Materials handling: What Modern’s readers say about conveyors

You can learn a lot from a reader survey.

Last month, the research department at Reed Business Information, Modern’s parent company, sent out a survey to our readers who were personally involved in specifying or buying conveyors and conveyor parts and equipment for their companies. We wanted to find out their purchasing plans for the next 18 months. I presented the results at CEMA’s annual meeting in Marco Island, Fla., last weekend.

First, a few housekeeping issues. We received 437 qualified responses from a mix of manufacturers, distributors and warehouse operators. The average annual revenue of the respondents was $428 million, with 30% reporting revenues of $500 million to more than $1 billion. Who’s involved in a conveyor purchase? Sixty-two percent are engineers, 51% are facility managers, and 43% are senior level executives. Clearly, it’s a team effort these days. Finally, most conveyor purchases (68%) will be part of a larger, integrated systems solution and part of a facility expansion (63%).

Some of the findings were predictable. It was no surprise to learn that in an economic downturn more than half (57%) of the respondents said they were taking a wait and see attitude before investing in new conveyor equipment or that their overall materials handling budget had been cut for 2009. Seventeen percent said they would be spending less – an average of 38% less – on conveyors/equipment over the next 12 months. Only 20% said they would be spending the same or more on conveyors this year. The average spend: $255,000. The bright spot: The average spend is slightly higher than the average spend for 2008 ($249,000), and those companies with a budget expect to spend 43% more in the next 12 months than they did in 2008.

Some other findings gave me reason to pause. Our readers were asked how important certain factors were in their conveyor purchase consideration? Reliability has been the most important factor, cited by 71%, in each of the last four years we’ve done the survey. It probably comes as no shock that 61% said that price was a very important consideration this year, up from 40% in 2008.

The stat that caught my eye: Forty-nine percent said that the reputation of the supplier was very important to them, up from just 24% in 2007. Supplier reputation has been a factor in the purchase of software solutions ever since the dot.com bust put a number of small but innovative software providers out of business. This is the first time I’ve seen evidence that supplier viability is playing a role in the purchase of equipment. If I were an equipment supplier, I’d want to stress the financial strength of my company whenever I could.

A second pair of stats caught my eye because we hear so much about the importance of “green” today. Nearly half (49%) of the respondents said that energy efficiency was very or extremely important to them as it relates to their conveyor system. Another 37% said it was somewhat important. At the same time, only 8% had investigated and received tax credits for an energy efficient conveyor system, more than half (54%) said they had no plans to look into tax credits. Given the tax incentives for investments in energy efficiency in the new federal stimulus package, I would have expected more interest.

Another surprise. We write a lot at Modern and our sister publication Logistics Management about outsourcing to third parties. We also hear a lot from system suppliers who are offering 24/7 maintenance contracts to their customers. But when it comes to conveyor systems, 84% of the respondents are still performing their own repair and maintenance. Only 5% reported that they were interested in outsourcing their conveyor maintenance. Again, in a down economy, I would have expected more companies to be interested in outsourcing to reduce their labor costs.

One final stat interested me: Sluggish conveyor sales may be good news for parts suppliers. Readers reported that they spent an average of $57,000 on parts for their conveyor systems in 2008; this year, they expect to spend $76,000, a 25% increase. 

What does that say? Just as you and I are trying to get another year out of our old cars and appliances, in the warehouse and factory, we’re trying to extend the lives of our conveyor systems.