News story

Arnold, H&E weigh deal involving NMHG brand

Wednesday, 22 July 2009 ( #420 ) - Salt Lake City, UT, United States
While nothing is final yet, Arnold Machinery Co may add Yale product at its Hyster dealerships in five states, linking Nacco Materials Handling Group (NMHG) brands. "We will sell both (Hyster and Yale) brands in our Rocky Mountain territory," says Rex Mecham, president of the materials handling division of Salt Lake City-based Arnold Machinery. "What we announced was based on a change in NMHG policy now allowing single owners of a brand" to acquire and market NMHG's other brand in North America. Arnold has agreed in principle to purchase the Yale business in Nevada, Arizona, Colorado, Utah and Idaho from H&E Equipment Services Inc of Baton Rouge, Louisiana and may complete the transaction by 31 July. If concluded, the Arnold-H&E transfer might become the first of several geographic NMHG dealership consolidations. Senior executives of NMHG and parent company Nacco Industries Inc met in June in Chicago to discuss possible distribution-consolidation avenues with certain Yale and Hyster dealers. Each attendee was required to sign a non-disclosure form. "We have been looking at improved organisation designs for some time as a growth strategy and to better support our dealers and customers, and our ultimate goal is strong Hyster and Yale representation in every market," says Colin Wilson, vice president and chief operating officer for NMHG in Greenville, North Carolina. "NMHG has not changed its view with regard to consolidation of brands. There is a Yale brand, and there is a Hyster brand. The two brands will not be combined." NMHG managers and dealers are aware of an effort at joint venture Mitsubishi Caterpillar Forklift America Inc (MCFA) of Houston, Texas. Beginning in 2006, MCFA established a two-brand, one-channel distribution strategy ( News #217) for its Caterpillar and Mitsubishi forklift brands. Wilson says the NMHG approach is not the same as MCFA because NMHG will continue to offer a full product line through both the Hyster and Yale dealer channels. Arnold Machinery and H&E reached an agreement in 45 days. Al Richer, chairman of Arnold, called John Engquist, H&E president and chief executive officer, on 1 June, according to Mecham. Top executives of each firm met on 6 and 7 July, and, internally, Arnold disclosed the agreement 15 July. "It is the goal of both H&E Equipment Services Inc and Arnold Machinery Co to make this transition as smooth as possible to both the company's employees and our valued customer base," the announcement says. Eight branches slated to add Yale include Arnold locations in Las Vegas, Nevada; Tucson and, for the Phoenix market, Laveen, Arizona; Colorado Springs and Denver, Colorado; Salt Lake City and St George, Utah; and Meridian, Idaho for the Boise market. A senior H&E executive acknowledges, "We are in discussions (with Arnold). Nacco has a desire to consolidate where they can," but, as of 20 July, NMHG had not officially approved any deal. Arnold Machinery started working with the Hyster brand initially via a verbal agreement in October 1944. On that basis, "we claim to be oldest independent Hyster dealer in the country," reports Mecham, who started with Arnold in 1974. Prior to factoring in the H&E assets, the material handling division accounted for 40% of Arnold business, according to Mecham. Other Arnold divisions focus on mining, construction and farm implements. Mecham identifies upcoming goals: "Increase marketshare for Hyster and Yale, not diminish either brand" and organise service, parts and inventory resources "to take care of these two products." "Over the years, we have tried to expand and grow," Mecham adds. On 1 October 2008, Arnold purchased the Hyster rights for North Dakota, Minnesota and western Wisconsin from RDO Equipment Co of Fargo, North Dakota, a major John Deere equipment dealer. In April 2006, Arnold acquired the Hyster market for Colorado and most of Wyoming from Materials Handling Co of Denver. In addition to Hyster and soon Yale, most Arnold locations represent the Sellick, Bendi, Drexel and Combilift brands, and some branches carry the Manitou, Shuttlelift, Hoist Liftruck and Taylor Dunn lines. Also, Arnold sites stock forklift attachments from Cascade, Brudi and Bolzoni Auramo. In existing locations in the Rocky Mountain region, H&E is expected to retain its aerial work platform business involving Genie, JLG, National Crane, Manitex, Elliott, Tadano and Lift-A-Loft brands. Other core H&E categories involve cranes and earthmoving equipment. H&E also represents Komatsu, Skyjack, SkyTrak, Bobcat, Taylor and Blue Giant brands. Publicly traded H&E has 63 full-service facilities in various US regions and reported a profit of USD43.3 million on 2008 sales of USD1.07 billion. H&E acquired the assets of JW Burress Inc of Roanoke, Virginia with 12 locations in four middle Atlantic states for about USD144.1 million on 1 September 2007 and the assets and some liabilities of Eagle High Reach Equipment Inc of La Mirada, California with four locations in southern California for about USD66.3 million on 28 February 2006. NMHG Holding Co is a subsidiary of publicly traded Nacco Industries of Mayfield Heights, Ohio and, through NMHG, designs, engineers, manufactures, sells, services and leases forklifts and aftermarket parts under the Hyster and Yale brand names. Two reportable business segments are wholesale manufacturing, known as NMHG Wholesale with 2008 sales of USD2.74 billion, and retail distribution, known as NMHG Retail with 2008 sales of USD84.2 million.