GREENE, N.Y.—In the world of lift trucks, nothing is what it seems, at least to an outside observer. Last week, The Raymond Corporation took the opportunity of its 85th anniversary and the introduction of three new lift trucks to the market, to discuss some of the behind-the-scenes factors that make this industry so important, both as a source of capital equipment and as a model of supply chain efficiency.

Raymond made its key personnel in manufacturing and distribution available to Logistics Management so readers could get an appreciation for how dynamic the industry is from a logistics standpoint. On the distribution side, Richard Shaw, president of Shaw Material Handling Systems, Bartlett, Tenn., and a key Raymond dealer in the South, told Logistics Management just how important the industrial truck supply chain is as a model for success. What’s particularly important to that success is cooperation among all dealers in serving customers that have centralized purchasing operations.

“With more [customers having] centralized control of warehouses out of Chicago, Los Angeles, and New York, we’re working more with other dealers and coordinating our efforts,” Shaw said. “We need excellent communications or they’ll have mis-specified vehicles. Both the headquarters Raymond dealer and the partner dealer have to be on the same page as far as specs and lead times. The lift truck purchase is supply chain driven.”

Communications are becoming part of the product itself. Lift trucks are getting more intelligent, incorporating on board computers and self diagnostics.

“There will be more communication abilities in the future so dealers can link to some central dispatch area if the customer is having some kind of problem rather than waiting for an operator to notice it,” Shaw believes. “We’ll know that ‘Truck 42’ at William Sonoma has some kind of problem and we’ll be able to respond.”

After meeting with Shaw, touring Raymond’s fuel cell “living lab,” then inspecting the company’s new 4100 and 4200 standup counterbalanced lift trucks as well as the 4400 sit-down AC three-wheel lift truck, it was time to ask Jim Malvaso, Raymond’s president and CEO, some of the “big picture” questions on every logistics manager’s mind these days. Here’s an excerpt from that encounter:

Q: How much of a competitive force does China represent in the lift truck market?

Malvaso: China is becoming the world’s factory and major corporations in the U.S. are using China as a producer of goods and products we use here. Half of the U.S. deficit is attributed to China. That said, China is in the very early stages of its logistics and material handling systems. In the year 2006 they sold 75,000 trucks. This year it is looking at potentially 107,000, and maybe as high as 120,000. That is for a population of 1.2 billion people. We have around 300 million in the U.S. and our lift truck market is around 200,000, and Europe is around 280,000. While China is an attractive production base, once they get more sophisticated in their logistics and their demand really takes hold (remember it’s been only the last ten years that the free market in China has emerged), and they start consuming at a similar rate to the rest of the world, there is not enough infrastructure capacity in China or in the world to take care of that demand. That’s why I think China will challenge their own manufacturers to take care of their demand.

Q: So U.S. based manufacturers shouldn’t worry about China coming into their markets?

Malvaso: Many of their largest manufacturers are interested in the U.S. market. I asked some of them why and they define success as success in America. We need to help them recalibrate so that success is defined as success in their own country. That’s why we shouldn’t be afraid to share technology with them to do that. I visited China regularly between 1985 and 1989 and the change since then is nothing but remarkable. You can see the younger generation wanting to buy. Once they start consuming they will need material handling equipment.

Q: What about sourcing opportunities for Raymond in other parts of the world?

Malvaso: We have to investigate other parts of the world for growth opportunities. It’s not our intent to close down a factory and move overseas, but there may be components we’re buying from suppliers today that may be better suited to manufacture on foreign soil. As we work more with the Toyota Group, all of a sudden Raymond’s purchasing power goes up dramatically. We have a chief purchasing officer who works with me to see what synergies we can find in component supply. We’ll look at foreign-sourced components as an alternative if they’re more cost competitive.

Q: How do Raymond’s philosophies mesh with those of Toyota, your parent firm?

Malvaso: I’ve been asked to take the lead in Toyota Material Handling Manufacturing in North America to help the Toyota Columbus, Ohio plant and Raymond’s plants to realize some operational synergies while not losing sight of who we are and who our customers are. Traditionally, Toyota has tried to keep its supply base close to the plants. We’ve encouraged some of our major suppliers to open branches around our plants. You have to look at logistics as part of the cost. You may get a product that’s $10 cheaper but if it’s coming from China on a slow boat you’re spending more on it.

Q: How healthy is the economy for lift truck OEMs and for Raymond in particular?

Malvaso: We see more opportunities to grow. However, success in my mind is stability of employment. The 10,000 people working in this organization and our dealers depend on us through good times and bad to make certain they can put food on their tables. We know we’re going through a little downturn in our economy. The lift truck market in the second half of 2006 dropped 10.9 percent from the first half. We believe the first half of 2007 will be down an additional 8-10%. A lot of industries just cut back the work force when that happens. We try hard not to do that. We look for other projects to increase our market share so we can be a stable employer.

Q: How important is fuel cell technology to your success?

Malvaso: Fuel cells will have a place once their cost and life is more understood. I believe that warehouses that are dense with product with 50 or 100 vehicles running through them will see a very significant benefit because the refueling cost goes away. It’s a battery change and 8 hours to charge and maybe 45 minutes to change the battery vs. minutes to fill. The up-front investment goes down, and you don’t need three batteries.

Q: How’s the talent pool in your industry?

Malvaso: We need to continue to find people who want to work in this industry. It’s not glamorous. But I’ve worked for the automotive industry, the systems and control industry, the petrochemical industry, and here. I wouldn’t trade this industry for any of them. Our biggest challenge is to find people who are as passionate about it as the current group of people. You have to start early. We have four or five computers in our lift trucks that are more sophisticated than the PCs and servers other industries work with. The software we use is more sophisticated, too. Making these technologies work together efficiently is an invigorating challenge and intellectually appealing. We hope to inspire young people to choose this industry.