Last year, many manufacturers of materials handling equipment and attachments reported record sales and profits, and market growth is projected to continue. This growth, according to a recent MarketWatch report, is being driven by rapid industrialisation, increased demand for automation and the upsurge of e-commerce, accelerated by the COVID-19 pandemic.
Although COVID-19 helped increase demand for equipment, the pandemic was a double-edged sword for the industry. Manufacturers were under pressure to increase production in an environment with disrupted supply chains, transport problems and COVID-related workforce challenges.
European manufacturers have long been major players in the global materials handling industry, and according to Olivier Janin, secretary general of the European Materials Handling Federation (FEM), while imports have gradually increased over the years, the trade balance remains largely positive, thanks to sustained exports.
But right now, Janin explains, companies are not only dealing with the consequences of COVID-19, but other challenges, too: supply chain disruptions, geopolitical tension resulting from the war in Ukraine, soaring energy prices and generalised inflation. “These generate difficulties (and) also uncertainty,” Janin says.
In this period of conflicting demands and uncertainty, making decisions within a company is no easy task.
“We are living in a complex period for business: On one hand, demand in the post-lockdown time is growing and the level of business is very high, which is good,” says Carlo Fallarini, group global marketing director of attachments group Bolzoni.
“On the other hand, we are facing continuous problems in the supply of raw material, parts and components. Increasing costs of materials, energy and transportation are adding difficulties to our manufacturing process.”
“The ability to create innovative solutions while maintaining the highest levels of safety and reliability gives European manufacturers a unique position on the world market.”
Janin notes that manufacturers have responded to these challenges by adapting business operations. “We are seeing new trends emerging. There seems to be a move from ‘buying cheap’ to ‘buying safe’, where logistics and availability beat cheaper purchasing conditions.
“Moreover, double or even triple sourcing is prioritised over single sourcing in order to maximise volumes, whether for commodities, components or raw materials. We also see nearshoring of some activities, notably centres of competence and back-office.”
As well as changing some business practices, European companies are leveraging their strengths, in particular their track record in the production of safe, environmentally friendly and reliable products, and their innovation capabilities, Janin says.
Company executives echo these observations. In speaking to manufacturers about how they are adapting to these challenges, three broad themes emerge:
- the importance of flexibility in adapting business practices to the circumstance
- a focus on quality, safety and sustainability
- thinking outside the square – taking innovative approaches both in terms of digital technology and customised solutions.
The importance of flexibility
As challenging as the pandemic has been, it could perhaps be considered a testing ground for the adaptability of manufacturers which are now facing this complex combination of circumstances.
“We've managed the impact of the global issues of the last few months through the resilience and flexibility-based management that we had adopted and tested during the pandemic,” explains Alessandro Pavin, CEO and plant manager of ALAR.
Flexibility means different things to different companies. Businesses such as Cascade, with manufacturing facilities distributed globally, have scope for flexibility since they can leverage the company’s manufacturing and purchasing network around the world to serve the increased demand of its customers.
“Cascade has been able to quickly adjust to provide manufacturing support for plants in locations that face more challenges than others. This has allowed us the flexibility to carry on with order fulfilment at all our facilities, fulfilling orders to meet our customers’ needs while minimising delivery times,” says Udo Schmidt, managing director of Cascade Europe.
Companies that rely on a single production facility lack this advantage and have had to find other ways of adapting. Stefan Pinter, managing director of Stabau, a company that manufactures forklift attachments in a single facility in Meschede, Germany, says: “During these challenging times, we do everything we can to provide our customers with the service and products they are used to.
“However, securing a seamless supply has become more difficult than ever before.” He notes that, for Stabau, being flexible has meant accepting the cost increases of raw materials and components, reduced profit margins and increased delivery times to customers.
In addition to ‘buying safe’ and double or triple-sourcing, as noted by Janin, companies including Stabau, UpLifting and Semax report that they have restructured assembly lines and increased buffers in efforts to keep ahead of future demand and minimise delivery times.
Tobias Ingemarsson from Semax explains: “To be able to produce the existing and upcoming orders, we have increased our stock substantially.” This has allowed Semax to maintain good delivery times.
ALAR has approached the problem both by restructuring aspects of its business operations and by negotiating new agreements with suppliers. “We have invested in advanced technology and work organisation; also, we have changed the raw material purchasing plan to two-year programs,” Pavin says.
Quality, safety and sustainability
Quality. Manufacturers in Europe are known for their high-quality products, and their dedication to safety and environmental best practice. These attributes are helping companies to stand out from their competitors as they navigate these challenging times.
“We manufacture our products in Germany, with the highest possible quality,” explains Pinter from Stabau. “This leads to the long lifetime of our products - some last for over a decade. Once a customer has finished with their equipment, we can even resell it in our used products range.”
