Material-Handling Industry Starting to See an Economic Turnaround

For many publicly traded companies, mid-summer marks the time of year when annual sales records and profitability can be reviewed at the half time. From there, plans can be altered for the rest of the year. Over the past few years, mid-year reports have been unstable—but are we finally starting to see a turnaround? A number of indicators point to positive improvements.

In 2009, material-handling equipment orders contracted more than 37 percent, according to the MHIA's Material Handling Equipment Manufacturing Forecast. Additionally, material-handling equipment shipments contracted 34.4 percent in 2009, and domestic demand (shipments plus imports less exports) contracted 34.7 percent in 2009. In June, the MHIA reported that orders are expected to grow 6 to 9.5 percent this year, and equipment shipments are forecasted to grow 1 to 2 percent in 2010. Domestic demand also will grow 1 to 2 percent in 2010, and exports and imports will improve in 2010 at about the same rate.

"Industrial production activity is increasing, even though factory operating rates (utilization) remain very low by historical comparison," said Hal Vandiver, MHIA executive vice president of business development. "We continue to believe that demand created as the economy shifts from recession into recovery mode (filling supply chain pipelines, re-establishing inventories, and responding to pent up demand) is the principal impetus for improvement over the next few quarters in manufacturing, warehousing and distribution."

Although Terex Corp. reported a net loss from continuing operations for the second quarter of 2010, the company's net sales for continuing  operations had increased 14 percent, compared to the second quarter of 2009. "We have just completed a challenging first half of 2010, but many of our businesses have seen their recent results show improvement off of trough levels experienced during 2009,” commented RonDeFeo, Terex chairman and CEO. “We are cautious, but positive, about our prospects for continued improvement."

He noted that Terex's factories have returned to more regular work schedules and production output, and improving business conditions provide for cautious optimism for the rest of the year. Although aerial work platform results remain soft, one bright area for the company was its port equipment business. The company said orders have increased substantially compared to 2009.

Overhead crane manufacturer Konecranes is also reporting its second quarter development met its expectations. The company says its service business has returned to growth, and the equipment businesses have started to see signs of a demand—mostly on the smaller end of the equipment range. "The demand for small cranes and components has increased, and the same is true for lift trucks for port operators," said Konecranes President and CEO Pekka Lundmark. "Large individual orders of heavy equipment are still missing."

While manufacturers are reporting slight increases in orders and sales, how has your business been treated in the first half of 2010? Write me at kparrish@maxcapmedia.com for any company updates you’d like to share.

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