State of the industry

SAN ANTONIO—I’m in San Antonio this week, home to the Alamo and the annual meeting of the Material Handling Industry of America. At today’s meeting, Hal Vandiver, MHIA’s long-time economist
and president of F. Hal Vandiver & Associates, and representatives for each of the product groups gave their economic outlooks.

What’s the outlook: Slow, and slowing, but steady growth over the next few years. The two product categories predicting a modest decrease in their markets – AGVs and AS/RS (both expect a mild contraction in their industries in 2012 and flat in 2013) are coming off record years in 2011. In the case of those two product groups, flat’s still pretty good.

Looking at the industry as a whole, Vandiver expects the national GDP to grow in the 2-to-3% range for the next two to three years and industry growth of 6-to-8% for 2013. While many industries would be thrilled with 6-to-8% year-over-year growth, that’s roughly half the rate of growth from 2011. “I don’t see things going south for us,” Vandiver said. “But I do see a declining rate of growth.”

Vandiver’s cautionary note: “Watch Europe and China,” he said. “Events in the export market aren’t good for us.

Here is a rundown on how representatives of the product categories view their markets:

Casters and wheels: Similar to Vandiver’s outlook for the overall market, caster and industrial wheel manufacturers expect a period of declining growth – business will be up, but not as up as
it has been.

Industrial racks: The rack market is still recovering from the Great Recession, when sales dropped in 2009 by 28%. The market is expected to be up 1.2% in 2012 and up by 13% in 2013.

Ergonomics and lift devices: Many labor trends are working in the favor of the market for ergonomic equipment, including an aging workforce, more women in the workforce and the expanding American waistline. Like the overall industry, ergonomic equipment manufacturers expect growth at a declining rate.

Overhead material handling: Demand has been strong, especially for overhead cranes. That demand is expected to continue at least through 2013. The hoist market is expected to be up by
11% in 2012; the crane market is expected to decline by 2% following a record year; and the overhead monorail market is expected to be up by 14%. In 2013, expect a 5% increase in hoists; a 1% decrease in cranes; and an 8% increase in overhead monorails.

Lift trucks: From 2009 through 2011, the lift truck market grew by 41%, making up some of the ground the industry gave up in the recession. Because of those significant growth, the industry
expects to post 12% growth in 2012 and 1% growth for 2013.

Conveyors and sortation equipment: Coming off its second strong year in a row, the market for conveyors and sorters is looking at 17-to-20% growth in shipments for 2012. The industry hasn’t posted a forecast for 2013, but growth is expected to continue, but at a declining rate.

AGVs and AS/RS: Both AGVs and AS/RS posted records sales in 2011, both in terms of actual dollars and number of units sold. In the AS/RS industry, for instance, 2010 – 2011 go down as
the longest and largest growth period in the industry’s history. For that reason, both product groups expect negative growth in 2012 followed by flat sales in 2013. Given the strong numbers those industries posted in 2011, slight declines aren’t bad.

Information technology: The markets for automatic data capture equipment and supply chain execution software systems that manage warehouses, plants and transportation departments
remain strong. Supply chain software is expected to grow from 7.3-to-10.3% depending on the application; and the overall ADC space is forecast to grow by 7.5%.