ProMat 2009: Maximize Return on Investment

ProMat 2009: Maximize Return on Investment

To help target your efforts, we asked MHIA’s John Nofsinger for his expert analysis.

John Nofsinger
John Nofsinger

Many of us will eagerly raise the champagne glass on New Year’s Eve, as it will mark the end of a painful year. But, will it also signal the start of something different?

To get a sense of what 2009 may hold for material-moving businesses in all industries, MHM asked John Nofsinger, chief executive officer of the Material Handling Industry of America (MHIA), for his observations and projections.

We focused on MHM’s six major areas of editorial coverage: powered vehicles, transport packaging, automation, workforce, facility operations and technology.

Here’s a snapshot of the near future, courtesy of Nofsinger:

Powered Vehicles
“Units are off in the 10% to 15% range. That sounds like a lot, but not that many years ago, people never thought lift trucks would go through 100,000 units in this country. The downturn is consumer led, but there is still a manufacturing and distribution infrastructure that needs to be renewed and refreshed to be competitive and get in front of the next period of growth. I expect the middle or third quarter of 2009 to continue to be soft. It’s anyone’s guess how fast it will pick up. Then, there will be growth for a couple of good years, from the middle of 2010 to the middle of 2012.

“There will be a lot of emphasis on alternative fuel systems, as hybrid lift truck and fuel-cell research continues. As we come out of this thing, there will be more people who will have sustainability in their minds. There will be tax or research incentives to focus on these subjects. Those who have these issues in mind as part of their strategic method of operating will probably get an unfair share of early growth as we go forward.”

Transport Packaging
“Going forward, it will be less about the package itself than the ability for that package and its contents to be transparent throughout the supply process. This includes automatic identification technology and automating the handling of packaging. Security issues continue to find their way into packaging and shipping. Also, we are moving closer to the each unit, with requirements that each item, instead of each pallet load, be transparent.

“Good things are being done to use less material, and there is more reusability being considered in the scheme of things being packaged so there is less to dispose of. Pallet and container pooling systems are doing well in this day and age.”

Automation
“Short term, there has been some recent postponement of automation projects. Companies are still feeling out the new presidential administration and its tax policies. The automation sector was going great guns until recently. Today’s environment represents a softening.

“However, the planets have come into alignment for automation in this country. It’s much more accepted today than ever. Due in part to disruptive demographics, automation is becoming a very viable alternative to offshoring and other strategies. There are many reasons automation makes sense now.

“Companies are also coming up with creative ways to fund automation projects. In many cases, end users are relying on manufacturers to own and operate the automated equipment. They are using a transaction cost system instead of carrying debt. We are going to see more creative approaches to financing that eliminates the traditional big debt loads carried by end users.

“When conditions improve, there will be a nice opportunity for companies that can structure non-traditional finance protocols.

“These creative approaches represent a true supplychain partnership in play, as opposed to just being about transactions. In a leasing arrangement, the manufacturer is not that involved, except to help arrange the financing. In this arrangement, the manufacturer is an active, daily partner in the performance of the system and strategically involved with the end user.

“These are C-level activities, located strategically at the very tops of organizations, and we will tend to see more interest in these kinds of structures. It will take courage and risk taking to pull it off, but there are a lot of bright upsides. Companies that want to invest in automation have more reason today than ever to do so, and companies that want creative solutions have access to some new models.”

Workforce
“There is no question we will see a worker shortage. We can’t wish it away. A giant generation is leaving the industry, and it is being followed by a smaller generation. We will see a continued reduction of worker-age people until 2025.

“The real issue is how we deal with fewer, less educated workers from different demographic areas. Of all the issues out there, this is the 500-pound gorilla. That’s why we’re hosting our “Workforce of the Future” initiative at ProMat. Attendees can talk to people on the show floor about technologies to leverage worker effectiveness.

“Although unemployment is at 7% or 8%, the numbers are misleading. It’s not quite as simple to say there is high employment, so there should be more workers. Many people are unemployed but not employable with the skills we need.”

Facility Operations
“We’re seeing the early effects of LEED, and more is being written and said about energy-efficient facilities all the time. The industry is showing some promise in that there are quantifiable ways to come up with more efficient facilities and support sustainability in general.

“With new buildings come some interesting concepts for footprint, shape and size, and the old issue of maximizing cube is getting a different level of interest.

“Also, maintenance is becoming more sophisticated and computer based. For example, we’re seeing more interest in computerized maintenance management systems (CMMSs). Maintenance in general is no longer just about a wrench and gloves.”

Technology
“Supply chains today have to move information and equipment concurrently. Those that operate sequentially will have a hard time without real-time communication upstream and downstream. This means there is a need for all types of control software.

“Barcodes and radio frequency keep getting more commercially viable as information has to be captured instantaneously. There is a great deal more productivity and throughput available to those who can anticipate, understand and know and then send information up and down the line and be flexible. Without information, this is a sequential process. Material handling has gone from a vertical activity to a supply-chain activity that is wide and horizontal.

“The landscape is different, and we are going to be asked to do different things, but this industry has been pretty resilient.”

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