Are good times ahead for materials handling?

I’m at the MHIA spring meetings in Charlotte this week. It’s also Race Week in Charlotte, which meant a trip to the NASCAR Hall of Fame and some barbecue for dinner last night.

Unlike ProMat, which is a showcase for our industry, much of what goes on at the MHIA meetings focuses on the mundane, like annual budgets and marketing campaigns for product sections. However, I sat in on three discussions yesterday that were fascinating.

The first was an overview of the economy and the state of the materials handling industry by Hal Vandiver. Now an executive consultant to MHIA, Vandiver has been studying the industry for years, calls it straight and gets it right. Vandiver acknowledged potential clouds on the horizon, but he’s looking for 11 to 12% growth this year, and continued growth through 2013. Some good things are happening.

The second was the membership meeting of the group that represents systems integrators. During the product meetings, members fill out a sheet that addresses business conditions like their backlog of orders, their pipeline of inquiries, whether they’re hiring in manufacturing and engineering and whether wages are going up. No one shares actual figures. Rather they use a scale that ranges from -2 (business is bad) to 0 (business is flat) to + 2 (business is good). Here’s what I noticed, with one or two exceptions, every member reported that their backlog of orders and inquiries was a +1 or a +2. Most companies were looking to add hourly and engineering staff. No one was popping the top on their Budweisers, but confirming Vandiver’s outlook, the view from the ground ain’t bad.

So, what’s driving that growth. In a sense, that was part of a round table discussion by the group that represents supply chain software. Here are some key takeaways:

We’ve gone global: Whether you chalk it up to a cheap dollar that makes exports more attractive or emerging markets embracing technology to mitigate rising wages, global markets are as important to our industry as domestic markets. One domestic provider of automation technology pointed out that more than half their business now comes from overseas. 

It’s all about China: But not in the way you think. Wages are going up in China, and that’s leading our customers – the manufacturers who use materials handling solutions – to look elsewhere to locate their factories. While its still unclear whether near-shoring is a point solution for some or a broad trend, some manufacturers are relocating to North America. If so, and its still an if, that should be good news for materials handling automation and supply chain software as manufacturers and distributors look to mitigate their labor costs. As one participant put it: “No one wants to hire, and I hear that from everyone.”

Rethinking Just-In-Time: The earthquakes and tsunami in Japan are causing some of our customers to rethink just-in-time strategies. There’s a sense that we got way too lean during the recession. The question is, what role can materials handling and supply chain software systems play as manufacturers craft new strategies.