SIC 3537
INDUSTRIAL TRUCKS, TRACTORS, TRAILERS, AND STACKERS



This classification comprises establishments primarily engaged in manufacturing industrial trucks, tractors, trailers, stackers (truck type), and related equipment used for handling materials on floors and paved surfaces in and around industrial and commercial plants, depots, docks, airports, and terminals. Excluded from this classification are establishments primarily involved in manufacturing motor vehicles and motor vehicle type trailers, which are classified in SIC 3710: Motor Vehicles and Motor Vehicle Equipment, and those manufacturing farm type wheel tractors, which are classified in SIC 3523: Farm Machinery & Equipment. Also excluded from this industry are establishments primarily engaged in manufacturing tractor shovel loaders and track laying tractors, which are classified in SIC 3531: Construction Machinery and Equipment, and those manufacturing wood pallets and skids, which are classified in SIC 2448: Wood Pallets and Skids.

NAICS Code(s)

333924 (Industrial Truck, Tractor, Trailer, and Stacker Machinery System Manufacturing)

332999 (All Other Miscellaneous Fabricated Metal Product Manufacturing)

332439 (Other Metal Container Manufacturing)

Industry Snapshot

The industrial truck and tractor industry includes a narrowly defined yet diverse assortment of products that are part of a larger industrial classification commonly known as the material handling equipment industry. Equipment within the smaller industrial truck and tractor category is utilized to move, package, and store both finished products and raw materials used to manufacture finished products. Accordingly, industrial truck and tractor products are used in nearly every industrial setting, from supermarkets to missile manufacturing installations. In 2001 the industrial truck, tractor, trailer, and stacker machinery system industry shipped products valued at $5.2 billion.

Organization and Structure

The average staff size of establishments in the truck and tractor industry was about 10 percent lower than that of all other manufacturing industries. The industry was predominately comprised of establishments employing less than 20 people. Of the 447 establishments in operation in 1996, only 161 employed 20 or more workers.

Geographically, the greatest concentration of industrial truck and tractor manufacturing establishments were in California, Michigan, Ohio, and Illinois, followed by New York and Pennsylvania. The 42 establishments in California represented the greatest number of industry establishments located in one state, followed by 31 in Michigan, 29 in Ohio, and 25 in Illinois. In the Northeast, New York had 29 establishments, followed by Pennsylvania with 23. Ohio led the industry in shipment values—totaling $399.8 billion, or 15.4 percent of the U.S. total—and had 2,700 employees. Illinois followed, with shipments valued at $293.2 million and 1,100 employees. While North Carolina had only 10 establishments, it employed 1,400 workers and accounted for $249.8 million in sales, the third highest after Ohio and Illinois.

In 1994, the average amount paid for raw manufacturing materials per establishment was somewhat higher than the average recorded by all other manufacturing industries. A typical firm in the truck and tractor industry spent $5.9 million on these materials, while firms in all other manufacturing industries spent an average of $5.0 million. Likewise, the average amount spent on manufacturing machinery and production retooling for an industrial truck and tractor establishment was considerably lower than the average recorded by all other manufacturing industries. In 1994, the average investment per establishment in the industrial truck and tractor industry was $158,215, less than half the average of $321,011 spent by firms in all other manufacturing industries.

Background and Development

America's entrance into World War II in 1941 signaled the beginning of a four-year surge in business activity that defined the future of many U.S. industries. The frenetic pace of production required to support the country's war efforts rejuvenated some industries, sparked the genesis of others, and launched many more toward exponentially higher production and sales volumes. For the industrial truck and tractor industry, the dramatically increased demand for manufactured goods created a commensurately heightened demand for material handling equipment; as the country manufactured more products, there was a growing need to move, stack, and store them quickly and efficiently. Consequently, the industrial truck and tractor industry was swept up into the expansion of U.S. industry as a whole, benefiting from the increased business activity enjoyed by the individual companies it served.

Augmenting this demand from the industry's traditional industrial customers was a vast government market that opened up during the war, as industrial truck and tractor manufacturers answered the sundry material handling needs of the military. The combination of these two factors fostered a rapid growth rate for the industry, amplifying the importance of industrial truck and tractor products in the successful operation of any manufacturing plant or military installation. During this period, truck and tractor products enabled manufacturers to approach production and sales volumes proportionate to levels recorded 50 years later, in the 1990s. Though its foundation was established before the war, the industry's modern structure was not fully defined until the 1950s and 1960s, when industrial establishments nationwide were transformed by the trend toward automation.

