Demand in the Northeast United States varies by the type of equipment and the end market for which they are to be used.
By Myra Pinkham
THE MARKET FOR lifting equipment in the eastern United States, while trailing some other regions in the country, continues to show strength–even with political uncertainties continuing to loom on the horizon. The amount of strength, however, varies by the type of equipment and the end market for which they are to be used.
“We just got off the best year that our company had ever had and it does not seem to be slowing down,” Keith Schuchart, sales manager at Foley Material Handling, Ashland, Va., says. “Chatter and quotes are still very high.” If they turn into bookings, then we also should do quite well in 2013, the overhead crane manufacturer adds.
For forklifts, it is a little more of a mixed bag. Gearoid Hogan, vice president of sales and marketing, Northeast, for Combilift USA, Greensboro, N.C., says that while his company has seen a steady increase in the Northeast market over last year—a 40 to 50 percent improvement in January versus a year earlier—for the four directional lift trucks that his company sells, most of that is coming from the revival of projects that were put on hold during the economic downturn and not new orders.
Some other lift truck companies say they have not seen the same pickup. For example, Ron McCluskey, president of Brodie Toyota-Lift, Lawrence, Mass., observes that after falling about 4 percent year on year in 2012, there continued to be a lull in ordering activity for forklifts early this year in New England.
There has been slow but steady improvement in demand for aerial platforms in the Northeast during the past 18 months or so, although the rate of improvement has not been quite as pronounced as it has been in certain other regions of the country, including the South and the Midwest, according to Adrian Max, vice president of sales, Northeast, for Terex Aerial Work Platforms, Redmond, Wash. Demand for this type of equipment generally follows trends in the construction market.
Overall, it appears that one of the big factors pushing up lifting equipment demand in the eastern United States has been pent-up demand resulting from purchasing decisions being pushed back during the economic downturn. “I think that many companies have held off making equipment purchases as long as they can,” says Gerry Dodgen, manager of business development, North America, for overhead crane and hoist maker Columbus McKinnon Corp., Amherst, N.Y.
Chris Beckman, sales manager at lift truck dealer Gregory Poole Equipment, Raleigh, N.C. agrees, observing that now that the economy in the eastern United States is generally improving, it has resulted in the stabilization and improvement of equipment demand. “Any good feelings about the economy tend to trigger increases in purchases,” he says.
Confidence increases
U.S. business confidence increased to 53.1 points in January from 50.2 points in December, according to the Institute for Supply Management. This was its highest reading since May 2012, although it remained slightly below the 54.1 point level a year earlier.
Meanwhile, what has been going on in the political arena has caused some hesitation. According to Jeff McNeil, marketing manager for Gorbel Inc., Fishers, N.Y., this is because it has resulted in less clarity about the future. “When people are uncertain, they are less likely to place orders. Companies are holding off a bit on investments until there is more clarity,” he says.
Concerns about the fiscal cliff have significantly impacted capital expenditures, Jason Bulan, eastern regional sales manager for Harrington Hoists Inc., Manheim, Pa., says. “We started to see that in the fourth quarter of last year. A lot of companies pulled back, fearing that we would go over the cliff,” he says. He adds that this continued into January as well, largely because the issue has been only partially solved.
McCluskey agrees. “Hopefully we will get over the fiscal cliff. There is been a partial deal but there are more discussions necessary on the outstanding issues. The chapter on the impact of the potential sequestration cuts is not written yet and it could have a big impact upon the defense sector,” he declares.
McNeil says that demand for overhead cranes was very strong last year right through November, after which it had slowed somewhat. “There continues to be a lot of quoting activity, but there has been a lull in orders,” he says, explaining that while companies are definitely interested to making an investment eventually, they are just not willing to pull the trigger yet. “Companies need to have better economic information,” he adds.
Meanwhile Mark Erny, vice president of the Progressive Crane unit of Mazzella Lifting Technologies, Cleveland, says his company has not felt that lull. In fact, he says that January had been one of its best months for bookings in nine months with almost all of that business coming from the Southeast and the Mid-Atlantic states.
“In general the Southeast has been strong, with especially strong demand in pulp and paper, but also the process industry, the steel industries and the petrochemical industry,” he says, with much of that being the replacement of older equipment and for projects that were held up during the downturn.
Meanwhile, he says the demand for cranes in the Northeast has not been as strong for his company, as it is a more mature, unionized market and not as much a target of its sales efforts.
Also, the trend of manufacturing activity moving away from the United States has been more pronounced in the Northeast than in Southeast, according to Harrington’s Bulan, and coal sales have also been significantly affected with concerns about greenhouse gas emissions expected to result in curtailments in coal-fired power plants.
Bulan says if there is any rationalization of manufacturing capacity, it is more likely to occur in the Northeast, where there are not only older, less efficient plants and equipment, but also higher labor costs and tax rates.
That isn’t to say there hasn’t been any rationalization of manufacturing capacity in the South. Joe DiCesare, vice president of sales for FHS Inc., Lakeland, Fla., observes that several marble distributors, steel distributors, cabinet makers, concrete producers, housing manufacturers, and power generation companies have closed. “Most are related to the housing industry, but others were just because they couldn’t hang on because of the economy,” he says.
