As part of The MHEDA Journal’s 1st Quarter 2011 issue, we randomly polled MHEDA distributors from across the United States to discuss predictions for 2011 and to get a sense of what to expect in the new year. More than 90 percent of those interviewed at the time projected sales growth, and not one distributor forecasted business to be down.
Now, with the 1st quarter behind us, we talked to five distributors to find out what has been happening so far this year and what to expect going forward. Every distributor that we spoke to has seen an uptick in sales and predicted that 2011 would end up better than 2010 did. Members representing all lines of material handling equipment were cautiously optimistic that the worst of the downturn is behind them and that the material handling industry is gearing up for a big rebound. While the distributors stopped short of saying that the economy is completely back on track, each one acknowledged that we are on the road to recovery.
Entering 2011, David Shank, president of Deluxe Systems Inc. of Florida (Tampa, FL), expected sales to remain constant with 2010. However, after the 1st Quarter, he has had to revise that projection. “Things are going up dramatically,” he says. “I am getting phone calls about projects that we started two years ago. Customers are finally starting to open their wallets for projects.” While the day-to-day orders had not come back as strongly, the major project work that Deluxe Systems has received in the 1st Quarter has already carried it past its 2010 sales total. “I see the material handling industry growing at a higher rate than the overall economic growth,” Shank says. “We have some pent-up demand, but, more important, we have some projects coming out of the ground.”
Charles Williamson, systems integrator at Advanced Equipment Company (Charlotte, NC), has also experienced a sales increase, although for a different reason. “The biggest improvement that I’ve seen has been in the small orders that we didn’t see in the past couple of years,” he says. “The last few years when we would get a good project, we weren’t sure if it was luck or a sign of improvement. Now that day-to-day orders have started coming back consistently, we see that as a true business environment improvement.” Williamson indicated that business is up 10 percent compared to where it was last year at this time. “It’s still tumultuous, but, overall, we are certainly trending upwards. There are still ups and downs, but our lows are not as low as they had been. There is more consistency in the order rate.”
Pent-up demand has been driving business at Allstate Equipment Company (Chesapeake, VA) in the 1st Quarter. “For a long time, people were holding off on purchasing equipment or having it repaired,” says President Jay Terry Jr. “They delayed for so long that the time has come where people have to start making those purchases.” That increase in activity has Allstate on track for an increase in sales over 2010. While 2011 will be better that last year, Terry expects 2012 to have a real boom. “Material handling traditionally lags behind the overall economy. As other industries pick up, that’s when you will see us start to move forward. This year will be better than last year, and we’re expecting to see a very strong 2012.”
On the other hand, Paul Raber, president of Allied Equipment Service Corp. (Indianapolis, IN), sees material handling as a leader rather than a follower. “From what I have seen, as material handling starts to improve, the rest of the economy follows suit. It really is an indicator for the overall economy,” he says. “With more people going back to work and the need for companies to move more product, companies need the right equipment.” Allied Equipment Service is on track to reach its projected growth in 2010. To do so will require the company to hire additional employees. All in all, Raber expects continued improvement throughout 2011.
Greg Wait, president of Fredon Handling (Jackson, MI), also expects improvement over 2010, although he has not seen as much as anticipated so far this year. “I thought that perhaps people would be more anxious to move forward with projects,” he says. “They’re still inquiring, but they have been taking a long time to implement improvements.” Wait expects that activity will continue to increase but has tempered his expectations slightly. “It will be very slow progress, but progress nonetheless. We expect to be up around 10 percent for the year compared to last year.” He, too, expects the industry to lag behind the overall economy, citing companies that have downsized or closed facilities. “A lot of these companies have excess equipment they can utilize before they buy new. They are learning to be a little bit leaner, as well.”
It’s a small sample, but material handling distributors appear to be heading for greener pastures after the tumultuous nature of the past couple of years. With no expectation of a double-dip recession, we seem to be in store for a sustained period of growth, welcome news for MHEDA members.