The robust growth experienced as a result of the war, and the increased applications for the industry's products prompted by the automation of U.S. industry following the war, prompted years of growth for the industry, a period during which industrial truck and tractor manufacturing companies began to record production and sales levels that distinguished the industry from other segments within the material handling equipment industry.

In the early 1960s, the sale of industrial trucks and tractors and related products accounted for approximately $389 million of the nearly $1 billion generated by the material handling equipment industry. The leading manufacturers involved in the industry at this time were primarily publicly held companies engaged in the manufacture of other products included in the material handling industry, such as conveyor and monorail systems, but derived the majority of their revenue from the sale of industrial truck and tractor equipment, particularly from the sale of forklifts. Clark Equipment Co., the largest of these manufacturers, posted annual sales of approximately $200 million in the late 1950s and early 1960s, far exceeding the sales volumes of its nearest competitors. These competitors, however, compensated for their more diminutive size by developing industrial truck and tractor equipment for more diverse applications, focusing on manufacturing equipment that increased efficiency in the industrial workplace.

Initially, the pace of the industry's growth was largely determined by the amount other businesses were spending on capital expansion, but by the early 1960s, U.S. industry as a whole began to focus on increasing the efficiency of manufacturing facilities. Manufacturers realized that industrial truck and tractor equipment could help them make great strides toward this goal. Decreasing the turning radius of a forklift, for example, allowed a manufacturer to reduce the distance between storage aisles and therefore increase inventory space without realizing any increase in land costs. Accordingly, many manufacturers, both large and small, were developing industrial truck and tractor products during the early 1960s that would eventually become integral components of modern manufacturing establishments.

Despite its relatively unimpressive revenue total of $49 million in 1960, Hyster Co. of Portland, Oregon, was, nevertheless, contributing to the industry's technological advancement by designing prototypes of forklifts that automatically weighed loads to be lifted and adjusted their operating speed accordingly. If a load was light, this sensing system enabled the forklift to operate at a higher speed than was normally achieved by earlier forklifts that operated at set speeds, regardless of load weight. Similar advancements were being made by other manufacturers. For instance, Barrett-Cravens Co.'s "Guide-o-matic" system controlled industrial tractors by a buried wire, enabling them to function without an operator.

The popularity of innovative products such as these fueled the industry's growth during the 1960s, as manufacturers increasingly began to look toward the industrial truck and tractor industry for solutions to problems associated with moving, stacking, and storing their manufactured products, and to aid in their move toward automated operation. This represented a significant shift in the nature of the needs that this industry's products filled. Instead of supplying equipment solely to manufacturers expanding the size of their plants, industrial truck and tractor manufacturing companies now could rely on business from companies that were streamlining their operations or automating their production processes.

Along with its move toward manufacturing more sophisticated products and designing complete material handling systems, the industry was enjoying increased demand for its newly developed large steel and aluminum containers. "Containerization," or the utilization of trailer-sized steel and aluminum containers for shipping purposes, was, in the early 1960s, one of the relatively recent innovations developed by the industry to help its customers cut costs. These containers, sometimes referred to as "ambulatory vaults," had been used by an increasing number of manufacturers in the 1950s because they reduced handling costs and allowed for quicker delivery.

Two developments in the early 1960s ensured that manufacturers could continue to rely on large containers to generate additional business. In early 1961, industry-wide standards were established for the production of containers, specifying that all containers in the future must be 8 feet in width and height and either 10, 20, or 40 feet in length. Following the establishment of these specifications, the Federal Maritime Board ordered that only ships built to accommodate these new, standardized containers would be eligible for government subsidies or government-insured mortgages.

By the mid-1960s the industry's annual value of shipments had surpassed $500 million, making it the largest segment within the overall material handling industry. Growth continued to be spurred by the industry's development of innovative products, which persuaded some of its customers to apportion a larger percentage of their capital investment budget toward material handling needs, and others to scrap their existing machinery and invest in more sophisticated equipment. A considerable amount of the industry's growth, however, came through capital expansion programs initiated by its customers. While this presented no problem to industrial truck and tractor manufacturers when economic conditions were particularly favorable, this dependency on the health of the U.S. economy in general made the industry vulnerable to general economic downturns.