The exit of the National Aeronautics and Space Administration (NASA) from Florida has also had an impact, Dodgen says. Meanwhile on the flip side, few large manufacturers are opening new plants or expanding their facilities, especially in the Southeast, Bulan observes. This includes manufacturers in a wide variety of industries including the aerospace, automotive and steel and steel pipe and tube markets, crane suppliers say.
Buoyant sectors
Steel and steel-related industries, as well as the waste energy sector, also bolstered demand in the Northeast, Foley’s Schuchart states. Some of that, according to McNeil, has been related to energy-related pipe and tube, which has seen a lift with the emergence of the controversial “franking” technology that has enabled energy companies to extract oil and natural gas from the shale plays, including the Marcellus and Utica shale formations in Ohio, Pennsylvania, New York, New Jersey, and West Virginia.
“We are also watching the housing market, which has been picking up, very carefully,” McNeil says, explaining that while overhead cranes aren’t used for building houses, they are used by manufacturers of products that go into the house, including appliances, shingles, and more.
Erny says that Progressive Crane foresees double digit increases this year, given its current large backlogs. Some other crane manufacturers, however, are predicting more modest growth rates in the Eastern region—closer to 3 to 5 percent year on year.
Bulan says that while he doubts there will be a spike of demand, he expects the growth rate to start accelerating in the second quarter and then be followed by slow, steady growth for the rest of 2013 and 2014.
McCluskey says that demand for lift trucks in the Northeast, while off about 15 percent from the 2006 peaks, improved considerably from the depths of the Great Recession, during which time they cratered, falling about 57 percent from 2006 record shipments. By 2012, they had already moved back up about 48 percent, which means that they still have another 9 percent to go to fully recover. This year, he says, shipments could climb another 5 or 6 percent.
Combilift’s Hogan says that he expects that four directional forklifts, however, will see even better demand, especially for such long products as steel and lumber, given that they allow customers to store more products in smaller areas and reevaluate how to make the most of their current space.
McCluskey agrees, noting that particularly in the Northeast there has been a push for increased narrow aisle and very narrow aisle lift trucks, given the space requirements and high cost of real estate.
The New England market is not largely manufacturing based, with lift truck demand coming more from the food warehousing and distribution, beverage, medical and defense sectors. McCluskey says that another big end use market, building materials, was “completely shattered” during the downturn, but is starting to come back slowly after bottoming out in 2010.
Demand in the food industry has been good, Gregory Poole’s Beckman says, explaining that has not been as affected by recent economic uncertainties as no matter how the economy is performing, people need to eat and drink. He says that also the strength of the aerospace and pharmaceutical industries have also provided a boost to demand for lift trucks. “Boeing, for example, is a large new customer on the East Coast,” he says. The airframe manufacturer is currently ramping up its new facility in Charleston, S.C.
Housing picking up
Hogan says that also with the housing market picking up, there is now starting to be more demand for lumber and other building materials after those markets had declined for the last several years. He says he is also seeing increased demand by the steel service center industry and general manufacturing, which he says has been increasing in the East in step with national trends. The U.S. Federal Reserve reports that in January industrial production was 2.1 percent in January compared with a year earlier.
McCluskey observes that there has been a significant increase in the percentage of electric lift trucks versus internal combustion trucks ordered in this region. “We are especially seeing a pickup in demand for electric trucks in the food and beverage industries,” he says, not only because of recent advances in their technology that allows the trucks to hold charges longer and new environmental regulations, but because food and beverage industry customers don’t want the emissions from the lift trucks to contaminate the food quality.
He says that he expects to see a continued gradual improvement in demand for lift trucks to a more normal level during the next five years or so.
Terex AWP’s Max says that he is bullish about the demand in the East for aerial lifts. After several years of purchasing delays, rental fleets, which make up much of aerial lift sales, are at the point that they need to be updated. “Our conversations with dealers have been very positive with more companies saying, ‘I know I need to make a purchase,’ as opposed to ‘I don’t know if we should’ and also capital is more readily available,” he says.
Jeff Ford, global product director for JLG Industries Inc., Hagerstown, Md., says that demand for boom lifts and scissor lifts have been seeing much improvement with not only housing starts rising but the potential for increases in nonresidential construction on the East Coast. “There are growing signs of some sustainable recovery,” he says.
The National Association of Home Builders is forecasting 949,000 housing starts nationally in 2013, up 21.5 percent from 2012. That, according to the group’s chief economist, David Crowe, is expected to be followed by another 30 percent rise in 2014.
Max observes that the Northeast is full of old, big cities with buildings that need rehabilitation and reconstruction, as well as old bridges and highway overpasses that need to be maintained or replaced.
He says that there has also been some pickup in demand for such smaller equipment , such as scissor lifts and boom lifts used in industrial applications, as well as telehandlers and rough-terrain forklifts because of the strength in the oil and natural gas market.