The materials handling industry, not just here in the UK but right across Europe, has never faced such a crisis as the one it faces today. Here we speak to John Meale, Vice President of Fédération Européenne de la Manutention (FEM), The European Federation of Materials Handling which represents the materials handling industry in Europe, and managing director of Thorworld Industries, about the challenges facing the industry and what action FEM is taking.
“Such is the materials handling industry’s involvement across all industries, that the worldwide recession has hit us hard and looks likely to affect us for some considerable time to come.
“My own company, Thorworld Industries, like many others, has been forced to make redundancies and we have certainly seen a drop in sales across our entire product catalogue, including best-sellers such as our mobile yardramps, loading docks and loading bay safety accessories. More worryingly still, we have also seen a drop in levels of maintenance – a key safety requirement – that can put employees at risk and cost companies dearly in the long run in terms of repairs.
“This has been reflected across the industry as a whole. As we speak, the six industry sectors that FEM actively represents have all suffered a significant drop in sales over the past two years. In hard figures, Industrial Trucks have seen sales drop by up to 40 per cent; Mobile Elevating Work Platforms between 65 and 70 per cent; Racking and Shelving up to 40 per cent, Elevating Equipment between 35 and 40 per cent; Cranes and Lifting Equipment between 40 and 50 per cent and Intralogistic Systems up to 20 per cent.
“Since FEM represents the interests of more than 1,000 companies across Europe, which directly employ 160,000 people and have a combined turnover of 45 billion Euros (figures from 2008), this reduction in sales represents a sizeable proportion of the European economy.
“The good news is that sales across our sector, Elevating Equipment and indeed the other five categories, now appear to have reached their lowest levels and Europe, including the UK, is pulling out of recession. But FEM is greeting this news with caution and we are advising our members to prepare for the very real possibility of a ‘double dip’.
“Cuts have been widespread across the private sector, but this hasn’t yet been reflected within the public sector, a situation that with the installation of the new coalition government is now being rectified through cuts and increased VAT and taxation in a bid to repay the huge debts incurred as a result of the banking crisis.
“And this is likely to result in the second dip for the materials handling industry. This is because we are an enabling industry, in that we enable other industries to move and store their goods. Naturally, when jobs are under threat or taxes rise, people stop spending, which means less goods need to be moved, impacting not only on the industries making them, but also on the industry that supports their movement.
“We would therefore advise our members to treat signs of recovery with not only enthusiasm but a little caution. We certainly believe that things will pick up in 2011, but until the economy has stabilized, especially here in the UK, we are advising members to remain cautious about undertaking substantial investment.
“Another factor that will impact on the recovery of the materials handling sector, and one that the FEM are working hard to lobby the European Commission about, is material costs.
“In the four years prior to recession, the cost of steel rose from £455 per tonne to £910 per tonne. This has meant that products produced by FEM members, particularly the UK and Scotland, which had enjoyed a strong pound, were uncompetitive compared to goods produced in China and Asia, which in turn led to many job losses.
“Whilst the recession had brought some respite, with the cost of steel falling to £500 to £550 per tonne, it is now rising again and is back to a level of £700 per tonne.
“FEM believes that there are several factors behind the exorbitant cost of steel including the role of speculators exploiting the commodity markets, the apparent lack of competition between European steel manufacturers and apparent political interference on steel imports from outside of Europe.
“As a result, FEM is calling for both the European Commission and the British Government to encourage steel capacity growth in Europe by ensuring full liberalisation of the steel market. At the same time, we want reasonable access to steel from other world regions until European capacity is fully adequate and available at reasonable prices.
“Another issue that has become even more important with the economic downturn is that of market surveillance. European materials handling manufacturers must comply with a number of regulatory requirements (e.g. noise and exhaust emissions limits, requirements stemming from the EU Machinery Directive etc.), which ensure that their products are intrinsically safe, safe to use by the operatives and third parties, and meet environmental considerations. These requirements come at a price for European manufacturers, who invest time, efforts and money to ensure that their products are compliant.
“In return, it is public authorities’ duty to prevent unfair competition from non-compliant products. These products, the price of which is attractive to users, put many European companies and the jobs they provide at risk. Yet, the market surveillance by public authorities is all too often insufficient, be it across the UK or in the rest of the EU. FEM and its members have alerted both EU and national authorities about this problem.
“With these actions, the materials handling industry here in the UK and Europe, should be able to compete on a level playing field, allowing it to not only recover, but come 2011 start to grow once more.”
The FEM Congress where these and other issues facing the materials handling industry will be discussed will take place in Istanbul in September 2010. For further information about this and FEM or to become a member, visit www.fem-eur.com.
Thorworld Industries Ltd
Tel: 01246 260981