2009 Lift Truck Usage Study: I see indecision in your future...
Our 2nd annual study finds that fleet managers won't be replacing their old lift trucks until economic recovery is assured. Here's what they're doing—and should be doing—in the meantime.
By Tom Andel, Contributing Editor -- Logistics Management, 10/1/2009
Before the recession of 2008 and 2009, the results of a lift truck usage study would have been an excellent reflection of how fleet managers are planning to upgrade their current fleets over the next 12 months. However, when you ask fleet managers about their relationship with lift trucks these days, their answers might be more accurately analyzed using a crystal ball.
But Logistics Management wanted to be more scientific than that, so we decided to build on the Lift Truck Usage study we started last year. In addition to examining the usage and buying intentions of our audience, we wanted to understand which lift truck characteristics are considered most important.
To put more context behind the findings, this yearwe've added the analysis of two lift truck industry experts to help us identify those characteristics and issues that should and will be important to fleet managers in the near future. Jim Shephard, president of Shephard's Industrial Training Systems in Memphis, and Ken Van Hook, president of Safe-T-Consultants of Humble, Texas, will provide the science inside our crystal ball.
According to our 2nd Annual Lift Truck Usage Study, much of our respondents' future purchasing activity will be shaped by what happens when the recession ends. However, before fleet managers read through the findings of this year's survey, they may want to run their own, shorter survey to help them get a better picture of what the lift truck market may look like once the economy shakes out. Do your best to answer the following questions before you read on:
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How many of the Top 20 lift truck OEMs will still be around (as we currently know them) at this time next year?
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How many of your underutilized lift trucks will still be around by this time next year?
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How much excess lift truck inventory will dealers still be offering at bargain prices by this time next year?
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How many new operators will you have to hire and train to operate your new lift trucks to meet your coming workload?
Neither lift truck sellers nor their customers are sure economic recovery is imminent, and that insecurity was implied in almost every answer to our survey. Apart from the numbers (charts displayed throughout) we received many comments with a single sentiment: “I'm waiting to be convinced that recovery is real and my purchase will be justified.”
Clinging to the old
The reluctance of lift truck buyers and managers to upgrade their fleets is resulting in machines working well beyond their economic service life: 10-year-old trucks are certainly common these days. According to our 552 respondents, some of the toughest challenges resulting form this hesitation include:
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“Balancing the need for high performance from the fleet and the need to limit spending.”
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“Maintaining the aged fleet we own until we feel able to update to a lease.”
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“The ability to bring in replacement vehicles to keep the age of the fleet within check.”
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“Parts are not as available for 10+ year-old trucks.”
End users are not only worried about the survival of their older fleets, but that of their lift truck suppliers. Dealers are the lifeline to uptime for many end users, but sometimes these users' survival strategies put their suppliers at risk.
Jim Shephard recalls the case of one client that was planning a major lift truck purchase: “They told me they're not going to buy those new trucks after all. They just shut down one of their plants and they're going to move the lift trucks from that site to another and see what they can make of them.”
That's not unusual based on our survey results. Almost half (46 percent) of the respondents indicated that they keep their lift trucks 10 years or longer. Shephard believes that these fleet managers are in for a big reality check when business starts coming back if they don't get serious about maintenance and training practices and start appreciating depreciation.
Much like a car, put enough miles on a lift truck and trade-in value drops drastically. “That old equipment in the field will fade away within a year of a comeback,” Shephard says.
Wobbly on training
There will also be a temptation to keep lift trucks rolling without investing in proper operator training. But let's be clear: Not only will skimping on training not save money, it will cost more.
“Companies aren't training as well, and they're not maintaining as they should,” Van Hook says. “If it runs, it's considered good. They may do preventive maintenance every three months instead of every month. As a result, there is an increase in accidents due to poor maintenance.”
On the OEM side, the legal consequences of any accidents may not be felt for a couple years, Van Hook believes, because most states have a two or three year statute of limitations. If a fatality is involved, legal action is usually taken within six months. Both Van Hook and Shephard are often called upon as expert witnesses during legal proceedings. “In the litigation I've been involved in, operators have not been trained because the companies have downsized,” Van Hook says.
Shephard agrees. “A lot of times companies will pull their horns in on training because they've laid off a lot of folks and they have skeleton crews,” he continues. “Any time you have a guy in training class you're paying someone else overtime. So they'll ask, 'What can we do to get this training program over in two or three hours?' They're not looking for conditions that need to be improved.”
