Record order levels pace positive forecast for '98
Look for the lift truck, unit-handling conveyor, and other sectors to stay abreast of or top their solid '97 bookings in '98.
By Lisa A. Goetze -- Modern Materials Handling, 1/1/1998
Last year was a good one for conveyor and lift truck manufacturers. As 1997 drew to a close, the conveyor industry expected to see sales of bulk- and unit-handling conveyors hit a record $6 billion. Lift truck makers were forecasting a new high of 165,000 truck orders, at the retail (dealer level) for equipment in classes I-V. Other materials handling equipment and system sectors did well, too, as shown by this magazine's exclusive materials handling index (chart below).But what's ahead? Materials handling equipment manufacturers certainly benefited from the over 20% annualized growth rates in spending for new equipment during the first two quarters of last year. This was reflected in last year's orders data for the industry's two most important individual product categories, industrial trucks and conveyors.
Yet a modest note of caution for the coming year is in order: "We project the volumes of bookings for both of these segments of the market to remain robust, al-though slightly lower than their phenomenal 1997 levels," says Daryl Delano, Director of Economics, Cahners Economics.
Unit-handling conveyor bookings
Third-quarter 1997 orders for the unit handling conveyor industry were down a deceptively sharp 18.2% from the strong numbers for the first half of the year. Orders during July-December were 6.3% better than they had been for the same period in 1996, however. And total orders for unit-handling equipment during the first nine months of 1997 were running 11.9% above the 1996 pace.
Mike B. McKee, president of the Conveyor Equipment Manufacturers Association (CEMA), and executive vice president, sales, of Automatic Systems, Inc., notes that the "past three or four years have been especially good ones" for the conveyor industry. Booked orders for 1997 in the unit- and bulk-handling conveyor industry will exceed $6 billion for the first time, according to McKee. (CEMA reports dollar figures for unit- and bulk-handling equipment jointly; disaggregated totals are not available.)
Last year saw an "11% increase in orders, while the dollar volume of bookings was up 17% over 1996 levels," McKee says. He also reports that among CEMA members, "95% of companies expect a favorable situation in 1998."
McKee also foresees strong growth potential for conveyor equipment within the international market, especially the Far East and developing countries. As one might expect, U.S. conveyor exports to these regions are also robust.
Lift truck orders strong
As another indication of the growing importance of international markets for many industries, Larry A. Borre, the new president of the Industrial Truck Association (ITA), and vice president of customer satisfaction for Nissan/Barrett, has pledged to work to expand the scope of ITA's annual Presidents Forum to include forklift manufacturers from Southeast Asia. ITA also wants to "increase the participation of Japan and Europe, and [we] will continue to work together on common interests," Borre says,
Industrial truck orders were down 4.9% between the second and third quarters of 1997. However, third-quarter 1997 orders were 37.2% above the level for the same quarter in 1996; second-quarter orders rose 34.8% above the total for the spring of 1996.
For the first ten months of last year, total industrial truck orders were tracking 30.5% ahead of the pace set in 1996.
"We expect to find that industrial truck orders were up between 25% and 30% during the past year, once all the accounting is finalized," explains Cahners Economics' Delano. "Although at the beginning of 1997, we had predicted strong market growth for the year, we were not optimistic enough," he adds.
"Our evaluation of the conveyor market, however, is unchanged from the predictions made in the fall," Delano declares. Moreover, he says that "the lofty growth rates for the unit-handling conveyors and lift trucks will not continue through 1998 and 1999, [but] we continue to believe that most parts of the materials handling industry will be able to maintain order levels that are at least close to the healthy 1997 totals."
The exclusive Modern Materials Handling index of orders fell by 7.7% during the third quarter of 1997, following a strong 7.9% gain during the second quarter, and an exceptional 14.7% gain during the first three months of the year. The third-quarter decline, however, was not far out of line with normal seasonal patterns.
Consequently, "the market looks very strong, and we expect to see the overall orders index grow by 14.4% for 1997," says Delano. The past year will certainly be seen as a positive one, the first one for the materials handling industry since 1994.
Although the coming year will be a good one, the market will cool gradually during the early months of 1998. Says Cahners Economics director Delano, "the extraordinary rate of growth in business investment simply cannot be sustained indefinitely."
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