Engine rebuilders often classify themselves as an automotive (carand light truck), and/or medium duty/heavy-duty diesel or industrialrebuilder, and usually primarily stay in one market or the other.Some cross the line and do business in both markets, but mosttend to stay in familiar territory where they’re comfortable.Yet rebuilding forklift engines is essentially no different thanrebuilding passenger car engines. The shop equipment and machineskills needed to do both are essentially the same even thoughthe markets themselves are different.
We only discovered about half-a-dozen rebuilders who do forkliftengines on an exchange basis, and perhaps less than a dozen morewho "specialize" in this market niche. A large percentageof shops who do forklift engines are rebuilders who do anythingthat comes in the door. For them, forklift engines are just anotherengine to clean and machine.
There’s nothing that’s really unusual or unique about enginesfor forklifts except perhaps the older obsolete engines for whichspecs and parts may take some digging to find. But for the mostpart, they’re just another engine for a specialty application.And in today’s market, most machine shops should be looking forany and all available jobs that can be handled with existing equipmentand manpower.
Many who are in the forklift market full-time, or who have dabbledin it from the automotive side of the business, say there’s goodmoney to be made doing forklift engines. On average, profit marginstend to be at least 20-30% higher than on comparable passengercar or light truck engines because new industrial engines fromOEM dealers tend to be quite expensive in comparison to automotiveengines.
Parts also cost more, and forklift users expect to pay somewhathigher prices. There’s competition between forklift engine rebuilders,but not the cutthroat kind of price competition that has becomecommonplace in today’s automotive market. Consequently, pricesare higher (much like the marine market) as are profit margins.One forklift engine rebuilder said, "It’s like the automotiveengine rebuilding business was 20 years ago. We’re still ableto make a dollar."
Fork it over
Unfortunately, the overall size of the forklift market is minusculecompared to the passenger car and light truck engine market, sovolumes are low. The Industrial Truck Association estimates therunning population of forklifts in the U.S. to be only about 1.5million – which is less than one percent of the car and truckpopulation in this country.
Nobody knows how many forklift engines are actually rebuilt orreplaced every year, but from those we spoke with it’s likelythat an average 5-10% of the forklift population probably getsa replacement engine every year.
Most forklift vehicles are worked hard eight or more hours a day,five or six days a week. So the estimated replacement market issomewhere between 75,000 to 150,000 engines annually. Some ofthese are new engines, but because of the relatively high costof new engines ($4,000 to $5,000 each), the vast majority areremanufactured engines.
Ninety percent of the forklift population are Class 4 or 5 vehicleswith four cylinder engines. Class 4 forklifts have cushion tiresfor indoor use, most are propane fueled, and are rated from 2,000to 8,000 lbs. lift capacity. Class 5 forklifts, which also havethe same load rating, have pneumatic tires for outdoor use andare mostly gasoline powered (though some are diesel-powered).
Years ago, the forklift market was the sole domain of U.S. manufacturerssuch as Continental, Waukasha and Hercules. The manufacturershad an extensive dealer network that could provide both partsand service. But these once familiar names have faded away becausethey suffered from the same shortcoming: all were powered by obsoleteflathead engines.
When the fuel crisis hit in the 1970s, everyone started lookingfor more fuel efficient engines. The Japanese saw a tremendousopportunity and began to sell overhead valve and eventually overheadcam powered forklifts in this country. By the mid-1980s, it’sestimated that these fuel efficient, clean burning Japanese enginespowered 90% of the new Class 4 and 5 forklifts that were beingsold.
Today, as much as 75-80% of the running forklift population ispowered by Japanese overhead valve or overhead cam engines. Thereare still a lot of the older Continental, Waukasha and Herculesengines in service, but their numbers continue to dwindle everyyear. So anyone who rebuilds forklift engines today needs to befamiliar with current Japanese engine technology Ñ whichis essentially the same technology that’s used in today’s passengercar engines: overhead cams, aluminum cylinder heads and cast ironblocks.
If you’re already doing Nissan, Toyota, Mazda or Mitsubishi passengercar engines, or even domestically built bi-metal engines, there’sno reason why you can’t add Japanese forklift engines to yourshop’s repertoire.
