MHI is forecasting orders for material handling equipment to grow 5-6% in 2013 and will increase further in 2014 with a projection of a 10% growth. This is following a strong 2012 which had 7.2% increases from the previous year. The main reasons for the growth are:
- Automotive is rebounding. US Automotive sales were 14.4 million units in 2012, industry forecasts are projecting the number to grow over the next couple years until it reaches around 16.6 million units in 2016. There are several factors that point to a stronger growth despite some overall concerns about the US economy. First is the average owned vehicle age is at its highest level in over a decade, this is usually a strong indicator for future new car sales. Also the US automotive restructuring done since the 2007 crash should put US manufacturers in a stronger position to capture sales.
- The housing market continues to grow at a robust rate. The trend has been strong since early 2012; latest reports show a continued increase in housing starts despite some bad weather across the US in April. Last month housing prices had their highest increase rate in nearly 7 years. Higher housing prices will put more existing home owners in the market as the higher value makes it more attractive to use.
- Manufacturing continues to recover. US manufacturing has let the recovery long before housing turned around. Many businesses are “reshoring” manufacturing, that is, bringing back manufacturing to the US from Asia. High wage inflation in China as well as increased shipping costs and increased complexity for adjusting the supply chain are some of the factors relating to “reshoring”.
Of course any number of things cans quickly change and cause things to deteriorate. Dramatic cuts in government spending, higher tax rates, continued problems with the Europe economy and the high debt of the US government could all drag the US economy to a standstill.