Conveyor market starts 1999 with a bang and rest of year looks good
Here are three other measures of materials handling orders and prices.; With a push from conveyor bookings, the materials handling index stands at its highest level since June of 1997.
By Elizabeth Baatz -- Modern Materials Handling, 7/1/1999
If Federal Reserve chairman Alan Greenspan is worried that the economy might be overheating, perhaps he has been looking at some of the recent materials handling market data. The surging economy is lifting some markets to extraordinary new heights. The Modern Materials Handling index of orders rose 16.4% from the final quarter of 1998 to the first quarter of 1999.The primary push for this hike came from the conveying equipment industry, which enjoyed an exceptional first quarter. Data from the Conveyor Equipment Manufacturers Association indicates orders for unit handling equipment rose 56% from the final quarter of 1998 to the first quarter of 1999. Compared to the first quarter of 1998, orders are up 25%. And so the MMH orders index for all equipment types stands at its highest level since June of 1997 (chart, right).
Surprisingly strong growth in the end-markets that buy conveyors is behind the climbing index value. Growth for manufacturers and services that use conveyors was at a 6.2% annual rate in April 1999. In April 1998, these markets grew only 4.7%. Growth in the industrial construction sector has given the biggest boost to the conveying equipment industry's recent order boom. With no recession on the horizon, the forecast calls for 6% growth in conveying equipment orders by the end of 1999.
Not all materials handling markets are swimming in the current economic boom, however. In the first quarter of 1999, members of the Industrial Truck Association reported orders fell 3.9% from the fourth quarter of 1998 and declined 13.2% from a year ago. Most of this drop came about at the hands of an extremely weak January; orders rebounded a bit in February and March.
These order trends appear to be yielding different pricing strategies in the materials handling markets. In the conveyor industry, strong demand allowed the industry to push through a 1.8% price hike for its average product sold in April. The largest price increases were seen in bulk handling pneumatic conveyors (up 5% from April 1998 to April 1999), the pallet, portable, and tow category of unit handling conveyors (up 4.1%), and parts and accessories for unit handling conveyors (up 2.7%).
Meanwhile, average product prices in the industrial trucks and tractors industry rose a mere 0.1% in April 1999 from year ago levels. This industry has struggled to hike prices in recent years and has generally not been able to keep up with escalating manufacturing costs.
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