Material Handling Equipment Distribution
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Industry Overview
About 4,000 distribution outlets for material handling equipment in the US generate combined annual sales of $15 billion, about half due to lift truck sales. No major companies dominate the industry, which is fragmented: the 50 largest companies generate about 35 percent of revenue.
Competitive Landscape
Demand depends on the quantity of goods moving through the US economy. The profitability of individual distributors depends on good marketing. Small distributors can compete by specializing in a specific industry or type of equipment, or by offering excellent service programs. Large distributors can negotiate favorable agreements with manufacturers. Average annual revenue per employee is over $250,000.
Products, Operations & Technology
Products include lift trucks and inventory handling systems like conveyors, sorters, storage racks, carousels, and shelving systems. Distributors usually operate in either the lift truck segment or in the inventory systems segment, but not both. Products are used in both manufacturing and inventory facilities. Well-known lift truck brands are Hyster, Yale, Crown, Clark, Caterpillar, Komatsu, Toyota, Nissan, and Raymond.
Most distributors have only one or two distribution outlets. A typical manufacturer sells products through a network of many distributors. For example, Clark Material Handling has over 200 dealers. Distributors are usually independent, but are often affiliated with a particular manufacturer. Some manufacturers own their own dealerships.
In addition to the sale of new and used equipment, dealerships lease and rent equipment either long- or short-term. Lift truck dealers operate much like traditional car dealers, providing sales, service, spare parts, financing (often in cooperation with the manufacturer); taking trade-ins; and selling used trucks. A large base of existing trucks provides dealers with a big market for replacement parts, maintenance, and retrofitting. The margins on service are better than those on original sales. A dealer’s territory is limited by its ability to provide service.
