Feature story

USA forklift industry prepared for recovery

Thursday, 25 February 2010 ( #450 ) - United States
The Institute for Supply Management (ISM) stated in its Report On Business, released this month, that economic activity, particularly in the manufacturing sector, saw across-the-board growth for the sixth consecutive month, with both new orders and production indexes above 60%, indicating strong current and future performance. Manufacturing sectors including apparel and leather, textiles, machinery, transportation equipment, paper products, food and beverage and fabricated metal all saw significant and sustained growth - good news for the forklift industry which relies heavily on the manufacturing sector for business. The Industrial Truck Association's (ITA) past president, Stan Simpson, says that new factory orders are up 21% for the first month of 2010 compared to the same time last year. The National Bureau of Economic Research believes the recession most likely reached its nadir in June to August, 2009 and has predicted 2010 GDP growth of 2.6% - traditionally enough of a rise to kick-start expansion in the forklift market. Many of the people Forkliftaction.com interviewed for this report predicted a conservative growth in equipment sales of between 4% and 10% over 2010. Ilidio Alves, director of marketing for Nissan Forklift Corporation, believes that the US forklift market could realistically achieve 100,000 unit sales in 2010.
Don Chance, President of Sales, NMHG
Don Chance, President of Sales, NMHG
This is particularly encouraging given that 2009 produced sales figures not seen since the mid-1980s. Don Chance, president of sales at Nacco Materials Handling Group (NMHG), notes last year was a tough year with the overall US forklift market down more than 50% from its 2006 level. "The numbers we saw for the industry were 92,000 units for 2009, compared to nearly 208,000 units for 2006. This has made for a very challenging business environment." Rising to the challenge But many in the US forklift industry have used this challenging time to improve the efficiency and effectiveness of their businesses. For those who have survived the storm, the past year has been an opportunity to rationalise staff, focus on training, improve customer relations, implement more sustainable practices and, for some, to even expand their businesses and invest in research and development. Early in 2009, Komatsu Forklift USA rationalised its operations by moving its manufacturing plant from Covington, Georgia to its Newberry plant in South Carolina. The move allowed Komatsu to reduce overall running costs and better utilise available staff. "This move will allow Komatsu Forklift to focus on sales, marketing and dealer support efforts, not only in North America, but also the burgeoning South and Central American markets," according to Komatsu Forklift president Akira Yamakawa. In addition, all Komatsu corporate offices will relocate to Chicago, Illinois early this year to share administrative functions, such as human resources and legal and accounting services, with its sibling company, Komatsu America Corporation.
Cascade paper clamps
Cascade paper clamps
Cascade Corp is also considering restructuring, with moves to close its attachment facility in the Netherlands by the end of 2010. Other restructuring throughout the year has been hinted at by President and CEO, Robert Warren (Forkliftaction.com.News #427). Nicholas Finetti, president of Vehicle Technologies Inc (Vetex), is also upbeat, this month announcing the resumption of production of the Airtrax-branded Sidewinder. The Sidewinder, an omni-directional forklift, was mothballed in 2008 after Airtrax encountered financial difficulties. Finetti says he is delighted to be bringing the Sidewinder, with improved functionality and extended onboard diagnostic capabilities, back into production. Unit Load Handling Systems has gained marketshare in the forks, accessories and attachment sector recently through new dealer customers. Brian Scally, general manager, has seen "a swing by dealers to find alternative sources for equivalent products versus their traditional, habitual buying channels. The residual effect will be that dealers will have formed new friends as suppliers when the market recovers and the traditional players will have lost (market)share." This seems to be a thought shared by a number of players in the US forklift industry, with Clark, Omega and Mitsubishi Caterpillar Forklift America all signing new partnerships or appointing new dealers over the past year and into 2010. Palfinger North America has had a flat year, according to sales and products manager Butch Hunter, but the company has used the opportunity wisely. "Most manufacturers have reduced their headcount and production capacity," he says, "as have we, but at the same time we are adding resources related to market and distribution development. We expect a 20-30% increase in orders over the next 12 months," he adds. Hank LeMeur, president and CEO of Superior Tire and Rubber Corp, also believes more reductions in staff will be necessary over the coming year, but this should result in better service from suppliers - along with excellent technical support. He believes good customer service is essential and plans to contact his customers more frequently. Superior will launch a new product, an XL tyre product for battery-electric forklifts, as well as start work on a new plant expansion in the first half of 2010. Terry Wickman, president of Keytroller, says nothing is more important in a recession than educating the industry face-to-face about how your product can achieve better efficiency and reduce costs. He doesn't believe the coming year will see significant economic expansion, but nonetheless has taken the opportunity to develop and perfect new products that will be ready when the 'up cycle' does begin. Keytroller plans to launch the next generation of its LCD keypads in early 2010. One of the key messages from the recession is that customers are putting more emphasis on return on investment than ever before. Hyster launched its new H550-700HD series on February 19, with Herman Klaus, director of Hyster big truck operations, citing an excellent return on investment as a key benefit.
