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DISTRIBUTOR FORECAST PART 1: Industrial Trucks

INDUSTRIAL TRUCK Distributors Diversify and Ramp Up Marketing

It’s no secret that the industrial truck market has been down for the last couple of years, but most IT distributors have renewed hope moving into 2011. “It can’t go down any farther,” some point out, only half-jokingly. The degree of optimism varies, but averages out to an expected increase of 8.6%. Much of that optimism stems from a perceived pickup in the general economy that will spur customers to spend money again, but MHEDA members are confident that specific company changes in procedures, computer systems and inventory will assist the rebound as well.

For Robert Stoffel Jr., president of Stoffel Equipment Company (Milwaukee, WI), the addition of a business development person in the sales department will result in a sales increase of 5%. The individual, who started in the second half of 2010, will be doing cold calls, market development and direct mail to increase awareness of the company in the local marketplace. “This individual will stay in touch with the market more than the salespeople can by just knocking on doors. It will help them cover more territory in a limited amount of time,” Stoffel says. The company will also add two service technicians to keep pace with customer needs.

Realigned sales territories will play a role as well at CFE Equipment Corporation (Norfolk, VA). President Anthony Sessa says, “We’ve added more emphasis on aftermarket selling. We are trying to focus on not only our vendor programs but some internal programs we created to add value to our customers and defend and grow our market share.” To handle what he expects to be a sales rise of 5-10%, Sessa will also upgrade to a more flexible management information system that will track customer information more effectively. Sessa also plans to stock more than the bare minimum of inventory to be ready to deliver for his customers.

Scott Lift Truck (Elk Grove Village, IL) President Loren Swakow is predicting a 20% increase thanks to the company’s new role as a stocking distributor for Mobile Industries, which will get the company’s warehouse back up to capacity. Scott Lift also added TCM and Hytsu forklifts. The sales driven from those new lines will offset the challenges of being in a marketplace full of hungry distributors. “We’re putting the squeeze on ourselves to get deals,” Swakow says. “Rental, for example, used to be a high-margin area for us, but the rates are coming down because everyone’s buildings are loaded with rental fleets.”

“We are stocking low-range, mid-range and high-end products to have multiple options for customers who are ready to buy.”
Eric Davidson
Santana Equipment Trading
“When the dam breaks, nobody will have everything for everyone. We’re trying to anticipate as best we can for our customers.”
Tom Showalter
Herc-U-Lift
“We spend no money on Yellow Pages ads anymore. Our marketing is done online.”
Andrew Decker
Decker Forklifts
  “The emphasis on being cost-conscious has really reduced customer loyalty and forced us to be more creative marketing our aftermarket services.”
Doug Ward
Hooper Handling
“We have a new website and new literature that are being promoted by our salespeople and support staff.”
Robert Stoffel Jr.
Stoffel Equipment Company
“Our customers are being cautious. Rather than purchasing new trucks, they are purchasing extended leases.”
Edward Otis
E.D. Farrell Company
“We are over-communicating with our customers to make sure they are always in the loop.”
Loren Swakow
Scott Lift Truck

Rentals also play a role in the forecast of Paul Raber, president of Allied Equipment Service Corp. (Indianapolis, IN). “We can’t keep a rental truck in the house,” he says. “Our customers don’t have the money to buy new yet, but they need the equipment.” Raber also is beginning to see more activity with narrow aisle and other specialty equipment. Having become a Clark dealer and being awarded the Komatsu territory for the entire state of Indiana in 2010, the sales force will need to grow. To handle his predicted 25% growth, Raber will stock more inventory across all product lines. “Right now, manufacturers are running 16 to 20 weeks out, and customers won’t tolerate that when things bust loose. We will need the equipment on hand.”

That sentiment is echoed by Tom Showalter, president of Herc-U-Lift (Maple Plain, MN). “Because of greater demand, those people who have inventory or rental equipment available will fare better than those who don’t,” he says, predicting a 5-10% sales increase. Part of that growth will also be attributed to improved marketing and internal training. “We’ve done some mystery shopping of our in-house employees to make sure that they are putting out the right presentation when customers call in,” Showalter adds. Streamlined processes and an upgraded computer system will allow the company to improve margins by handling a larger volume without adding people.

