STORAGE & HANDLING Distributors Expand Services and Upgrade Technology
Even more than the rest of the industry, enthusiasm abounds for distributors of storage & handling equipment. Most have seen large products on hold for the past two years and are confident clients can’t continue to hold out much longer. Quotation activity is up, so orders will follow. Although storage & handling distributors intend to incorporate different strategies, all anticipate increases, with the average climb at a robust 19.8%.
The positive forecast is exemplified by Mid Middleton, president of Carolina Material Handling (Greensboro, NC), who expects a sales gain of 15%. “We are finally getting to do jobs that we quoted as long as two years ago,” Middleton says. “Customers waited, and now they have cash.” Middleton will add four or five salespeople and will focus on marketing the company’s capabilities as it reaches its 40th anniversary in 2011. The initiative will involve Google pay-per-click marketing and a monthly newsletter handled by a part-time employee. To prepare for the milestone, Middleton invested in facility upgrades, including new interior offices, building exterior, signage and pallet rack for inventory storage. “It looks a lot better, and we made ourselves more efficient in the process,” Middleton says.
Container Systems Inc./CSI Materials Handling (Westmont, IL) President Mike Wall renovated his facility in 2010 to better handle used equipment inventory. “We reorganized to a better layout so we could process orders more efficiently,” he says. The company also upgraded its computer system to give outside salespeople better access to customer information while on the road. “We need our salespeople to be in front of customers, not sitting and working on their computers,” Wall says, adding that customers will increasingly rely on companies like CSI to succeed. “They are taxed for time because fewer people are doing the same amount of work,” he says. “We become their industrial engineer, purchasing agent and warehouse specialist, anything that will help them do their jobs better.”
That philosophy is repeated by John Foley, president of Binghamton Material Handling (Binghamton, NY). “Customers are looking for more help in terms of engineering and installation of equipment, so they’re looking for vendors who can supply all of the services required to sell, deliver, install and maintain their equipment,” Foley says. By providing these services, along with shorter lead times as manufacturers pick up production, Foley will be in position to grow sales by 12-14% and start to restock cash reserves. “My plan is to reinforce our financial position to be in better shape to deal with the coming expansion.”
One large contract is enough for Curtis Ward, CEO of Certified Handling Systems (Salt Lake City, UT), to predict a 50% sales increase, though otherwise business will be similar to 2010. “The demand is out there, but people can’t afford to buy new material,” he says. Consequently, Ward is investing in two marketing people who will help the company sell used equipment inventory. Also, there will be a focus on expanding the services the company provides. “Government is becoming more involved in our industry, and we must be prepared to help customers handle that,” he says. “We’re doing a lot more with preliminary layouts, budgetary pricing and permitting.”
Another extremely positive forecast comes from Chris Dozier, president of Dozier Material Handling (Franklin, TN), who has already received orders for projects next year that will increase business by 60%. Because of that, he will be able to hire two salespeople in the second quarter. However, managing such rapid growth will be his biggest challenge. Dozier will continue to monitor expenses, and he is partnering with an outside marketing firm to develop an integrated marketing plan.
Marketing will also be essential for Kevin Katona, president of DACO Corporation (Kent, WA). Specifically, the company will put more video on its website to help sell the value of the company. The addition of two outside territory managers and a potential acquisition in either material handling or packaging will result in a sales escalation of 15%. Katona also hopes to add a service facility. “We’ve always used subcontractors to perform service work, but that is one area we are looking at for growth,” he says. The company will also make a $50,000 investment in computer hardware that has been put on hold in recent years.
2010 was a record year for Allied Caster & Equipment (Charlotte, NC). President John Stephens expects the success to continue, projecting 10% growth in 2011 based on expanded sales territory, new products and investments in customer service representatives. “There are a lot of talented people out there right now, so it’s a good time to add staff,” Stephens says. He also plans to add inventory, “because if we have it in stock and can ship it quickly, then we will be ahead of the ball game.” Traditionally strictly a caster and wheel house, Allied Caster & Equipment will do more with cantilever rack and more specialized material handling equipment.
Rather than add products, Tyler Supply Company (Kalamazoo, MI) General Manager Ron Paska will stick with what the company does best. “We know what we do well, and we don’t want to change that. This is still a word-of-mouth business and we want to make sure we continue to deliver for customers,” he says. If his expected sales elevation of 15% occurs, Paska will hire a warehouse worker and a part-time administrative employee. Keeping expenses down will remain a challenge, particularly in health care, where the company is looking into health savings accounts (HSAs) to try to mitigate costs.
94% of material handling distributors expect sales to increase anywhere from 3% to 60%. The average increase for these distributors is 11.9%.
Health care and other political issues are also of concern to Jerry Harrison, president of Harrison Equipment Company (Kent, WA). Harrison anticipates that the changing of the guard in Congress, combined with general economic recovery, will make for a more favorable business climate that will help sales rise by 6-8%. Other challenges will persist, including more demanding customers. “They require us to do more price breakouts to do more cost comparisons,” Harrison says.
At ESS Group, President Jeff Ross (Brenham, TX), is making a similar sales prediction. Sales growth of 5-10% will allow him to hire two salespeople and invest in training of existing employees. “People are budgeting for capital investments, but it takes them a lot longer to make decisions,” Ross says. “They are holding on to their money longer but then want a finished product much quicker.” Dealing with that requires Ross and his staff to communicate with customers and vendors more than ever before. “It forces us to do a much better job of prioritizing our backlog to make sure everyone is taken care of and happy. We are working hard to maintain existing accounts while growing the business.”
William Petro, president of Century-Fournier (Youngstown, OH), concurs. “Customers don’t have time to do business with everyone, so they are shrinking the number of people they have relationships with,” Petro explains. “Good suppliers are going to benefit by having strong, dependable relationships.” Petro expects continued success in aftermarket service, including repairs, parts and accessorization of existing equipment. When added to the general economic recovery, he predicts a sales increase of 20%. Petro will add one inside and one outside salesperson to accommodate the expected growth.
2011 Industry Forecast:
- Distributor Forecast Part 1: Industrial Trucks
- Distributor Forecast Part 2: Storage & Handling
- Distributor Forecast Part 3: Diverse Mix
- Distributor Forecast Part 4: Engineered Systems