After the painful contraction in the forklift industry over the past two years, 2010 came as a pleasant surprise. Last year at this time, expectations were for single-digit growth. However, buoyed by outsized growth in the manufacturing sector, orders for new lift trucks and parts have shown significant improvement, as customers update their fleets and dealers replenish inventories.
Estimates from ITA member companies on total market size for 2011 reflect this renewed optimism. In 2010, the overall industry finished 25% to 35% up from 2009. Further growth is predicted for the coming year, albeit more moderate at just less than 10%.
The shift to electric products from internal combustion (IC) lift trucks that has occurred over the last several years is typical of recessionary periods. However, it has never been so pronounced, with electrics moving from roughly 55% of orders in 2006 to nearly 70% in 2009.
A Different Recovery
The IC market is predicted to regain a portion of its market share as more traditional sectors of the economy rebound but, interestingly, it has not grown as quickly as in previous recoveries. Even with recovery well underway, electric demand remains strong and is predicted to end the year at 64% of total orders. ITA member estimates predict 2011 electric demand at 63% of the total market. So why is this recovery different?
This trend to electrics has staying power not seen before, due to heightened concerns about fossil fuel costs, ecology and related regulatory requirements, and advances in technology that have electric trucks performing closer to IC trucks. Future technology has remained a focus for manufacturers, with further research and development in hydrogen fuel cells, lithium ion and electric hybrids leading the way. Another key issue is the changing face of the U.S. economy, which has made a shift from IC-heavy manufacturing industries to a more electric-friendly distribution culture.
There’s no doubt that 2011 will continue to be a road to recovery, with customers looking to replace aging equipment and distributors continuing to replenish inventories and rental fleets. Proposed legislation offering full deductions for capital expenditures made during 2011 could spur significant growth. At the same time, smaller levels of distributor inventory brought on by tighter credit requirements, combined with customers’ undiminished lead time expectations, could put pressure on lead times and be a new post-recession challenge for manufacturers.
The last few years have been a trying time for manufacturers and dealers alike. We are in a tough business, but we are tough people and we have come through it, as we knew we would. I am relieved and excited to once again be contending with problems stemming from a growing industry and business. I’m sure everyone in our industry agrees that it’s more familiar territory and much better than the alternative.
|Meet the Author
Jeff Rufener is vice president of Mitsubishi Caterpillar Forklift America, located in Houston, Texas, and on the Web at www.mcfa.com. Rufener is president of the Industrial Truck Association, located in Washington, D.C., and on the Web at www.indtrk.org.