Materials handling: MHIA says the economy is not out of the woods yet
Through the first half of 2009, orders for new equipment across all product categories tracked by MHIA were down nearly 45% compared to 2008, while demand was down nearly 39%.
By Bob Trebilcock, Executive Editor -- Modern Materials Handling, 10/6/2009
AMELIA ISLAND, FLA.--We’re not out of the woods yet.
That was the main takeaway from a presentation today on the state of the materials handling and supply chain software industries at the fall meetings of the Material Handling Industry of America (MHIA) held in Amelia Island, Fla.
Through the first half of 2009, orders for new equipment across all product categories tracked by MHIA were down nearly 45% compared to 2008, while demand – the product being used and consumed by end users – was down nearly 39%. Early numbers for July, August and September are consistent with the first half of the year.
The one bright spot: The ISM Index, a monthly composite index released by the Institute for Supply Management based on surveys of 300 purchasing managers throughout the United States, recently passed an important threshold that typically indicates a turnaround is in the works. Unfortunately, that turnaround typically takes 12 to 15 months to occur.
MHIA’s bottom line: “We are in the middle of a serious contraction this year,” said Hal Vandiver, MHIA’s executive vice president of business development. “Based on the indicators that we follow, we are forecasting that 2010 will be 6% to 8% below 2009 for the industry, and it will be 2011 before we see the industry come back into growth.”
In addition to Vandiver’s presentation, each of the product sections gave a snapshot of how its industry has been affected:
Rack Manufacturers
For the 12 months ending June 2009, orders for rack systems were down 32% from the prior 12 months. The tons shipped, another important measure, was down nearly 46%, and the market had dropped from a peak of $1.4 billion in annual sales to an estimated $800 million for the 12-month period. “I am confident we have bottomed out,” said George Prest, Unarco. “But I’m skeptical that we’ll have the 18% growth in 2010 that some in the industry are predicting.”
Ergonomic Systems
The market for ergonomic systems and lifts was off 20% from the prior year period through the second quarter of 2009. “Technically, we have hit a bottom,” said Briand McNamara, Southworth International Group. “But it doesn’t feel very good.”
Conveyor & Sortation Systems
The market for packaged conveyor – the type of systems used in most warehouses and distribution centers – declined by 30% for the 12 month period ending in July 2009, said Steve Bucella, Dematic. MHIA is expecting a total year decline in the conveyor market of 35- to 38% for 2009, and a further decline of 5- to 10% in 2010, with a recovery of 10% to 12% in 2011.
Overhead Materials Handling & Cranes
New orders for cranes are down by 50% for 2009 compared to 2008, with no expectation of growth before the end of 2010. From there, growth is expected to average 2% a year, said John Paxton, Demag Cranes.
Casters & Wheels
Caster manufacturers have seen a 25% drop in their market in 2009 – relatively strong performance compared to their peers – but see continued contraction into 2010. “We do see a six- to eight-year up turn in business after that,” said Dave Lippert, Hamilton Caster Manufacturing Co.
Automation
The automation market consists of a number of different products – everything from automatic guided vehicles to robotics to automated storage solutions – making it difficult to quantify overall industry results. Anecdotally, “our members have been seeing signs of life in the second half of the year,” said Ed Romaine, Kardex Remstar. “We believe our end of the industry is holding up better than other groups, and we see 2010 as a year of recovery.”
Supply Chain Software
Annual sales for warehouse management systems, one of the most relevant categories of software to the warehousing and distribution industries, fell from $1.24 billion to $1.195 billion from 2007 to 2008. Industry experts estimated that it has continued to contract in 2009, but the industry has been less affected than other segments. They expect the market to continue growing again in 2010.
Industrial Trucks
The lift truck industry has seen a 53% drop in the number of units sold annually since 2006, from 191,000 trucks per year to 89,000. Since so many lift and industrial trucks are used in construction, “we don’t believe lift trucks will begin to rebound until housing and construction rebound,” said Vandiver.
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