Global supply crisis sees Combilift lose out on €50m sales

Monaghan forklift maker’s revenue will hit €350m this year, says CEO Martin McVicar

Martin McVicar at the Combilift plant in Monaghan. Photo: Steve Humphreys

John Mulligan Twitter Email

July 14 2022 02:30 AM

MONAGHAN-BASED Combilift will lose out on sales of up to €50m this year because of the global supply chain crisis and a lack of electronic components, according to its co-founder and chief executive, Martin McVicar.

Speaking to the Irish Independent, he said sales at the forklift maker are likely to be around €350m this year compared to just over €300m in 2021. However, he said that without current component shortages, revenue this year could have been around €400m.

The company is also eyeing unfolding events in Sri Lanka, where huge economic, political and social upheaval has resulted in a major crisis and a state of emergency. Combilift sources about 90pc of the tyres for its vehicles from a company in Sri Lanka.

One of Ireland’s most successful privately-owned manufacturers, Combilift has its strongest order book on record, but the supply chain problems and the strength of the dollar will eat into margins, suppressing profit growth, said Mr McVicar. The company is unlimited and doesn’t divulge profits.

Combilift sells its products to almost 100 countries and sources components globally.

“A purchase order doesn’t guarantee that you’re going to get a raw material any more,” he said. “Even if you order it, the price will have changed before you get it. So, prices are not guaranteed and delivery times are not guaranteed. It’s a big challenge.”

He said that about seven weeks ago, one of Combilift’s suppliers of a dash-panel display that’s used in its vehicles told the Irish group that it will struggle to supply the panels after October because of an inability to source a specific microprocessor that’s used in the display.

“This chip would normally cost €1 to €2,” said Mr McVicar.

Combilift was forced to hunt for the chip itself on a grey market in China, as the dash-panel maker only buys them directly from the chip manufacturer, which couldn’t supply them. It managed to source the chip on behalf of the dash-panel maker.

“It means buying it from a wholesaler or warehouse somewhere in China,” Mr McVicar pointed out. “It’s the same chip, but it costs $115,” he said. “We ordered 2,811 of them to ensure we won’t have a shortfall by October this year.”

And the lead time from order to delivery has shot up to nine months from the normal three due to the lack of necessary components, the chief executive said.

“The demand is there, but we’re struggling to increase our supply of components to meet demand,” said Mr McVicar. “Our delivery times are so long that raw material costs can change so much in nine months.”

Rising costs across the board have seen Combilift raise its vehicle prices by an average of 20pc since last year, according to the engineering boss.

But because its advanced forklift products are designed to help customers make the most efficient use of warehouse space, demand has remained strong, propelled by the continuing surge in e-commerce sales.

Combilift’s facility in Monaghan employs 750 people, having added about 80 in the past year. It’s shipping about 160 vehicles every week, most of them to countries outside Ireland.

“Our demand has been the highest it’s ever been,” said Mr McVicar.

“But we’ve had to implement price increases to our customers as the result of increased input costs. It’s very hard to predict what your margin is going to be as a manufacturer any longer.”

The bumper demand is also being hit by transit delays.

Shipping times to the east coast of the United States would typically have been about three weeks for Combilift.

Now they’re six weeks.

“There are delays at ports all over the world,” he said.

“It’s all adding to costs. A lot of the freight companies we deal with can’t guarantee when our products will arrive at their destination.”