Tag: material handling trends

Tough Economy Expected to Force Industry Consolidation

Consolidation across the American economy is one of the most discussed results of the down-turning economy. While economic gurus aren’t predicting a return to national monopolies, Americans will definitely have fewer choices to make by the time the economy turns the corner in the next year or two. Most industry watchers agree that this across-the-board contraction in U.S. markets will have a positive effect, both for industry and the consumer. Consolidation is expected to force industries in all sectors of the economy to become leaner and more efficient while improving product quality and customer service.

Times have changed since the breakup of the monopolies that controlled the American economy and workplace in the 1800s and early 1900s. It’s been a quarter of a century since the government split apart the Bell Telephone System, America’s last remaining monopoly, and some would say, opened Pandora’s Box. The plethora of phone options and short-lived providers that followed gives credence to the current view that too much competition is not always a good thing. Customers became annoyed by the constantly changing phone rates and service options. Many of the new companies were unable to maintain promised service levels and failed. While there is still healthy competition in the telecommunications industry today, there are fewer big players and each one is stronger. Consumers may have fewer products to choose from, but products are more dependable and reliable. 

The U.S. auto industry is undergoing a similar consolidation. True, if GM can’t stop the bleeding, the Big 3 may become the Big 2 which would be a considerable loss to U.S. industry. But on the plus side, each of America’s auto makers is pruning out the dead wood. Low-profit lines like Hummer and Saturn are on the chopping block. Labor contracts are being renegotiated to more reasonable and sustainable levels. Detroit is finally releasing its grip on “bigger is better” and embracing a fuel-efficient future. When the dust settles, industry experts expect the U.S. auto industry to be leaner, meaner and more competitive with foreign auto makers.

The same healthy consolidation is expected to happen across most sectors of the U.S. economy. Stay tuned Wednesday for more on this subject. 

Consolidation Mergers Can Strengthen U.S. Industry

Consolidation is the new industry watchword. As we discussed in our last post, industry experts expect consolidation to affect every sector of the U.S. economy as we struggle to climb out of the current recession. The good news is that some experts, particularly Federal Reserve Chairman Ben Bernanke, are now cautiously predicting an end to the recession this year. Echoing a statement he made to Congress last month, Bernanke said in an interview with CBS’ 60 Minutes this week that if the government’s shoring up of the U.S. banking system succeeds, “… we’ll see the recession coming to an end probably this year.”

That doesn’t mean that U.S. business will return to its pre-crash ways. The hard lessons learned during the past year are expected to have a lasting impact on U.S. businesses. Savvy business owners are expected to continue leaner, more-efficient practices adopted during the recession to protect themselves against a still uncertain future. But we’re not out of the woods yet. Consolidation is playing a major role in weeding out weak and under capitalized players and broadening the scope of strong companies. Consolidation mergers could play a significant role in strengthening U.S. industry across the board.

In a March 16, 2009 article posted on SupplyChainDigest online, Materials Handling Editor Cliff Holste says, “SCDigest predicts the automated materials handling industry will soon see rapid consolidation …” Holste reports that a merger between two of the conveyor systems industry’s biggest suppliers is imminent, barring any last minute glitch. It could be the first of many. Holste and SCDigest believe the material handling industry is ripe for consolidation. Contributing factors include:

  • Over-abundance of suppliers in a shrinking market. Even before the recession, Holste reminds us that many industry watchers didn’t believe there was enough business to support all the players profitably. The recession just accelerated what might have been a slower winnowing of the ranks.
  • Consolidation allows companies to increase their product and customer scope while cutting expenses, primarily in personnel cuts across the board. Mergers “can goose profits of the combined companies,” Holste notes, while nearly halving expenses.
  • Well capitalized companies are buying out poorly capitalized ones resulting in stronger firms better able to withstand the economy’s financial roller coaster and provide long-term products and services to their clients. 

Capital Investments That Make Sense

It may be a bear market, but this is no time to hibernate. If you want to weather the pending economic winter, you can’t afford to crawl into a cave and wait for better times. This is a time when the old saying, “You snooze, you loose,” rings true. Competition gets more cutthroat when times are tough and only the smart survive. Everyone’s going to be reining in expenses to maximize their cash flow, and many will limp along with out-dated equipment or technology, afraid to make any capital investments until the economy eases up. Savvy businesspeople know this is faulty thinking. Even in a poor economy, certain capital investments not only make sense, but give you a critical edge over your competition.