Toyota working in food and beverage warehouse
Toyota working in food and beverage warehouse
Toyota Materials Handling USA Inc (TMHU) unveiled its hybrid concept forklift at ProMat 2009 with the message from president Brett Wood that these machines "are designed to meet the customer's needs for more efficient vehicles that reduce emissions and fuel consumption significantly while delivering performance". Big trucks (55,000lb- 25,000kg) are usually the first forklift class to feel the effects of a recession, evidenced by the mining sector. However, those involved in port operations in the US have been fairly resilient. Port infrastructure investments look at business cycles of 30 years or more for payback. Enhancing this resilience is the planned Panama canal expansion, which will lead to a higher demand for throughput of containers per hour from 5,000 to 8,000 TEUs. Unexpected winners
Yale at work
Yale at work
One of the most resilient sectors of the US economy has been the food and beverage industry and, as a result, the forklifts which service this sector have seen the only increase in sales over 2009. In recent years, battery-electric forklifts have consistently outsold IC forklifts. Last year, electric forklifts represented 67% of all lift truck sales in the USA - a 7% increase over 2008. Toyota's national marketing manager, Melinda Beckett-Maines, believes that the trend to battery-electric is based on many factors including government regulations, environmental concerns and fuel costs. She sees more demand for electric forklifts in the future. The main advantage of battery-electric power in the current economic climate is its ability to be run cheaply and efficiently while meeting government regulations regarding fuel and noise emissions. Over the past two years, the Environmental Protection Agency (EPA), federal departments and various state authorities have issued directives regarding fuel emissions and safety standards. NMHG has begun to implement AC technology across its entire product line, with Chance saying the products "will run longer and cooler, providing lower operating costs, better performance and higher durability". He says that customers are specifically asking for "green" machines. "We are hearing more and more customers request energy-efficient products that can interface with alternative energy sources. Our customers are asking for them, because they're being asked what steps they're taking to help the environment." Despite the recession - or perhaps because of it - a huge range of innovative technology is being developed for the US materials handling industry, including hydrogen fuel cells and other alternative energy sources. ITA's Simpson says there are indications that the "clean-burn" engine products have also seen significant improvement in sale levels of one year ago. Service sectors of the forklift industry are also encouraged to be more environmentally responsible, with tyre manufacturers developing tyres with lower rolling resistance which help to reduce fuel use and electronics manufacturers required by a Restriction of Hazardous Substances (RoHS) directive to produce printed circuit boards with non-poisonous lead-free solder.
Safety is something that often gets overlooked during the busy times. Bill Pedriana, director of sales for Big Lift LLC, believes that the "focus on safety and productivity which have been a hallmark of good material handling solutions over the years seems to have re-emerged during the recession". Simpson says that the OSHA-ITA joint training effort to improve the knowledge of the OSHA field inspectors when they are conducting site inspections has begun to show results in the form of improved workplace safety. 2010 promises to be an interesting year for the US forklift market, summed up by Big Lift's Pedriana: "This is, has been and continues to be the challenge and promise of capitalism playing out in a recessionary environment. It's what makes our system in the USA the best, in my opinion, as periods of innovation are typically the result. When we are past all this, we will find ourselves in an industry that will both be transformed but more relevant and better suited to the needs of the future."