Europe set to meet challenges

Local Feature Article
- 27 Sep 2018 ( #891 )
11 min read
The European materials handling market has performed extremely well, but will it survive geo-political uncertainties and mounting trade tensions? Allan Leibowitz reports on the resilience of a number of manufacturers.

Materials handling production and sales in Europe continue to rise steadily, with the major manufacturers reporting positive trends in their latest half-year results. This reinforces a trend documented by the FEM manufacturers' group, which estimated the market value at EUR62.4 billion (USD72.5 billion) in 2016 - the highest since pre-GFC records of EUR77.2 billion (USD89.8 billion) in 2007.

Among those with positive results in the latest quarter was the KION Group, and Henrik Hannemann, senior director - corporate media relations & external communications, says the company "benefited from sustained strong growth in the markets for industrial trucks and supply chain solutions".

"The growth drivers remain intact both for industrial trucks and in the supply chain solutions market, ensuring sustained high demand," he says, noting in particular the growth of demand for automated systems.

Lift-tec's two-sdtage dual mast
Lift-tec's two-sdtage dual mast
A number of manufacturers are benefiting from the adoption of Industry 4.0 innovations including automation and integration, among them Italian mast manufacturer Lift-Tek Elecar. Corporate chief engineer Diego Colombi says the Industry 4.0 and order management system lines are growing rapidly. "We can see a general portfolio growth, with great pipelines towards ad hoc solutions and Industry 4.0 in the warehouse market (as well as) automation. Almost all our offerings of new products go in this direction."

Another beneficiary of the Industry 4.0 boom is AGV specialist JBT, where EMEA sales director Mark Stevenson welcomes an increased focus on automation across most industries. "AGV safety technology is better and more advanced than it's ever been and our systems, which have always been some of the safest on the market, continually evolve with respect to safety."

Italian equipment manufacturer Baumann is seeing strong activity in the electric trucks market, according to managing director Klaus Pirpamer. "Heavy duty trucks are also increasingly in demand. For many heavy applications, the reliability and flexibility of a sideloader makes real sense," he adds.

A Cascade paper clamp on an AGV
A Cascade paper clamp on an AGV
As forklift demand increases, so too does the market for attachments. Charlie Mitchelson, managing director of Cascade Europe, says sales growth for attachments and fork products has been driven by the rapid advancement in e-commerce solutions for the warehousing and logistics industries.

"Cascade sees increasing demand for materials handling solutions in the logistics and warehouse industries. Automation and AGV solutions have also provided new opportunities to expand our portfolio of products," he explains, adding that Cascade offers a full range of attachments designed specifically for AGVs, including multiple load handlers, carton clamps and paper roll clamps. "This range of attachments is equipped with an electronic interface and sensors for easy integration with AGVs. Our ongoing R&D efforts will allow for continued expansion in this area."

Responding to demand for IoT solutions, Cascade is also "actively developing materials handling solutions that allow for data transfer from the forklift and attachment for implementation with virtually any warehouse system".

Holger Kaup
Holger Kaup
For German attachments manufacturer KAUP, the big growth lines have been fork positioners, sideshifters and multi-pallet handlers, according to Holger Kaup, managing director.

KAUP is also experiencing a trend towards electrification which is spreading to attachments. "Increased electrification of forklift trucks will, in our opinion, lead to a stronger demand for fully or partly electrified attachments in the medium term. KAUP has already designed a completely electrically operated and controlled attachment: the new fork positioner can, for instance, communicate with fleet telematics systems or be integrated into the control of the forklift truck," he explains.

Baumann's Pirpamer is also observing a move towards electric forklifts, prompted by environmental and financial considerations. "There is also a greater emphasis on features that deliver productivity improvements, such as our Archimedes outreach system, operator comfort and greater awareness of fleet performance, so monitoring becomes important," he says.

Hubtex general manager Hans-Joachim Finger, meanwhile, identifies digitalisation and Industry 4.0 as key drivers shaping "the scope of orders and length of projects". The company specialises in customised trucks for handling difficult and bulky goods and Finger notes a trend towards increased energy efficiency, "with companies primarily seeking higher performance capacities for motors and battery systems. This means that forklift trucks fitted with lithium-ion batteries can also become an interesting investment for medium-duration deployments," he says.

Trade tensions

While the overall European market has been growing, FEM statistics indicate falling exports, with 2016 figures lower than exports in 2011. Imports, meanwhile, have reached record levels, at EUR8.7 billion (USD10.1 billion) last financial year.

China ranks as one of the largest sources of imports, challenging European producers, especially at the value end of the market.

"The biggest impact is market pressure on cost, as many Asian suppliers employ a low-cost strategy for market entry. The proliferation of limited-capability, low-tech, low-cost transport options, such as simple automatic guided carts, throughout the European market translates into a maturing understanding of price points," says Stevenson.

"Competition and external market forces are a good thing for the industry," he adds. "As a global manufacturer of our AGV technology and software, we are able to position our offerings competitively in most major markets in Europe and throughout the world."

Hubtex's order-picking side-loader
Hubtex's order-picking side-loader
For specialised and niche manufacturers, competition from Asia poses no threats. As Finger sees it, "This is less of a problem for Hubtex, as we primarily serve niche areas within the broader forklift truck market. A small number of companies are currently competing with each other in this niche market. Our goal is to provide our customers with excellent vehicles featuring the very best technical equipment. And we also want to be a pioneer in digitalisation and Industry 4.0."

In similar vein, Lift-Tek's Colombi explains: "We are in a market segment; therefore, we are not directly affected by the competition (from) the Asian market. We offer engineered solutions as barriers against the incumbent Asian competition."

