Fixed-cost financial products are dramatically changing the way warehouse operators invest in automation, according to a new report.

Contract hire products and hire purchase facilities previously unavailable are playing a key role in opening up investment opportunities, according to Linde Material Handling.

The forklift truck maker claimed finance houses and banks had recognised over the last decade that automation was an attractive asset proposition and this was benefitting hauliers with reduced whole-life costs on a project that typically paid back in two to three years.

And it said that the Chancellor of the Exchequer decision to allow permanent full expensing for firms investing in plant and machinery made such investments even more attractive.

In its report, Linde said low unemployment rates and high job vacancy levels had created a tight labour market, which was affecting the logistics industry.

But unlike in some other sectors, it pointed out warehouse operators had the option of filling skills gaps through automation.

According to Mike Wilson, chief automation officer at the Manufacturing Technology Centre, significant labour shortages across many industries would drive a greater uptake of automation: “To me, it is a journey we should be undertaking,” he said.

“We should be moving towards ensuring that automation does the dull, dirty and dangerous jobs and we use people where their skills can add value. And give them more interesting jobs.”

Steve Probut, automation project engineer at Linde Material Handling, said investing in the technology could be seen as daunting and it was natural for employers and employees to be concerned about the impact on jobs: “It’s crucial for organisations to communicate the transition effectively and clearly to their workforces,” he added.

“Be transparent and honest about the reasons for automation and the potential impact on the job.

“Also share information about the new technology and how it will be implemented and, more importantly, involve employees and encourage questions and provide feedback during the transition.”

Howard Thomas, account manager at Kion Financial Services, said: “Ten years ago, you couldn’t get financing, whether by contract hire or hire purchase, for this type of product. We see payback typically within 36 or 30 months on investment.”

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