2023 Business Scan: Insights Shared at the MHEDA Board Meeting

May 8, 2023

The MHEDA Board of Directors and Manufacturer Board of Advisors is comprised of 21 executives from material handling businesses across North America. This group of industry leaders volunteer to meet in person twice a year to discuss industry trends, plan MHEDA programs and discuss ideas on how to improve the MHEDA organization.

As the foundation to developing programs and services for MHEDA Members, the Board and MBOA conduct a “Business Scan” where they share the big picture of what is happening within their business. The Board met in Q1 2023 for their first meeting of the year. Board and MBOA Members were asked to comment on current business conditions within their respective markets. A summary of comments and general themes follows.

Industrial Truck

→  The Industrial Truck (IT) dealers continue to face extensive lead times which in turn, impacts excess inventory and shipments of forklift parts such as batteries, forks, attachments, etc.

→  The extended lead times for forklifts are creating several issues such as, the need to modify commission structures, sales cycle disruption, employee burnout because of delivering repetitive “bad news” to customers, customer demands for discounted rentals and free loaners.

→  Rental utilization continues to be strong although at least one member is seeing a softening.

→  OEMs continue to ask for large commitments in rental orders and stock.

→  Equipment theft is on the rise and scams are getting very sophisticated. One person noted the importance of physically going to any new customer address and receiving payment in full before pick-ups or deliveries.

→  Class I, II and III (electric) continue to dominate the forklift market with a noticeable move away from internal combustion to electric.

Storage & Handling and Engineered Systems/Integrators

→  Those from the Storage & Handling (SH) and Engineered Systems (ES) segment commented that lead times are getting back to a “new-new normal” although there are still issues with various conveyor components which result in extended lead times.

→  Container shipping costs have come down considerably.

→  Steel pricing remains very volatile.

→  The high demand for automation continues and the order emphasis is on lead times versus price.

→  While labor shortages are improving, it is still challenging to hire skilled labor such as technicians and welders.

→  In some cases, customers are trying to buy direct from manufacturers which is a threat to the distributor, especially to those that are not keeping up with technology and best practices. It’s important to maintain marketing synergy between the manufacturer and distributor.

Managing Employee Well-Being

→  Employee retention is critical, and many commented on how they are increasing wages to keep incumbents.

→  Employee burnout is a significant problem, and more than one member has hired a chaplain service or some other mental health provider.

→  Employers are also dealing with earlier retirements.

→  Several people commented on the importance of organizational culture and shared how community service initiatives have enhanced employee morale.

The Economy

→  While there is still talk about a looming recession, it may not be as impactful for the MH industry depending on the end user markets that you serve.

→  There is a concern about continued rising interest rates. Most commented that business remains robust, but a softening is expected in 2023 after coming off two very strong years.

→  The retail market is showing signs of softening and members should be selective about how much capacity they allot to specific customers.

→  In Mexico, inflation is at 8% and interest rates are currently 12%. The economy is growing at 1.6%. There is resistance to new leases because of high interest rates. There are labor shortages and an increase in warehouse pricing which is creating rental space issues. Manufacturers are experiencing employee retention issues with significant turnover. It’s imperative to motivate and compensate employees to retain them. Government policies continue to be complicated.

General Business

→  Members must embrace technology from lead generation to providing data analytics to customers or they will be left behind.

→  Cyber-security should remain top of mind for members as it’s a continued threat. Hire professionals to examine your vulnerabilities and invest in cyber risk insurance.

→  Sustainability and reduction of a company’s carbon footprint is becoming increasingly more important and required of publicly traded companies. Any company that becomes part of this supply chain will be required to report. This issue is here to stay.

→  Due to price increases, some are tracking performance