Innovation is the key as forklift truck manufacturers look to support customers in new economic circumstances. MALORY DAVIES reports on some of the initiatives now being adopted.
Forklift truck manufacturers are moving quickly to develop innovative new ways to support their customers in the face of the downturn in themarket.
Figures fromtheBritish IndustrialTruckAssociationshow that in the final quarter of last year, the number of new truck orders, at 4,700, was the lowest since 1993 – the last major market recession.
It doesn’t take a Hogwarts graduate to work out that inventive thinking is required, and there is plenty of evidence thatmanufacturers are stepping up to themark.
There is a new focus on service and maintenance, extending the life of existing vehicles and helping customers make the best possible decisions about warehouse configuration and vehicle selection.
Of course, there is an element of enlightened self-interest in all this. Most forklift trucks are on leases, and to make a profit the lessor needs to get the residual value right – the price at which the truck can be sold into the second-hand market at the end of the lease.
When demand falls, used vehicle prices also fall, and that creates a gap between the expected profit and the actual proceeds. In that situation it becomes critically important to manage the second-hand market as carefully as the new truckmarket.
There is also evidence that rather than offer big discounts on new trucks, some suppliers are suggesting that customers could savemoney by choosing reconditioned equipment.
Jungheinrich recently announced the opening of seven specialist used forklift truck showrooms alongside the existing regional facilities at Warrington, Sheffield, Birmingham, Milton Keynes, Bristol, Llanelli and Cumbernauld. They stock products from Jungheinrich’s Ready To Go range which have been rebuilt at the Jungheinrich Group’s specialist used truck refurbishment centre in Dresden, Germany. Jungheinrich has recently doubled the capacity of the Dresden plant.
“While it will depend upon the specification, a used truck will, on average, cost around 60 per cent of the selling price of an equivalent new model,” says Neil Warren, Jungheinrich’s used equipment and short-termrental director.Over the next three years Jungheinrich expects to have more than 100,000 trucks coming back fromcontract hire packages.
Roger Massey of Barloworld says: “In this economic climate, businesses requiring trucks for low daily utilisation may benefit fromselecting quality used forklift trucks.” When buying a used forklift truck it is important to look for a reputable supplier who has access to a good stock of machines and can offer clear advice.
Short-term rentals are another option. “Many of our customers make significant savings by running smaller core fleets and pulling in extra units during periods of seasonal demand,” saysMarkWard, UK commercial assetmanager at Barloworld, which has an extensive short-termrental fleet.
“We have seen a noticeable increase in demand for trucks on short-term deals,” says Jungheinrich’s Neil Warren. “Traditionally truck users have turned to short-termdeals to cover peaks in demand – such asChristmas or Easter – butwe are experiencing a growing number of enquiries from companies seeking short-termrentalmachines because they have a need for a truck, but a permanent addition to the fleet is not in the budget.”
Service and maintenance is another key area of development. Linde has been developing its offering in this area andBarloworld recently launched a newservice package called Truckserve, designed to meet the operational needs and legislative requirements of the current and future UK industrial climate.RogerMassey ofBarloworld says: “The two levels of service, Truckserve and Truckserve Plus, both offer a scheduled programme of maintenance to minimise costly unforeseen repairs and unproductive downtime.”
Briggs has launched a product called FlexiHire, which it reckons can help customers to de-risk their business with short, flexible contracts at the same time as reducing their cost of running the fleet year on year by five to ten per cent. The no-penalty withdrawal options, coupled with a sliding scale payment plan, are ideally suited to difficult business conditions.
Chris Hawkins, Jungheinrich’s driver training manager, points out that an important part of Jungheinrich’s global materials handling consultancy includes driver training. Many truck users – both the bigger fleet operators and the smaller one-off buyers – sometimes fail to see the substantial performance benefits that professionally trained operators can bring to their business, says Hawkins, despite the fact that they understand that there are significant cost benefits fromsupplierswith the service andmaintenance credentials.
Charge of the fast brigade
James Clark, secretary general of BITA, highlights the importance of new electrical technologies such as high frequency battery chargers. “They use less mains energy than conventional chargers, and permit time-efficient ‘opportunity charging’ over breaks.
Combine this with smarter warehouse layouts, which optimise specific lift truck capabilities and you are starting to ‘work smart’ to reduce your costs.”
Tony Rooney of Briggs Equipment, points out that a typical 50 Hz battery will store around 35kw of energy and can take 12 hours to charge. “By increasing the efficiency of charging and improving battery run times, savings in electricity consumption of up to 22 per cent can be achieved.”
Exide Technologies has introduced a five-year warranty for its high frequency chargers. Nigel Harris of Exide says: “The main benefit is that they are more energy efficient and in these days of high energy prices and concern over carbon emissions, they are a worthwhile investment. Investment in our SP range of chargers can show significant cost benefits over a five-year period. The SP high frequency chargers are about one tenth the size of an equivalent conventional charger, meaning that valuable space is freed up for more profitable applications.”
Thorntons reduced energy consumption and costs at its main chocolate production site in Derbyshire by standardising on Hawker LifeTech high frequency battery chargers from EnerSys across its materials handling fleet. The company expects to achieve a two-to-one return on its investment over the lifetime of the contract. The decision to adopt Hawker LifeTech high frequency chargers from EnerSys was taken during 2007 when Thorntons appointed Linde as its truck supplier.
Linde focuses on unlocking value for customers
Customers are looking to their suppliers to help save costs and unlock value, says Andrew Daly, head of sales and marketing at Linde in the UK.
They are looking for support to manage the fleet more efficiently and reduce costs, and companies that can step up and offer that support are benefiting. “We have seen that reflected in our market share,” says Daly. “We increased our market share in 2008 and that has gone on into 2009. We have increased our focus on customer needs and we are well positioned to serve them.” To meet the need Linde is stepping up the focus on its fleet management services. “We are able to look at the total cost of operation and improve the efficiency,” says Daly.
It has a couple of tools to do this. The first, Stratos, is a warehouse planning tool that helps identify the optimal storage system and configuration for a warehouse using 3D modelling. It also helps calculate the right amount of racking, as well as both the numbers and types of mobile handling equipment that will be required.
Linde has used this for a number of blue chip customers and, says Daly, the facility is currently booked up two months in advance.
It has also developed a tool to look at the total cost of operations. This covers everything from fuel costs to pallets handled to show the efficiency of a piece of equipment and how money can be saved. Daly says that the tool has been independently verified to show that its data is correct.
Linde has also been increasing its investment in sales and service training so that all the sales and service staff will have gone through a tailored programme by the end of next year.
Another area of development is the national network. Daly believes the network of ten companies in the UK and Ireland gives Linde greater agility and a real competitive advantage. The strategy, he says, is to maintain these strengths as well as building on the synergies to enable the network to act as one. A key element of the strategy is to increase the focus beyond the new truck business to take in used trucks, short-term rental and after sales.
Customers want a broad proposition and greater flexibility. “If we can establish that broad proposition we are able to talk about all these areas,” says Daly.
Only a small proportion of forklift trucks are bought outright – the vast majority are taken on some kind of lease with maintenance contract. Daly points out that this means Linde has a very strong service network.
Linde is working on a number of ideas to offer cost effective solutions to customers, says Daly, for example, the idea of run-on vehicles – postponing the return of an existing truck and thus postponing the need for a new truck.