The most common brand of forklift you’re apt to encounter is stillClark, which has been powered by Mitsubishi engines since theearly 1980s. Among the newer forklifts, Hyster and Yale are popularnameplates. Both are powered by Mazda engines. Nissan, Toyotaand Mitsubishi forklifts have all used their own respective engines,while Caterpillar used Peugeot engines up until the early 1990swhen they switched to Mitsubishi.
The blocks and cylinder heads on most of these engines are eithersimilar or identical to those on many passenger cars, so theyshould hold no surprises. But because of the variety of forkliftsa given engine might be used in, there are a lot of differencesin flywheels, water pumps, timing covers, manifolds and fuel systems.Identifying the correct application, therefore, is essential ifyou’re remanufacturing and selling forklift engines on an exchangebasis. But that shouldn’t be a problem if you’re custom rebuildinga single engine (unless some of these bolt-on parts have to bereplaced or are missing).
An insider’s perspective
Engine Power in Pineville, NC, is one of the major players inthe forklift market. The company has been in the forklift marketsince 1978 and rebuilds about 140 forklift engines a month, saysEngine Power’s David Couick. "We also distribute for Kubota,Hercules, Nissan and Perkins," said Couick. "About 25-30%of our production is diesel engines, and the rest is gasolineand LP (liquefied petroleum or propane)."
Couick says it takes a lot of expertise to sell forklift engineson an exchange basis because of all the application variables."You have to know which parts are used on which engines,otherwise you can get yourself into trouble real quick, he explained."
Most of Engine Power’s customers are forklift dealers to whomthey sell at wholesale prices. Less than 10% of the company’ssales are at list price directly to end users. Couick says EnginePower sells nationwide, but primarily markets east of the Mississippibecause freight gets expensive the further west one goes. Enginesare shipped complete with oil pan and valve covers.
"We warranty all of our engines for one year on both partsand labor, which includes installation," said Couick. "Ourprice really doesn’t reflect this because installation labor canbe a big factor if you get a warranty claim. On some of theseengines, installation labor can be $750 to $900 because it takes12 to 15 hours to replace the engine."
The most popular engines, says Couick, are Mazda, Mitsubishi andNissan gasoline engines, along with Perkins diesels. Most arefour cylinders, but there are also some V6s. Parts are usuallyreadily available, and can be sourced from various suppliers,however, OEM parts are expensive. "You really need an OEMaffiliation to source parts at a reasonable cost," explainedCouick. "Being a distributor saves us 20-25% on our partscost, and also allows us to sell engine kits along with otherassociated parts to smaller shops or fleets who want to rebuildforklift engines. Kits are really popular because you can geteverything you need from one source."
Prices for remanufactured engines obviously vary according tothe application, but according to those we spoke with can rangefrom $1,695 (dealer price) for a popular Mazda engine up to $5,195for a turbocharged Perkins six cylinder diesel – plus core charge.
Cores are a real challenge in the forklift market, says Couick,because they’re hard to find. Most users seem to keep their forkliftsforever. They’ll go through multiple replacement engines, or havethe same engine rebuilt over and over until it’s completely wornout; that can make for a very meager supply of good, rebuildablecores.
As a result, core prices can range from $200 to $300 or more dependingon the engine. "Most automotive core brokers don’t know industrialengines so they either can’t or won’t supply forklift engines,"said Couick. "So we buy cores from our own sources or workwith a few brokers who know this business."
Same business, different name
Motor Power in Hopkinsville, KY, is another player in the remanforklift engine market. Mike Green says Motor Power does 25 to30 of these engines a month and sells nationwide on an exchangebasis to forklift dealers as well as independents. Engine parts,though, is actually a larger percentage of the company’s overallbusiness. "We sell about 275 engine kits a month for Nissan,Toyota and Mazda engines," he said. "Most of the peoplewho are buying these kits are small AERA (Automotive Engine RebuilderAssociation) member machine shops and rebuilders who are doingforklift engines either occasionally or on a small scale basis."
Green also says forklifts are a good market, made even betterby the fact that remanufactured forklift engines are not readilyavailable through traditional automotive channels. Most forkliftoperators have to go back to their dealer if they need an engineor parts.
