Materials handling business on the move
From ADC to AGVs, companies in the materials handling industry are making a number of acquisitions.
By Corinne Kator, Associate Editor -- Modern Materials Handling, 10/1/2006
A notable number of companies in the materials handling industry are in the midst of business deals that could significantly affect their markets. Most of Modern's news section this month details these transactions. The deals affect the automatic data capture (ADC) industry, the supply chain software market and the automatic guided vehicles (AGV) and lift truck businesses.What do these changes mean to the materials handling industry and to you, the customer?
The constant stream of acquisitions in the supply chain software space is a sign of the inevitable maturing of this market, says ARC Advisory Group analyst Steve Banker. When a market is no longer vibrant and growing, he says, companies leave the space—either by selling out or folding up.
For customers of struggling software providers, a buyout likely means the end of upgrades and enhancements, but it also means at least some measure of continued maintenance. So while a buyout isn't ideal, it's certainly better than a fold up.
When complementary software providers merge, says Banker, they usually announce plans to integrate. "Will integration occur? Yes. Will it be as seamless as you are led to believe? Not for many years," he adds.
Recent transactions in the ADC market are the latest in a series of industry buyouts. Research firm Venture Development Corp. (VDC) wrote in a recent report it anticipates further consolidation among ADC suppliers. "The next decade could effectively eliminate mid-sized participants in bar code scanning, rugged mobile computing and enterprise mobility solutions," according to the report.
How any acquisition affects customers, says veteran materials handling consultant Gene Forte, often depends on the measure of autonomy the acquired company is allowed to maintain. The more independence the company loses, he says, the more pronounced the ripple effect felt by suppliers and customers.
Mergers and acquisitions usually result in fewer products for customers to choose from, says Forte, but that's not always bad. "It's not negative if the fewer companies are able to develop better products with wider application," he says.
"The materials handling industry has been more of a stodgy, mature market over the years," says Forte, "but now the activity in the market parallels what's going on in newer, fast-paced industries." Forte says he believes this movement in the industry is a result of materials handling becoming an increasingly critical component of the supply chain.
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