European Union (EU) membership for Eastern European countries has removed bureaucracy and trade barriers, leading to conducive conditions for the growing forklift market but some industry members say there is still room for improvement.

A growing forklift market

The economies of Eastern European countries are growing and so too is demand for costlier and more sophisticated forklifts.

Forkliftaction.com News does not have overall statistics for forklifts in the region, but the Association of Hungarian Forklift Distributors (Magyar Targonca-forgalmazók Egyesülete) estimates Hungary's forklift market size for 2006 at 2,804 units. This is expected to grow 15% this year. World Industrial Statistics (WITS) data show Polish new factory orders grew 37% from 6,787 units in 2005 to 9,326 units in 2006. According to the Romanian State Control for Lifting Equipment, around 20,000 new forklifts were added to the country's fleets in 2005. A Romanian source says the market grew at least 4% in 2006.

Historically, Balkancar internal combustion forklifts were the workhorses of Eastern Europe but today, forklift users are increasingly turning to foreign brands.

German brands Linde, Jungheinrich, Still; Japanese brands Toyota, Mitsubishi; and even Chinese brands Baoli and Dalian are dominating the market, Forkliftaction.com News sources say.

Daniel Nita, co-owner of forklift service, parts and retail company Net Strike srl in Bucharest, Romania, says demand for VNA forklifts has jumped in the past two years. He attributes the growth to rising land prices in Bucharest which have led to the construction of "modern warehouses with up to 17 metre-high racking".

Nita, who used to work for a Yale dealership servicing Romania and Moldavia, says local and expatriate managers in Romania have become quality-conscious, and brand recognition is important.

He finds that only known brands like BT, Hyster, Jungheinrich, Linde and Toyota fetch realistic prices in Romania.

Alan Bennett, director of BT Polska Sp zoo of Pruszkow, Poland, says service is crucial in his market.

Bennett, 57, who started his 30-odd-year forklift career with a Lancer Boss dealer in 1974, says Polish managers now expect service on par with their Western European counterparts.

"Forklift suppliers [here] need to achieve a high level of service to retain confidence of the buyer. With proper investment and the removal of pre-EU membership barriers, this is now possible."

He cites WITS data indicating that new VNA trucks accounted for 12.5% of the total rider warehouse trucks ordered in 2006. Last year, 918 new rider warehouse truck orders were placed in Poland.

Blachdeker in Cracow, Poland

Bartek Larski, a 28-year-old sales representative for forklift import/export company Blachdeker in Cracow, Poland, says local manufacturers like Zremb Gilwice SA and Boryszew SA have less than 10% of the total market and that figure is likely to decrease.

"Mostly German and Japanese brands are used in Poland. It's also possible to buy new, cheap Chinese machines, but they are not so popular.

"Company managers' mentalities have changed. Big, global companies and small to medium-sized companies are investing more in equipment."

Peter Kardos, Budapest-based managing director of Toyota Material Handling Hungary, says while forklift use has grown, there is still limited demand for specialised forklifts like VNA trucks.

"But there is a trend of establishing new logistics centres where the need for VNA forklifts will presumably grow."

Challenges ahead

BT's Bennett has a glowing report of Poland as a forklift market and golden opportunity for foreign investors.

He says the presence of large multinationals has sparked increased interest in investment in the country.

Citibank, Deustche Bank, ABN-Amro, HSBC and GE Bank all have a presence in Poland, as do leading auditing companies PricewaterhouseCoopers, Ernst & Young, KPMG and Deloitte.

Bennett says Poland is attractive to foreign investors because of its highly educated work force, its EU membership and its strategic position between Western Europe and Russia and the Baltic States. The seaports of Szvzecin-Swinoujscie, Gdynia and Gdansk also afford import/export opportunities.

Bartek Larski

Larski also sees EU membership as a catalyst for the growth of the Eastern European materials handling industry, but he still sees Polish bureaucracy as an impediment.

"It is still difficult to deal with the [state] administration. Although government changes the law, it's just a drop in the ocean - there is too much bureaucracy."

Hungary seems to be on the opposite end of the scale, with TMH's Kardos saying the Hungarian government is lackadaisical about enforcing some of the tougher European Union regulations.

"There are some companies that bring in forklifts from Japan, Korea and China and sell them in Europe but the problem is they are not CE-marked," he says, referring to the European standards requirements.

"They are cheaper than European products. These companies modify the specs, frame number and sell to users who don't care about the forklift's background or whether it's CE-marked."

He says the Hungarian government is currently not doing anything to restrict the "grey imports".

Often, the problem only comes to the fore when customers try to trade in the grey imports for a new forklift. "They find out it is 'rubbish' because we won't accept a forklift that's not CE-marked."

Daniel Nita, who started forklift parts and retail company Net Strike srl in Romania last year, says workplace health & safety legislation in his country is similar to other EU countries, but it's still in the process of being harmonised.

"At the moment we are more permissive than the EU. For example, forklift drivers are not required to use seat belts [yet]."

Nita, who says Romania's forklift market grew 5-10% from 2004 to 2006, says his main concern is the rampant corruption in his country.

"Romania is in the top 10 most corrupted countries in Europe," he says. "It is everywhere in state-owned companies and government agencies."

Nita cites bribes which can overcome the mandated 20-day waiting period for a forklift driver's licence and ensure the documents are issued within a week.

"About 30% of my customers even ask what are we giving them if they buy forklifts from us. What do you say to that?"

Other trends and issues

Another challenge, according to Bennett, is forklift parts distribution, with few suppliers investing in centralised parts stores, local depots and mobile service when the market started maturing.

"Lately, we see new market entrants wanting to cover everything themselves but the physical area and the logistics involved mean they have to rely on contracted labour or dealers in some areas."

Poland's total land area is 312,685 sqkm (120,728 sqmi), making it Europe's ninth-largest country. According to Eurostat, over 60% of its 38.5 million population live in cities.

BT Polska has a fleet of 80 mobile workshops, Ford Transit vans that carry spare parts and specialised tooling to customer's sites.

"Most servicing tends to be done on the customer's premises. What is done at our depots are major rebuilds and servicing our own short-term rental fleet."

Blachdeker's Larski agrees it is difficult to find spare parts for foreign forklift brands - or the expertise to service them.

"Few mechanics are capable of fixing new machines with high technology. Most experts are leaving Poland to work in Western Europe so the situation is not good."

In Romania, according to Nita, mobile workshops have been used since 1989 and that the lead time for spare parts remains a problem.

"Forklift dealers make parts orders once or twice a week to have lower transport costs. Companies that service forklifts order from TVH in Belgium. A few are ordering from Van Gent in the Netherlands."

Kardos identifies the lack of training in Hungary for forklift technicians as a contributor to the skills shortage for complicated forklifts.

He adds that Toyota Material Handling Hungary (TMHH) will establish branches near customer sites if there are over 60 forklifts used in a single location.

TMHH's main office is in Budapest with two branches in the country. One of the branches in Tiszaujvaros was established to provide support to customer TVK, a chemical company that uses over 100 of TMHH's forklifts.