Subscribe to our free, weekly email newsletter!


M&A materials handling style

By Bob Trebilcock, Editor at Large
February 25, 2011

Editor’s note: This blog was originally posted on the web site of Modern Materials Handling, LM’s sister.

Want to know where all that corporate cash we hear about sitting on the sidelines is going? Try the materials handling industry.

The last couple of years have seen more merger and acquisition activity in the materials handling industry than I can ever remember seeing.

Daifuku got the ball rolling in 2007 when it acquired Jervis B. Webb. That was followed by Intelligrated’s purchase of FKI in the spring of 2009 and the acquisition of Diamond Phoenix by System Logistics that fall. Last summer, Dematic acquired HK Systems. Just last week, Savoye, a subsidiary of Groupe Legris, acquired Retrotech.

In the pallet industry, Brambles, the parent company of CHEP, intends to acquire IFCO and CAPS and PECO Pallet was acquired by a private equity firm. I know I’m leaving out a few deals in the rack and lift truck industries.

It’s as if the old geezers are now the most popular dance partners at the sock hop. What’s interesting to me is that we’re getting to be hot at a time when many in the industry are eschewing the term materials handling for more exciting terms like logistics.

What’s behind this sudden surge in interest in our industry? Yesterday, I spoke with a representative from the DAK Group, an investment bank that was involved in the Retrotech deal about the trends she’s seeing in our industry. I’ll post that next week. Meanwhile, I have a couple of thoughts and I think they’re connected.

The first is that in North America, the bulk of the industry is comprised of privately-held, family-owned businesses. The owners are graying and their kids chose sexier fields. With no one to pass the business on to, they’re thinking about cashing out. I’m Exhibit A: My Dad had four kids and none of us was interested in the family pallet business. 

The second is that what we do is finally getting the respect it deserves by business.

Warehouses and factories used to be black holes to the business; C-level executives mostly noticed us when things went wrong. Today, there is a recognition that materials handling is integral to broader business goals. In fact, I increasingly hear from companies that they did a makeover of their warehouse because of a new business strategy. That makes solution providers more attractive.

The third is that business is increasingly global. IKEA, for instance, has developed several cookie cutter designs for its warehouses that it rolls out everywhere it does business. The idea is that a warehouse manager in Georgia could walk into a warehouse in Sweden and run the joint. Ditto global manufacturers. Global companies are going to choose partners that can serve them on a global basis.

This was driven home to me a few years ago when Markem, a leader in case marking and bar code technologies with more than $300 million in sales, was purchased by Dover. At the time, I asked the company’s CEO why he sold. His answer was succinct: “We were too small to compete.”

Back then, Markem was a family-owned business headquartered in my home town. The family members managing the company were in their early 60’s. Their kids were largely uninvolved. Meanwhile, Markem’s global customers wanted it to install and support solutions anywhere in the world they built plants. Markem either had to invest to provide that level of support, contract and serve a limited market or sell. They sold. It’s no coincidence that the corporate headquarters is now Paris and not Keene, NH.

Given the amount of cash that’s supposed to be sitting on the sidelines and the interest in our industry, I expect to see more of these deals in the future.

For more articles on materials handling, please click here.

About the Author

image
Bob Trebilcock
Editor at Large

Bob Trebilcock, executive editor, has covered materials handling, technology and supply chain topics for Modern Materials Handling since 1984. A graduate of Bowling Green State University, Trebilcock lives in Keene, NH. He can be reached at 603-357-0484 and .(JavaScript must be enabled to view this email address)


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Seasonally-adjusted (SA) for-hire truck tonnage in March was up 1.1 percent on the heels of a revised 2.8 percent (from 3.1 percent) February decline, with the SA index at 133.5 (2000=100). This is off 0.3 percent from the all-time high for the SA of 135.8 from January 2015 and is up 5 percent annually.

Intermodal volume was up 8.1 percent annually at 280,016 containers and trailers. This outpaced the week ending April 11 at 270,463 and the week ending April 4 at 271,127. AAR said this tally marks the second highest weekly output it has ever recorded as well as the first time container and trailer traffic was higher than carloads for a one-week period.

Ocean cargo carrier service reliability across the three core East-West trades hit a five-month peak in March with an aggregate on-time performance of 64 percent, according to Carrier Performance Insight, the online schedule reliability tool provided by Drewry Supply Chain Advisors.

The Airforwarders Association, which represents more than 360 companies that move air cargo through the supply chain, today applauded an agreement reached by Congressional leaders to advance legislation giving the President authority to conclude key global trade agreements.

Despite great opportunity for growth, the logistics market in Latin America is lagging behind other emerging markets thanks in part to its notoriety for corruption, violence, poor infrastructure and government bureaucracy.

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA