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Optimism in the manufacturing sector

Dare we hope for some good news finally? If numbers are any indication, then it seems that the sun is finally beginning to shine on the material handling and manufacturing sector. While the improvement in the market is not yet significant enough to bring out the champagne, it is still good news and it gives the industry plenty of reasons to be optimistic.

A 2.7% increase in GDP over the last three quarters was attributed to an increase in equipment export and growth in the manufacturing sector according to Reed Business Information’s Construction Data Group. And according to the same study, manufacturing increased by 6% through January, and will continue to increase up to 9% by the end of 2011.

A closer look at some of this industry research can help set guidelines for the material handling world, and enable manufacturers and suppliers to make critical decisions based on these guesstimates. For example, MHIA (Material Handling Industry of America) conducted the MHEM (Material Handling Equipment Manufacturing) forecast to determine the market outlook. Their numbers predict a 6% to 8.5% growth range in 2010. According to their forecast, material handling suppliers are starting with smaller orders, which will increase progressively as 2010 comes to a close.

Last year, MHEM predicted an 18-20% decrease in market performance in the industry, and the reality was far worse – a 37% decline instead. This year, let’s hope that the actual market performance will exceed the predicted outcome of a 6% – 8.5% increase and maybe surprise us with growth in the double-digits. While it is clear that the worst is behind us and the industry is starting to see an upward trend in performance, we must treat this news with cautious optimism.

Shown below is a brief study conducted by Modern Material Handling (MMH) Magazine (April 2010):
How is the present state of the economy affecting your spending on materials handling equipment technologies, services and solutions?
• We are taking a “wait-and-see” approach/ moving slowly with our decisions – 48%
• We are holding off on investing – 21%
• We are proceeding with our investments – 18%
• The economy is having little or no impact on our materials handling spending – 13%

As manufacturers, we must buckle up and increase our efforts in creating products that the end-user needs in these lean times and forge ahead in our efforts to sell and meet customer expectations in a strategic manner.