MHEDA Supplier Forecast: Five Reasons MHEDA Suppliers Are Bullish For 2017

January 1, 2017

The measured optimism that MHEDA Suppliers were feeling last year at this time was largely validated, with many Suppliers seeing sales increases, and sales records in some cases. Though manufacturers of material handling equipment saw gains in some areas offset by declines in other areas, a similar sentiment permeates the supplier sector this year as it looks ahead to 2017. MHEDA Suppliers are ready, as always, to overcome whatever obstacles are in their path, and most of the MHEDA Suppliers we spoke to are expecting growth. Five of the main reason why are outlined below.

GOVERNMENT POLICY WILL SPUR GROWTH
MHEDA Suppliers expect the results of the November elections to have a notable effect on business.

A 5% sales gain is in the offing for Hamilton Caster & Mfg. Co. (Hamilton, OH). “This is largely due to the fact that the government will be run by one party so things may actually get done,” says Steve Lippert, executive vice president. “Oil and gas now have a pulse, and the new president’s commitment to defense and infrastructure improvements will help our industry. Big changes and fewer regulations will create a more favorable business climate.” The company will add outside salespeople to support distributors and also created a new series of high-heat casters and wheels in response to customer requests. In addition, the company will invest in a new powder-coating system and new welding tables and robots.

Terry Wickman, president, Keytroller Inc. (Tampa, FL), is looking forward a growing economy under the new presidential administration. He believes the economy will thrive, and is also making internal improvements to help drive sales growth as well. The company will add salespeople and customer support staff to handle the influx in business. “Clients are recognizing the productivity improvements that result from monitoring, weighing equipment and electronic devices that gauge performance,” Wickman says. “Our products are in line with that goal and will continue to increase as we add new products and features to our microprocessor-driven devices.”

It won’t all be smooth under a new administration, however. “The new president’s position on imports will dramatically increase the cost of imported goods,” says Bob Herling, president of Tri-Lite Inc. (Chicago, IL). Herling expects to offset this concern by developing unique new products that will allow the company to re-serve an old market. Among those products are new rotating LED warning lights in the First Quarter. It all adds up to expected sales growth of 3-5%.

In states like New York, other government initiatives will have significant impacts on the overall business climate. “We have a new $15 minimum wage and paid family medical leave,” says Nathan Andrews, president of Morse Manufacturing (East Syracuse, NY). “Although the FLSA overtime regulations are unlikely to directly affect many material handling manufacturers or distributors in a significant way, ancillary businesses are likely to negatively impacted.” Even so, Andrews expects to see increased sales on the order of 5% or more driven by increased confidence domestically in the manufacturing sector and stronger international business. In response, the company will hire a few new employees and release a new product early in 2017.

NO MORE ELECTION YEAR JITTERS
In some Suppliers’ opinion, at least as important than the actual result of the election is the fact that it is behind us.

Bryan Carey, president of Starrco Company, speaks for many MHEDA Suppliers (and likely much of the known universe). “I think just getting it behind us will help everyone,” Carey said. Carey also points to upticks in cleanroom business, industrial real estate, and the burgeoning cannabis industry as indicators of a 25-30% increase. The company will implement new sales technology to assist its dealer network close more business, and new internal technology will help design and ship products faster in response to customer demands for more and more speed.

The political gridlock and extended buildup to the election caused consumer uncertainty and delayed purchasing, according to Lyn Shepperd, director of dealer development at Kalmar USA (Cibolo, TX). He expects a recovery of energy-related sectors, especially oil and steel, and a strong agriculture market that will help his company realize sales growth of 5-7%. He has seen safety become more important to customers. Added positions in sales and parts will help the company outperform what he believes will be a flat market.

At Narrow Aisle Inc. (Dallas, TX), Bruce Dickey, vice president of sales, agrees. “The election year affected the implementation of planned expansion projects; now we can return activity to normal,” says Dickey, who predicts sales growth of 15-20%. Customers continue to need to maximize warehouse space, but their approach to purchases is changing. “They can find more information on the internet, which takes the sales advantage away from the incumbent dealer and increases competition,” Dickey adds. He believes past investments in the Internet will pay off to capitalize on those customer needs.

STRONG DISTRIBUTION CENTER MARKETS
One market that has continued to provide positive results is construction and maintenance of distribution centers.

Hytrol Conveyor Company (Jonesboro, AR) will see a sales escalation of 5-6%, according to David Peacock, president. “The driver for the growth will be companies continuing their expansion in the e-commerce market; companies driving to create leaner, more efficient distribution centers; and a resurgence of manufacturing in the United States,” he adds. The company will add controls engineers and industrial engineers in an effort to make manufacturing processes more efficient. A new product line for the food, pharmaceutical, and beverage markets will allow distributors to focus on a new segment of the market, while a production area expansion within the existing warehouse will take place during the First Quarter.