Judging by the service attributes that were indicated as the most important in making purchasing decisions, our survey respondents tend to agree with Shephard's assessment. Only 44 percent cited “training materials/programs” as highly important. Serviceability, parts availability, ease of maintenance, and productivity were the highest scoring service attributes among more than 80 percent of respondents.
Again, that's the economy talking. In the lift truck buyer's mind, he's being practical. Look at it this way: Many operators who were trained two years ago aren't driving lift trucks today. The budgets for training have been cut because the workforce has been cut. In this economy, supervisors and anyone else who can be quickly taught the controls is driving lift trucks.
Can't manage what's not measured
For safety and productivity to be managed effectively, they must be measured. Our survey asked: “Do you use any kind of technology to measure fleet performance?” Only 17 percent said yes; and of those, 39 percent involved vendor-provided systems, 31 percent were home-grown, and 21 percent required paper-based tracking. For those who don't measure fleet performance, there were plenty of rationalizations:
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“Not enough units to measure.”
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“We do not see the need. We like the brand of truck we use and this is not an issue.”
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“Cost-to-benefit ratio has not been there.”
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“Right now the supplier in which we have a complete maintenance agreement with provides us with a quarterly assessment statement of hour usage, parts repaired, labor etc. We use that instead.”
Jim Shephard is an optimist, however, and believes as business comes back, relationships with dealers will become more important to fleet managers. Energy costs will also become more important, and these managers will put in more sophisticated analytical tools to manage them.
“They'll have to change warehousing concepts to lower energy costs,” Shephard says. “Some may not be able to go from LP gas to electric because of the initial cost of the electrics. But if they change their logistics systems, they'll be looking at running trucks fewer hours and rotating their fleets.” That means balancing out lift truck usage so the overall fleet ages more gracefully. The technology is there today to help users monitor lift truck activity and it tends to pay for itself—even the life cycle of batteries can be monitored.
Balancing mechanical and human power
It was clear from our findings that many survey respondents have their eyes on future power alternatives. Fifty-eight percent indicated they are interested in converting their fleets to another power source. The favorite candidates (when widely available) are lithium-ion batteries (33 percent), hybrids (32 percent), and fuel cells (23 percent).
For now, however, fleet managers can still be more cost efficient while we're in what many see as the tail end of the down economy. The lowest hanging fruit can be found by being smarter about balancing labor and equipment usage. Take trailer loading, for example, where much of the work is still single-layer loading. Jim Shephard says that this is a great opportunity to make better use of pallet trucks.
However, our survey indicates that only 14 percent of respondents said pallet trucks were most commonly in use at their facilities while 35 percent said electric-powered counterbalanced trucks were their vehicles of choice. This indicates labor may not be getting rationed productively.
Consider how long it takes someone to prepare a trailer for loading. While he's doing this, there may be nobody pulling orders, moving product, or staging pallet loads.
“There's a lot of wasted time if you have one person doing everything,” Shephard says. “But if you have two people you have fewer trucks in the warehouse and you pull just as many—if not more—orders while the worker loading trucks can pick up and load with a pallet truck. Fleet cost would go down and quality of loads would be a lot better.”
Squeezing out remaining life
Even if our respondents took Shephard's advice, chances are they wouldn't buy brand new trucks to establish that balance. When asked how much they plan to spend on lift trucks through 2010, 48 percent said less than $25,000.
That doesn't sound like new equipment: That means the first surge in sales the OEMs can expect post-recovery will be in parts, says Ken Van Hook.
“End users will lease used equipment for a year to make sure how stable things will be,” he says. “I think a lot of businesses will be cash-strapped for capital expenditures and it will take them a year to catch up. That's why I think there will be a spike in new-equipment sales after two years.”
That also means any new safety features that come on the market may not see widespread usage during that time either. Luckily, existing safety features on mature lift trucks are still doing their jobs. Maybe that's why safety features came in the lowest of the top-rated attributes our respondents considered when making a purchase. Safety could be seen as a given.
On the bright side, Van Hook believes new features designed to enhance safety will be right up there with reliability and uptime (the current top attributes) when users are ready to buy the new stuff. As the top providers of this equipment evolve through mergers and acquisitions, the best minds in industrial research and development will be focused on making the perfect lift truck.
Here's a prediction: That job will never go away.
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