Looks like manufacturing is finally building some muscle.

In its December semiannual economic forecast, the Institute for Supply Management (ISM) predicts manufacturing revenues will grow 5.7% in 2010 compared to 2009’s 10.7% decrease. For material handling equipment, MHIA forecasts growth in the 2% to 3.5% range.

Despite these positive predictions, belts continue to tighten. In fact, the preliminary results of our Quick Poll this month are very interesting. We asked visitors where they plan to focus their efforts in 2010. “Making the operation even leaner” received more than half (63%) of the total votes.

What’s more, purchasing and supply executives surveyed for the ISM forecast say capital expenditures will decrease by 4% in 2010. That’s better than 2009’s decrease of 7.8%, but it’s hardly a spending spree. The ISM report also says businesses will continue lean initiatives and inventory reductions that may have been partly responsible for their survival.

What’s going on in the complex psychology of business? Executives may be skeptical of the positive indicators because they’re not seeing growth in their own operations. My other guess is they are indeed seeing growth but remain conservative with their investments. A few may be looking for certainty that will never arrive.

But the bright side of economic downturns is the power shift to buyers, and this recession is no exception. Material handling equipment suppliers are offering plenty of incentives to buy their products.

The government, too, is trying to get companies to loosen their belts. Section 179 expensing for small businesses and 50% bonus depreciation for new capital equipment purchases were both extended through 2009 under the American Recovery and Reinvestment Act.

Section 179 expensing allows small businesses to expense up to $250,000 of qualified equipment and other business investments, and the bonus depreciation tax incentive allows businesses to depreciate 50% of the costs of capital expenditures.

Pres. Obama wants to extend these tax incentives for another year—through 2010. He also proposes giving tax breaks to small businesses for new hires.

If they continue through next year, these incentives may offer the boost businesses need to start spending again. With indicators finally going in the right direction, it may be a perfect time to restart projects that had been shelved.

As the old saying goes, “No pain, no gain.” We’ve suffered enough. Bring on the gain.

Watch the president’s Dec. 8 speech at the Brookings Institution in Washington:

Many of the media reports covering the material handling equipment economic forecast presented at the Material Handling Industry of America (MHIA) annual meeting in October glossed over some interesting details. I realize the importance of covering the big stuff and looking at the long run, but in the end, we still have to eat.

And that’s exactly what I thought as I listened to a group of industry leaders present their own economic forecasts for their respective segments. They really drilled down into the state of material handling equipment in specific industry verticals.

Most interesting to me was the fact that three speakers, representing three different material handling segments—package handling conveyors, automation and lift trucks—all pointed to food and beverage as a key market and growth opportunity.

Brett Wood, president of Toyota Material Handling USA Inc. (representing lift trucks), Ed Romaine, vice president of marketing for KardexRemstar (for automation), and Steve Buccella of Dematic Corp. (looking at package handling conveyors) all described the food and beverage industry vertical as resilient and poised for significant growth. The experts even went so far as to describe the food, beverage and grocery markets as catalysts with the potential to lead other industries out of the Great Recession.

I’m seeing some evidence to back that up. This fall, third-party logistics provider Genco helped its clients Wegmans and Whole Foods Market convert their lift truck fleets to fuel-cell power. Granted, these installations benefited from millions made available by the Department of Energy as part of the American Recovery and Reinvestment Act, but the news still reveals that grocery distributors are ready and willing to invest in significant projects during this tough economic climate.

In October, United Supermarkets announced its plan to build a brand-new distribution center in Texas. And, more recently, Super Store Industries ordered more methanol fuel cells for use in its freezer operation.

Sounds like the food and beverage market is “ripe” for investment in new facilities, automation and other material handling equipment. Makes sense to me. After all, we still have to eat!