The early months of 2001 turned out to be an ugly time for materials handling equipment manufacturers and distributors. The slowdown in orders volume that showed up during the second half of last year became more firmly entrenched during this year's first quarter. And, the early numbers on industry orders for the second quarter of the year showed a deepening of the downward trend. But, we're still confident that things will be looking up by the end of this year, and that 2002 will be a time of solid recovery for the industry.

The exclusive Modern Materials Handling magazine index of orders fell by an estimated 4.4% between the fourth quarter of 2000 and the first quarter of this year. In our forecast late last year, we were looking for about 13% over-the-quarter growth in orders during the first three months of 2001. That was down from the average of 20% over the past decade. But the absolute decline in orders activity between the final quarter of last year and the first three months of 2001 paints a picture of a much weaker market than could have been anticipated.

After growing by 11.6% in 1999 and by 2.4% last year, we now expect that our composite orders index will fall by 13.3% over the course of 2001. That will put orders at nearly the same levels as two years ago.

April 2001 industrial truck orders were 39.4% lower than during April 2000, according to the Industrial Truck Association. Meanwhile, total orders through the first third of this year were running 38.8% below the January-April 2000 total says the ITA. This comes on the heels of two years when annual growth averaged about 7%.

The orders numbers coming out of the Conveyor Equipment Manufacturers Association (CEMA) survey showed a similar weakening growth pattern. The absolute orders level was (as seasonally expected) stronger during the first quarter of this year than over the final three months of 2000. However, the orders numbers have weakened dramatically as we've moved through the year. Total conveyor orders during January of this year were actually slightly greater (2.9%) than in January 2000. February orders slipped to a level almost 19% below the year-earlier total, and March orders plunged to a point nearly 60% behind the March 2000 total.

Consequently, we think the index of orders will shrink by about 15% this year. However, because of the surprisingly depressed state of the market this year and partly because we believe that capital investment spending will pick up dramatically by the spring of next year, we're forecasting a gain of about 11% in our composite orders index during 2002. It may be wishful thinking but it seems that the market will have nowhere to go but up after a demoralizing performance during 2001. Remember that the darkest hour is always before the dawn.