Economic Forecast – Suppliers

Suppliers Look for Balance Amid Economic Uncertainty

By Nicole Needles

Suppliers expect new growth in 2023, but they also expect some old challenges to resurface. In addition, they hope to see some niche markets on the horizon, becoming more popular in the coming years. By expanding their businesses, whether it’s through new locations, lines of business or products, over half of MHEDA member suppliers are planning to reach new goals in the coming year.

As for revenue, most companies expect it to either go up or stay level rather than decrease, which is good news for them. If they were to be affected negatively by new or continuing macro trends, however, many expect inflation, extended lead times, continued consolidation, wage pressure and labor shortages, among other things. The most concerning trend for members is still inflation. Even though disinflation is predicted to come, members still feel the damage it caused.

Automation is a niche market that could be impacted. Members are seeing a growing need and use of warehouse automation, among other things. Eliminating manual processes is crucial in the more fast-paced business environment that many members find themselves in today. Taking advantage of this emerging concept will be highly beneficial for suppliers and distributors alike. It may even be a key player in handling some of the major concerns of members. These concerns are the threat of a recession and a bit of a yo-yo when it comes to the economy getting better, worse, then slowly better again.

The following responses from MHEDA suppliers across North America outline what they forecast for 2023. They share their thoughts on the year ahead for their businesses and the steps they are taking to succeed in today’s unique, pandemicaffected economic climate.

Chad Uplinger, VP of Motive Power Americas at EnerSys, says, “2023 looks stable for MHE. However, the inflation will affect GDP and eventually our market late in 2023.” Uplinger is representative of the industrial truck segment and believes that labor shortages will affect his business the most. Uplinger plans to continue his business’s momentum in 2023.

Many businesses are gazing high or remaining consistent for the coming year. Many are in this same boat of aiming for steadiness since the past few years have brought so much that was unexpected.

Within the storage and handling sector, the president of Morse Mfg. Co., Inc. Nathan Andrews says, “I’m cautiously optimistic for 2023.” He expects steady revenue and expansions for his company. This progress will come in the form of the company’s equipment and expansion business into other countries. However, the caution comes in with inflation and other macro trends mentioned earlier being in the mix.

Morse Mfg. Co., Inc. is not the only business that is feeling this way. In sectors such as engineered systems, Karl Scholz, President of Pacline Corp, says that while they are expanding their business, opening new locations and expecting sales to be up, inflation is still lurking as the most significant challenger.

Steve Miskelley, VP of Sales at MHS Conveyor, says, “Inflation is putting a damper on consumer demand, and this will only get worse as the Fed’s interest rate hikes start to impact the overall economy. End users will continue to delay significant capital expenditures if consumer demand declines. Recession is a genuine concern.

Some are more concerned about things other than inflation, however. Superior Fabrication VP of Sales and Marketing Robert Polich says that although they expect sales to be up, supply and labor shortages will be the biggest challenge in 2023. Materials may still be in a backlog for sectors such as the industrial truck sector. For most other suppliers in different sectors, the next highest concern for this year was labor shortages, with materials shortages close behind.

Milt Tandy, President of WireCrafters, LLC., is aware of the industry’s challenges but is also hopeful for the company’s growth this year. The company hopes to expand its facilities and see a 3-to-5% growth. Although inflation is a concern for the company, as for most companies, Tandy says that easing demand should help with wage pressure and labor shortages, giving light at the end of the tunnel. Tandy also pointed out the emergence of automation technology advancement in the storage and handling sector as well as the industry as a whole.

Suppliers mentioned trends other than automation. One of these was Jeff Tiedt, Director of Sales and Marketing at Troax. Tiedt said that the industry would see more electric vehicle manufacturing support. Electric and hybrid vehicles are becoming more popular for personal use and in the materials handling and distributing industry.

A few other trends mentioned were ecommerce, lead times softening and robotics. E-commerce has been around for a while now, but the necessity of it is dramatically increasing. Most businesses nowadays are expected to have a website that is easy for users to navigate and functions at the very least. Enhancing websites will be a great bonus to set businesses apart from the masses. Since order volume is decreasing and orders are not so backlogged, a few members predict lead times will be much less intense than they have been in the past.

Similarly to automation, more use of robotics in different forms will increase. Ideally, it will improve processes so more people and businesses are hopping on board. The resounding consensus is the industry will continue to strive to meet goals and is keeping a close eye out for any more economic shifts. There is collective wary hope for 2023 and what it will bring for the industry.

About the Author: Nicole Needles is Editor of The MHEDA Journal and a graduate of the University of Florida School of Journalism.