Forecast still strong for new equipment
By Staff -- Industrial Distribution, 3/1/1999
Will this be the year customers begin to cut back on material handling systems and equipment purchases? A few industry executives acknowledge that after several boom years, 1999 presents some uncertainties. Yet as of January several officials remained upbeat and saw no major warning signs ahead."It's no secret that the whole material handling industry has had some very good economic times," said Dick Montague, who oversees engineering systems sales for Matthews Conveyor. "People wonder when it will slack off."
Gary Moore, immediate past president of the Material Handling Equipment Distributors Assn., said most distributors and suppliers indicated that 1998 was one of their top -- if not record -- years for sales and profits. He said last year's early expectations that demand would drop by as much as 10 percent were reversed later on as many firms saw revenues increase at least that much.
MHEDA president Sam Grooms said the economy's underlying strength bodes well for capital equipment spending again this year.
"As long as corporate profits don't start dropping and capital markets aren't at the point where people don't expand, we don't see any reason why they shouldn't," he says. Grooms' company, Hi-Tech Material Handling, Inc. in Columbus, Ohio, completed a successful 1998 -- although down a notch from the record profits of 1997 -- with strong sales in automated systems, trucks and other areas.
One question mark on the horizon is the Y2K computer glitch, which one forklift manufacturer executive suggests may show itself in the fourth quarter. Some computer experts believe firms that have not reprogrammed their information systems by then may experience havoc late in the year.
"I think the year 2000 may be the year when things come off the rails a little bit, but we don't think it will be more than 10 percent off," says Larry Wuench, executive vice president at Mitsubishi Caterpillar Forklift of America.
Moore suggests that quick-stepping firms are preparing for the prospect of a slight downturn even as most forecasts remain bright. While recruiting talented salespeople in an up market with low unemployment was a challenge, managers at his company are being asked what to do with them in a slump.
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