Home >Forklift manufacturers ‘less optimistic’ for future
Forklift manufacturers ‘less optimistic’ for future
23 November 2016
The latest Forklift Truck Market Outlook for 2016, produced by Oxford Economics on behalf of the British Industrial Truck Association, reveals that BITA member confidence has softened in line with the slowing prospects for the UK economy.
Half of respondents surveyed in the Autumn considered themselves ‘less optimistic’ about the outlook for the coming 12 months, compared to just 20% who said the same back in the Spring. This is reflected in attitudes towards expected sales, with fewer respondents now in the ‘rise significantly’ and ‘rise modestly’ categories, but opinion still fairly divided.
However, despite this pessimism regarding general prospects, current order books are not yet suffering as a result, with the majority of those polled considering their ledgers to be significantly better than normal, a substantial change from earlier in the year when less than a fifth reckoned this to be the case.
Opinions on pricing were one of the most noticeable shifts in the latest report, with all respondents now expecting these to rise, compared to flatter predictions previously. This is due to a weaker currency in the wake of the EU referendum result and is also the reason why those surveyed expect higher costs to impact on profitability.
The ongoing uncertainty following the UK’s decision to vote to leave the European Union, and the subsequent lack of clarity regarding the shape of any future deal, has meant it is difficult for businesses to commit to investment while the economic landscape continues to change.
Against this backdrop, the counterbalance sector is expected to be particularly hard-hit given its dependency on such investment. Counterbalance orders fell 16.4% year-on-year in Q3, having already decreased by 5.9% in Q2.
The warehouse segment hasn’t been immune to the economic uncertainty either, but hasn’t witnessed as drastic a decline as the counterbalance sector. Class 2 bookings fell 3.1% on an annual basis, having decreased by 5.8% in Q2. Class 3 managed to grow by 8.4% in Q3, but this was something of a recovery given a 17.7% fall in the second quarter.
The Oxford Economics forecast for growth anticipates consumption staying strong in the short term (+2.8% in 2016) before slowing to 1.2% in 2017 and 0.5% in 2018. GDP growth is predicted to be 2.1% this year before slowing to 1.4% in 2017.
Jeremy Leonard, Head of Industry Services for Oxford Economics, said: “The longer term outlook should provide grounds for optimism. The migration towards online shopping should continue, even if this occurs to a smaller extent due to the increased price of importing to the UK following the sharp depreciation of the pound. Online shopping requires delivery and warehousing of goods, which should continue to drive demand for warehouse trucks.
“However, market-specific risks are expected to be second order in comparison to the greater overarching risks associated with Brexit. Innovation remains a key source for positive optimism, where new product offerings or new technologies could begin to shape the market faster than envisioned. In fact, the more challenging market environment following Brexit may be exactly the time when such innovatory changes are most likely, as firms are forced to compete more vigorously.”
James Clark, Secretary-General of BITA, comments: “The previous Forklift Truck Market Outlook and members’ survey portrayed an industry that was upbeat despite the shock of the referendum result and remained optimistic about future prospects. Despite the lack of real clarification from Westminster – not to mention the High Court ruling requiring MP approval to trigger Article 50 – about what form Brexit might take, the sector has become more subdued in its perspective as a result of more modest data filtering through.
“That said, it’s not all doom and gloom and there are still plenty of reasons to be cheerful – not least encouraging current order books and the continuing evolution of online shopping which should guarantee a proportion of warehouse truck orders for the foreseeable future. There are undoubtedly challenges ahead, but the materials handling industry is well equipped to adapt and innovate to overcome these obstacles.”
The Forklift Truck Market Outlook includes a detailed overview of sector by sector performance, both in terms of forklift product categories and customer business divisions. It is prepared for BITA by independent economic consultancy Oxford Economics and is available exclusively to BITA members as one of the key membership benefits. The next Outlook report will appear in Spring 2017.