The demand for materials handling products is expected to grow at least 5% per year through 2018, according to a new report issued by the Freedonia Group.
According to the report, “World Material Handling Products,” some of the biggest gains will be seen in the sale of high-tech, cutting-edge materials handling technology, such as Automated Guided Vehicles (AGVs) and conveyor systems that can be instantly reconfigured because these types of products allow businesses to cut labor costs and react quickly to changes in demand.
Other materials handling products expected to have surging sales during the next four years include electric lift trucks and other energy efficient products.
In-Depth Industry Analysis
The complete report costs $6,400 and is used mostly by corporate executives and industry analysts to anticipate trends so that they can make long-range plans for their businesses. But Mike Deneen, Fredonia Group’s Senior industry analyst, offered a sneak peek at the reports contents.
Deneen said manufacturers are looking for products that are geared toward integration into large-scale manufacturing automation and automated warehouse environment. Automated storage and retrieval systems (AS/RS), robotics and especially AGVs will lead charge with about 6% annual growth.
“Following the recession, many companies don’t want to hire extensively,” Deneen told Modern Materials Handling. “And combined with rising US labor costs, there are more incentives to get into higher technology.”
Companies in Western Europe have long been among the leaders in adopting automated equipment when wagers increase, according to Deneen. But the US will continue to lead the world in materials handling products due to an improved outlook for fixed investment spending. As a result, US manufacturers will be more willing to invest in new equipment, especially labor-saving automated products, he said.
The Rise of Aftermarket Products
Another materials handling sector that will show stronger than normal growth will be aftermarket products, he said.
“It’s not just a matter of finding, say, lift truck parts, which are available anywhere,” Deneen said. “Now companies are looking for suppliers who can deal with the hardware, software and the entire package going forward. They’re looking for more of a relationship, and more suppliers are working to provide the whole package as opposed too any one piece. That’s a trend even beyond durable goods.”
While the sale of lift trucks and conveyors is expected to boom, the sale of hoist and cranes probably will be stagnant or grow more slowly. That’s because these types of high-priced products require a larger, long-term investment on the part of companies. Unless macroeconomic economic indicators project robust growth, those buyers may not yet be willing to spend that kind of money.
Strongest Growth in the Far East
Geographically, China and India are expected to show the most rapid growth in materials handling products, according to Deneen.
“China has been the hot thing in the last 15 to 20 years, but there are some concerns that — as labor costs go up — at some point it might cool off a bit,” he said. “In any case, Asia will become a larger portion of the pie going forward. Things are going pretty well here at home, and the US will continue to be an extremely important player. But as Asia grows, the US will make up a smaller share of the pie. As for Russia, it’s kind of a wild card right now.”
Deneed said the Brazil will continue to show strong growth, but probably not as fast as China and India.