Habits of the recession can prove costly as recovery takes hold.A recent survey by a major forklift manufacturer revealed that about 50% of customers expect their fleets will stay the same size in the coming three years. According to Nick Adams, business development manager for Mitsubishi Caterpillar Forklift America’s fleet services group, the survey indicates the desire of forklift and used forklifts customers to achieve more with less as the industry continues its recovery. He warns, however, that extended lease terms and an aversion to replacement can quickly lead to over-worked equipment and increased maintenance costs. But there’s a right way to optimize every fleet, says Adams, and data tracking can make all the difference.
“When customers get into a recession, utilization will drop as they retain their core fleet,” says Adams. “Then, in the recovery, customers hold the same fleet size but push for higher equipment utilization. When that higher utilization is sustained, customers will see higher maintenance costs from that aging fleet. I still think you’ve got customers, in general, who are just now having enough confidence to start looking at replacements.”
Not all of the habits learned in a recession are bad, Adams adds.
“They got lean during the recession, and now they’re going from 30% utilization to 60%,” says Adams of one customer. “But as they grow, they want to keep learning from these lessons. It can mean a better return and more profit.”
Lately, the number of lease extensions has dropped significantly, says Adams. Business growth is starting to get forklift and used forklifts rollover cycles back to “normal,” but the scarcity of new expansion will continue to limit overall fleet growth.
There are smart ways to squeeze more from existing equipment in existing buildings, says Adams, who cited one of MCFA’s biggest customers. The customer’s fleet was at about 55% utilization, which was higher than 2009, but about level from 2010 through 2011. But maintenance costs started to increase, and short-term rental costs went up. By tracking and reacting to data, the customer was able to course correct, prevent further waste, and keep utilization at an optimal level.
“What about a customer who went into a lease agreement in the recession?” asks Adams. “Now they are exceeding their contract usage since utilization is way up. Data enables customers and dealers to enter lease agreements based on accurate annual usage and avoid penalties.”
Adams encourages fleet managers to anticipate the line between lean fleets and unnecessary costs, and emphasizes the importance of detailed data.
“Track utilization and track expenses. You’re going to need that to justify replacement,” he says. “If the accountants are used to just replacing a forklift every seven years, they’re not going to see the usage data until you bring it to them.”
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