By the close of the decade, however, the overall U.S. economy had proven strong enough to support the continued growth of the industrial truck and tractor industry. Revenues exceeded $1 billion by 1970, representing an average annual growth rate of greater than 11 percent during the previous decade. While no single dramatic technological advancement launched the industry toward higher revenues, each year customer demands were stimulated by new products that incorporated innovative designs and functions.

Over the course of the next several years, as the nation's economy spiraled downward in reaction to a shortage of oil and petroleum products, the industrial truck and tractor industry's performance began to flag. The industrial sector of the U.S. economy operated below capacity throughout the recession, causing the cancellation or postponement of many manufacturers' expansion plans. Because these investments represented a major source of industrial truck and tractor manufacturers' revenues, business faltered, demonstrating the volatility of the industry's market. With the industrial sector of the nation's economy operating at 70 percent of its capacity, the industrial truck and tractor industry's revenues dropped from $1.53 billion in 1974 to $1.30 billion in 1975.

The industry slowly recovered from the losses of the early and mid-1970s, generating revenues of $1.9 billion in 1977, and by the end of the decade, revenues skyrocketed to nearly $3.0 billion. This growth, however, masked the emergence of a pernicious force that threatened to derail the industry's leading companies from their meteoric recovery.

For years, industrial truck and tractor manufacturers' command of the U.S. market was virtually unassailable; foreign manufacturers were relegated to producing inexpensive equipment and left the manufacturing of higher priced, more sophisticated equipment—which was by far the more lucrative segment of the global industrial truck and tractor market—to American companies. But by the late 1970s, domestic manufactures had become lulled into complacency by decades of dominance, and foreign manufacturers, particularly the Japanese, began to woo customers away from U.S. manufacturers. Ironically, the reason for this rise in demand for Japanese products was attributed largely to the success domestic manufacturers enjoyed for the previous several decades. Each year new designs and features were incorporated into U.S.-produced equipment, creating an assortment of highly sophisticated equipment by the late 1970s. The incremental advances in technology had, by this time, spawned equipment too advanced and too costly for the basic material handling needs of U.S. industries. Concurrently, an increasing number of industrial truck and tractor customers found the cheaper Japanese equipment suitable for their basic material handling tasks, a revelation that led to reduced operating costs for customers and to an erosion of U.S. industrial truck and tractor manufacturers' market share. American truck and trucking equipment had simply become too sophisticated for the needs of its average customer.

By the early 1980s, the price advantage afforded to purchasers of Japanese industrial truck and tractor equipment widened to as much as 30 percent. Still, in the face of this trend toward more inexpensive, less sophisticated equipment, U.S. manufacturers were slow to respond. As conditions worsened, domestic manufacturers attempted to stave off mounting foreign competition by designing even more sophisticated products, which further aggravated their losses. Clark Equipment Co., for example, spent $25 million on the design of a high-technology lift truck equipped with oil-cooled brakes that failed miserably when it was introduced in 1982.

When the U.S. forklift market plummeted in 1982 and 1983, many domestic manufacturers were poorly positioned to sustain further losses. Caterpillar Inc., bereft of its once commanding lead over the industry, sought cheaper manufacturing sites for its production of industrial trucks and tractors, and, in 1983, the company moved the majority of its lift truck production to Korea under the aegis of a South Korean company, Daewoo Heavy Industries Ltd. Similarly, Clark Equipment relocated from Michigan to more inexpensive Kentucky, and, in 1986, Clark eventually followed Caterpillar's lead by signing a ten-year production accord with Samsung Group in Korea.

Among the industry's leaders, Hyster Co. was the one notable exception to domestic manufacturers' disregard toward the shifting market demands. Introducing an inexpensive "XL" line of forklifts in 1981, which matched the Japanese in terms of price and accounted for $44 million in sales in 18 months, Hyster avoided the debilitating losses suffered by its largest competitors. Moreover, Hyster revamped its design, engineering, and manufacturing methods to emulate the cross-functional and more efficient style of Japanese production, enabling the company to manufacture as many industrial truck and tractor products by the end of the 1980s as it had ten years earlier, with half as many employees. Consequently, Hyster was the only U.S. industrial truck and tractor manufacturer among the industry's three largest producers to remain profitable during the 1980s, further under-scoring the imprudence of Clark Equipment's and Caterpillar's continued focus on producing technologically advanced equipment in the early 1980s.

