Materials handling equipment orders stay strong

By DARYL DELANO , Delano Data Insights -- Modern Materials Handling, 4/1/2000

By all indications, the materials handling equipment industry closed out 1999 in fine fashion and promises still more gains this year. The exclusive Modern Materials Handling magazine index of orders increased by an estimated 14.4% between the third and fourth quarters of last year. This represented unambiguous good news for the industry since little, if any, of the surge could be attributed to normal seasonal factors.

Between the third and fourth quarters of 1998 our orders index had risen by a scant 0.2% and had declined by almost 13% between the same two quarters of 1997. So the industry as a whole was still clearly on the upswing as the 20th century drew to a close.

In fact, the MMH index of orders for the fourth quarter of 1999 was 29.7% higher than during the final quarter of 1998. On a cumulative basis, our orders index for all four quarters of 1999 averaged 11.6% greater than the 1998 average. The downward trend in the index-which fell by almost 8% between 1997 and 1998-hit its low point during the fall of 1998. It then recorded progressively stronger growth as we moved through the twelve months of last year. Over-the-year improvement moved higher-to a 4.0% growth rate-by mid-year 1999, before accelerating to 13.5% growth in the third quarter and to the almost 30% over-the-year gain that we see for the quarter ended last December. The estimated 11.6% gain in the MMH index of orders for 1999 as a whole recovers all of the 1998 loss-and then some.

Trends in 1999 orders for industrial trucks and conveyors, the two most important industries that make up our comprehensive materials handling industry index, showed a similarly healthy and improving pattern during 1999. Fourth quarter 1999 industrial truck orders were a strong 9.7% higher than in the previous quarter, and 15.8% above their level of a year earlier. Lift truck orders had risen by a little bit more than this between the third and fourth quarters of 1998 (12.7%) but had moved up only a scant 0.6% over the same two quarters of 1997. Preliminary figures for full-year 1999 put industrial truck orders 6.5% above their total for all of 1998, much better than the marginal 0.8% gain registered between 1997 and 1998.

Unit handling conveyor orders advanced an extraordinary 29.5% between the third and fourth quarters of last year. October-December 1999 orders for new unit handling equipment were 51.2% above the level of the final quarter of 1998, and only 3.1% below the extraordinary first quarter 1999 order level. Between the third and fourth quarters of 1998, orders for unit handling conveyor advanced only 11.7% and they actually declined by 9.3% over the same two quarters of 1997. From this historical perspective, last year' s second-half performance of the unit conveyor sector is even more impressive. Preliminary totals for 1999 show unit handling orders 34.1% higher than during 1998.

What' s going to happen in 2000 and 2001? Based on early 2000 trends, we' re betting that total materials handling industry order levels will inch up a bit more this year, and then climb at a somewhat stronger rate during 2001. We' re forecasting continued economic expansion through at least the year 2001, with the MMH materials handling index next year moving up about 7% following only a 2% increase this year.