What kinds of capital investments make sense? Industry experts say capital expenditures that give you both immediate and future value should get top priority.

  • Equipment and technology that make and keep you competitive are essential, especially in a tough economy. You can’t afford to lag behind competitors or you’ll be left choking in their dust. As U.S. industry moves ever closer to integrated automation, you’ll need to embrace state-of-the-art technology and equipment to remain competitive.
  • Equipment that decreases your fuel expenses will become increasingly valuable as oil production continues to drive world economy. Battery and electric-powered equipment not only produces immediate savings in fuel expenses, but decreases future dependence on fossil fuels. 
  • Businesses shouldn’t overlook the powerful message that energy efficiency sends to customers: that you care about the environment and the planet we live on. As global warming heats up, more businesses will be choosing environmentally-friendly partners over energy-wasting ones.
  • Ergonomic equipment that improves worker safety and significantly decreases medical, insurance and workers’ compensation expenses will gain even greater importance as healthcare costs rise. Both presidential candidates are furthering healthcare platforms that will force U.S. businesses to shoulder an even greater burden of our country’s healthcare costs. Equipment that decreases the direct and peripheral medical costs of worker injury will benefit your bottom line. 
  • As the U.S. workforce shrinks, ergonomic equipment will play an important role in maintaining worker satisfaction as well as safety. As competition for workers increases, businesses will need to offer workers more tangible job benefits. Use of ergonomic equipment shows your workers you care about their health, safety and comfort on the job. And it has the added benefit of making your operation more efficient and more productive.
  • Ergonomically-designed equipment that allows a single worker to accomplish a greater volume of work safely will also reap savings in a shrinking workforce. With presidential candidates promising to penalize businesses for taking jobs overseas, the ability to maximize productivity with a minimal American workforce will gain importance.

Predicted Material Handling Slowdown to Be Short Lived

The predicted slowdown in the material handling industry is expected to be short lived, said Material Handling Industry of America (MHIA) executives in a news conference last week. After a strong period of growth, contraction and consolidation are expected for 2008 and 2009 before the industry resumes growth in 2010.

“We have had double-digit growth for the last few years,” said MHIA executive VP of business development Hal Vandiver. “But there is a business cycle.” The slowdown is expected to be felt hardest in logistics sectors of the $156 billion material handling industry.

Overall consumption of material handling equipment is expected to contract by 5% over the next two years with new orders decreasing by 5% to 7% and shipments declining by 2% to 4%. High fuel costs are one factor contributing to declining diesel forklift sales. Industry is switching to more energy-efficient and maneuverable electric and battery-operated motorized carts and tugs.

The poor economy is also having an effect on the material handling industry. Many companies are deferring capital equipment purchases until the economy picks up. Fewer system-wide equipment purchases are expected in the next couple of years in favor of individual item and small order solution-specific purchases.

The graying of the American workforce as Baby Boomers aged, coupled with escalating health and insurance costs focused emphasis on ergonomic design in the material handling industry. As the Boomer generation retires, the importance of ergonomic design is expected to increase as the available workforce shrinks. Equipment that can be used safely and efficiently by workers of varying body type, height and strength will be vital to industry success.

2009 Ends on Material Handling High Note

2009 seemed like the year that would never end. For manufacturers, the bad news just kept on coming. But hope seems to have finally struggled above the horizon. From the depths of last winter’s discontent, 2009 has risen to end on a high note for material handling manufacturers and, indeed, most U.S. manufacturers. Reports indicate that U.S. manufacturing has finally turned the corner, and we can expect 2010 to be a far more productive and more profitable year. Break out the champagne!

The fourth quarter of 2009 saw strong manufacturing growth. With the job market showing signs of stabilization and housing prices beginning to climb toward normal, November brought a cautious increase in consumer spending. Manufacturing benefitted from increased orders for durable goods during the fourth quarter as customers started restocking their shelves. While durable goods orders in November were less than robust, they were twice the amount forecast by economists. Overall, the U.S. economic picture looks hopefully optimistic for the first time since the recession hit.

“We are seeing progress in a number of areas, from increases in consumer spending and business spending to growth in exports,” Brian Bethune, an economist at IHS Global Economics told the Associated Press last week. “It all adds up to a recovery that is gaining some momentum.”

