YOUNGSTOWN, Ohio – Those companies that provide basic – but vital – services to help the local economy move along are experiencing a strong rebound as business activity ramps up.
This growth hasn’t come without some degrees of uncertainty and pain, especially for materials handling firms hamstrung by an anemic labor market and a volatile supply chain that could affect their businesses and those of their customers.
“We’re busier than we’ve ever been,” says the president of DEL Lift Rentals and Sales in Boardman, Carl Stitzel. “We’ve been turning work away daily.”
While that’s not a bad position for the company, there are downsides to the current spike in demand, Stitzel says.
First, it’s difficult to find employees in a very competitive labor market, he says. “I can’t find enough employees. We are crazy busy.”
Manufacturing and distributing centers in the Mahoning Valley have been hit over the last several months with disruptions in supply chains that stretch across the world.
Many of these operations are faced with long lead times for orders for new forklifts, scissor lifts, or other materials handling equipment, many of which are manufactured overseas.
Moreover, costs have skyrocketed this year, making it less appealing for customers to buy new equipment, Stitzel says. “New equipment is up between 30% and 35%.”
To solve this problem, these companies are turning to suppliers such as DEL, which can make available late model used forklifts, for example, or provide lease and rental arrangements for the customer at a lower cost.
“We’re filling the void in the supply chain,” Stitzel says. “We’re selling to local manufacturers, the building trades, and contractors doing work at Ultium.”
The manufacturing sector is driving most of its business, Stitzel says, while activity in the warehousing and distribution space is also robust.
“It’s the fastest-growing sector in the materials handling industry,” he says.
“Call it the Amazon effect.”
“We’re selling a lot of equipment to warehouses – taller equipment,” Stitzel says. The distribution market is so hot right now that DEL added two new product lines – cleaning equipment and floor scrubbers for warehouses.
Still, supply-chain issues have led to shortages, driving up transportation costs and the prices for raw materials, says Gary Sharon, vice president at Litco International Inc. “Companies that rely on raw materials and components from overseas are expecting long delays,” he says.
Litco makes engineered molded wood pallets from domestic sources, using wood fibers instead of boards and nails. They are pest-free and ideal for carrying products in international trade. Business has increased dramatically with the shortage of shipping pallets on the market, Sharon says.
“There’s increased demand and a shortage of domestic hard, and softwood, pallet lumber, plus nails that are manufactured overseas,” he says. Lead times for new pallets on average are between 4 and 7 weeks, instead of the normal two weeks, he says.
According to data provided by WarehouseGig.com, the revenue of the warehouse industry in 2019 totaled $36.6 billion. By 2028, it’s projected that more than 156,200 materials moving jobs will be available nationwide, while wages for distribution workers rose 20% between 2008 and 2017.
“Business is very good at the moment,” says Jim Hammond, president and owner of Valley Industrial Trucks Inc., which has locations in Boardman and Akron. “People are looking for equipment and spending money.”
Valley Industrial Trucks sells, leases and provides service for forklifts, scissor lifts and aerial equipment. “A lot of our customers are hiring. All of our industrial customers are busy. Our guys are working overtime, every day,” Hammond says.
Original equipment manufacturers are having a tough time securing parts, thereby delaying production of new models, Hammond says.
Meanwhile, inflationary pressures on raw materials such as steel or rubber for tires, compounded by high demand, have driven prices for new equipment much higher. These higher prices have also trickled down to higher prices in the used market.
“It’s a big problem,” Hammond adds. “It’s just like the auto industry.”
The lack of inventory for new equipment on the market has forced customers to extend their leases or to refurbish existing trucks, Hammond says.
“We’re used to equipment lead times that were between eight and 10 weeks,” he says. “Now, they’re 20, 30 or in some cases 40 weeks out. Manufacturers can’t get components.”
This, in turn, has boosted business for Valley Industrial’s service department, Hammond says. “We could hire several people right now.”
Valley Industrial reported strong revenues for 2020. Already, sales for this year are much better, Hammond reports. Still, he says the company is accustomed to having more inventory on the floor so it can fulfill an order within a tight window.
“We still have inventory and we have a supply of equipment in the pipeline coming in,” Hammond says. “But we’re not used to this.”
Others in the materials handling industry say that supply chain pressures have led to cost increases in the steel, transportation and construction segments, making it challenging for companies that deal in new equipment.
“Customers are trying to fight these costs and move their business forward,” says Bill Petro, president of Century-Fournier Inc., Boardman. “It’s very challenging for them.”
Petro says business at his company has rebounded to nearly pre-pandemic levels. But, he notes, Century-Fournier still feels the pinch of the constricted supply chain. “The ability to deliver and have goods on hand is a real challenge,” he says.
Which makes his company’s service department all the more important, he says. “It’s in high demand right now. The only issue is that there aren’t enough employees to go around.”
Century-Fournier provides a wide variety of materials handling and storage equipment such as racking, shelving, pallet trucks, forklifts, conveyors, cranes, hoists, hand trucks and containers.
“We’ve been able to provide a lot of diverse, material handling equipment to a lot of customers here,” Petro says. “We’ve touched upon a lot of local businesses at one time or another here. It’s something of which we’re very proud.”
Pictured: Companies like DEL Lift Rentals and Sales are experiencing a strong rebound as business activity ramps up.