The relocation of key manufacturing responsibilities to Korea by Clark Equipment Co. and Caterpillar failed to arrest the plunge of their integral fork lift operations. Korean wages tripled during the 1980s, erasing any benefits that would have been otherwise realized by relocating, and the dollar declined 24 percent against the Korean won between 1986 and 1989, further increasing the severity of their losses. By the early 1990s, the cumulative effect of the previous decade's failures forced Clark Equipment and Caterpillar Inc. to divest their core industrial truck and tractor businesses. In 1992, Clark Equipment sold its forklift operations to Terex Corp. for $95 million. Later that year, Caterpillar signed a joint venture agreement with Mitsubishi Heavy Industries Ltd. that ceded 80 percent of its fork lift business to the Japanese company.

The industrial truck and tractor industry adjusted slowly to the changing needs of its customers as it entered the mid-1990s. Sparked by the recessive economic conditions of the early 1990s, the U.S. industry as a whole experienced changes, and many businesses reduced their workforce and streamlined their operations, leading to greater operating efficiencies.

The concerted movement toward manufacturing a proportionately higher number of electric lift trucks, initiated by the Japanese in 1992, prompted a parallel response by U.S. manufacturers. These electrically powered lift trucks were more profitable for industrial truck and tractor manufacturers than gas-powered lift trucks and became the industry's most popular product in the mid-1990s.

Forklift manufacturers also made changes. According to Beverage World , the forklift companies compete fiercely with each other. Consequently, the electric forklift was in a constant state of flux, and each manufacturer regularly improved and updated its products, creating a "quality through competition" mentality for forklift manufacturers. This continuing trend ensures better products and greater customer satisfaction.

In 1992-93, the worldwide lift truck market grew by approximately 30 percent, or 100,000 units, but the market softened in 1996; the North American market declined by an estimated 13,000 units, 8 percent, that year. An estimated 447 companies in the United States were involved in manufacturing industrial trucks and tractors in 1996. These companies generated $3.7 billion in revenues for products included in this classification. This figure represents an aggregate value of shipments largely derived from the production of forklift trucks and other work trucks fitted with lifting or handling equipment machines—the largest product group within the industry. Industrial trucks, tractors, mobile straddle carriers and cranes, and automatic stacking machines accounted for 67.1 percent of the value of the industry's total shipments. Of these, self-propelled, electric-powered fork lift work trucks accounted for 27.2 percent, and liquid petroleum gas motor-powered accounted for 16.8 percent. Self-propelled nonriding forklift and other work trucks fitted with lifting or handling equipment accounted for 10.4 percent. The other primary product group was comprised of parts and attachments for industrial trucks and tractors, which composed 21.7 percent of the industry's total shipments.

In 1997, the 483 establishments in this industry employed 26,214 people and shipped $5.57 billion worth of products. Of this total, $5.53 billion was from the production of industrial trucks, while the remaining $40 million was from the production of metal pallets and metal air cargo containers.

Current Conditions

During the first years of the 2000s, the trailer industry languished as the U.S. economy stalled and, with it, the commercial and industrial sectors. With the demand for truck transportation down, the trucking industry held off on new purchases until the economy rebounded. Value of products shipped fell from more than $5.9 billion in 2000 to less than $5.2 billion in 2001. Productivity remained stagnant through 2002.

Murmurs of a reinvigorated industry began early in 2003 as the trucking industry prepared for anticipated growth in freight demand with expectations that the economy would begin a slow road to recovery in late 2003 and into 2004. According to a survey by CK Marketing & Communications of 25 fleets in May 2003, 79 percent of those surveyed anticipated buying new trucks within the next six months, and 80 percent planned to buy new trailers. Another factor that should drive truck trailer sales in 2004 and beyond are new standards for emissions that will take effect in 2007.

Industry Leaders

Ford Motor Co. of Dearborn, Michigan, led the industry with overall sales of $163.4 billion for 2002 (though most of these sales were concentrated in Ford's other markets). Of the companies that focused their efforts within this industry, Caterpillar Inc. of Mossville, Illinois, led the pack with $20.2 billion in 2002 sales. Arch-rival Deere and Co. of Moline, Illinois, generated $13.9 billion in sales for its fiscal year ended October 31, 2002. Deere long dominated the farm machinery and equipment market with its John Deere tractors, but Caterpillar broke into that market in the late 1980s to contend head-to-head with Deere. Deere responded by breaking into the construction machinery and equipment market, which traditionally belonged to Caterpillar. This rivalry also played itself out in the industrial truck and tractor industry.