Similar results are expected at Hooper Handling (Hamburg, NY), where internal computer and business management system upgrades will lead to 8-10% sales growth. Says President Doug Ward, “We hope it makes us more effective selling and gives us better control over our parts and service departments.” Ward also is freshening the company’s website to make it more like other Raymond dealers’ sites and drive more awareness of the company.

Brand awareness will also be a focus for Cory Thorne, president, Southeast Industrial Equipment (Charlotte, NC), who is investing resources in creating a resonant brand identity. “We’re putting a massive push on both sales and marketing so that customers understand who Southeast is from start to finish,” he says. “We’ve lost business because customers weren’t aware of the services we provide.” To remedy that, Thorne is focused on standardizing ordering procedures across all nine branches and developing a consistent marketing message. The addition of floor cleaning, yard spotting and construction products leads Thorne to expect a sales escalation of 7-12%. Managing that growth will be made possible by improved metrics that will keep the workforce at the proper levels.

As a wholesaler who does lots of exporting, Andrew Decker, president of Decker Forklifts (Solon, OH), sees unknown tariff and currency changes having the most impact on his company in 2011. Despite that potential uncertainty, he is anticipating 10% growth thanks to consolidating two buildings into one and increasing inventory to meet the needs of a changing customer base. “Our customers have changed from industrial users of large forklifts to distribution firms that use smaller trucks. Our inventory has changed drastically,” Decker says.

Robert Parkin, president of National Forklift Exchange (Feasterville, PA), is planning to revamp his inventory as well. “Because there is a lack of available late-model, low-hour used forklifts, my plan is to strategically buy and stock as many as I can find,” he says. That larger inventory plus a potential acquisition are reasons for Parkin to predict a sales increase of 3-4%.

Stocking inventory is also going to be a key at Santana Equipment Trading (Gurnee, IL), according to President Eric Davidson. “We’re trying to keep a full warehouse of just about everything we sell, because when customers do decide to buy, they want product right now. There is very little shopping around,” he says. Obtaining enough used inventory is a challenge, however, because customers are using their equipment much longer. “Anything decent is still in use and hard to get hold of,” Davidson adds. He is adding more battery chargers in the warehouse to accommodate more inventory but finds the market too volatile to make a definitive forecast.

“The economy has changed the whole mentality of customer purchasing,” says Russ Wilkins, president, Frontier Forklifts and Service (Pearland, TX). “A year and a half ago, people asked us to quote every job, but now it has turned into, ‘Just come fix it.’ They need to have their machines running.” It’s a change in mentality he sees as a positive for business, as customers are being forced to stop repairing old equipment and slowly replace it with new. Based on that behavior, Wilkins foresees a 12% sales gain for the company in 2011.

The opposite perspective comes from Alicia Nyborg, president of SuperTech (Fayetteville, GA). “Customers used to just say, ‘Fix it.’ Now they won’t proceed until they know what it costs,” Nyborg says. That’s one reason she feels like the service end of the business is not yet ready to take off. New sales won’t either, so she predicts level sales. The company won’t be in a position to offer raises, but she may offer job-based bonuses in order to maintain a quality workforce. “If a project comes in under budget, we will share that profit with employees to keep morale up.”

Sales growth of 11% is on tap for Delta Materials Handling (Memphis, TN), which President/CEO Greg Costa attributes to the company’s ability to design a complete warehouse, from docks to forklifts to shelving. A well-trained work force will expand by two sales representatives and as many as four service technicians to capitalize on that growth. “Customers have become better educated about issues like fuel economy and cost per hour, which never used to be the case for owners of small fleets,” Costa says.

At E.D. Farrell Company (West Seneca, NY), a number of traditional buying customers extended their leases rather than get new trucks, leading President/CEO Edward Otis to believe overall sales in his area will lag behind the rest of the country and remain relatively stagnant, no more than 5% ahead of last year. “This year will be fairly modest, but we’re gearing up for 2012, which I think will be a big turnaround year,” he says. He is budgeting for three more service technicians and one more salesperson to get the company ready for the final upturn when it does occur. The biggest challenge for Otis will be continuing to control expenses and pay off debt.

