MHEDA Dealers Across All Segments Forecast Growth
Every year, The MHEDA Journal devotes much of the first quarter issue of the magazine to discussing the economic outlook for the year ahead. We spoke to dozens of MHEDA members in every segment of the industry across North America in an attempt to paint a picture of what to expect in 2014. While the memory of the Great Recession is still fresh in our minds, the industry has taken great strides since the dog days of 2008-2009, with many companies reporting record sales in 2013.
And if 2013 was a banner year for the industry, 2014 is poised to be even better. Not one distributor polled for the forecast expects sales to be down next year, while 69.2 percent forecasted sales to be up. The storage and handling segment of the industry is projected to lead the way with an aggregate forecast of 8.1 percent growth next year!
Though confidence abounds, there is still a sense of unease that permeated the tone of the conversation. Even coming off of a record 2013 and with the expectation of new records in 2014, the cloud of Washington still hangs in the air. There is confusion about how much the healthcare law will impact companies, with several members already seeing their premiums skyrocket. The threat of another shutdown next year gives other members pause, as companies with government contracts or SBA loans have already seen the adverse effects of the first. And finally, there is a strong idea that the industry is succeeding in spite of Washington and not because of it and that the toxic regulatory environment in the country is actually slowing down what could be a more robust recovery.
“It’s not a matter of if,” says one member, when asked if Washington gridlock will impact business next year. “It’s a matter of when and by how much?”
Growth in Store
But even with those potential obstacles to growth in place, 2014 is setting up to be a very strong year for the industry. According to MHI CEO George Prest, the industry grew by 7 percent in 2013 and will grow 11 percent more in 2014! That certainly jibes with what dealers told The MHEDA Journal as all segments of the industry projected growth and only 30.8 percent of respondents expected 2014 to be level with 2013. As they have demonstrated time and again, MHEDA members will do anything and everything necessary to succeed.
Coming into 2013, industrial truck distributors were cautiously optimistic that there would be some growth, though most expected that growth to be relatively small. Overall, IT dealers expected roughly a 4 percent growth last year. However, many companies surveyed saw record sales in 2013 and most expect the momentum from 2013 to carry into 2014. As a whole, IT dealers expect a 4.4 percent increase in sales next year, though not one company expects sales to decrease from 2013 to 2014. Sixty-seven percent of respondents expect sales to be up, while 33 percent expect level sales. Lingering concerns about the healthcare law and the overall state of gridlock in Washington temper optimism, but not enough to slow the momentum we saw this year.
The investment that Garrison Service Company (Nashville, TN) made in a new computer operating system two years ago continues to pay dividends. President Stuart Thompson expects that impact to continue and to be felt in 2014 and beyond. “We feel we have only scratched the surface of the business enhancement that system will yield,” he says. Thompson expects to see a 4 to 6 percent increase in sales in 2014, thanks in large part to aggressive email lead generating marketing efforts, supported by efficient operational processes. And while he expects sales to increase, Thompson is wary of how the climate in Washington will impact business going forward. “It’s not a matter of if,” he says. “It’s a matter of when and by how much? The key here is awareness and knowledge of what’s going on and what one has control over.”
Robert Kehley, general manager of Key Material Handling (Brooklyn, NY) shares those fears of Washington’s impact on the industry next year. “There are too many unknowns,” he says. “It’s holding back growth.” Kehley specifically points to “Obamacare” as one factor that will inhibit growth in 2014. But it won’t be the only culprit. “Consumer confidence is flat,” says Kehley. “That’s the major driving force behind the slow growth.” Kehley expects his 2014 sales to be about level with 2013 but does expect the electric forklift market to continue to grow.
While Mark Milovich, president of Lift Atlanta Inc. (Decatur, GA), expects overall revenue to be up by as much as 10 percent in 2014, he expects equipment sales to be about level with 2013. The company took on the Clark line of forklifts in August for Eastern Georgia and West/Central South Carolina, which has been a boon for the company. “Since Clark has models in all five classes of forklifts, we can market to a wide variety of industries,” Milovich says. Overall, Milovich sees companies slowly coming out of “recession mode” and easing into buying goods and services that they had previously been putting off. However, like many others that were surveyed, Milovich sees the healthcare law putting major strain on the economy. Lift Atlanta will have a 34 percent increase in insurance costs in 2014 and the company is extremely worried about this beyond 2014.
