In a deal of major importance, Siemens has completed its acquisition of Mannesmann Dematic, creating the world's largest materials handling system supplier.

Sales of the new company, Siemens Dematic AG, are $4.2 billion worldwide, substantially outdistancing London-based FKI plc (www.fki.co.uk) now in the second spot at $1.5 billion. Prior to the deal, Mannesmann Dematic was ranked first and Siemens second in the world, according to the Modern Materials Handling Top Systems Suppliers listing in March, 2001.

The new company combines Mannesmann Dematic's U.S. subsidiaries Rapistan Systems (www.rapistan.com) and Demag Cranes and Components (www.demagcranes.de) with Siemens' Production and Logistics Group, which has operating divisions in the U.S. and around the globe. It was just 10 years ago that Mannesmann acquired Rapistan.

Siemens Dematic (www.siemens.com) consists of five divisions. They are Material Handling Automation (including Rapistan), Postal Automation, Electronics Assembly Systems, Demag Cranes and Components, and Demag Mobile Cranes (see graphic below). Siemens Electrocom is now part of the Postal Automation division.

Siemens is the third European company to establish a major presence in the U.S. materials handling market in the past year and a half. The other two are FKI and Swisslog (www.swisslog.com) of Buchs/Aarua, Switzerland (now ranked sixth in worldwide materials handling systems revenue).

The Americas account for the largest portion of Siemens Dematic sales at 42%, said Dr. Edward Krubasik, chairman of the supervisory board of Siemens Dematic, at a press conference last month. Germany accounts for 20% of sales, the rest of Europe 25%, Asia 7%, and the rest of the world 6%.

"Siemens has found the ideal partner in the production and logistics market," explained Dr. Dietmar Straub, chairman of the managing board of Siemens Dematic. All five divisions are ranked either number one or two worldwide in their markets, he continued. Material Handling Automation, Postal Automation, and Demag Cranes and Components are number one in their fields. Demag Mobile Cranes and Electronics Assembly Systems are second in theirs.

Straub went on to say, "We now have all the products and fundamentals we need to provide good solutions. Furthermore, Siemens Dematic can partner with other parts of Siemens to complement its efforts."

According to Pete Metros, a member of the board of Siemens Dematic and director of the Material Handling Automation Division, the company's value proposition is a combination of a broad global product line and innovation. "We always try to out-concept our competitors," he said.

Metros went on to say that new product development would continue to be a major emphasis. He cited sortation and conveyor systems as areas to watch in the near future. In addition, Metros left the door open to additional acquisitions to strengthen the company's software offering beyond materials handling system control.

"We have to get into warehouse management systems and that could come from internal development or from acquisitions," Metros said.