Driving a hard bargain for the best deals on wheels

Forklift truck suppliers who ‘bid low’ to try and gain market share with elaborate service and support deals are treading on thin ice.

The demand from forklift truck purchasers for constant improvements in value for money is now well established. It can only act to increase the pressure on manufacturers’ R&D programmes, as well as push for reduced component and manufacturing costs. This is likely to lead to further consolidation and collaborative agreements between manufacturers and suppliers.

As for technological developments, the basic functional requirements of forklift trucks tend to limit how radically they can be redesigned: the fundamental configurations are proven and sound. Nor are the available propulsion methods – electric, liquified gas, and diesel – liable to change. Rather, development is expected to focus on fuel efficiency, reliability and operating cycles, as well as in ergonomics and on-board diagnostics, sensing and management systems and load capacity.

Today’s customer in the UK is often looking for a utopian solution. A more efficient,reliable, safe, clean and more comfortable machine is not an unrealistic demand. However, the squeeze that is being placed on reducing industry costs in the UK – particularly in manufacturing – has placed the focus heavily on reducing the costs of acquisition. The somewhat less professional buyers, considering only initial cost and not the subsequent operating cost, tend therefore to have an expectation that can be unrealistic in terms of what they will really get for their money.

Forklift suppliers have also had to consider not just the product but the total ‘package’ they can provide. This includes the truck, its service and maintenance, and the management of the fleet for the customer. Larger fleet users recognise the use and importance of forklifts in terms of materials handling needs, but look to offload their operation on to their supplier, leaving them free to devote time to other pressing needs in their business.

Suppliers have met this challenge, and the increasing demand from users is unlikely to diminish as industry seeks to both cut costs and time spent managing their fleets.

There is, however, one problem for both customer and supplier in meeting this trend. Trained and competent service technicians and engineers are becoming more difficult to recruit and retain in relation to demand. Costs for service and maintenance are likely to rise as costs increase to retain, attract and train additional service-engineering staff.

As some forklift suppliers – driven by internal pressure to gain more market share – fail to recognise the escalating problem and continue to ‘bid low’ to secure more and more business, they will face diminishing returns as service costs increase.

Alternatively, they will overstretch capacity to a point at which their service level declines. Larger customers, who think that by placing all their business with the lowest bidder is getting them the best deal, face a hidden risk. If thesupplier cannot provide sufficient engineering capacity of the right quality, the customer will experience a serious decline in uptime. This can raise costs for the customer and damage the reputation of the supplier.

Brand integrity is vital to the maintenance of long-term business relationships and growth. History has shown that suppliers that gain a bad reputation can face massive costs to correct this – or go out of business.

Brendon Sparks is president of BITA, the British Industrial Truck Association.