How Will Material Handling Fare in 2016?

Here we are the start of a new year, filled with hope and anticipation. So, what does 2016 hold for the material handling industry and the economy in general? There are plenty of opinions for one to consider. The general consensus is positive. However, accurate predictions are dependent upon many factors and most become less reliable the further out one goes. Therefore, this is what we can expect:

According to the Foundation-Keybridge U.S. Equipment & Software Investment Momentum Monitor¹, growth in the purchase/lease of material handling equipment will not be strong, possibly through mid-year. However, the Material Handling Institute² (MHI) is hedging this assessment by stating other factors including strong equity markets, low interest rates and continued manufacturing expansion could delay a downturn in new orders, possibly into 2017.

Speaking of manufacturing expansion, the Manufacturers Alliance for Productivity and Innovation³ (MAPI) anticipated manufacturing growth rising 2.9% in 2016. Furthermore, MAPI predicts [overall] equipment investment for growth to rise 6.6% and industrial equipment expenditures increasing by 8.3%. In fact, the purchasing and supply management executives⁴ are more bullish on growth in 2015. More than 30% of respondents to their survey indicated an average increase of 24.1% in capital expenditures.

A need for more warehouse space will continue in 2016 according to JOC.com⁵. According to the publication, demand will outstrip supply, even with the current construction of additional warehouse space nationwide.

The nation’s overall economic outlook for 2016 depends upon who is talking. Goldman Sachs⁶ has downgraded previous predictions for growth to 2.4% while Kiplingers⁷ thinks the economy is strong enough to grow at a 2.8% rate.

Those are the predictions that suggest 2016 holds promise for material handling, manufacturing and the economy in general. Add in continued low interest rates and fuel prices that should only increase modestly and things look pretty good for the year, right?

Unfortunately, there is enough information from opposing points-of-view that suggest other factors could negatively affect growth. Among these, include a variety of internal and external factors including terrorism both here and abroad, the ongoing financial debt crisis plaguing many European countries, and misleading unemployment numbers.

Where does this ultimately leave you? Remember the adage that goes “you can lay all the economists in the world from end-to-end and never arrive at a conclusion.” In other words, economic predictions may offer some insight, but shouldn’t be relied upon to make a decision.

The best tact is taking a cautiously optimistic position. If you plan to invest in material handling products, do your homework to see what makes most sense financially and in terms of productivity. Work with trusted business partners who emphasize quality and strong relationships. Following this advice should help you achieve your material handling goals in the new year.

May we all experience a prosperous 2016.

1 https://globenewswire.com/news-release/2015/12/09/794102/0/en/2016-Economic-Outlook-Forecasts-4-4-Growth-in-Equipment-and-Software-Investment.html
2 https://www.mhisolutionsmag.com/index.php/2015/09/21/initial-2016-outlook-u-s-growth-to-continue-as-global-growth-improves
3 https://mhlnews.com/global-supply-chain/manufacturing-increase-26-2016-and-3-2017
4 https://www.prnewswire.com/news-releases/economic-growth-continues-in-2016-manufacturing-growth-expected-in-2016-revenue-to-increase-41-capital-expenditures-to-increase-10-capacity-utilization-currently-at-816-non-manufacturing-growth-projected-in-2016-revenu-300189385.html
5 https://www.joc.com/international-logistics/distribution-centers/us-industrial-demand-forecast-exceed-space-2016_20151218.html
6 https://www.cbsnews.com/news/goldman-sachs-2016-looks-like-a-dud-for-the-economy
7 https://www.kiplinger.com/tool/business/T019-S000-kiplinger-s-economic-outlooks