“Our integrator partners are seeing growth in many areas of the distribution center, with typical order fulfillment systems leading the way,” says Gordon Hellberg, vice president of integrator sales, Daifuku/Wynright (Elk Grove, IL), while predicting a sales increase between 20-25%. The company will expand its regional sales forces and application engineering team to handle the anticipated growth. In addition, the company is expanding its manufacturing plant to accommodate a new parcel conveyor line and completing its new Daifuku/Wynright Innovation Center that will exhibit conveyor, robotics and automated storage & retrieval system products.

At Douglas Battery (Winston-Salem, NC), Brian Faust, general manager, sees growth within the distribution center segment as customers become more reliant on data and information to support their decision-making. “DCs will continue to thrive. Large national accounts will continue to grow, and they will open more distribution centers nearer their customers to speed up delivery and improve customer service,” Faust says. Douglas itself, in fact, is contemplating an expansion to its own distribution center in early 2017. New charger products introduced in 2016 will help increase market share, but he is wary that state regulations will continue to force changes in product specifications and construction methods. “Customers are becoming more reliant on data and information to support their decision-making.” It all adds up to a sales increase of 3-4%.

POSITIVE OUTLOOKS ELSEWHERE
A rising tide raises all boats, and MHEDA Suppliers expect a cumulatively strong industry to provide positive individual results.

“We listen very carefully to the economic forecasters provided by both MHEDA and MHI. Over the years their forecasts have been very good and we have found our business follows the activity of the industry as a whole,” says Milt Tandy, vice president of sales, Wirecrafters LLC (Louisville, KY). With that in mind, Tandy sees a 5% increase over a record 2016. Primarily, the increase will be the result of upgraded technology to improve communication with distributors and the addition of sales, engineering, and production staff.

Jim Spera, regional sales manager at Ambaflex Inc. (Arlington, TX), the expectation is for business to be up 3-4% based on relevant industry forecasting data. The company will add salespeople, target vertical markets and launch a new product launch to help achieve the goal. The company will also add a showroom to its manufacturing facility in Canton, Ohio. “Customers are requesting faster response to RFQs and asking for extended terms of up to 120 days. We try to negotiate better terms for our organization as continued extension puts a cash flow strain on any company,” Spera says.

ABILITY TO MEET CUSTOMER NEEDS
Customer needs are changing, and the companies that can meet those needs are well positioned for success.

Such is the case for Matt Futrelle, U.S. market manager for Continental Tire the Americas (Fort Mill, SC), who expects double-digit growth in the material handling sector, driven at least in part by increases in port business, earthmoving equipment, and top-line forklift solid and pneumatic tires. Specific to the material handling sector, Futrelle attributes that growth to an expanded dealer network, increased direct end-user business and increased domestic warehouse capacity. “End-users have recognized the need for total cost of ownership, including total hours of service and lower rolling resistance. Proving this to our customers has helped us outgrow the market the last several years,” Futrelle says. Continental will add sales and operations personnel to handle the anticipated growth.

A similar outlook is given by Steve Phelps, vice president of marketing at Bluff Manufacturing (Fort Worth, TX). “We are adding and improving tools to help our channel partners,” he says, adding that the company is adjusting to the need to meet customer demands for more online resources and time-sensitive response times. A strong 2016 fourth quarter by a new field sales team and the continued growth of new warehouse constructions leads Phelps to forecast 6-8%. He expects the increase to be driven by continued sales efforts, employee and channel partner training, and advances in general industrial equipment expenditures.

For Dirk von Holt, vice president of sales and marketing, TVH (Olathe, KS), customer satisfaction comes down to quality and availability. “Of course, the quality has to be there but after that, having our parts and products available is what our customers want most. Availability is more important than lower pricing because having the product is what makes them valuable to their customers,” he says. TVH will aim to continue to meet that customer need with the expansion of a warehouse in Mississauga, Ontario, Canada in late 2017. He sees continued environmental regulations having an impact on the industrial truck aftermarket along with industry consolidation. “Fewer brands means less need for us to sell parts, and more electric trucks means fewer need for us to sell parts,” von Holt adds. In response to these ongoing trends, the company has diversified into industrial and small construction equipment parts to drive growth. All in all, von Holt sees modest single-digit growth in 2017, slightly outperforming a flat industry.

These are only a few of the many reasons MHEDA Suppliers are looking forward to the year ahead. Of course, nobody knows for sure what will happen. But one thing is certain – MHEDA Suppliers will be up to the challenge.