James Burman (JB): How has Investec’s materials handling team managed through the past year and a half of uncertainty?
Andrew Woodward (AW): I’d like to think that we’ve tried our very best to help our introducers and end users through what has been an extremely difficult period.
We’ve spoken with many end users who approached us for assistance by way of payment deferrals during the early days of COVID-19 and checked in with them throughout to understand their situations, where possible, and offer appropriate levels of assistance.
Right from the start, we tried to act as quickly as possible, but also in a way that was thoughtful and long-term. Whilst many funders provided a 3 month forbearance period, our view from the outset was that this was likely to be a longer-term problem and as such an extended period would be more useful for our clients to protect cash flow and help get them through these unprecedented times. So rather than 3 months, we offered a forbearance period of up to 6 months depending on circumstances. In hindsight, that certainly turned out to be the correct decision.
I’m really pleased to say we had some amazing – sometimes emotional – feedback from clients, and our introducers told us that the way we had promptly and efficiently handled these requests helped many businesses get through these stressful times and even believe it will help them win more business in future.
In most cases, I’m very pleased to say that we’re back on track, with payments being collected as scheduled.
JB: How have clients found things?
AW: I think that this sector is very robust, and that resilience has made all the difference here. Clearly, those clients who serve the hospitality industry have had some really hard times, and in many cases have had to restructure and furlough. On the other hand, e-commerce and many transport and logistics companies have absolutely thrived.
So it’s been a very different period depending on which sectors you’re active in: some have had record months, others have had to mothball businesses
I think that we’re fortunate as an industry in that materials handling equipment is a necessary product and an integral asset required to power the economy, and this is reflected in its resilience.
More generally, it’s clear to see that many senior management teams have taken the opportunity to streamline their businesses – they’ve had a chance to take a really hard look at their model, and in some cases found that there were improvements and often savings to be made – that’s helped them to emerge from this crisis stronger.
Lastly, the timing was interesting – as we approached the Brexit deadline, people sought to stockpile and warehouse space was at a premium. This will have insulated many providers.
JB: Are we out of the woods now?
AW: I think that there are still some tough times ahead, but the economic picture is certainly improving – and that’s good news for our industry.
The rollout of vaccines, increased consumer confidence and reopening of non-essential retail has helped, all reflected in Investec’s projection for 2021: GDP growth of 7.9% at time of writing.
Research from Oxford Economics highlights a strong rebound in activity since England reopened non-essential retail and outdoor hospitality in mid-April, adding weight to an above-expectation GDP growth this year. As restrictions ease, this has resulted in higher consumer spending, as well as greater mobility.
Despite the fact we’re still insulated by the furlough scheme, there’s pent-up savings to be spent and retail and e-commerce are really thriving.
Truck wise, we are seeing a continued rise in new orders being placed – but that’s starting from a relatively low base, following the significant reduction in 2020. Drilling into the data a little further, it’s clear to see that counterbalance trucks fared worse than warehouse equipment.
JB: What are we expecting over the next few years?
AW: Looking a little further over the horizon, it’s certainly worth being mindful of rising inflation and unemployment, and of course the impact on fragile consumer confidence. We also have lingering Brexit disruptions, which could impact the economy pending any new trading agreements.
In the grand scheme of things though, these are likely to be bumps in the road: there are big structural drivers in favour of the materials handling industry, not least the ubiquity of e-commerce.
JB: And how has 2021 been for you so far?
AW: I think that the hard work we’ve put in over the past year or so has helped keep us in a good place – we’ve managed to get through a tough period of disruption, and we remain 100% open for business: focused, as ever, on helping our introducers and end user clients in this sector .
We’re expecting continued growth, with forecasts from the UKMHA predicting forklift orders rising by 3.4% in 2022, 1.4% in 2023.
Despite everything that has happened over the last 18 months, it’s an exciting time to be in the industry, and we’re very proud – as ever – to be a part of it.
Contact us to find out more: 0330 123 2017 or [email protected]