Bethune and other economists are predicting a 4% annual rate of economic growth (as measured by gross domestic product) for the final quarter of 2009. In addition to durable goods, particularly a growing increase in high ticket items, industrial growth into the new year is expected to come from increased equipment and software purchases. Ergonomic material handling equipment sales are expected to increase as manufacturers and business owners seek out ways to increase worker productivity and decrease healthcare costs. Expected new regulatory requirements aimed at protecting worker health and safety are also expected to drive up sales of ergonomic carts and tugs.

Election Ushers in Era of ‘Ergobamanomics’

In the wake of Barack Obama’s election, U.S. industry should brace itself for a re-emphasis on ergonomics in the workplace. We are about to enter the era of “Ergobamanomics,” predicts senior editor Austin Weber, coining the phrase in his November 6 post on AssemblyBlog, a function of Assembly magazine which serves the manufacturing product assembly market.

“We’re going to have a government that makes sure workers aren’t put at unnecessary risk,” Obama said while stumping on the campaign trail this summer. It seems likely that increased federal emphasis on the development and implementation of ergonomics standards and legislation will be part of the Obama administration’s plan to revitalize and improve U.S. industry. In numerous studies, ergonomics has been proven to significantly reduce workplace injuries and improve worker health and safety.

While workplace health and safety policy changes may not be immediate — president-elect Obama will, after all, have his hands full with more pressing problems in the first few months of his presidency — a solid Democratic majority in Congress makes it likely that tighter ergonomic standards will see quick passage in the near future. Some industry experts believe that a return to the OSHA standards of the Clinton administration could easily be enacted by Congress within the first six months of the new Obama administration.

The sweeping OSHA ergonomics changes ushered in by the Clinton administration in 2000 were quickly repealed by Republicans when George Bush took office in 2001. OSHA’s scaled-back ergonomics plan of 2002 revised the controversial Clinton-era regulations to focus primarily on the reduction of repetitive stress injuries. During his 2004 Senate campaign, Obama said he supported reviving the more comprehensive Clinton OSHA ergonomic standards. During his presidential campaign, Obama has repeatedly promised to renew the government’s commitment to improving the health and safety of all American workers.

Critics fear that a return to Clinton-era OSHA ergonomics standards would place an additional onerous burden on struggling American businesses. Tighter ergonomics standards could necessitate retooling and restructuring of production tasks. Training programs would have to be developed and executed. Increased record-keeping of repetitive stress and musculoskeletal complaints and injuries would also add to time-consuming paperwork and reporting demands, critics charge.

Despite industry fears, ergonomically-designed equipment and work procedures have the proven capacity to increase production efficiency and substantially cut injury rates. Results are both immediate and long-term, resulting in instantaneous and sustained reductions in medical, insurance, workers compensation and lost work hours while reaping considerable gains in worker satisfaction, production efficiency and improved product quality and customer service.

For more information on how ergonomically-designed equipment can improve your business, talk to the experts at DJ Products. 

Material Handling Solutions of the Future Available Today

Our last two posts (April 18 & 21) have talked about a vision of the future in which a smaller number of highly-trained and skilled, self-directed workers fuse automation and manual operations to accomplish material handling functions with maximum efficiency. While some aspects of this utopian vision will require years of careful planning and development, part of this dream is already within the grasp of business owners.

Smart carts are already available today that can significantly increase the effectiveness and efficiency of a single worker.  Highly maneuverable electric, motorized and batter-powered carts allow a worker to effortlessly transport and manipulate equipment and goods, even in confined spaces.  Ergonomic design ensures the workers can accomplish tasks with an economy of motion, minimum physical force and maximum safety. “Walk-behind” construction allows maximum operator control, even in tight, difficult spaces. Electric cart movers provide operating flexibility that allows more versatile use than standard material handling equipment such as forklifts.

CartCaddy material handling carts, tugs and pushers come in a variety of shapes, sizes and configurations geared to handle any wheeled material handling application, including:

  • Electric cart pullers are designed to pull carts with two swivel casters. The 5th-wheel style of these carts allows them to turn with the load. Loads of 3,000 up to 50,000 pounds can be handled with ease.
  • Electric tuggers that can accommodate 4-swivel casters or wagon wheel type turning enable the operator to also control the back end of the cart.
  • Specialized electric pushers can push carts in a straight line, down a rail or down an assembly line. Among the applications available are car pushers designed to push cars, buses and heavy equipment down an assembly line and paper roll pushers developed to push rolls, materials or large wheels that move in a straight line or roll on their own surface. Trailer movers can move wheeled equipment such as trailers, boats and RVs, anything with a ball coupler or pintle-hitch tongue.

