Is it Year-End Already?

June 16th, 2021 - Recommendations for Planning Equipment Additions or Replacement

The calendar is telling us that its only mid-year, however market conditions are advising us to act now on activities that often normally are addressed late in Q3 or Q4. The use of budgeted approved capital for equipment most certainly falls into that category if you’re needing to acquire before the end of December.

With a 40-year perspective of the lift truck industry in the rear-view mirror, I can vouch for the fact that we’re in unprecedented times. Unfortunately, I also recognize that our industry is not alone and firsthand are feeling the effects of long lead times and manufacturing repromise dates on many of our purchases.

Vulnerability within the supply chain, high demand, soaring commodity prices, delays at the ports, all mixed together are resulting in challenges for many industries. The effects within the lift truck industry are leaving dealer rental fleets decimated, low on-hand stock inventory, higher prices on new and used equipment, and lead times that in many cases are already slotting in 2022.

Unfortunately, there is no “easy button” available. However, there are a few things that you can do to help your organization. Below are a few thoughts that we hope are helpful:

• For those that are leasing, consider ordering the replacement equipment six months earlier than normal (if normal lead times are 3-4 months, you need to consider placing the order for replacement equipment 9-10 months prior to your lease maturity date).
• By acting earlier, utilize the time to thoroughly evaluate your needs instead of simply replacing aged equipment with new “like” equipment. For the 30-35% of engine powered users, this is an ideal time to consider the benefits of electric powered equipment. Zero emissions, improved reliability, space savings, and lower maintenance costs are only a few of the benefits that await you.
• When economic life of existing equipment is still viable, consider extending the lease term or continue operating fully depreciated equipment. The lower lease payment (compared to the cost of new payments) might easily offset a little higher maintenance risk. When considering this option, please utilize your dealer resources that are available and reach out to understand what repairs might be around the corner (i.e. based on current equipment hours, when is an engine timing belt replacement needed for interference designed engines).
• Where you’re able, rotate “like” trucks to balance usage/operating hours and help to reduce your maintenance costs. High hour trucks should be rotated and replaced with lower hour trucks. This simple activity can help extend the economic life on existing equipment and defer the replacement cycle until normalcy returns.

It is our sincerest desire to help you make decisions that are best for your organization. Please reach out to your Lift Truck Center representative and allow us the opportunity to help.