Lifts and Hoists Industry - Strategic Analysis

According to the Hoist Manufacturers Institute, the total 2006 U.S. market for lifts and hoists is estimated at $625 million. Lifts and hoists fall into the material handling equipment systems market serving multiple industries including commercial building, industrial manufacturing, petroleum/chemical production, power generation, commercial shipping and bridge/rail infrastructure.

Lifts and hoists classified in the overall market are defined by two segments: lifting medium and power application. Ducker Worldwide recently conducted a market opportunity assessment by gathering end user feedback. According to respondents the overall lifts and hoists market has grown 3-5 percent in the past year.

Over 90 percent of the lifts and hoists market consists of equipment purchases versus rental. However, the domination of hoist purchases over rentals varies according to market segment and is affected by safety, liability, maintenance and equipment availability issues.

Manufacturers of lifts and hoists including Harrington Hoists, Columbus McKinnon, JD Neuhaus, Beta Max and Ingersoll-Rand distributing through both the purchasing and rental channel segments should be aware of rental trends and issues influencing purchasing decisions. According to end user respondents the decision to rent versus to buy a hoist is based upon several factors including: time duration of hoist usage, customization, varied application, capital, maintenance, inventory control and ease of equipment usage.

The rental business of lifts and hoists is growing at just under 5 percent annually, however, prices are trending upward for both rentals and purchases. Rental channels offer higher margins than direct sales – for rental companies, the equipment quickly pays for itself which is usually about six months to a year. Hoist manufacturers state that the commercial building market is the key driver behind growth of hoist equipment rentals by contractors and subcontractors. Rental companies agree that commercial construction is still strong as projects initiated two to three years ago are still in progress. Rental revenues presently are up approximately 15 percent over the same quarter last year however, this market is expected to fall rapidly in two to three years.

Lift and hoist manufacturers should target industries for rental market share as declines are expected in the commercial segment. Industries that are expected to grow with high rental volume include industrial manufacturing and petroleum/chemical production. Respondents report that within the industrial manufacturing industry over 50 percent of the purchasing power resides at the facilities managers’ level while 70 percent occurs at the corporate policy purchasing level within the petroleum/chemical production industry.