Galloway joined Oxford Economics, which employs some 450 economists and analysts worldwide, in 2014. His research work supports local and national policy discussions across nearly every major industry sector, including semiconductors, railcar and rail supply manufacturing, retail, U.S. salaries, and housing affordability. He spoke recently with DC Velocity Group Editorial Director David Maloney about the report’s findings.
Q: You just finished a research report called Lifting America: The Economic Impact of Industrial Truck Manufacturers, Distributors, and Dealers—research that was done in conjunction with the Industrial Truck Association. While supported by ITA, your study was, of course, performed independently. What was the methodology you used for the research?
A: In every study, we seek to be as thorough as possible in our research approach. Importantly, that independence and objectivity in research combined with a methodological rigor is a cornerstone to our brand as a company. So ITA commissioned us to demonstrate the economic contribution of lift trucks as well as the distribution and maintenance aspects associated with that sector. The research therefore really drew on both publicly available data, such as industry data from the Bureau of Labor Statistics and the Bureau of Economic Analysis, and private data collected and compiled by ITA and MHEDA [the Material Handling Equipment Distributors Association]. This provided us with as full a picture as possible of the lift truck sector.
We then used specialized software to model and map the upstream economic activities that are associated with the lift truck supply chain as well as the contribution of the employees who work across the lift truck value chain who then go out and spend their income in the economy and drive further demand for the consumer goods and services that we all purchase.
We then mapped all these economic activities where lift truck production takes place as well as the supply chain activities across each U.S. state so that we could better understand how the economic activity tapestry of lift trucks is woven into the American landscape.
Q: What were some of the key findings and insights into how the industrial truck industry impacts the U.S. economy?
A: Our headline figures show $36.6 billion in GDP supported, which represents about 257,500 jobs and about $8.4 billion in tax revenue. If we drill down just a little bit further, we find that the manufacturing activities of the industry represent nearly half of the jobs and half of the GDP supported overall.
Q: Let’s dig a little deeper into some of the specific findings of the report. For instance, how does the industry impact employment in the United States?
A: From my perspective, there are really two ways to view this—the jobs supported and the jobs enabled. We’ve developed models to estimate the relative number of full-time jobs required for manufacturing lift trucks and the other parts of the lift truck sector. So from this we have found that the sector directly employs about 68,500 people, but also supports an additional 90,000 workers through indirect supply chain activities and another 99,000 jobs through the induced economic activity [economic activity derived from workers spending their earnings on goods and services].
However, when you look at this from a broader employment effect and impact from the industrial truck sector overall, you also have to look a bit more at what those jobs enabled. And this is a tricky part and something we really don’t get into in the study, mainly due to the opaqueness of the downstream users of lift trucks and our ability to quantify the productivity gains associated with the users of those industrial trucks.
For example, there’s a considerable value that’s being generated from the efficiency gains and throughput capabilities that industrial trucks provide in boosting productivity across transportation, logistics, retail, wholesale, and nearly every goods-producing sector in the U.S.
And then ITA estimates that 4.5 million people in the U.S. operate forklifts. And so, if you consider the impacts from the employment and productivity of those workers in hundreds of sectors, we start to get a sense of the scale of the actual employment and the value of the industry overall.
Q: All of those jobs and the sales they generate also contribute to tax revenues, both nationally and at the state level. I assume your study looked at this too?
A: Yes, absolutely. Taxes are one of those two certainties in life, right? Our modeling incorporates taxes collected in multiple stages of production and spending. We factored in the traditional national taxes—those that are levied on corporate profits and payroll—as well as taxes collected across each state, such as property, sales, school district, and excise taxes.
Because suppliers often operate in states and locations other than those where the lift trucks are produced, we have to be mindful of those state and local differences in tax code regimes. We also must consider that workers are out there spending their money in those state and local economies and supporting a tax base. So in the end, this rolls up to $8.4 billion in total taxes. Of this, about $5.2 billion is federal, $1.9 billion is state, and $1.3 billion is local.
Q: You just mentioned states. Are there some states or regions of the country that benefit more from the lift truck industry than others?
