It’s that time of the year when predictions for forklift markets exercise the crystal ball gazers but how reliable are they, given that predictions by economists, in particular, are often based on flawed assumptions which leave them looking embarrassed when future developments confound their forecasts. So should we pay more attention to the latest, numbers-backed truck order trends rather than imagined fears that may not be fulfilled?
According to the latest Oxford Economics forecast on behalf of the British Industrial Truck Association (BITA) there appears to be a dichotomy. On the one hand BITA members show a softening of confidence in line with the slowing prospects for UK PLC, which saw a 10% slowdown in truck orders during the second quarter. Note “prospects” being the operative word. Yet on the other hand since the Brexit vote truck orders are not suffering. Britain recovered from the Brexit vote better than previously expected, despite the best attempts of the remain camp’s cheer leaders, including the Bank of England, to spread alarm and despondency. In short, the doom mongers got it badly wrong, emphasising the need for caution when examining these predictions based heavily on sentiments.
Like it or not, however, market outlook surveys are here to stay, for they are important marketing department tools, and given that all businesses hate uncertainty they look to them for signposts that may herald a sea change in sentiment. So given that figures, i.e. truck orders, trump fears can we say if the latest Oxford Economics’ forecast for 2017, revealing weaker sentiment, is unduly pessimistic?
Half of the survey’s respondents last Autumn considered themselves less optimistic about the outlook over the following 12 months compared with just 20% who said the same thing in the Spring. But what has been the reality so far? According to BITA’s secretary-general, James Clark, “current order books are not suffering, with the majority of those polled considering their ledgers to be significantly better than normal, a substantial change from earlier in the year when less than a fifth reckoned this to be the case.” As for the UK economy as a whole it looks like the country will end 2016 as a top performer among western countries, well ahead of their EU members.
So what can the forklift market expect this year and, more importantly, what should truck buyers do if they feel concerned about uncertainties ahead? According to the Oxford survey one of the most noticeable shifts is that all respondents now expect truck prices to rise owing to adverse currency changes weakening the pound against the dollar and Euro. Although that expectation is sound in theory the reality could be otherwise for several reasons. The UK forklift industry has always been intensely competitive, with often wafer thin margins, so their ability to raise prices is constrained. Potential buyers also have the choice to switch to second-hand and refurbished trucks, currently a very strong market, if they perceive proposed price rises as opportunistic and high. New truck sellers, therefore, may have to look for more internal efficiencies or take a hit on their margins. What could develop if price rise resistance is too strong is that sellers raise their after-sales charges for spares and maintenance as part of their rental deals.
The forklift market, however, should take comfort over the longer-term outlook for the UK economy, as the Oxford Economics’ latest forecast suggests. A more competitive pound will boost manufacturing, a key market sector for counterbalanced trucks, in particular. The concerns over a Brexit fall-out are almost certainly overdone and who knows where the EU will be at the end of this year after four key country elections? New opportunities beckon overseas and many foreign countries still view Britain as the best place to do business, shown by a raft of recent multi-billion pound investment deals and proposals. Now is the time for Albion to honour the legacy of Drake’s ships as they steered to glory, a great leap in the dark if ever there was one, which ultimately changed the whole world for the better.
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