To address the trend of customers tightening their aisle widths to increase their pallet positions, Lift Parts Service LLC (Wichita, KS) has expanded its product offerings into more narrow aisle applications. COO Kyle Free has also noticed that many companies have put off replacement of equipment into 2014, one of many factors that leave the industry on an upward trend for next year. For Lift Parts Service, Free expects 2014 sales to be about level with 2013, based on historic ITA numbers.
New products being introduced by their manufacturing partners will contribute, in part, to Wisconsin Lift Truck Corp.’s sales increasing 5 to 6 percent in 2014. President Jerry Weidmann expects the economy to grow 2 percent next year with the balance of WLT’s growth coming from new business development. “The material handling market will be reflective of the economy as a whole,” he notes. “We are planning on slow growth in the first half of 2014 with growth accelerating in the second half.”
Though Atlantic Coast Toyotalift President Jay Williford expects a fairly flat 2014 for the industry as a whole, he sees ACT leveraging its Industrial Truck investments to a 10 percent increase in sales next year. “We are looking forward to updated products in our current lines,” he says. “That, combined with tier 4 and consolidation plans with our competition should present some unique challenges and opportunities.” The company’s initial target will be medium to large fleet users. “Leveraging our IT will allow us to proactively communicate with customers, providing more value and differentiating us from the competition.”
Fallsway Equipment Company (Akron, OH) saw a strengthening of orders in the late third quarter of 2013 that has created a backlog heading into 2014. This was an encouraging sign to Vice President of Marketing and Sales Doug Carson who sees a 3 to 5 percent increase in sales in 2014. “The strength of our year-end activity and subsequent backlog, coupled with the ongoing shale oil/gas business is positively affecting our area,” Carson says. The company also introduced a large pneumatic forklift line, Kalmar, in late 2013 that will be rolled-out to customers in 2014.
Carolina Handling (Charlotte, NC) saw a strong 2013 that President and CEO Dave Reder expects to see carry over into 2014. “We have seen companies finally spending capital dollars that they have been holding off on in recent years,” Reder says. As an industry, Reder sees a 3 to 4 percent growth next year, though he cautions that healthcare issues and the ongoing gridlock in Washington could impact that projection. If things go as planned, though, Reder plans to add staff in 2014, primarily sales, technicians and support staff.
CMH Services CEO Buddy Smith anticipates a slight recession in 2014 based on the normal business cycle but expects the company’s sales to be level with 2013. CMH Services (Columbia, SC) will be building a new facility next year due to its growth and will also be investing in additional rental equipment, as its rental department has experienced significant growth in the past two years. Smith has also seen some movement in the industry toward more automation, such as vertical carousels and cranes, in addition to goods-to-people gaining momentum.
A strong Texas economy is part of the reason that Sunbelt Industrial Trucks (Dallas, TX) President Bill Rowan sees a 5 to 10 percent growth in 2014. The company recently took on Nissan at its Dallas branch and Doosan in its Houston branch and both have provided strong early results with the expectation for further growth from both lines in 2014. “Little by little customers seem to be gaining confidence in the long-term economy,” Rowan says. To keep up with expected growth, Sunbelt will be adding technicians and sales staff. “Between taxes and insurance, many businesses’ margins have shrunk to the point that you have to question whether it makes sense to be in business or to try to grow your business,” Rowan notes. “Can the U.S. economy survive in this climate? It is imperative that small businesses in this country take a leadership role in projecting a positive attitude and restoring consumer confidence.”
A fellow Texan, ASCO-Associated Supply Co., Inc. (Lubbock, TX) CEO W.B. (Brax) Wright shares Rowan’s concerns about the U.S. regulatory climate. “Everything about the government situation makes me believe our markets and business will be down,” Wright says. “However, I think it has to keep plodding forward and upward, slowly, until it implodes. In the end, it’s all a cheap house of political cards!” Even with this toxic environment, Wright does expect to see a more than 10 percent growth in ASCO’s rental, parts and service business, while whole good sales remain flat. The company acquired new markets and bought a company in 2013 and plans to update or replace multiple facilities in the next several years.
