UK forklift industry analysts have identified 125 UK forklift companies as "zombie" businesses.

David Pattison, author of the latest Plimsoll Analysis, says the companies' performance has deteriorated to the extent that they now exist to pay off their debts.

"These companies are ... posting growing losses and, despite the obvious freeze in the credit markets, increasing their debts. They are zombie businesses with debts at an average of 45% of turnover. They exist to service their out-of-control liabilities," Pattison says.

He adds that many are using their suppliers to finance their losses by taking twice the industry average of 67 days to pay their bills.

Pattison explains the other problems these "zombies" are facing. "They are falling behind the rest and their productivity is well below the industry average. It's hard for them to compete as their cost base is just too high. As a result, investment plans have been mothballed meaning their aging assets are further restricting their ability to remain competitive."

He predicts that the companies that survive will have a lot of pain ahead and suggests they prioritise sorting out their immediate finances.

The struggling companies "have to convince their banks and suppliers to keep supporting them" and urgently stem their losses and control costs.

However, there present opportunities for canny investors to pick up a bargain.

"Some of these companies, stuck in a zombie state because of their balance sheet, have lots of potential for new owners to turn it around. We picked 50 companies that we feel have the most potential," Pattison says.

To find out more about these companies, call +44 1642 626400 to order the new Plimsoll Industry Analysis - Fork Lift Trucks. Forkliftacton.com readers get a GBP50 discount if they quote reference PR/SD33.