Conveyor Industry Clouded For 2008

Flat or minimal growth year expected.

By Fred Thimmel

2008 is proving to be a difficult year to forecast, according to many of the Conveyor Equipment Manufacturers Association (CEMA) member companies. CEMA was formed in 1933 and is celebrating its 75th anniversary year as serving as the voice of the North American conveyor industry. CEMA’s 92 member companies represent the leading producers and designers of conveying equipment and accessories in the United States, Canada and Mexico. Through an active statistics program, CEMA accurately tracks output statistics in over 15 product classes, as well as the combined economic activity for the industry as a whole.

The difficutly in forecasting holds true for the two major industry segments within CEMA—the bulk section and the unit handling section. The bulk materials section encompasses conveyors and accessories used in such fields as mining, aggregates and grain handling. Unit handling conveyors are employed in airport baggage, warehousing, distribution and general industrial applications.

Both segments face a number of economic uncertainties as they look toward 2008. What is reasonably certain is that the industry growth rate of 6 percent, based on booked orders for 2007, will not be reached in 2008.

Bulk Handling Outlook
On the bulk side, the poor prospects in the housing market and an expected softening in commercial construction may slow demand for construction materials such as aggregates, concrete and asphalt, key markets for bulk handling conveyors. Conversely, the rising demand for ethanol and possible growth in highway and infrastructure improvement in the wake of the Minnesota bridge collapse may absorb some of the excess capacity present now and drive demand in the future.

Unit Handling Outlook
The future is equally clouded on the unit handling side. Many, if not all, of the airport projects slated for 2008 have already been funded, providing some security for this very important segment of the unit handling side of the business. However, tightening credit, the decline in the housing market, speculation over the movement of interest rates and the direction of the presidential race all promise to influence consumer sentiment, which weighs heavily upon warehousing and distribution, as well as how aggressively businesses are willing to invest in expanding production capacity.

Even the most optimistic estimate for 2008 suggests that the combined growth for unit and bulk sides of North American conveying will be at or around 2 percent. Many in the industry are predicting a flat year, for which they would be thankful. Some CEMA members are even predicting a down year until the third quarter of 2008, when the industry will level out with stronger growth in 2009. Uncertainty best described the mood as industry leaders gathered in Chicago for CEMA’s fall conference. Their very conservative assessment of how the industry will fare in 2008 clearly reflects the difficulty in determining how these very volatile factors will influence the economy over the next 12 to 18 months.

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The MHEDA Journal • First Quarter 2008 • Volume 37, No. 1 • Contents are Copyright © Data Key Communications, Inc.
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