In 1996, Caterpillar launched a new line of 24-volt narrow aisle reach trucks with 3,000-, 3,500-, and 4,000-pound capacity. The new line of trucks were ergonomically designed around an original "CAT Command Center," which puts all controls within easy reach. The truck was controlled by Caterpillar's "Micro Command," an advanced microprocessor control system. In 1995 Caterpillar introduced its E-series, a new line of articulated trucks, which offered operators added comfort and serviceability. The trucks were capable of any earthmoving function and were ideal to be used in distances between 0.5 km and 5.0 km.

Workforce

Of the 116,579 people employed by the industry in 2001, 86,283 were production workers, while the remaining employees performed technical, managerial, or administrative duties. Executive and managerial positions suffered a high rate of attrition through the early 1990s.

Typically, production workers were employed on a full-time basis. Average hourly wages of workers in the industrial truck and tractor industry were slightly higher than those of workers in all other manufacturing industries. In 2001, production workers in the industrial truck and tractor industry earned an average hourly wage of $13.80.

Prospects for the industry's workforce remain bleak, according to U.S. Bureau of Labor projections. Between 1994 and 2005, positions for general manufacturing assemblers and fabricators, welders, cutters, and machinists employed by the construction and related machinery industry, of which the industrial truck and tractor industry is a subdivision, were expected to decline 9.1 percent. Predicted to be even more hard hit were positions for drilling and boring machine tool workers, which were expected to drop 54.6 percent. Other job categories projected to decline by more than 20 percent were machine builders, drafters, and machine tool cutting operators. Non-production workers including bookkeepers, accountants, and general office clerks were also expected to experience declines of more than 20 percent.

America and the World

As U.S. manufacturers of industrial trucks and tractors entered the mid-1990s, competition from foreign manufacturers posed the greatest threat to the industry's future. For years, U.S. manufacturers held the domestic market largely to themselves; businesses in need of industrial truck and tractor equipment generally shied away from purchasing products manufactured abroad, fearing a lack of spare parts and service. By 1970, imports accounted for a mere $13 million of the $1 billion U.S. industrial truck and tractor market. Moreover, the $13 million recorded by foreign manufacturers in 1970 reflected a 72 percent increase from the total posted two years earlier. Likewise, U.S. manufacturers explored profit potentials overseas. By 1970, the value of U.S. exports neared $100 million a year, with parts and complete trucks and tractors being shipped to Europe, South America, and Asia.

By the end of the 1970s, however, the commanding position that U.S. manufacturers held over foreign manufacturers was reversed, largely due to the gains achieved by Japanese manufacturers. By concentrating on supplying inexpensive yet sturdy industrial truck and tractor products, the Japanese were able to secure a formidable presence in the U.S. market. Competition became fierce, leading one of the few large U.S. manufacturers of industrial truck and tractor products that fared well during the 1980s, Hyster Co., to petition the International Trade Commission in 1986, charging that Japan was selling equipment in the United States at prices below the cost of production. Two years later, the International Trade Commission ruled in Hyster's favor and applied import duties of up to 51.3 percent to Japanese products entering the U.S. market. Although these import duties provided a much needed respite from increasing Japanese competition, Japanese manufacturers began establishing assembly plants in the United States soon after the ruling to circumvent the tariff payments. Entering the 1990s, the Japanese continued to maintain a roughly 50 percent share of the U.S. market.

Further Reading

Birkland, Carol. "Insights from the Top." Fleet Equipment , May 2002, 14-21.

"Boom in Heavy-Truck Sales Predicted." Modern Bulk Transporter , 1 April 2003.

"CSX Earnings Warning." Chemical Week , 5 January 2000.

"Fleets Poised to Buy Trucks and Trailers." Trailer/Body Builders , 8 May 2003. Available from http://www.trailerbodybuilders.com .

Kilcarr, Sean. "More Options." Fleet Owner , 1 November 2002.

"Record Sales Spur Paccar Earnings Surge." Refrigerated Transporter , May 1999.

"Trailer Shipments Continue to Grow." Trailer/Body Builders , 13 May 2003. Available from http://www.trailer-bodybuilders.com .

U.S. Census Bureau. Statistics for Industry Groups and Industries: 2001 , January 2003. Available from http://www.census.gov .

——. "Truck Trailers: 2000." Current Industrial Reports , August 2001. Available from http://www.census.gov .

U.S. Department of Labor, Bureau of Labor Statistics. 2001 National Industry-Specific Occupational Employment and Wage Estimates , 2001. Available from http://www.bls.gov .



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