies Western Europe as the best performer for most of 2015, with an 11% rise. Similarly, North American demand rose by 11%, while Asia (excluding China) grew 4%.

Demand in Eastern Europe fell by 12%, while Asia overall dropped 6%, hit mostly by the sharp decline in China.

Liz Richards, executive vice president of the Material Handling Equipment Distributors Association, says members are expecting the US industry to grow in 2016, "although not the record numbers seen in 2014 and 2015".  

FLTA chairman Andrew Woodward says UK dealers also expect sales to grow next year. "Indeed, more than half anticipated more than 15% growth over what was achieved in 2014.

"While we believe most dealers have benefitted from growth in 2015, it was, perhaps, not as much as they hoped for at the outset of the year.

"This is hardly surprising when you review the trends and challenges faced over the last 12 months. We have seen increasing volatility in the global markets following oil price lows, a Chinese economy slow-down, political issues from the Syrian crisis and European tensions with Russia, not forgetting the ongoing potential exit of Greece from the EU.

"Closer to home, there has been sharp currency movements - particularly during Q1 - leading to increased prices of our exports, uncertainty about the UK’s continuing membership of the EU, the matter of a general election that historically always leads to deferring of decision making within businesses and finally the speculation about the timing of an interest rate increase.  

"While the mood of the industry is still optimistic about the year ahead, it’s much more grounded as we recognise that slower, steadier growth is much more likely to result in long-term benefits."

There’s a similar message from James Clark, secretary-general of BITA: "When we asked our members in September how they see the next 12 months panning out, they were broadly positive, particularly so when asked about their firm’s own sales prospects, with almost 40% thinking sales would rise significantly.

"Almost 90% of respondents expect (forklift) prices to rise modestly as the economic upturn drives forklift demand.

"Our exclusively produced forklift market predictions from our research partners Oxford Economics corroborate this, forecasting overall orders to grow by 5.7% in 2016 and staying at a healthy 5% or thereabouts for the following two years."

The Big Issues

James Clark
For BITA’s Clark, one of the biggest challenges in 2016 will be environmental. "Emissions – and reducing them – is increasingly a priority for companies across most industries. That is being supported by forklift manufacturers who are producing a new generation of diesel and electric trucks with minimal or zero emissions.

"At the same time, the performance of electric trucks has improved dramatically, leading to some industries that would traditionally have only considered diesel trucks to look at electric as a genuine option for the first time.

"That is borne out by our survey of members who believe the trend of electric trucks replacing diesel will continue, with one in 10 thinking a ‘significant’ substitution will occur.

"Having said that, there is mounting evidence that competition-induced innovation may become an important driver of market growth. BITA members are re-examining existing products to provide new offerings to customers."

UK colleague FLTA president Martyn Fletcher also notes "greater interest – and acceptance – of electric alternatives in the UK", especially in the wake of the recent diesel controversy.

"British businesses are changing the ways they operate, too. Manufacturing is returning – on a regional basis – from the Far East and Eastern Europe and this will drive local industry growth. In particular, we are expecting an increase in sales of warehouse equipment – including articulated trucks.

"And how these trucks will be supplied is changing, too. In recent years, we’ve seen more and more manufacturers take a direct route to market and 2016 will be no exception with independent dealers facing increased competition from them."

For MHEDA, the big issues in 2016 will include accelerating consolidation of dealerships and OEMs. "Member must have a strategy to deal with this in their market," says Richards.

The need for skilled technicians in all segments of the industry continues to escalate and necessitates creative recruitment practices, heightened training and more reliance on diagnostic tools and mobile technologies to augment the workforce.

"The economy is healthy but members must maintain vigilance and develop a plan for the next downturn.

"Members must embrace data mining techniques and predictive analytics to increase revenues, cut costs, improve customer relationships, enhance the sales process and reduce risks.

"Government and safety regulations continue to become more stringent and complex.  Members must have a clear understanding of these requirements and recognise both the risks and opportunities.

"Members (also) need to take necessary precautions to protect against cyber threats and the security of data," she advises.

Olivier Janin
Olivier Janin, secretary general of the European industry peak body FEM, points out that the integration of Industry 4.0. into materials handling equipment will continue and further develop. "It is already reshaping the industry, its offer and the relationship with customers. It will be interesting to see how our industry will develop further opportunities from Industry 4.0. and translate them into operational efficiencies (increased productivity, better processes, better use of resources, etc.).

"In this respect, I am very much looking forward to seeing the innovations displayed by our manufacturers at upcoming trade exhibitions in 2016 and notably the next CeMAT Hannover show, which has Smart Supply Chain Solutions as its lead theme, and All4pack in Paris."

For its part, 2016 will see FEM maintain its focus on the revision of the EU legislation on exhaust emissions.

"(The emissions revision) should come to an end in the first half of 2016 and FEM will be working on a guide to help our industry in the application of the new requirements. Meanwhile, the review of the machinery directive will start. It will be a gigantic work, the first stage of which will last 17 months and impact on pretty much all our product segments.

"At international level, FEM will continue to help develop the World Materials Handling Alliance. We are already very proud to have been able to produce world statistics just one year after the official launch. We now hope to develop the regulatory and standard cooperation to better understand each others’ constraints and requirements. We will also reinforce our communication, whether through a new website (due to go live at the beginning of 2016), our partnership with trade exhibitions and the FEM Congress."

FLTA chief executive Peter Harvey tells Forkliftaction.com News: "It’s clear that the year ahead offers excellent opportunities for those dealers equipped and ready to respond to the challenges.

"For more than 40 years, our members have placed customers at the hearts of their businesses. They’ve worked closely with British businesses, making operations smarter, safer and more efficient.

"Our members agree to sign up to a common, defined Code of Practice which governs the ethical and safety standards expected of all companies whose work involves forklift trucks. "    

He notes that his association is working with members to raise standards within the industry, a goal shared by other materials handling associations.

MHEDA’s Richards advises industry participants to familiarise themselves with the industry changes and challenges "and determine the best way to address them".

"This is an important exercise for any company within the materials handling industry. Getting involved with your industry trade association is vital."
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