Forklift manufacturers and service providers have softened in their expectations for 2020 after continued Brexit uncertainty.
This comes despite 2019 being another successful year for the materials handling industry, with the level of shipments exceeding those of the previous twelve months and the number of new orders received by suppliers pretty much on a par with 2018.
However, the prevailing uncertainty of Brexit appears to have permeated through the sector as it has done with so many other industries. This has caused a change in attitude since the summer and one that mirrors the position of other industries as the cycle of reduced growth, falling demand and dwindling investment continues to stall the UK economy.
The current picture is revealed by the British Industrial Truck Association (BITA) in the latest survey of its membership.
Half (50%) of those responding to the survey have said they expect market conditions to remain much the same during the coming twelve months, while 40% of responses are less optimistic now about their year-ahead prospects. This is in sharp contrast to the summer survey when just 11% of respondents cited a lack of optimism for their 2020 prospects.
Looking at their own businesses for the next twelve months, the results again show a lack of confidence compared with the picture six months ago. Almost one third (30%) of respondents predicted a significant or modest fall in sales, compared with none in the summer. In addition, 40% of respondents said they expected sales to remain flat.
Just 30% of respondents were expecting to see a modest rise in sales, down from two-thirds in the summer.
Commenting on the data, James Clark, Secretary-General, BITA said: “It is disappointing – but perhaps not surprising – that BITA members are less optimistic today than they were in the summer.
“Continued Brexit uncertainty has impacted many of the market sectors on which our membership is reliant, with the obvious knock-on effect for the materials handling industry.
“Delivery of a prompt and orderly Brexit outcome would start to restore business’s confidence to invest. This has evaporated over the last six months despite the availability of capital.”
The latest UK Forklift Truck Market Outlook, which is prepared for BITA by Oxford Economics, offers clues to the direction of the market during 2020.
The report, which covers the period from the summer until the end of the third quarter, suggests the materials handling industry has been victim to the volatile economic conditions being felt across the UK during 2019.
It shows bookings data mirroring the volatility of the overall economy, with total bookings growth turning negative in Q3 following steady growth during the first half of the year.
As a result, bookings are expected to fall this year compared with 2018, with flat growth predicted for 2020.
Warehouse bookings fared better, largely due to the stockpiling of goods in advance of both previous Brexit deadlines at the end of March and October. For the year overall, growth is forecast to be 3.5%, with the picture levelling out at 1.4% during 2020.
However, the counterbalance trucks market has not performed as well. Orders fell 3.6% in the first nine months of 2019 – with a 6% dip in Class 4/5 bookings dragging down overall performance.
For the year as a whole, the forecast for the counterbalance sector is disappointing, with a 5.3% fall in orders. The situation is predicted to ease slightly next year, but overall the economists have predicted a 1.5% decline as industrial activity and investment remain under pressure.
Much will depend on what happens with Brexit.
Writing before the outcome of the general election, the authors of the report based their findings on a Conservative election victory and an orderly Brexit at the end of January. This would be followed by a two-year transition period in which new trade deals were negotiated, with the outcome being a free-trade agreement between the UK and the EU.
However, this scenario could be severely impacted in the event of a hard – no-deal – Brexit.
The report states: “Downside risks to the forecast are significant, given the true state of the UK’s economy following Brexit is yet to be seen.
“Under a ‘no-deal’ Brexit scenario, additional trade frictions and a sizeable depreciation of sterling would cause a significant slowdown in the UK economy, even if fiscal and monetary policy are loosened. This would harm UK manufacturing more than the overall economy. Investment-oriented and trade-intensive sectors would experience significant disruption, as trade slows, and business investment weakens.”
Over the last 10 years, the UK forklift market has risen dramatically from a low in 2009 of 17,658 units to just over 35,000 orders in 2018. The figure is expected to be broadly flat for 2019, with 2020 continuing the trend.
BITA forecasting has proved extremely reliable down the years, enabling members to plan sales strategies with certainty.
Released twice a year – in late spring/early summer and autumn – BITA forecasts are authored by Oxford Economics, a leader in global forecasting and quantitative analysis. Having access to accurate economic and industry modelling, market forecasts and analysis is one of the many benefits to BITA membership.
BITA is the sole provider of industrial truck sales statistics in the UK. The statistics are supplied by and made available exclusively to, association members.
BITA’s exclusive market analysis provides an ongoing illustration of market conditions as recorded by all its manufacturing members, who together represent well over 90% of the UK market. BITA thus holds a unique repository of information on the current state and historical trends of the UK fork-lift market.