A: Yes, there are. Some states and regions have much more concentrated activities of industrial truck manufacturing, sales, and maintenance. Moreover, many other supply chains [manufacturers and distributors] prefer to be within proximity to those lift truck manufacturers. Therefore, much of the value associated with the sector occurs in those locations, places such as Texas, Ohio, North Carolina, California, Illinois, Indiana, and Michigan. However, it’s still important to note that all states benefit from the industry, because within that economic-impact tapestry, industrial trucks are interacting with every U.S. state economy.
Q: And, of course, the states that you mentioned are more heavily involved in both lift truck manufacturing and distribution, so it makes sense that they would be more heavily impacted by the industry. Now this was the second time you’ve conducted an economic-impact study for ITA. The initial study was done in 2015.What has changed in the industry since then?
A: We saw substantial growth in the industrial truck sector since the original study. There has been an increase in orders, even in the wake of the Covid challenge to economic activity, and that shows quite a large increase in the overall value and the impact of the industrial truck industry.
The total number of jobs supported jumped from 209,600 in 2015 to 257,500 jobs in this recent study—a 23% increase. Importantly, the jobs multiplier also increased from 2.5 to 2.8—meaning that every new direct job added in the industrial truck sector supports more U.S. jobs today than it did in 2015. This is largely indicative of increases in domestic supply chain spending.
So what you have is a combination of increases in domestic production and increases in domestic supply chain spending, both of which spur increases in U.S. jobs throughout the value chain. For additional context, also consider that the total GDP supported increased from $25.7 billion to $36.6 billion—a more than 40% increase in less than a decade.
Q: That is impressive growth. Your study was conducted before the recent trade wars began. Do you have any insights into how they may affect the market for industrial trucks, considering everything from higher prices for steel to possible tariffs on imported forklifts and retaliatory tariffs that may be levied on American exports?
A: Yes, that is a very timely question. There are a number of perspectives that I think can be taken here, and so maybe I’ll just pick a few. One, what is the length of a potential trade war and the duration of the actual tariff itself? If a trade war resolves quickly, we will likely have minimal disruption. A prolonged trade war, though, will inevitably affect many of the components that go into lift truck manufacturing.
Take batteries, for example. The fastest-growing segment of the lift truck market is electric-powered vehicles. The high-capacity batteries for electric trucks are generally not made here in the U.S., and building out the manufacturing capacity for batteries doesn’t happen overnight.
You aptly mentioned steel. Much of the raw material is imported from places like Canada and Mexico and then transformed into the parts and components used to make lift trucks. Once again, the U.S. can’t just simply build out the raw material capacity overnight. So therefore, the cost of producing a lift truck is set to see a considerable increase in the wake of a drawn-out tariff or long-term trade war scenario.
But let’s also contrast that with the potential risk of things like a recession or market volatility. One clear outcome is a slowdown in productivity of those sectors that purchase the lift trucks, coupled with the possible reduction in capital spending for those same sectors. So in other words, the sectors that are buying lift trucks—those involved in logistics, transportation, wholesale, and retail—may not buy as many forklifts, or perhaps they’ll delay replacing old forklifts simply because they don’t know if a trade war might be a short- or medium-term phenomenon. This, in turn, reduces lift truck orders and creates some strong headwinds for the lift truck sector.
But ultimately, the punch line here is that jobs, livelihoods, and ultimately household economic self-determination are all put at risk.
Q: Is there anything in your research that surprised you?
A: There’s one fact that I enjoyed finding in this particular study, mainly because we don’t see it often in our studies. The industrial truck sector has an affinity for veteran employment, or perhaps veterans have an affinity for working in this sector. I’m not quite sure which is pushing which, but, regardless, 8% of people, or about one in 12 workers, employed directly in the lift truck manufacturing sector are the brave men and women who served our country. Contrast that with 5% overall across U.S. economy, or about one in 20 workers. I think that’s quite an interesting finding in terms of the role that the lift truck sector plays in employing our veterans.
Editor’s note: To view a copy of the full report, go to the ITA’s online newsroom.
