great expectations

There's nothing more basic in material handling than the lift truck. It is the tried and true workhorse of the distribution center and the factory, and it has been around for a very long time.

But the lift truck on today's DC floor is a substantially different machine than its ancestors. Equipment buyers have a much greater variety of equipment available to meet specific handling requirements, and the technology underlying the vehicles has made industrial trucks of all stripes increasingly productive.

Price continues to matter, as does performance, but factors such as life-cycle costs, ergonomics, and emissions continue to gain prominence in industrial truck purchase decisions. Today's customers want it all, says James Malvaso, president and CEO of Raymond Corp. "[They] are looking for high throughput, low cost of operation, good ergonomics, and reliable uptime supported by a reliable service organization."

Much of the change has been driven by DC managers who have become increasingly sophisticated in the way they analyze lift truck costs, buttressed by a number of analytical tools provided by the lift truck makers and software providers. Managers can now measure life-cycle costs more accurately than ever. Even so, the initial price remains the major driver for many buyers. That creates a dilemma for truck builders: If they focus on building the most reliable truck they can, they risk pricing themselves right out of the market.

What's the total cost?
One executive who wrestles with decisions like that is Dirk Von Holt, president of Jungheinrich Lift Truck Corp. The largest industrial truck manufacturer in Europe, Jungheinrich is a relative newcomer to the U.S. DC market (though the corporation's Multiton division has produced a variety of lift truck products in the United States for more than half a century). "Life-cycle costs have become more and more important to the end user as well as to distributors," says Von Holt. "That's good for the users, but as manufacturers … we have to make adjustments. We have to work on our marketing and sales skills to persuade buyers to look at the whole cost. It's not an easy task."

Some of the market changes have even forced distributors to reconsider the way they do business. Von Holt explains that as truck reliability has improved and maintenance schedules are extended, aftermarket sales—long a staple of distributor profitability—have fallen off. At the same time, large customers with national networks have upped their expectations when it comes to service. "Customers want the same service in Atlanta as in Washington," says Von Holt.

Right now, Jungheinrich is field testing several new models designed for the North American market.With the addition of a new model reach truck, walkie, and order picker by the end of next year, the company will offer a full line of electric trucks for the U.S. market, Von Holt says.

It appears that Jungheinrich's timing is good. James Moran, senior vice president of Crown Equipment Corp., reports that demand for all types of trucks was substantially stronger in 2004 than in 2003 (see table), although he points out that looking at annualized numbers from August to August, sales were still down about 15 percent from the peak year of 2000. "[One] trend we're seeing is that customers are beginning to replace their fleets more frequently," he says. "I think that's driven in part by the popularity of leasing over the last seven or eight years. The factories have made that easier. It is also because of the increased sophistication of warehouse management systems.Managers have greater information on truck utilization."

Management systems, combined with more durable vehicles, also enable DC managers to keep their fleets smaller and work them harder.Moran notes that DCs tend to have fewer spare trucks than in the past and that the trucks they do have are kept working longer hours. "They're working their trucks harder," he says. "That's causing manufacturers to develop products with longer run times between maintenance. The whole idea of durability and uptime is a much bigger deal. There's a real focus on quality."

Nowhere to hide
Like Von Holt, Moran believes customers are more focused on total cost of ownership than in the past. "We're talking about ways to reduce operating cost, where we used to talk about acquisition cost. Today, the data [are] so good and so timely, there's no place to hide bad quality anymore. If you're going to be a leader in this industry, [you] have to provide users with features that increase uptime and productivity and provide them with cost-of-ownership data before they ask," he says.

But that quality awareness also has an upside, he adds."More and more people are beginning to understand the value of using OEM parts. We can prove to them that our parts last three to four times longer [than third-party parts]."

Crown makes a wide variety of electric trucks, including hand pallet trucks, walkie pallet trucks, stockpickers, stand-up and sit-down counterbalanced trucks, and narrow aisle reach and turret trucks. The company has introduced several new products this year, including two new stackers, a rider pallet truck, and a new walkie pallet truck.

Like other lift truck companies, Crown has extended its franchise over the years to offer customers fleet management services. Moran notes that the company is now handling maintenance for one customer with 120 locations. But that's not all: "We're [also] supplying them with a variety of ways of doing maintenance," he says. "You've got to be willing to do that."

In the meantime, the amount of information available to lift truck customers continues to grow. Some Crown customers, for example, can log onto a secure Web site to see work orders at their facilities around the country. "Even a few years ago," says Moran, "we would not have been able to pull that off."

AC in the DC
Malvaso of Raymond Corp., by contrast, says that for his customers, it's all about performance in daily operations. "Fuel efficiency, ergonomics, and productivity have been the big drivers for us," he says. Raymond has turned to alternating current (AC) technology because company managers are persuaded of its benefits. "Customer demands are getting stronger in those areas. AC, in particular, allows us to respond to those demands."

Raymond makes a range of electric lift truck products, including hand pallet and walkie pallet trucks, stackers, counterbalanced trucks, reach trucks, and order pickers. Like other truck manufacturers, it has extended its services into fleet management, managing the Home Depot lift truck fleet for the past several years. "It's our belief that when you get into distribution, where the margins are so thin, we can bring value to the customer by taking a business partner approach," says Malvaso.

As a result, Raymond now works more closely with its distributors on national accounts. "Our customers are becoming more national in nature," Malvaso notes, "so we have to have a cohesive network that provides the same experience in every corner of the marketplace."

Customers continue to look for ways to improve fleet productivity, he adds. With that in mind, Raymond has introduced several new products this year, including a new walkie pallet truck and reach truck, plus a new generation of fleet management software.

New and improved
Asked what Mitsubishi's customers want, Roger Arras, director of product development and marketing support for Mitsubishi forklift trucks in the United States, has a slightly different take. "We believe that customers look primarily at three general areas when considering where to buy a truck," he says. "Productivity is one; quality, which is making sure that they get a product they can live with in their application, is another; and then there's low cost of ownership."

He reports that Mitsubishi, which manufactures both electric and internal combustion industrial trucks, has developed safety enhancements, like features that disable a truck without a driver aboard or that provide warnings to drivers, that also help reduce costs. "The safer the operation," says Arras, "the lower the cost."

Mitsubishi, like others, is making efforts to lengthen truck maintenance intervals. Arras says most new products will have maintenance intervals of 500 operating hours, compared to 200 to 250 hours in earlier products. "That substantially reduces the cost of maintenance and the cost of having the truck out of service," he says.

Other manufacturers have been actively developing new products, largely aimed at meeting demands for more productivity, more uptime, less maintenance, and greater comfort for operators.

Some examples:

• Toyota Material Handling USA has the largest market share in the U.S. lift truck industry, according to research published by the company. It introduced several new lift trucks into the market this year, including a new stand-up rider electric lift truck, a line of electric reach trucks, an electric walkie, and an electric pallet truck.
• Yale Materials Handling Corp. recently rolled out the second vehicle in its AC-powered line of electric rider trucks and a new walkie pallet truck. The first truck in the line was introduced in February.
• Hyster Co. has introduced several new AC-powered lift trucks. Its J40-65Z series of counterbalanced pneumatic tire lift trucks and its E45-65Z cushion tire trucks have optional AC lift motor with capacities of 4,500 to 6,500 pounds. The J30-40ZT threewheel lift truck series models have capacities of 3,000 to 4,000 pounds.