After forecasting a further drop of 5% to 10% in orders for material handling equipment in 2010, the Material Handling Industry of America (MHIA) has revised its projections to reflect the unthinkable—growth.
At the association’s annual meeting in October, Hal Vandiver, MHIA executive vice president, said recovery had begun for material handling equipment manufacturing (MHEM), but growth would not follow until early 2011.
MHIA now sees a ray of sunlight. “The decline in new orders is now forecasted to slow slightly in the last quarter of 2009 and hold the total year decline to 35% to 38%,” says Vandiver, explaining the revision to the quarterly MHEM forecast. “We now believe that growth in the 2% to 3.5% range is possible in 2010.”
Material handling equipment shipments, however, are projected to decline 35% in 2009 and another 5.5% in 2010. But that’s a less severe contraction than the previous forecast, which put 2010 shipment declines at 9.5%.
Predictions for domestic demand (shipments plus imports less exports) haven’t changed. MHIA still projects a decline of approximately 35% for 2009 and a continuing but slight decrease in 2010. Exports will drop in 2009 but return to growth in 2010, the association says.
MHIA’s most recent prediction considers four primary indicators that have historically influenced the MHEM market: the Institute for Supply Management’s Purchasing Managers Index, the FRB Industrial Production Index, the Index of Consumer Sentiment and housing starts. All but one of these indicators show turnaround, and that means MHEM is “very likely” to do the same, according to MHIA.
“As capacity utilization increases at higher rates of change, it indicates mounting pressure to perform at higher output levels and the need for more efficient throughput solutions. In turn, this drives demand for material handling and logistics products,” Vandiver explains.
He also points to an October industry survey conducted by the National Association of Business Economists revealing that business decisions are currently being made with an expectation that economic growth, as measured by real GDP, will be positive in 2010. Some 73% of executives believe real GDP will expand 1% to 3% in the New Year.