As the general housing market recovers and people continue to move to the Southeast, LiftOne President Bill Ryan sees company sales rising by approximately 6 percent in 2014. This growth will outpace the projected 4.5 percent growth for the overall industry. LiftOne will place a heightened focus on warehouse products and AGVs next year, as Ryan sees this as a growing segment in the industry. “AGVs are becoming more affordable as the technology has improved,” Ryan says. “They are becoming a more cost-effective alternative for some applications.” Ryan sees Congressional inaction potentially resulting in a slow first half of 2014, but on the whole is confident for growth going forward.
A variety of factors will contribute to a 10 percent growth in sales for Atlantic Lift Systems (Norfolk, VA). “Our market has changed very little over the past 20 years, with the exception of the last downturn,” says President Allan Haynsworth. “We see little growth in the overall market for new equipment and will be looking to grow our rental market. We have also taken on some new manufacturers and are going after markets we have not competed in the past.” Being in Virginia, government plays a major role in all of the industries in the area. The gridlock in Washington could negatively influence the forecast for next year.
Coming off of a record-setting year in 2013, Raymond Handling Concepts Corp. President Steve Raymond expects another record year in 2014, as he sees sales growing by 5 to 10 percent in 2014. The company plans to expand its Fremont, California, office by about 1/3, as it needs to accommodate the company’s rental fleet, which has expanded by 30 percent in the past two years. Raymond will continue to add sales staff and technicians next year. “We’ve been in expansion mode for a couple of years now in those areas and we’re finally being able to fill them,” Raymond says.
FMH Material Handling Solutions (Denver, CO) recently became a Kubota dealer to strengthen its presence in the agricultural market. “We’ve ventured off from the traditional material handling road,” President John Faulkner says. “We bought a Kubota dealership in southern New Mexico and are looking at additional expansion into the agricultural industry. We have all the tools to support the distribution of light construction and ag. It just complements our existing business model with the distribution process.” Faulkner expects a 5.5 to 6 percent growth in sales in 2014.
Growth in e-commerce and automation has Engineered System integrators bullish for 2014. Though respondents were relatively split on growth, 57 percent will be up in 2014 while 43 percent will be level, overall, those polled expect an aggregate 7.5 percent increase in sales next year. That number would be even larger with a more certain political landscape and the 2014 mid-term elections could lead to strong growth in 2015.
As manufacturing continues to grow as a percent of overall GDP, Munroe Material Handling Vice President Robert Munroe projects sales to be up in the manufacturing segment. For the company, Munroe projects a robust 10 to 15 percent increase in sales, as the company focuses on improving internal efficiencies and uncovering more projects by investing in marketing. Munroe expects 2014 to gradually get better as the year goes on. Interestingly, though Munroe sees a way for the healthcare law to actually have a positive impact on our industry. “As companies cut back on full-time employees, there will be a need for them to maintain or increase efficiencies without people,” he says. “The resulting automation requirements will be beneficial to our industry.”
Conveyor Solutions, Inc. President Scott Lee also sees very strong growth ahead in 2014. Lee projects a 10 to 20 percent growth in sales next year. “I usually try not to use the past to predict the future,” Lee says, “however, I do think there was more demand in our marketplace than was actually released and converted into business. Some companies in certain vertical markets became conservative in the second half of 2013.” Last year, Conveyor Solutions added to its support and engineering capabilities and is prepared to expand areas of the business that drive revenue. “As a systems integrator, it’s very important for us to support the clients after the initial project is completed,” Lee says. “We’re investing a lot of effort and financial backing into our service and planned maintenance growth. This will remain a focus throughout 2014.”
