We’ve all seen the shiny new truck on the job site with an extended cab, leather, DVD player—and a tailgate that looks like a tree fell on it. Just as familiar is the truck whose best years are far behind it, yet it’s hauling a family camper. These are clear examples of the wrong truck for the job, but the match between lift truck and application is not always quite so obvious. If the loads get lifted and the trucks get loaded, all is well.
But if you look at maintenance, utilization, productivity and total cost of equipment, you get a clearer picture of a lift truck’s fitness for the task. As equipment sellers, users and service providers collect more data and get better at interpreting it, the art of pairing tool and task is becoming a well-honed science. It’s now possible to accurately predict whether a given lift truck model will under-perform, over-perform or get it just right.
But this analysis can also uncover applications where no new piece of equipment quite fits. The utilization is too low, and renting or purchasing a used lift truck might make better sense. Lift truck manufacturers have taken note and are now working to expand their offerings at the “low cost of acquisition” end of the market. The idea is that end-users can then enjoy the warranty, service and support of a new piece of equipment without overpaying for something they don’t need. However, this new battleground for lift truck customers presents its own assortment of risks and challenges.
Utility on an economic budget
Like any bell curve, the mid-range lift truck market will always comprise the majority of sales. The upper tier premium products are largely identical to those mid-range platforms, but with added features and options like telematics solutions and robust support for maximum uptime.
“In the lower utilization category, a lot of manufacturers have struggled with how to play in that space,” says Martin Boyd, vice president of counterbalanced solutions at Hyster Company. “Manufacturers have spent enormous amounts of time and energy establishing their brands in the marketplace and it can be challenging to maintain that brand image while catering to the lower-utilization market. It’s also difficult to directly target this ‘utility’ market with products while simultaneously optimizing the supply management chain so the number of variations doesn’t become overwhelming.”
For the low-cost segment—whether it’s called utility, economy or budget—the end-user challenge is for purchasers to determine exactly why the price is so low.
“It becomes a matter of trust,” Boyd says. “Why would I pay 25% more for one tool when another tool performs the same basic functions to meet my operational requirements? Trust in emerging ‘utility’ type industrial lift trucks will ramp up quickly when customers realize the service and support they have become accustomed to will also apply to these new utility brands.”
Boyd says all industrial lift truck manufacturers in North America have been carefully monitoring the movement of lower-cost, off-shore brands as they pursue a bigger share in the North American market. Unlike the eastern European region, he says, the North American market has experienced modest penetration from these off-shore lift truck manufacturers.
“There are more low-cost or import dealers popping up, and some of them follow a good model of providing the lift truck, parts and service,” says Andrew Omahen, business development manager for UTILEV. “Others are quoting with no service or support at all, and tell customers any other lift truck manufacturer can service the equipment. If a low-cost lift truck is imported, if there is unplanned maintenance it can take time to get parts.”
Kevin Trenga is the North American product manager for Baoli, a Chinese brand KION acquired in 2009. He says the arrangement—which is mirrored in similar relationships among top lift truck manufacturers—results in more effective coordination of global resources.
“It’s important to remember that ‘economy’ doesn’t have to mean ‘cheap,’” Trenga says. “Good quality and effective service support are two key elements of industrial equipment customer satisfaction, regardless of price. When a manufacturer has an in-house Chinese brand, the company is able to more directly influence product quality and effectively ‘owns’ the supply chain for parts and service support. That makes a difference in the customer experience.”
As the top manufacturers have expanded low-cost offerings, they have been keen to emphasize the support of their existing dealer networks. Nonetheless, the budget shopper is still likely to go with the lowest up-front cost, so a conversation around total cost of ownership remains important.
“I don’t know how many fleet buyers step back and think about it,” Omahen says. “I suspect it’s not happening a lot. More often it’s ‘I need this many, send a quote.’”
Over the long term, Omahen says the periodic maintenance requirements for a low-cost and premium lift truck are similar and the robustness of engineering behind both is comparable.
“The design intent for a premium product is to last,” he says. “For low-cost, some components might not be as robust, and the life expectancy might not be as long. This tiered approach is following the same mindset in materials handling in general.”
A fleet worth more than the sum of its parts
Of course plenty of fleets need both low-cost and premium equipment. In fact, saving at the low end can help fund the additional features and capabilities at the high end. Not all customers will be able to keep certain equipment in one area or another to fully realize these benefits, but benefits come with standardization, too.
“I completely understand why people would go in either direction,” Omahen says. “But if you really look at different operations within facilities, there could be a big swing in the type of lift truck required.”
Data from end-users and dealers eventually rolls up to the manufacturer level, where it can illustrate the spectrum of usage and potentially inform the creation of new products. Many manufacturers will admit to having a phase where expansion of their product range had more to do with what was trendy in an effort to differentiate, but current efforts are based on identified needs. Tim Combs, president of sales and marketing for The Raymond Corp., offers the example of a new reach model with four-directional travel capability.
“It was developed for customers who needed an easier way to handle long, bulky loads,” Combs says. “It was something we were seeing consistently and that needed to be addressed.”
Combs emphasized the closer pairing of equipment and application as a key driver for the industry. Telematics and data analysis can help inform new product design, but they can also rapidly diagnose problems in real-world applications. For example, high horizontal transport times and minimal lifting times on a reach truck would indicate the truck is not a good fit. Dealers can monitor these patterns on behalf of customers and recommend adjustments accordingly.
Dealers therefore have incentive to be proficient in a variety of models, brands and services. Boyd says a dealer portfolio that only represents the forklift brand they support will find it increasingly difficult to compete.
“More sophisticated dealers almost act as a general contractor,” he says. “They might identify the need for better lighting while discussing very narrow aisle equipment, or improved air quality where internal combustion trucks are used indoors.”
According to Mick McCormick, vice president of warehouse solutions for Yale Materials Handling Corp., dealers should also be prepared for change as customers’ businesses and workforces grow and change. This is a challenging dynamic for low-cost, entry-level models, he says, where the cost of initial acquisition is a more significant driver.
“Sales and service models are broadening or blurring because of the way customers want to consume trucks today,” he says. “It’s driven by distribution centers that are really focused on staying on the cutting edge of labor productivity and might be looking to rotate and rebalance the fleet on a very frequent basis. It’s not to the extreme of a pure rental model, but they want a two- or three-year window to rebalance or completely change out equipment to take advantage of new technology and anything that can add value.”
McCormick says it comes down to how the customer approaches the purchase. Low-cost equipment is often approached from a purely product standpoint—a round peg for a round hole.
“When the customers say they need to increase labor productivity and get more out of assets and people, they’re really looking beyond a product for a solution,” he says. “The surprising benefits come not from discrete products but how well a dealer puts them together.”
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