The best thing anyone had to say about the economy’s effect on our industry throughout 2009 was that it could only get better. Lift truck factory orders hit bottom early in the year and remained consistently low from month to month at levels unseen in almost two decades.
As we bumped along the bottom, manufacturers and dealers alike made progressively more difficult decisions about how to sustain their companies so they would be around and relevant when business improved.
A 4th Quarter 2009 poll of Industrial Truck Association (ITA) member companies, which included the Mexico market area for the first time, revealed that 2009 volume was expected to finish in the mid-90,000 range. This is down nearly 40 percent from 2008 and consistent with levels last seen in the mid-1980s. The internal combustion lift truck segment has been even more severely impacted, with 2009 volume expected to be just over 30,000 units; this is a decrease of 50 percent from 2008 and one-third the size of the market at its peak in 2006.
An increase in the proportion of total orders that are electric products has occurred in past recessions, but this time the change was more profound and likely has some staying power. Electric products accounted for 70 percent of orders through the first three quarters of 2009. Just a few years ago, in 2005, electric products were only 55 percent of orders—the average for roughly the past two decades.
Some of the dramatic move to electrics is certainly due to short-term economic factors. Electric product users tend to be in more recession-proof industries—food distribution, for example. They are also comparatively larger companies that are by definition more diverse and committed to capital investment plans. Nevertheless, energy and ecology concerns, coupled with advancing technology, are making a lasting mark on our industry, and it’s unlikely that internal combustion lift trucks will ever again exceed 40 percent of the U.S. and Canada market.
Although the lift truck industry has yet to see them, there are signs that business for us could get better soon. As of this writing, the National Bureau of Economic Research, the entity that officially does these things, had not declared the recession over, but most economists agree that it likely ended in the June to August period. 2010 GDP growth is expected to be around 2.6 percent. This is important, because history has shown that this level of economic activity is sufficient to drive expansion in the lift truck market. Based on responses to the ITA poll, member companies anticipate 2010 industry volume in the low 100,000-unit range for the United States, Canada and Mexico—an increase of about 10 percent compared to 2009. Member poll responses show the 2010 order mix by power type is expected to be similar to that observed in 2009, with nearly seven out of every ten orders for electric products.
Much has been said and written about the historic nature of the recession and the resulting long-term implications for our economy. Like the overall economy, the lift truck industry will return to expansion in 2010. Momentum will increase in 2011, as pent-up demand will result in an even stronger order rate. It will take a few years, but the industry will rebound during this period of expansion, ultimately surpassing the 200,000-unit mark last seen in the prior peak of 2006.
|Meet the Author
2010 ITA President Jeff Rufener is vice president of marketing at Mitsubishi Caterpillar Forklift America, located in Houston, Texas, and on the Web at www.mcfa.com. ITA is located in Washington, D.C., and on the Web at www.indtrk.org.