An upgraded Warehouse Control System (named Shiraz) will be one of the many factors driving a 10 percent growth for W&H Systems (Carlstadt, NJ) in 2014. Vice President and General Manager Ken Knapp also sees pent-up demand, consolidation in certain markets that W&H serves, and e-commerce and Omni-channel opportunities also contributing to that double digit growth. The company will likely add engineering and technical positions to handle its 2014 growth. Though he expects growth, Knapp has some concerns going forward. “Sales tax on Internet orders may/will change locations and size of distribution centers for online retailers,” he says. He also cautions that political gridlock is slowing economic growth.
“Due to the very good year we are having, we feel very positive about 2014,” says Advanced Equipment Company President Daryle Ogburn. “From what we see, not near as many plants are going out of the country for manufacturing and many manufacturers are bringing production back to this country.” Ogburn expects growth from one of the company’s new lines, Spacesaver ActiveRAC and continued growth in conveyor lines and other automation products. For the industry, he expects slow but steady growth, with automation products like robotics growing faster. In 2014, Advanced will be investing in a new accounting/ order system that will allow real-time interaction with the company’s sales engineers.
2014 promises to be a busy year for FloStor Engineering. Though CEO Dave Rebata projects level sales with 2013, the company is positioning itself for strong growth going forward. One special area of emphasis is on the company’s WCS/WMS offering. In the past, FloStor offered WCS/WMS as a custom solution. This led to the company having to support multiple WCS solutions throughout its client base. Last year, FloStor partnered with Invar Warehouse Solutions as its primary WCS platform and the company is already seeing results. In addition to this undertaking, FloStor has plans to add a variety of new staff in 2014, including sales engineers, inside sales personnel and an engineering manager. Finally, the company will be moving to a new facility in the second quarter. While 2014 might not see sales growth over 2013, FloStor has positioned itself well for the future.
AHS, Inc. (Cincinnati, OH) President Chuck Frank has seen e-commerce business flourish in 2013 and expects to see retailers continue to see accelerated growth with the online business. Frank feels that AHS is well-positioned to assist these companies with their e-commerce business. 2013 was a very good year for the company and Frank expects that momentum to carry over in 2014. “We have great exposure to a lot of projects that are slated to get approved and implemented in 2014,” he says. He continues, “I feel, overall, that things are going to remain strong. The key to success is getting in front of the right prospects at the right time. The key to sustainability is having a great plan and process to develop new business.”
“The inability of our federal government to create certainty versus uncertainty has been extremely poor,” says Peach State Integrated Technologies President Jim Bowes. “Washington continues to create uncertainty across the board which, in turn, creates uncertainty and very conservative decisions on the client’s side.” Even with that uncertainty, however, Bowes expects a 15 percent increase in sales in 2014. Automation would be poised for major growth if there were a bit more certainty in the economy. The company’s primary investment for next year will be in adding staff.
Storage & Handling
In 2013, Storage & Handling dealers were the most optimistic of all segments of the industry, with an expected growth of nearly 6 percent. This year, they are still the most optimistic dealers in the industry, however their expected sales have ballooned to more than 8 percent. Multiple dealers experienced record sales in 2013 and many more expect records in 2014.
Increased market share and new client development are two major factors in a 12 to 15 percent projected increase in sales for Storage Solutions (Westfield, IN). “The amount of budget number requests for projects in 2014-15 have been substantial,” says President Kevin Rowles. “That is a good leading indicator for future activity.” Rowles has seen many customers develop an overall lean philosophy and with it a need for service-oriented assistance. He concludes, “In general, the business environment seems to be more active and improving. The term ‘cautiously optimistic’ is a theme that may resonate in 2014.”
“2013 has been an exceptional year for our company,” says Prestige Sales Co. Vice President Steve Westbrooks. “We expect this to continue into 2014 but will continue to be cautious and watch for any signs of a change in that prediction.” A projected increase in both used equipment and project business, as well as new construction all spell a projected 15 to 20 percent growth for Prestige next year. Prestige added two employees in 2013 and plans to add another in 2014. The company is also working on upgrading its website next year.
Nelson Equipment (Shreveport, LA) invested heavily in technology and infrastructure in 2013. President Mark Nelson anticipates being able to manage the business better and increase sales by improved strategies and reaction times going forward. The company projects a 10 percent growth in 2014, spurred by those investments. “We forecast long-term for a 10 percent growth over 2013,” Nelson notes. “However, sales have not performed to expectations this year and we still have maintained our forecast going forward into 2014. Therefore, that number may actually be larger.” Nelson sees growth for all areas of the industry next year.