“Customers are replacing staff with younger employees who don’t know us. We use that to our advantage by reinforcing the history of our relationship.”
Ken MacDonald
M & G Materials
Handling Company
“More customers are better educated about the product now than they used to be. We must continue to provide all the information they ask for.”
Greg Costa
Delta Materials Handling
“Customers had been using parts from idle equipment. Now those units are needed again, so we have pent-up demand for parts and service.”
Jeff Darling
Washington Liftruck
“We are monitoring our labor rate and watching whether it’s profitable to maintain certain customers.”
Alicia Nyborg
SuperTech Inc.
“I’m going to replace some service vehicles and update my rental fleet.”
Russ Wilkins
Frontier Forklifts and Service
“We have strong bookings, which hopefully will lead to population of parts and service.”
Dave Griffith
Modern Group
“While large corporations are making commitments to more expensive green technology, smaller customers remain very cost-conscious and have not yet jumped on board.”
Robert Kehley
Key Material Handling
Equipment Company
“We’re bringing a dedicated marketing person on board for the first time to give some commonality across our branches.”
Cory Thorne
Southeast Industrial Equipment

Samuel Stoltzfus, owner of Sams Mechanical Service (Narvon, PA), is budgeting for a 5% increase, thanks in part to the introduction of a material handling general lines catalog that his sales force can use to get in the door of more potential customers. He foresees both the used market and the repair side of the business remaining strong as the customers continue to hold on to their money. “People will need us to make repairs. They aren’t buying new, and when they do, the new technology on the trucks won’t allow them to fix it themselves,” Stoltzfus says. He plans to ramp up internal training to be able to make those repairs and increase billable service hours.

The same sales rise of 5% will happen at Washington Liftruck (Seattle, WA), where Vice President of Operations Jeff Darling sees growth from online marketing via the company’s website. “In 2010 for the first time, we saw some significant growth online. We expect that to continue,” he says. Darling also will rely on the implementation of a new CRM program to help manage contact and follow through with customers. The addition of two technicians and one salesperson will help the company achieve its sales goals.

Another company looking to the Web is Tri-Lift (New Haven, CT). President Paul Murgo is working with an outside Web development firm to design a dynamic page that will be a bigger help to customers. “We’ve historically just had a stagnant page, but we’re opening that up to be more of a customer resource, with things like OSHA regulations and a place for customers to e-mail questions,” Murgo says. He plans to move the company’s parts depot in Springfield, Massachusetts, to a new location with more space. It all adds up to projected sales growth of 6-7%.

“Our intention is to grow both organically and through acquisitions, and to exit some businesses that don’t have the returns that make sense for us,” says Dave Griffith, president/CEO of Modern Group (Bristol, PA). He expects the forklift business to rebound by 3-5% and fleet business to grow significantly. He points to a company-wide dedication to social media as something that will continue to pay off. “We’re heavily invested in social media and our CRM technology, and we’ve sold a lot of iron as a result. We’ll continue to build on that investment,” Griffith says.

A sales increase of 15% is the expectation for Robert Kehley, general manager, Key Material Handling Equipment Company (Brooklyn, NY). He finds his business affected by regulations in the five boroughs of New York City that re-zoned commercial property for residential use. “Our customer base is changing from predominantly light manufacturing companies to more pure distribution facilities,” he says. “Plus, the big green push in urban areas really makes our electric offerings very attractive to customers.”

Electric forklift demand will be a cornerstone for M & G Materials Handling Company (East Providence, RI) and Ken MacDonald, president. He already has received new-product orders from a company that hasn’t been a customer in 50 years, and more such orders are on the way. If his expected 10-12% sales gain materializes, MacDonald will add two service technicians and one salesperson. MacDonald also implemented voice over Internet protocol (VoIP) for telephone service that should lower monthly expenses by roughly $700. It all adds up to a very optimistic feeling that’s been a long time coming. MacDonald probably sums up the feeling for a lot of members by saying, “It’s very exciting. I haven’t felt this way in a long time.”
2011 Industry Forecast:

Material Handling Equipment Distributors Association

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