Modern Materials Handling - April 2010

SPECIAL REPORTILLUSTRATION BY DANIEL GUIDERAAcross the industry, across the country and across the globe, it was unanimous: Every segmentof the materials handling industry took a hit in 2009. Experts predicted a contraction last year,but underestimated the breadth of the economic decline.That was then, and this is now. Once again, industry experts are in agreement: The worst isbehind us and the signs are pointing to a better 2010 and beyond.“We can clearly say, that we have seen the turn from thematerials handling industry being in free fall to it starting tofeel as if there is a floor under us again,” says John Nofsinger,CEO of the Material Handling Industry of America (MHIA,704-676-1190, www.mhia.org), the trade organization thatHow is the present state of the economyaffecting your spending on materialshandling equipment technologies servicesand solutions?We are taking a "wait-and-see" approach/ moving slowly with our decisions48%We are holding off on investing21%We are proceeding with our investments18%The economy is having little/no impact on our materials handling spending13%Modern Materials Handling’s 2010 State of the Industry Studyrepresents the industry. “We started to see hints of a recoveryin the second quarter of 2009, and we’re now seeing renewedoptimism.”MHIA’s optimism is backed up by recent economic data.The Gross Domestic Product increased by 2.7% in the threequarters through winter 2010 and will keep growing at abouta 2.5% to 3.0% annual pace through 2011, according to JimHaughey, chief economist with Reed Business Information’sConstruction Data Group. Much of that growth is being drivenby a surge in equipment exports and an expansion of manufacturingproduction, which increased by nearly 6% in thesix months through January 2010 and willincrease 9% more by the end of 2011.Still, while the industry is gentlybouncing off the bottom, this is a subparrecovery after a deep recession, Haugheycautions.Modern’s Survey says…Modern’s Readers share Haughey’s cautiousoptimism, according to our recent2010 State of the Industry study conductedfor Modern Materials Handling byHow does your company'sspending on materialshandling solutions in 2010compare with 2009?Increasing 16%Decreasing 17%Staying the sameas 2009 67%Modern Materials Handling’s2010 State of the Industry Studythe research department of parent company Reed BusinessInformation. The annual survey, which was e-mailed toModern readers in February and yielded 353 respondents,tracks market changes during the last year and aims to understandthe current state, trends and practices in manufacturing,warehousing and distribution.Last year was a mixed bag, according to our respondents.Spend levels on materials handling solutions for 67% of theresponding companies remained steady. The remaining wereevenly split: 16% say spending on materials handling equipmentincreased, while 17% say spending fell.The industry outlook for 2010 and beyond is encouraging.Nine out of 10 companies say that spending on materialshandling will either increase or remain the same during thenext year. Only 8% say spending will drop.Still, that optimism is tempered. While nearly 31% ofrespondents say they are moving forward with intendedplans, 48% say they are taking a wait-and-see approach.MHIA’s viewThe Material Handling Equipment Manufacturing (MHEM)forecast, conducted by MHIA, provides a solid foundation forpredicting the market outlook. What do those numbers say?Last year, MHEM numbers led MHIA to predict a relativelymodest contraction for the industry of 18% to 20%.The actual decline was closer to 37%.For 2010, MHEM numbers are predicting a relativelypositive forecast, with growth in orders in the 6% to 8.5%range. “Material handling suppliers are starting with a smallerorder book going into 2010, but order books will be up bythe end of the year,” Nofsinger says.Although shipments of materials handling products contractedby 34% in 2009, Nofsinger says the contraction isdone and shipments are expected togrow 1% to 2% this year. While the globaleconomy has yet to rebound from theeconomic downturn, exports of materialshandling equipment, which droppedfrom $5.8 billion to $3.7 billion in 2009,are expected to increase in 2010 to about$3.8 billion. Imports of materials handlingequipment are forecasted to see a similarslight uptick from $3.7 billion in 2009 to$3.8 billion this year.Still, shipments and exports have a waymmh.com MODERN MATERIALS HANDLING / A P R I L 2 0 1 0 35