Lift trucks riding more boats from China

By Tom Andel, Executive Editor -- Logistics Management, 4/12/2007

MEMPHIS, Tenn.—Exports from China are up 28% for the first quarter of this year compared to the same period last year, according to the Wall Street Journal. In fact China is racking up quite a trade surplus with most of the world’s markets. This isn’t making China many friends in these markets, so it is promising to impose changes that make exports less attractive and imports more appealing.

That’s not likely to phase lift truck exports out of China, however. Some in the industrial truck industry are comparing China’s new presence in U.S. markets to Japan’s onslaught in the late 70s. China’s compelling message when it comes to its lift trucks is “high quality, low price.”

Bruce Pelynio, president and CEO of Heli Americas, is paving the way for its line of lift trucks by building a distribution network in the U.S. He is an American entrepreneur who took a page out of the Japanese play book of 25 years ago and is attempting to repeat the kind of success Toyota has had. He’s finding, however, that it’s going to require logistics management skills to take full advantage of U.S. markets.

“I’m having more issues with logistics than I ever cared to have,” he says. “It’s much more difficult than I imagined. We can get product in, but finding containers is difficult and the cost to do so is all over the board. I wish I were shipping product to China because the number of empties going back has to be tremendous.”

Pelynio is also trying to sharpen his planning skills.

“What I’m finding is that during a lot of the seasons you end up having to book 30-40 days in advance just to get container space,” he adds. “With the tremendous seasonality, container pricing is variable. God help you if you need to get anything in the fourth quarter.”

This difficulty hasn’t stopped the flow of Chinese-made lift trucks from entering the U.S. market. Parent company Anuhi Heli is shipping about $2 million worth to the U.S. this month. They’ll be sold out of the Heli Americas headquarters in Memphis and Southwest Equipment Sales in Denver. Why not just set up manufacturing in the States?

“That’s not an option because of the capital investment,” Pelynio answers. “The Chinese have made a huge investment in manufacturing facilities. Heli opened a new plant and has been expanding it exponentially over the last 24 months. They’ve invested in space and machine tooling and very high tech assembly equipment, and that would be difficult to duplicate on this side for the volumes we have right now. They’re using that plant to supply a global marketplace.”

Pelynio is betting that as his line of lift trucks finds its markets he’ll generate more container volume and he’ll be able to leverage that for better pricing, or at least more stable pricing. In the meantime, he’s looking to sign up more distributors so he can get away from the direct selling he’s been doing—not that there’s anything wrong with that.

“It’s great to retail sell a product, but it’s like giving someone a fish vs. teaching them to fish,” he concludes. “Selling a lift truck is good, but once the sale is done that process is over. Signing a dealer is a longer process, but once you sign them, you’ve taught them to fish and that revenue stream from their sales efforts will be ongoing, so you won’t have to keep repeating that.”

Of course in this industry the real money is made through after-sale support. Pelynio plans to supplement his existing Memphis parts and service support operations with two more warehouses over the next four years as his distribution network expands further north and east.