MHEDA Debuts Material Handling Wiki Web Resource

MHEDA, the Material Handling Equipment Distributors Association, has just launched wikiMHEDA, an excellent online resource for those of us who work in material handling, our customers and people who want to learn more about the material handling industry. Think of it as Wikipedia for the material handling industry. Just like the famous online encyclopedia, wikiMHEDA is an interactive Web resource written and edited by its readers, in this case people active in the material handling industry. However, unlike Wikipedia’s broad “every subject under the sun” scope, wikiMHEDA focuses solely on the subject of material handling.

According to website information, MHEDA intends its new wiki site to:

  • serve as an educational resource for and about the industry
  • provide an encyclopedia of material handling industry terms
  • provide a news outlet for industry events, activities and developments
  • be a resource for material handling product specification sheets
  • serve as a library and distribution center for industry white papers
  • provide a video library of material handling equipment and accessories
  • provide a directory of firms that manufacture and distribute material handling equipment and accessories

We found searching for information about the material handling industry and its players easy on the new site, but — and we’re sure this is because it has just launched — information is sketchy in some areas and distributor lists are far less than comprehensive. For example, a search for “ergonomics” brought up an abbreviated definition with a cursory overview of OSHA activity, all generally related to the manufacturing industry. Because it is a wiki site, the new site does allow users to add content, and the process is fairly simple. Creation of an account and website registration are required before editing. 

Material Handling Headed for a Workforce Crisis

Not a single one of America’s top players in material handling and logistics wanted their sons and daughters to be working in a distribution center as adults. That was the shocking result of a show-of-hands poll Benoit Montreuil, president of the College Industry Council on Material Handling Education, took during a speech at last summer’s Material Handling and Logistics Summit. The straw poll of industry leaders caused Montreuil to take a hard look at the future of material handling and the workforce issues that will help define that future.

Montreuil believes America’s growing workforce crisis, which he said is not industry specific, is rooted in three issues:

  1. As Baby Boomers retire, there are fewer workers to replace them. America’s workforce is shrinking.
  2. America’s next generation of workers prefers white collar jobs to jobs in factories and distribution centers. To cut costs, many businesses are outsourcing labor jobs to foreign countries. Immigrant laborers comprise the largest segment of factory and distribution workers, a trend that is growing.
  3. Material handling and logistics jobs are perceived to be dull, entry-level jobs requiring little skill and garnering bottom-rung pay.

The obvious short-term solutions are to import more foreign workers eager to work in America under current conditions and for present pay levels, undertake a major marketing initiative to change the negative image of material handling and attract a new workforce, and computerize and automate our operations to minimize manpower needs. However, Montreuil warned that long-term solutions will require a change in the material handling industry’s paradigm.

Next time: The future of the material handling industry.

What Is the Future of the Material Handling Industry?

The future of the material handling industry is at a crossroads in America. A declining workforce, decreased interest in blue collar jobs and negative perceptions about pay and job satisfaction threaten the future of material handling. The short-term solution for survival is to hire an increasingly immigrant workforce, mount a PR campaign to revamp our image, and automate to minimize manpower strain, says Benoit Montreuil of the College Industry Council on Material Handling Education (see our April 18 post). “I believe that each of these three solutions has merits in specific settings,” said Montreuil, “but that it will be insufficient for addressing the scale and scope of the emerging crisis.”

If we are to survive as an industry, material handling must change its basic paradigm, warns Montreuil. He believes that by automating many of the steps in warehousing and logistics, we have stripped workers of the opportunity to think, make decisions and have input into their jobs, the very things that provide job satisfaction. When workers are merely required to follow a pre-determined pattern, as in pick-to-light solutions, they become little better than robots, says Montreuil. By removing the challenge from the job, he believes, we are losing our most important resource — the intelligent, innovative worker.

The alternative paradigm that Montreuil envisions is a material handling industry that relies on highly-skilled, certified logistics professionals operating in self-sufficient teams in distribution centers, factories and logistics applications around the world. These professionals would be “trained to exploit all the physical handling and transport technologies,” says Montreuil, combining automation with manual operations to achieve maximum efficiency. In his utopia, Montreuil sees a material handling industry that offers “career paths for their talented workforce.”