Industry Forecast: Supplier

January 18, 2022

Suppliers Forecast Growth in 2022 as They Embrace Automation and E-Commerce
BY TOM GRESHAM

Unsurprisingly, the labor shortage is top of mind for suppliers. For those who provide automation-based solutions, it’s an opportunity. For others, the struggle to identify, hire and retain workers hampers keeping up with demand for their products. Despite that and other challenges, almost all suppliers participating in the survey expect to see healthy growth next year. Some will be expanding their physical footprint to build more capacity to keep up with interest in their products. The rise of e-commerce has provided a boost for several suppliers who have taken advantage of shifting customer buying behaviors to use online tools to bolster their sales. Targeted growth markets cited by suppliers ranged from e-commerce and automation to the international market and even marijuana.

The following are responses from MHEDA suppliers across North America to what they forecast for 2022. They share their thoughts on the year ahead for their businesses and the steps they are taking to succeed in today’s unique, pandemic-affected economic climate.

For Autoquip Corporation, the climate is promising. “Demand is incredibly high for lifts and especially our products,” says Louis A. Coleman, director of sales and marketing for Autoquip, the Oklahoma-based manufacturer of lifts and other material handling equipment. “All-time highs in demand. We don’t see increases in pricing as we expect materials to maintain.” Consequently, Coleman says Autoquip projects 15% sales growth in 2022. Potential obstacles that could hamper that projection are that materials will be challenging and “staffing up is also a challenge,” according to Coleman. Autoquip is not planning to enter any new, emerging growth markets in 2022, though Coleman says the business could pursue other expansion opportunities in the new year.

The new year will bring a new factory in Ohio for Pacline Overhead Conveyors. The factory should be fully operational by the first quarter of 2022, says Karl Scholz, president of the Ontario-based company. Scholz expects sales to remain level next year and says the company is looking for better efficiency in the year as it aims to maintain sales and margins “with rising input costs and shortages of everything.” Labor/employee acquisition and retention will be major factors for the company in successfully pursuing its growth plans in the new year. Scholz expects the macro trends that emerged in the economy in 2021 to expand next year. “I think the free market will fill the gaps but would like to see the government take the reins. [An] example is skills. Why graduate so many psychologists when they will not find work and will eventually have to switch professions?” Pacline is leaning into a growth market with its entrance into the business-to-consumer market for automated home closets, Scholz says. “People have excess money that we expect them to spend excessively,” he says.

Mark Kelley, vice president, Crown Battery Manufacturing Company, projects sales growth of 2-4% in 2022. The Ohio-based company, which manufactures a full line of industrial batteries, will be watching developments with the available workforce, supply chain productivity and forklift manufacturers’ production output rates as the most important factors in that projection. When considering such challenges as inflation and extended lead times, Kelley says he believes that additional government mandates might exacerbate the macro trends that emerged in 2021.

Automation continues to be a booming area. E-commerce’s rapid growth during COVID has generated a significant amount of interest in more automated material handling solutions

Capacity will play a key role in projected sales growth of 12-15% next year for Starrco, a Missouri-based company that specializes in the design and manufacture of pre-engineered modular office systems. Bryan Carey, president of the company, says the business plans to expand in 2022 with new product launches, and he says that Starrco has entered an emerging growth market in marijuana. The company manufactures commercial indoor grow rooms for marijuana cultivation.

A strong e-commerce economy will be essential to projected sales growth of 2-3% for Ridg-U-Rak, according to Dave Olson, national sales manager of the Pennsylvania-based pallet rack and storage rack manufacturer. Olson expects to see a continuation of constraints in the supply chain affecting materials and freight in 2022. Ridg-U-Rak has no expansion plans in the new year nor is it targeting new growth markets, Olson says.

Looking ahead to 2022, Shawn Lennes, strategic planning and business analytics manager with Toyota Material Handling, says, “Unquestionably, the hope is that we’re putting most of the volatility that was sparked with the pandemic behind us. Supply chains should catch, and inflation should cool, and we should be entering a calmer period.” Lennes forecasts a sales increase of more than 40% next year for his company with the forklift market having “some correction from the large upswing” and declining 15%. “We have unique circumstances, but the forklift market declining is just a normalization,” Lennes says. “CY21 is exaggerated most due to COVID rebound, inflation and extended lead times.” Toyota continually launches new projects, and Lennes says most of 2022’s launches will be focused in the first half of the year. Lennes says he can see 2022 calming in terms of inflation with some reduction in backlogs likely in the second half of the year. Automation continues to be “a booming area,” Lennes says. “E-commerce’s rapid growth during COVID has generated a significant amount of interest in more automated material handling solutions,” he says. “Generally, this is a shift most forklift manufacturers have taken and continue to journey toward.”

