Article contributed by Total Fleet Solutions, March 2011
Material Handling Equipment Purchasing Trends Annual forklift sales are tracked by the Industrial Truck Association, which represents the manufacturers of lift trucks and their suppliers doing business in Canada, the United States or Mexico. Annual purchase of equipment has fallen drastically with the economic downturn in 2008-2009; unit sales declined over 40 percent in 2009 and 2010. This data suggests that for over 75 percent of companies, most of their assets are operating beyond their useful economic life.
While some of the decline can be linked to the manufacturing contraction, a significant portion is attributed to the contraction of investment in new equipment. Material handling equipment (MHE) is often the first capital item cut in the budget process, and as a result equipment is utilized well beyond its useful economic life. Thus, fleets become old, unsafe and very maintenance intensive, which creates a high cost and unproductive fleet that relies heavily on costly excess or rental equipment.
Ninety percent of companies surveyed by Total Fleet Solutions confirmed that their fleet includes many forklifts that are beyond their useful life because their ability to invest in new equipment has been limited due to budget constraints. Ideally, a fleet of forklifts should be on a consistent, timely replacement schedule based on usage hours, environmental factors and application. A proactively managed replacement program will result in a productive, safe fleet with the lowest total cost of operation.
The primary cost drivers of MHE are maintenance (preventative and avoidable), procurement (leasing / owning) and the operators. The economic life cycle chart below exhibits the optimized asset management model in which planned maintenance and timely planned replacement is managed proactively to deliver the lowest total cost of operation. In this example, the asset’s maintenance becomes unpredictable after year 6 and the cost of a new asset is less than the 6 year old assets. Assets beyond their optimal economic life have a negative safety, productivity, and environmental impact in any operation.
While it can be tedious, taking a proactive approach to fleet management – from regimented maintenance to asset rotation to a thorough replacement strategy – will result in a productive, safe, environmentally sound and low cost MHE fleet.