Join the crowd
About 30 brands of lift trucks for warehouse applications are sold in the United States today. So why are new entrants eager to enter such a crowded field?
By Toby Gooley
Lift trucks have been around for a long time—Clark Equipment Co. is widely credited as the inventor of the sit-down counterbalanced forklift, back in 1917. In the 100 years since, lift trucks have become both ubiquitous and indispensable. More than half a million forklifts are in use in the United States today, and orders for new equipment have grown to well over 200,000 units annually, according to the Industrial Truck Association (ITA), which represents providers of lift trucks and associated products and services in North America. About 30 brands of lift trucks for warehouse applications are currently sold in the U.S.—some manufactured here and others imported.
Clearly, this is a mature and highly competitive market. Yet in the past few years, new companies have entered the U.S. marketplace, and others that already had a toehold have expanded their presence. What is drawing them here, and why would they want to enter—or expand in—such a crowded field?ANOTHER RECORD YEAR AHEAD?
The main reason the U.S. lift truck market is so attractive right now is that it's red-hot. The June 2017 report "Lifting America: The Economic Impact of Industrial Truck Manufacturers, Distributors and Dealers," produced by Oxford Economics for ITA, notes that U.S. domestic orders for industrial trucks have grown by 150 percent since 2009, representing a volume increase of 130,000 units. For North America as a whole, 2015 and 2016 were "historic" years for retail sales, with approximately 226,000 and 231,000 units sold, respectively, says ITA President Brian J. Feehan. This year seems primed for another strong performance: North American sales for the first six months of 2017 were a little above those for the same period a year earlier. If that pace continues, Feehan says, sales could surpass 2016's record high.
Several factors continue to push sales upward, according to Feehan and other industry observers. One is the need to replace equipment after years of recession-induced belt-tightening that led companies to try to squeeze more life out of older trucks. Another is the desire to take advantage of technological innovations like telematics, new power sources, and more fuel-efficient designs that can boost productivity and reduce operating and maintenance costs. A third is the growth of e-commerce. With online sales soaring, companies such as Amazon are opening more distribution centers—and that means they're buying entire fleets of forklifts, too. Even companies that expand or reconfigure existing facilities to accommodate e-commerce fulfillment need more forklifts, particularly electric trucks, which are experiencing especially strong sales, according to Feehan.
But what goes up must come down, and it's reasonable to wonder how long the market will continue to accelerate or at least sustain its current performance. Almost every industry is affected by cyclical economic factors, and material handling equipment is no exception. There's also the question, Feehan says, of "how much is too much, and how little is too little"—in other words, what is a sustainable level for the industry. The past few years have seen some consolidation among forklift makers, and if the market becomes too crowded, there could potentially be further consolidation at some point. Still, he says, "all the economic forecasts we get for 2017 through 2019 are pretty positive, and it looks like we'll continue to have a healthy, robust industry for at least the next several years."WANTED: SOMETHING NEW AND DIFFERENT
But strong demand in and of itself is not enough to assure sales for any newcomer. To break into the market, they must identify a growing need that is not being adequately met, bring something new and different to the market, or both.
BYD Forklifts, which entered the North American market in late 2015, is doing both. In North America, the company offers three counterbalanced rider forklift models and a pallet truck with lithium-ion (l-i) batteries made by parent company BYD Heavy Industries of China, the world's largest manufacturer of rechargeable batteries. Proprietary battery chemistry and the first forklifts designed specifically for lithium-ion batteries will position the company to capitalize on the expected high demand for l-i-powered lift trucks, according to Brian Rippie, BYD's sales director, forklifts-North America.
Because BYD designs and builds its forklifts and batteries as a unit, the bright blue trucks allay some of the concerns buyers may have about lithium-ion, Rippie said in an interview at the 2017 ProMat Show in Chicago. For example, the lift trucks' form factors were designed to accommodate lithium-ion batteries' lighter weight, and the battery management system is fully integrated into the forklift, rather than provided as an add-on, he said. A 10-year warranty on the battery and environmentally friendly battery chemistry are also among the features that differentiate the trucks from others on the market, he said.
Another "newcomer," France's Manitou, may be a familiar name from its rough-terrain lift trucks, compact loaders, telescopic handlers, and aerial platforms, but now it's aiming to get into the North American warehouse and manufacturing logistics space, too. At ProMat, Manitou Americas Inc. announced that it would be launching four new internal combustion (IC) and 10 new electric forklift models in North America in 2017, with more (including diesel versions) planned for 2018. The company had two of those new product lines—one IC and the other electric—on display at the show.
Manitou's target market is clear: The company's announcement refers to "simplicity and value positioning" that will provide an "alternative to the highly technical forklifts available in the industrial market." Other manufacturers have "value" brands, but Manitou says what will set its forklifts apart is that they'll be designed to the same quality and service standards that its heavy-duty equipment is known for.
Similarly, Germany's Kion Group, the world's second-largest manufacturer of forklifts, is focusing in 2017 and 2018 on gaining a stronger foothold in the U.S. warehousing market. At ProMat, Kion previewed an extensive lineup of brand-new trucks designed specifically for this market—four from Linde (electric and IC models) and a diesel-powered model from its Baoli brand, which made its North American debut in late 2015. Another Linde electric was introduced prior to the show, and the company said it would launch yet another Linde electric, a line of Linde lithium-ion-powered trucks, and two more Baoli models by the end of 2017.
One reason Kion has been slow to expand its market share in the U.S. is that its Linde brand, the top seller in Europe, is often perceived as too high-quality and expensive for the market—a Mercedes-Benz where a Ford or a Volkswagen might do. Kion is addressing that head-on, spending more than $5 million to reconfigure and upgrade production lines at its Summerville, S.C., plant this year and introducing new efficiencies and other cost-saving changes. "[The new models] are the same high-quality forklifts that our customers have come to rely on, but at a price point we've never been able to deliver before," said Kion North America President and CEO Vincent Halma. The company expects that strategy to pay off: Its goal is to increase production capacity in Summerville to 12,000 lift trucks annually by 2020, up from 3,000 in 2015.ROOM FOR ALL
BYD, Manitou, and Kion are not the only forklift manufacturers that believe there is plenty of room for new providers and new products in the U.S. and North American warehouse markets. Since the end of the Great Recession, others have begun distributing here, including China's LiuGong, which entered the North American market in 2011. Heli Americas, a subsidiary of Chinese manufacturer Anhui Heli, last year signaled its intent to expand in North America when it began hiring engineers for a new U.S. design center; among the center's charges is designing new products for the North American market.
With demand continuing to grow, others are likely to follow, either entering the market for the first time or expanding their product lines. If conditions continue as they have been for the past two years, then there could well be room at the table for everyone.
About the Author
Contributing Editor Toby Gooley is a freelance writer and editor specializing in supply chain, logistics, material handling, and international trade. She previously was Senior Editor at DC VELOCITY and Editor of DCV's sister publication, CSCMP's Supply Chain Quarterly. Prior to joining AGiLE Business Media in 2007, she spent 20 years at Logistics Management magazine as Managing Editor and Senior Editor covering international trade and transportation. Prior to that she was an export traffic manager for 10 years. She holds a B.A. in Asian Studies from Cornell University.
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