Stellana similarly has its sights on automation, having identified it as a growth market in the material handling industry for the last several years, according to Michael Scoon, director of global sales and marketing. “We will be investing more resources to better penetrate that market,” Scoon says. Scoon projects sales growth of 3% next year for the Wisconsin-based company, a manufacturer of polyurethane wheels and tires, rubber tires and caster wheels, and thermoplastic wheels for the material handling industry. Biggest factors impacting that projection include inflation, supply chain uncertainty, logistics costs and finding enough employees. Scoon sees “little to no” easing of those conditions next year. Expansion is in Stellana’s plans for the new year. “We need to expand capacity in several locations,” Scoon says. “Also, we have a couple of new product launches planned. Both will occur throughout the year. It is designed to increase sales and reduce costs.”

Kelly Kamlager Sr., director of marketing for RIOS, which develops automation for factory assembly lines, warehouses, and logistics/supply chain operations, projects 100% sales growth in 2022. Kamlager says the California-based company is seeking to expand its business next year. Chief factors impacting the company’s robust growth projection is the lack of available labor and the “quest for efficiency” that is prompting businesses to explore automation-based solutions for their workplaces. Kamlager believes 2021’s macro trends will continue next year, noting consumer confidence will be a trend factor as a response to challenges such as inflation and labor shortages. Kamlager says political changes, such as the midterm elections, could play a role in the overall economic outlook.

New products, an expanding customer base and improved acceptance from existing customers are the drivers behind a forecast of 25% sales growth next year for Noblelift North America, according to Loren Swakow, managing director of the Illinois-based maker of hand pallet trucks and other material handling equipment. Swakow says Noblelift plans to expand in 2022 with new products in the second quarter, following the introduction of new lines in the fourth quarter of 2021. The first quarter of next year will bring new exhibitions that “should have pent-up demand,” Swakow says. Swakow notes that “qualified people are hard to come by,” and he says wage pressure will continue to be a challenge next year.

Tom Rogers, CEO of Western Pacific Storage Solutions, expects sales growth of 20% in 2022, while noting the availability of skilled and unskilled labor – “finding people willing to work and take responsibility,” he says – will impact that projection. Rogers says finding people interested in entering the material handling world could help the company’s economic outlook for 2022. Rogers says WPSS plans to expand its manufacturing capacity by 100,000 square feet next year. He expects the pressure on steel pricing and availability to continue next year, saying the cost of steel is “outrageous.” WPSS is involved in e-commerce as a notable growth market, and Rogers says the company has experienced “eight years of explosive growth” in the realm of e-commerce. “More to come,” he says.

For Morse Manufacturing Company, relief from the current supply chain congestion, price increases and employment relief will be key to meeting projected 10% sales growth next year, says Nathan Andrews, president of the New York-based manufacturer of drum-handling equipment. Andrews believes that international will re-emerge as a growing market for his company. He expects 2021’s macro trends will continue into 2022, but also says “when supply chain issues stop, we anticipate reductions in demand.” Andrews says, “Once the supply chain bottleneck eases there will likely be too much on-hand inventory leading to (dare I say) a recession.”

Milt Tandy, president of WireCrafters, a Kentucky-based producer of wire partitions, expects to see sales growth of 10% in 2022. However, he says hiring people will be a factor in reaching that projection. He expects some of the macro challenges of the current economic landscape to continue and potentially get worse next year. For WireCrafters’ growth plans, he hopes to hire more employees now and expand its facility in the fourth quarter of 2022. Among growth markets, Tandy cites the company’s involvement in automation. When considering possible large influences on the economy next year, Tandy says, “If chips are available for the automotive market, it will explode.”

Secure Network Technologies, a New York-based information security consulting firm, expects sizable sales growth of 50% in 2021, according to Kevin Conley, managing partner of the company. The direction of the economy will be the biggest factor in meeting that projection, he says. Conley says he’s “cautiously optimistic that we can ride out the current inflation trends.” Secure Network plans to add additional people to its payroll next year and open a new office in Florida, all starting in the first quarter of the year.