Most forklift dealers do not have any shop facilities for rebuildingengines themselves, so they either have to sell the customer anexchange engine if the customer doesn’t want to buy a new engine,or send the customer’s old engine out to a rebuilder or localmachine shop to have it rebuilt. Some larger companies that havea fleet of forklifts may have the shop facilities to do theirown overhauls, but many will still farm out the work to a localmachine shop.
"Any rebuilder who wants to get into this market should contactlocal forklift dealers and companies that use forklifts in theirbusiness," said Green.
Such a grind
Grindstaff Engines in Independence, MO, is another niche playerthat specializes in forklift engines, as well as engines for otherindustrial applications such as generators and compressors. Thecompany has been selling forklift engines on an exchange basisfor the past 15 years, marketing only to forklift dealers.
Rick Grindstaff says that although the forklift market is a goodone to be in, it isn’t as strong as it was two years ago. "We’veseen some peaks and valleys," said Grindstaff. "Thispast summer was poor, but it picked up in the fall."
He cautioned that the forklift engine market is a difficult businessto break into. "If you’re going to sell engines on an exchangebasis, you first have to develop an extensive core bank,"said Grindstaff. "That isn’t easily done because most coresare hard to get and are very expensive. We pay at least $300 formost of the cores we buy, and as much as $500 to $600 for some,if we can find them. You also have to know all the different variationsso you can give your customer the correct engine for the application."
He also warned that profits aren’t necessarily higher with forkliftengines, but that people are used to paying more because coresand component parts cost more. "Our biggest competition isfrom local machine shops and rebuilders who overhaul a customer’sengines on a custom basis," said Grindstaff.
A southern view
Jose Sabatier of Zabatt Engine Service in Jacksonville, FL, saidabout 10% of his company’s business is on forklift engines. "Wemarket in about a 150-mile radius, and do custom rebuilding forforklift dealers, as well as for forklift operators," saidSabatier. "In some cases, we will also remove and installthe engine for the customer, which is actually easier than doinga passenger car engine because there are fewer accessories inthe way."
Is the work profitable? Sabatier says he can generally charge20-30% more for the same work on a forklift engine with "noarguments" because customers are used to paying so much moreat a dealer. He said rebuilders shouldn’t be afraid to crossoverto forklift engines because they’re essentially the same as automotiveengines. But Sabatier also cautioned that quality work is a mustbecause a forklift engine works much harder than the average passengercar engine.
Two different views
There are those that have gotten into but exited the forkliftmarket, for different reasons. "We stopped doing forkliftengines three years ago because we needed the production capacityto expand our OEM business," said Mike Jarvis of FranklinPower Products, Franklin, IN. "We’re an authorized remanufacturerfor Navistar 6.9L and 7.3L gasoline engines, and Ford mid-rangetruck diesel engines. We also do diesel fuel pumps, injectorsand turbochargers. It really wasn’t our core business so we stopped.But it can be an ideal niche for a shop that does 10 to 12 enginesa week," said Jarvis.
Tim Haas of Auto Parts & Machine in Louisville, KY, expresseda different view. "We quit the forklift market three yearsago because we found we couldn’t do business profitably with forkliftdealers. We were doing about six to eight Continental enginesa month at $1,200 per engine because that’s all the dealers wouldpay us. I figured we were losing 15 hours per engine on everyforklift engine we did.
"The dealers were also hitting us with outlandish warrantyclaims, nine out of 10 of which were not our fault," continuedHaas. "The last straw was a warranty claim because the enginewouldn’t crank. It turned out to be a bad starter. So we saidenough and got out – and immediately saw our shop profitabilitygo up! We now do mostly industrial engines for construction companiesand some industrial dealers."
Parts for forklift engines are available from a variety of suppliersother than OEM distributors and dealers. Those who sell forkliftparts are usually specialty distributors. But many engine partscan also be sourced through traditional automotive channels fromfamiliar suppliers. Parts for older obsolete engines may be harderto find, but are still available from certain supplier specialists.
As with most market opportunities, forklifts aren’t for everyone.However, for those who understand customer expectations, and suchissues as core availability, applications and pricing, rebuildingforklifts may provide added revenue that drops to the bottom line.