The same is true for Baumann, according to Pirpamer: "Our products are still unique and with poor Asian alternatives. We have almost 50 years of design and production experience, and customers that have stayed with us for decades. We will stay true to our quality and reliability ethos."

Attachment maker KAUP not only faces no Asian competition, it actually benefits from Asia's capabilities. "KAUP has been present in Asia for over 20 years, especially in China, with a manufacturing plant locally in order to immediately react to changing demands and special Asian/Chinese customer requirements," the managing director explains.

The autonomous Linde R-MATIC reach truck
The autonomous Linde R-MATIC reach truck
Although most of the companies approached are not affected by the growing competition, they are concerned about looming trade tensions, including the threat of tariffs in the United States.

For KION, the impact is already evident, says Hannemann: "Increased tariffs on imports from China are affecting our information technology and systems (IT&S) business, where we ship trucks and truck kits from China to the USA for final assembly." However, he explains that KION's North American business in the IT&S segment accounted for only 2% of segment revenue in 2017. "It is difficult to foresee what will happen, so we are watching the situation very closely."

"The United States is our most important export market," says Hubtex's Finger. "As such, it would certainly be unfavourable for us if the situation were to escalate. Our ability to steer clear of negative impacts in the trade dispute is limited. We are putting our faith in our decades-long partnerships in the United States, our customers and the vehicle solutions that we have developed - and will continue to develop - specially for the US market."

Production at Baumann's factory
Production at Baumann's factory
Baumann's position is similar: "We have business all around the world and the US is an important market for us. We are investing and supporting our dealers in the North American market, but we take a long-term approach. Whilst we feel a trade war is in nobody's interest, we have faith that ultimately the market decides what products are successful and we must focus our energies into making sure we continue to build the best sideloader in the world. Common-sense will hopefully prevail," says Pirpamer.

Cascade's Mitchelson believes his company is largely shielded from the current tensions: "As a global company, we have several manufacturing facilities and strong support capabilities, both in Europe and the USA. Since we are able to produce in both regions, the impact for us would be minimal. Cascade's philosophy is to produce locally for the local market while continuing to focus on satisfying the needs of our customers."

A JBT AGV in action
A JBT AGV in action
Another ticking timebomb for trade is the looming departure of Britain from the European Union under Brexit. Many in the industry, like JBT, are concerned about the UK's departure. "We have already seen an impact as a result of Brexit, and there will be tariff speculation until Brexit is complete. End-users, particularly large customers with multiple-phase or multiple-site projects, have shown marked interest in advancing the procurement of automation. The nature of these rollouts, which usually extend across borders and cover several months, mean that they require special attention and forethought, and we are seeing this among our customers in the UK. In particular, UK-based manufacturers and EU companies with extensive supply chain footprints in the UK are showing an increased interest in automation for their UK operations. JBT manufacturing, engineering and deployment capabilities are well positioned to meet these challenges," says Stevenson.

For most manufacturers, it's business as usual until Brexit becomes a reality.

According to Finger, Brexit is yet to impact on Hubtex's sales performance in the UK. "However, we are actively working to strengthen our position on the British market. Last year, we began strategically expanding our unit in England together with the Hubtex UK team."

Baumann is feeling the pinch of the Euro-Sterling exchange rate, "but we cannot see a dramatic market reduction; if anything, demand has grown as companies look to invest now before the UK picture gets even more complicated," says Pirpamer.

"As a large European manufacturer, we are in a unique position where we have manufacturing facilities on both the European mainland and in the UK," says Mitchelson. "With this balance, we are able to offset some of the Brexit cost and currency exposure."

KAUP is represented in the UK by B&B Attachments, says Kaup. "We are currently satisfied with the development in this market but cannot say if the positive figures arise from investments in advance of a possible Brexit. Independent of this, it is not clear at the moment how, for example, future market access will be structured, and which custom duties will be applied. This makes it difficult to get ready for (conditions post- Brexit)."

Looking ahead

Despite the challenges, most are confident about the rest of the year and into 2019.

"Uncertainty tends to dampen the market, and there is a lot of that around right now, so the immediate future may be slightly down on previous years, but we are living in the age of materials handling and logistics. Online purchasing, automation and technological advances are gripping the public's imagination and we're now more capable than ever of delivering efficiencies, product personalisation and carrying out major infrastructure projects," says Pirpamer. "With a future like that ahead of us, we remain optimistic that any dip will be short-lived and the market will recover and grow strongly."

Cascade's Mitchelson is also tipping "steady and sustainable growth for 2018 into 2019".

Likewise, there is optimism at KAUP: "Based on current assumptions and developments, we fully expect a stable growth for this and the coming year. Naturally, unexpected political (further US tariffs, a hard Brexit, etc.) and economic developments which we cannot predict could cloud the positive outlook."

Finger has a similar view: "Despite the difficult market environment due to Brexit, the trade dispute, etc., Hubtex anticipates solid growth for 2018 and 2019."

"We trust the market will keep on growing in 2019 with the same pace as in the first quarters of 2018," adds Lift-Tek's Colombi.

There's also optimism from JBC: "We have every confidence that the materials handling market will continue to undergo robust growth in the coming year, particularly in the areas related to the finished goods supply chain. In markets across the spectrum, especially food, beverage, consumer goods and retail, we believe that their focus on automation downstream of the factory will keep demand strong."

Strong recent performance, a profound understanding of markets, offerings of specialised products and common business sense look set to prevail against the challenges and uncertainties that lie ahead for European manufacturers.

Additional information and a special 'THANK YOU' to our contributors:

Cascade Corporation: website

HUBTEX Maschinenbau GmbH & Co. KG: website

KION Group AG: website

JBT Corporation: website
KAUP GmbH & Co. KG: website
Lift-Tek Elecar: website
Baumann S.r.l.: website
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