The temporary government shut down and overall state of gridlock in Washington had a tangible impact on Storage Systems Midwest (Waukesha, WI). “Our sales in the last quarter look to be quite weak and historically our 4th quarters have been good sales quarters,” says President R.J. Safranek. Continued uncertainty in the economy leads Safranek to believe that the economy will lead to a good, but not great environment in 2014, with another potential debt ceiling standoff slated for January. Overall, he expects sales to be level with 2013. The company plans to add new salespeople and design engineers next year.
In 2013, W.W. Cannon grew its business by 20 percent. And while President Greg Brown doesn’t exactly see a repeat of that performance, he does anticipate a further 10 percent growth in 2014. “If 2013 is any indicator, I would say the economy is trending positive,” Brown says. W.W. Cannon became involved with a carousel and lift company in 2013 and will look to intensify its marketing in that area in 2014. In the last few years, Brown has seen customers come to expect quicker solutions, estimates and quotations. To adapt to that trend, W.W. Cannon has made CRM and ERP upgrades.
Federal regulations will have an adverse effect on Cranston Material Handling Equipment Corp. (Pittsburgh, PA) in 2014. “Our primary market is manufacturing,” President David Cranston, Jr. says. “The trend has been sluggish growth in this market segment over the past 12 months. With the onslaught of restrictive federal regulations, increases in healthcare costs and taxes and the sluggish world economy, we are not seeing manufacturers adding capacity with any sort of consistency.” In addition to those regulations, regulations on the coal industry will also dampen the region’s economy, Cranston predicts. However, Pennsylvania has seen a huge boom in drilling for natural gas and oil, which has been a bright spot for the economy and for Cranston. Overall, Cranston sees level sales next year.
An increased focus on Search Engine Optimization led Mathand, Inc. (Woodstock, GA) to an 11 percent increase in sales in 2013. President Connie Costner expects a further 8 percent growth next year. “We did a lot with SEO and got a lot of leads off of the website last year,” Costner says. “We also put another salesperson in place to help with the volume and a lot of those leads actually turned into sales.” The company’s social media efforts, including a presence on Facebook and LinkedIn, along with a company blog, really contributed to Mathand’s strong search engine rankings. The company also developed an e-commerce website for quick ship products that will be released in the first quarter that has Costner very excited and optimistic.
“Our business community has more and more desire to improve storage efficiencies,” says Integrated Warehouse Systems President Brian Reaves. “I believe that we’re going to see more of the same in 2014 and that will drive our sales up 5 to 7 percent.” In 2013, the company upgraded its inventory control system, which increased efficiencies and gave sales personnel an up-to-date inventory. “There is a tremendous amount of pressure on our elected officials at both a state and federal level to continue to stimulate the economy and make sure that we have job growth and economic growth. As long as the emphasis is on those two items, I continue to see the need for an increase in the material handling world when it comes to everything from the storage product sides all the way up to new equipment and new warehouse and distribution centers.”
One area that MHEDA membership has really grown in recent years is in the Dock and Door segment of the industry. For the purposes of this forecast, DD dealers have been labeled as “Diverse” companies. 2014 promises to be a strong year for companies that sell a diverse mix of products, as 78 percent of those polled expect an increase in sales next year. Overall, the Diverse segment of the industry projects a 7.2 percent increase in sales, which last year would have been the highest projected segment by more than 2 percent, but this year, unbelievably, is only the third highest. It seems good times are ahead.
Star Equipment, Inc. (Blaine, MN) President Steve Schmitz expects new equipment sales to be relatively level in 2014 but expects a double-digit increase in the company’s service and repair business. “Star Equipment will continue to invest in our service and aftermarket department,” he says. “We will add staff as required and continue to actively pursue new accounts.” The company will also continue to expand its product offerings geared toward helping customers become more energy efficient.
