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Material Handling Turnaround To Begin In 2010

Data suggest a sluggish rebound this year.

Overall, the first three quarters of 2009 saw a decline of 42 percent for orders of new material handling equipment versus 2008 using the Material Handling Equipment Manufacturing (MHEM) series as a proxy for the industry.

The most recent data from Material Handling Industry of America (MHIA) suggest that the decline slowed slightly in the last quarter of 2009 to hold the total yearly decline to 35 percent to 38 percent. A rebound of 2 percent to 3.5 percent in 2010 is expected, with growth continuing into 2011 at a healthier pace.

Specific information on several key material handling and logistics markets is discussed below.

Package Handling Conveyors
The conveyor market declined by 30 percent for the 12-month period ending in July 2009. MHIA expects a total-year decline in the conveyor market of 35 percent to 38 percent for 2009, and a further decline of 5 percent to 10 percent in 2010. A recovery of 10 percent to 12 percent is forecasted in 2011. Conveyor market growth opportunities are seen in retail and general merchandise, grocery and food service, direct to consumer, pharmaceutical and medical supply, and third-party logistics. Some problematic areas as we transition to growth will be economic uncertainty, higher ROI hurdle rates and commoditization of many conveyor systems as part of a total solution.

Industrial Racks
U.S. domestic production of rack equipment is estimated to be $800 million in 2009, down 37.5 percent from 2008. 2010 is expected to see low single-digit growth over 2009 followed by 2011 with growth in the low- to mid-teens range. Factors that will influence the pace of recovery include availability and cost of raw materials and energy, consolidation in the industry and the globalization of this market.

Casters and Wheels
Caster manufacturers saw a 25 percent drop in their market in 2009. Bottoming out is expected in 2010, followed by slow growth for several years. Growth opportunities are seen in the alternative energy, medical and automotive markets. Key drivers are lean manufacturing practices and the demand for ergonomic solutions.

The first half of 2009 saw a record low for automation. The second half of 2009 is showing signs of improvement. We see 2010 as a year of recovery and growth compared to 2009, but below 2008 levels. Growth opportunities are seen in manufacturing, medical, food, beverage, government and sustainability. Short-term concerns remain, including a W-shaped recovery, continued weakness in the housing and non-residential construction sectors, and increasing globalization.

The market for ergonomic systems and lifts was off 20 percent from the prior year period through the second quarter of 2009. Technically, we have hit a bottom. Opportunities include applying solutions to an aging and increasingly more female workforce as well as mandates to improve worker safety. Some concerns include harmonization of safety regulations as well as short-term response to ISO 18000.

Supply Chain Software
A proxy for the supply chain software sector is warehouse management software and services sales, which declined from $1.256 billion in 2007 to $1.246 billion in 2008, a contraction of less than 1 percent. It has continued to contract in 2009 by another 4 percent to 5 percent. By any measure, this is the safest harbor in our marketplace. The market is forecasted to grow again in 2010 about 2.5 percent and continue its expansion through 2013 at modest rates.

Lift Trucks
In 2009, the U.S. lift truck market is estimated to drop approximately 35 percent compared to 2008. 2009 is forecasted to be the bottom with recovery to begin gradually next year. Growth opportunities are seen in food and beverage, grocery chains, and general merchandise stores. Constraints to growth include the availability of credit, housing and construction markets, and investor/consumer confidence.

Overhead Material Handling
In 2009, the industry contracted in all three segments (hoists, cranes and monorails). The outlook for 2010 is to begin a long, slow recovery, but positive growth likely will not be seen until late in the year. Growth opportunities are seen in renewable energy, infrastructure, government/military and aerospace.

It’s clear from these estimates that the first half of 2010 may be another difficult time for the industry. On the bright side, those who are able to withstand the prolonged downturn can look forward to renewed growth in the last half of 2010 and 2011.

Material Handling Equipment Distributors Association

Hal Vandiver Meet the Author
Hal Vandiver is executive vice president of Material Handling Industry of America, located in Charlotte, North Carolina, and on the Web at www.mhia.org.

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