The world's top 20 systems suppliers

By By David Maloney, Associate Editor -- Modern Materials Handling, 3/1/2001

While many materials handling companies are currently worried about slower economic growth, all agree that 2000 was a solid year for nearly all aspects of the industry. Reflecting that growth is this year's MMH listing of the world's Top 20 system suppliers, by sales.

In fact, 2000 left all of our Top 20 companies smiling, as our list shows the average increase in revenue among them last year at 9.5%, with six reporting double-digit growth. That compares with industry-wide growth of nearly 6%. 2000 was also the first time that all 20 of the top companies exceeded $100-million in revenues. Additionally, eight were over $500-million and four over $1- billion. Together, the 20 companies on the list sold systems totaling more than $13 billion.

Mannesmann Dematic leads the list again, as it has for the past several years. The company saw a huge sales increase in 2000 of 29%. Last year's number two, Daifuku, dropped to fourth position after increases of 4%. FKI, bolstered by last year's acquisition of Pinnacle Automation's many well-known brands, increased sales by 15% and maintained the third position.

Changing positions

Unfortunately, two of last year's participants did not make this year's Top 20—Knapp Logistics and SI Handling, now part of Paragon Technologies. Both had a good year, but due to two new additions to the list, it was not enough to keep them in the Top 20. Another company absent this year is Pinnacle Automation, which as mentioned earlier, is now part of FKI.

That leaves 17 of the Top 20 returning from last year. Joining them are newcomers Siemens Production and Logistics, and Lockheed Martin. Both companies have shown a marked increase in their commitment to materials handling during the past 2 years.

In addition, German-based Durr returns to the list after a year's absence. In past listings, we discovered that the company had not reported all of its worldwide sales. They are included this year, allowing Durr to leap all the way to the eleventh position.

Siemens PL, the logistics arm of one of the world's largest companies, was created in 1997 and has steadily raised its profile in the industry. While most of their efforts have been in Europe, they were significant enough last year to earn the second spot on our list. The pending acquisition of current leader Mannesman Dematic by Siemens (in final stages at press time) virtually assures that Siemens PL will be top dog on the materials handling block for some time to come. The two companies together last year had $4.8 billion in revenue - more than three times any other company.

Until just 2 years ago, Lockheed Martin manufactured sortation systems nearly exclusively for the postal service. It was at that time that the company decided to address the commercial market as well, earning them the tenth spot on this year's list.

To qualify for the list, companies must be suppliers of materials handling systems not just equipment providers. In addition to manufacturing at least one major handling system component, a company must also have full-time staff that designs, installs, integrates, and implements materials handling systems that include two or more major equipment types. These are transportation devices, storage and staging equipment, picking units, sortation systems, data capture technologies, and information management software.

There is one other important criteria that must be fulfilled. A company must have at least one major business unit operating in the U.S., and sell systems to industrial end users here.

Joining forces

The MMH list shows a continuation of the trend toward consolidation, with several major players making key acquisitions during 2000.

"Everyone wants to be a total solutions provider," says Gary Master of Green Associates. Master predicts that even more consolidation and partnering will occur as the economy slows.

In addition to FKI's acquisition of Pinnacle Automation, several other suppliers acquired companies that expanded their core competencies and revenues. Swisslog purchased Sonica Software Corp., as well as the logistics division of Kewill Systems. Swisslog's revenues increased 9% as a result, but their ranking fell two slots to seventh position due to the new additions to the MMH list.

Interlake, the American component of GKN, acquired Kentucky-based Control Solutions, a software and controls supplier. GKN now holds the thirteen position with solid sales increases of 17%.

Kardex bought AFT Automation and Conveying Systems, a German conveyor manufacturer and supplier to the auto industry. As a result, Kardex jumped one rung to fourteenth position with a hefty 36% increase in 2000 revenue.

One major firm also changed its name and its international headquarters. Constuctor Dexion is now known as Dexion Group Ltd., while shifting operations from England to Oslo, Norway.

Reflecting on 2000

Obviously, 2000 was a good year for the materials handling industry, as indicated by the 9.5% growth averaged by the Top 20. At least it was good until the economy began touching the brake lights during the last quarter.

"The double-digit growth we saw in 1999 was not expected to carry over into 2000," observes Daryl Delano of Delano Data Insights. "But we continued to have strong growth and it took until the Fall to see some slowdown."

While overall numbers for material handling are still being evaluated, Delano expects 2000 to have posted a 5-6% growth industry-wide. That is still well above the 4% average seen in years leading up to 1999.

"The biggest thing that provided a lot of punch in 2000 was that many dot-com companies had money to spend," says Jim Apple of the Progress Group.

While eventually the dot-coms stalled, some major projects were completed in early 2000 from 1999 commitments. Of course we all know what happened to dot-coms as the year rolled on.

"There has definitely been a switch in the dot-com mentality," says Master. "The philosophy now is that e-com is taboo."

While Master feels that pure dot-coms may be dead, there is growth potential for e-commerce, particularly by established brick-and-mortar retailers.

Delano adds that increased spending in manufacturing facilities in 2000 helped to narrow the gap between manufacturing and warehousing in new construction orders. Labor shortages also encouraged more mechanization of facilities in 2000.

How successful the Top 20 companies and other materials handling firms are in 2001 remains to be seen. Of course, we will have that information for you—on next year's list.

2001 expectations

Will 2001 be a year of odyssey for the industry? Most experts agree that it will be slow going in the first two quarters, but 2001 should be another solid year before it winds down. Daryl Delano, of Delano Data Insights, expects growth of about 2.5-3%.

"There will be an increasing amount of money being spent on expansions and retrofits," he says, adding that there will probably be less new construction than the past 2 years. Suppliers that concentrate on offering upgrades to clients should do well.

The dot-coms have left the legacy of fast turnarounds and same-day processing, an approach that has many DCs now upgrading to meet higher customer service expectations.

Another trend pushed by the dot-coms is smaller package handling and more daily shipments, a condition that often leads companies to upgrade to faster, more efficient materials handling systems.

A slowing economy may also affect the tight labor market.

"Labor availability may not be the driver it had been," says Jim Apple of The Progress Group.

He also predicts that third-party providers will continue to increase their role in complicated distribution processes, and that ergonomics will also be a major force, as companies respond to OSHA's new guidelines.

"Companies don't yet know how the guidelines will affect them," Apple says. "When labor is tight, employees need workplaces that provide safe environments for their workers. Otherwise they face high turnovers."

Materials handling firms must help their customers address these issues to maintain the level of sales they have enjoyed the past two years.

"Companies need to think about how to meet market needs while increasing the diversity of products they provide," says Gary Master of Green Associates. Master feels confident that 2001 may find a 4%-plus growth rate. "Materials handling companies must show customers how to reduce their long-term costs and do more with less," he says.