The demand for quality equipment is growing not just in Europe, but globally, according to Christian Wadell from off-highway lighting manufacturer TYRI. “Global trends in lighting show an increasing demand for quality and sustainability, as well as fast and efficient problem-solving capabilities.”
The European commitment to quality extends to after-sales service, which is a point of pride for some companies. Schmidt says that customers benefit from Cascade’s ‘glocal’ support which combines “our global resources and manufacturing presence with accessible, local assistance to ensure customer success”.
But when in-person service is not possible, technology can help - and it has the advantage of being instantaneous. “We try to give fast and personalised service through a virtual assistance that allows almost immediate attention,” says Jean-Michel Aspas, commercial director of UpLifting.
Safety and sustainability. Safety and sustainability go hand in hand with quality. And with increasingly stringent safety and environmental standards in Europe, these considerations mark a point of difference for European manufacturers.
“TYRI has a clear focus on quality, meaning we produce sustainable and environmentally friendly products and can therefore continue to be an attractive global supplier to the largest producers in the world. Poor-quality work lights cause issues with EMC interference and machine downtime, so quality is of utmost importance,” Wadell says.
Similarly, Ingemarsson points to safety as a critical feature of Semax’s equipment. “With our products, the end-users can work with more flexibility and, at the same time, raise the safety level at different sites. We also implement different types of safety systems - for example, human recognition, to avoid dangerous situations.”
In addition to developing products to improve the safety and environmental performance of equipment, some manufacturers are going as far as developing entire company departments to help them keep up with legislative requirements. Semax, for example, will soon open a new technical centre that will focus on R&D.
“At this centre, we are hiring highly experienced people in this area,” Ingemarsson explains. “This will help us to keep up with the tempo of new and updated regulations but also improve our product portfolio.”
This kind of good forward planning allows companies to stay abreast of regulations, as noted by Aspas: “This year, we had the new engine emission regulation that we were waiting for and that we had prepared months ago, so it had no impact.”
Thinking outside the square
Innovation through customisation. According to Janin, “The ability to create innovative solutions while maintaining the highest levels of safety and reliability gives European manufacturers a unique position on the world market.”
For European manufacturers, ‘innovation’ not only means advances in digital technology, but also a focus on novel, personalised solutions to meet the unique needs of customers.
“There are few assignments that are impossible for us,” Wadell says. “We manufacture special solutions for almost every requirement.”
This willingness to take on the challenge of developing custom solutions is being embraced by many European manufacturers as a means of standing out from their competitors.
Aspas sums it up: “Unlike much of the market that seeks the standardisation of economies of scale, a point of differentiation for us is personalisation of the product. Our machines are never the same – each is adapted to the customer's needs.”
He provides the example of a custom-designed reachstacker to handle precast concrete pieces: “It not only has an elevated cab to increase the operator's field of vision, but also has a specially designed attachment for this type of work as well as a dimensioned boom for these tasks.”
Not all customers need personalised equipment, so an important aspect of this approach is to identify the right market. “We try to think out of the box and, due to our unique solution, we work hard to find the right type of customers where we can add (significant) value,” says Ingemarsson.
Digital innovation. The role of manufacturers is changing, according to Janin: “With the digital transformation, our companies are evolving from supplying equipment to providing integrated and often tailor-made solutions to address complex logistics needs.”
This is epitomised by Bolzoni’s approach: “In most of our products, the new technology also supports big data collection, helping the logistics and operations managers to control and monitor the global handling operations,” Fallarini says.
In fact, if there’s one thing that all European companies agree on, it’s the importance of staying ahead of digital developments and considering the bigger picture when creating products.
“Like many other industries, TYRI must think beyond our proprietary hardware; it is not only the hardware that needs to be developed to tackle tomorrow’s challenges. It is the system encompassing the lights that can create intelligent lighting,” says Wadell.
Innovation is also key to Bolzoni’s business strategy, according to Fallarini. “The main driver of innovation in our range is the new technologies. Increasingly, our forklift attachments are completed and integrated with electronic devices able to support the truck driver in the daily operation - increasing safety, improving productivity, and reducing potential damage to goods.”
Looking to the future
While manufacturers are dealing with many immediate challenges, in the long run, access to skilled labour will be the biggest challenge for European companies, according to Janin.
Demand for equipment is increasing, accelerated by the pandemic; but megatrends such as urbanisation and sustainability are resulting in a redesign of logistics – and manufacturing companies are at the centre of the process.
“Despite an uncertain short-term future, long-term prospects are extremely promising for the European materials handling industry,” he concludes.
For this report we interviewed the following industry specialists:
CEO and Plant Manager
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