...The ratings reflect NMHG Holding Co.'s leading positions within cyclical and volatile markets, its aggressive financial profile, and fair financial flexibility. Oregon-based NMHG competes in the global forklift truck market, which is characterized as moderate in size, somewhat consolidated, and modestly capital-intensive. Over the business cycle, the industry grows at GDP-like rates. Larger forklift manufacturers also are gaining market share from vendor consolidation, which is leading to national account opportunities. However, the industry is both cyclical and volatile; demand for lift trucks has been improving, as noted by a 27% increase in NMHG's backlog in 2002. Although manufacturing consists mainly of assembly and some welding of purchased components, operating leverage is high because of modest industry profitability and the highly cyclical nature of higher-margin products. Barriers to entry--including brand image, economies of scale, and a strong distribution network--are meaningful....
