By Brian Feehan, President, ITA
The global growth rate has been maintained at its strongest rate for the first time since 2010. The growth rate throughout 2017 has been above recent trends for both advanced and emerging economies and the acceleration has been more “synchronized” among the major economies than at any time since before the major financial crisis. This is not only true in our economies but we also seem to be experiencing global growth in our industry as well. We have a positive outlook for the remainder of 2017.
Real gross domestic product (GDP) is defined as an “inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year.” Real GDP can account for changes in price level and provide a more accurate figure of economic growth.
One thing that has helped bring some stability to the U.S. economy has been the recently reported stronger real GDP growth. The estimate of growth in the US economy was 2.6% during the second quarter, an increase over first quarter growth of 1.2% in a report from the US Bureau of Economic Analysis and with some now forecasting a 3.0% growth in GDP.
When you look at the details of the GDP data, it is interesting to note that “Personal Consumption” grew by 2.8% during Q2 2017 and has been one of the catalysts of GDP growth in the U.S. Personal Consumption accounts for approximately 67% of the growth and perhaps our strong lift truck industry also reflects this trend in consumer confidence.
The Labor Department’s Bureau of Labor Statistics (BLS) said the unemployment rate was steady at 4.3 percent. Another way to look at the current unemployment sector in the US is to look at a snapshot from 7 years ago at the height of the recession where unemployment stood at 10% to where we are now at 4.3%.
The Federal Reserve approved two rate hikes in 2017 to date. The policymaking Federal Open Market Committee increased its benchmark target a quarter point. The new range will be 1 percent to 1.25 percent for a rate that currently is approximately 0.91 percent. The big question now is whether the Federal Reserve will decide to raise interest rates again in 2017? Many experts have expressed more confidence that the Federal Reserve is likely to leave interest rates are their current levels due to low inflation and low wage growth.
Overall US manufacturers are seeking to maintain the strong recovery. Although new orders for manufactured durable goods in July decreased $16.7 billion or 6.8% to $229.2 billion – this decrease followed a June increase of 6.4%, as reported by the U.S. Census Bureau in August.
A weaker dollar and stronger markets around the world could be seen as helping demand and production for export products. The US Department of Commerce reported earlier that the trade deficit shrunk by $2.7 billion in June to $43.6 billion, a decrease of 6.0 percent over the revised May figure of $46.4 billion. It is important to note that the trade deficit is running 2.3% below last year’s level, reflecting a larger decrease in imports compared to exports. However, when measured in September 2017, the trade deficit increased 26.7 billion or 10.7% from the same period in 2016.
The July Purchasing Managers Index (PMI) registered 56.3 percent, a decrease of 1.5 percentage points from the June reading of 57.8 percent. It is important for us to recognize this report does not track hard data but the present situation in a number of industries derived from a survey of purchasing managers from those industries. A reading over 50 from those surveyed indicates that a majority reported that conditions in their industry are improving.
US Forklift Industry
2016 was a record setting year (on top of the record year in 2015) for our industry in the US with approximately 231,000 units sold. This growth speaks well of the current business environment our industry is enjoying and also reminds us of how prevalent our products are in all facets of our economy.
A further breakdown of the North American lift truck trends, starting with engine types we have witnessed a slight increase in diesel purchases, this could be related to timing of certain customer activity and therefore the proportion of diesel to LPG may shift back to annualized levels by the end of this year. Unlike other regions in the world, diesel power is not as popular in North America, and is basically used by customers in outdoor, heavy-duty applications with larger capacities.
However, to be clear in the internal combustion market, over the last 5 years LPG has increased in popularity compared to diesel and gas customers. Trends in electric vs internal combustion lift trucks in North America has witnessed a slow increase in the popularity of electric lift trucks over the years. Our data shows increasing popularity in warehouse lift trucks, which can be related to the shift in electric lift trucks I previously mentioned. But this also can indicate a general shift in our economic landscape, to less manufacturing applications and more distribution or warehousing environments.
2017 has been another strong year for our industry as retail orders are near the record setting levels of last year. Overall, the North American industry is up 5.7% year-to-date compared to last year (through October 2017).
National Forklift Safety Day was originally launched in 2014, this past June we held our 4th Annual National Forklift Safety Day in Washington, DC. This day provides an opportunity for the industry to raise awareness and educate customers, policymakers and US government officials on forklift operating safety practices. Experience has (and will continue) to allow us to refine our message and grow participation in the event. I was pleased by all ITA member’s support of National Forklift Safety Day this year across the country by hosting open houses, providing free operator training classes as well as distributing safety materials. We welcomed speeches from influential members of Washington and also industry experts during our event held in Washington DC including:
- The Honorable Glenn Grothman, Education and the Workforce Committee, US House of Representatives (R-WI)
- Mr. Brett Wood, President & CEO, Toyota Material Handling North America, ITA Chairman
- Mr. Patrick Kapust, Deputy Director, Directorate of Enforcement Programs, Occupational Safety & Health Administration
- Mr. Tony Smith, Director of Safety Outreach, Institute of Scrap Recycling Industries
- Mr. Kevin Krakora, Vice President, Design, Quality & Product Support Mitsubishi Caterpillar Forklift America, ITA NFSD Task Force Chairman
- Mr. Scott Bicksler, Lead Safety Manager, Aerotek
This year’s attendees included a number of guests from the end user community, Occupational Safety & Health Administration (OSHA) as well as members of the ITA.
We were able to increase awareness of fork lift safety by again generating a considerable amount of media coverage related to this event, which included circulation numbers from all of the media outlets that (similar to numbers in 2016) exceeded 58 million. I hope that you will be able to join us on June 12, 2018 as we celebrate the 5th Anniversary of National Forklift Safety Day.
Our industry plays a significant role in all of our respective economies through our support of moving goods, our manufacturing and employment. We partnered with Oxford Economics to conduct the study to provide a synopsis of the US powered industrial truck industry based on a statistical analysis and an industry survey. This information was used to evaluate the contribution of the US industrial truck industry by quantifying the direct, indirect and associated impact of our businesses have on the US economy. I wanted to share with you some highlights from the report:
- Globally, more than 1 million industrial truck or forklift units are sold annually.
- In the U.S., Canada and Mexico, more than 230,000 units were sold in 2016.
- With over 200,000 units in the U.S. alone, more than 60 percent are electric.
- The industry’s economic contribution to the U.S. gross domestic product (GDP) was $25.7 billion in 2015.
- The industry’s activity supports a total of 209,000 U.S. jobs.
- Each job within the industry supports 2.5 additional jobs elsewhere in the U.S. economy.
- The industrial truck manufacturing industry workforce has a greater share of veterans compared to all other manufacturing as well as other industries.
- In 2015, the industry paid $5.3 billion to local, state and federal governments in taxes.
Our industry has been fortunate over the past few years to be operating in a robust market. As described in the Oxford Economics report, our industry has a strong presence in many of the communities we serve, are fortunate to substantially contribute to the growth of our economy and provide good job opportunities for many families. It is through the dedication and commitment of the people in the industry that affords us success. Thank you.
You can find out more about the Industrial Truck Association at indtrk.org