Since moving into its new location, business for Watts Equipment (Manteca, CA) is booming. President and CEO Shirley Perreira anticipates a 3 to 5 percent increase in sales in 2014. “We have taken on some new products,” she says. “We now sell and install modular offices and mezzanines. People are looking to maximize the space in their warehouses and going up is the best way to do that!” The company has already begun adding staff to keep up with its rapid growth and Perreira anticipates adding technicians in 2014.
PeakLogix (Midlothian, VA) Principal Robert Giberson sees automation and robotics as future growth areas for the company. With that in mind, Giberson projects an 8 percent increase in sales in 2014. The company recently added a professional project manager and a service technician to help PeakLogix handle its backlog and help with the demand the company sees coming next year. “As always, we’ll be investing heavily in our people to help us continue to improve our ‘product’ deliverable to our clients,” Giberson says. “As well, our theme for 2014 is ‘Be Effective,’ so we’ll be looking at the many ways that we can improve our overall effectiveness.” Giberson has seen clients downsize considerably over the past couple of years, which has increased the need for them to partner with PeakLogix.
Engineered Systems projects will carry Jefferds Corporation (St. Albans, WV) to a 5 percent growth in 2014. President and CEO Richard Sinclair sees forklift sales as being relatively flat next year. “We operate in areas that are somewhat dependent on coal,” Sinclair says. “Coal has become something of an endangered species under the current administration and that creates serious repercussions for us.” The company added 13 new employees in 2013. One thing that Sinclair is excited for next year is the company’s fight against breast cancer. A portion of Jefferds’ rental income will be donated to the Susan G. Komen foundation. The company will be renting two new pink forklifts to increase visibility for the effort.
Carolina Material Handling (Greensboro, NC) opened a construction division in 2013 to sell to contractors. President Mid Middleton anticipates this being one of the driving forces that will lead the company to a 10 percent growth in 2014. Another major factor in that double-digit growth will be leads generated by the two recently hired salespeople in new territories. Finally, the company has focused a lot of time and energy on expanding its LinkedIn presence in the past few years, which has shown tangible results and allows the company an avenue to potential customers with recently hired engineers.
Morrison Company President Jim Green sees a relatively flat market for 2014 as compared to 2013. While he has seen growth from existing customers, he expects sales to be about level next year. One investment Morrison will be making in 2014 will be bonuses for key employees. Green sees the industry as a whole in a growth period for 2014.
Deeper account penetration and market share will lead Riekes Equipment Company (Omaha, NE) to a ten percent growth in 2014. “We believe the industry will follow our trend of slow growth, with spikes up or down based on customer acquisition or loss and industry segment growth or shrinkage,” says Riekes President Duncan Murphy. One area that Riekes will be focusing on next year is doing a better job of communicating to the marketplace the breadth and depth of its product offerings. As Murphy says, “You never want to hear the dreaded ‘I didn’t know you did that!’”
SJF Material Handling President Stafford Sterner foresees a 20 to 25 percent increase in sales over 2013. Two of the major reasons for that optimism are companies retrofitting their warehouses to build up and software that they offer from SurePik Automation. “One of the things that SurePik is able to do is it will integrate with anybody’s existing software, any database type of system, no matter the language,” says Sterner. “It will retrofit onto any equipment that a customer has. I can retrofit brand new modern 2013-14 SurePik controls onto a unit that is 20 years old and that unit will function like a brand new unit coming out of the factory.” This software has generated solid interest from SJF clients. Finally, SJF’s devotion to social media and online analytics has been a large reason for the company’s success to date and will continue to be going forward.
Like many respondents, McKinley Equipment Corporation President Greg Larsen expects equipment sales to be flat in 2014 with service being up. All told, the Irvine, California-based dealer expects 2014 to be level with 2013. However, level with 2013 represents a large increase over the company’s 2012 sales. One of the company’s biggest areas of focus in 2014 will be in service. “In regards to service, we’ve added staff, we’ve added technology and we’ve really focused on providing a higher level of service to our customers,” says Larsen. “We call it ‘Five Star Service’ and our customers really seem to be responding to it. It’s about trying to provide a true partnership with our customers and give them more transparency and more visibility with what’s going on with their equipment, service and projects.”