Automation: Behind the Conveying Solutions acquisition
Consolidation. In a word, that was the catalyst behind the acquisition of Atlanata-based Conveying Solutions and Allied Conveying Solutions announced last week by Hy-Tek Material Handling. The acquisition is expected to boost Columbus, Ohio-based Hy-Tek’s 2014 revenues to $95 million, an increase of $15 million over 2013 sales of $80 million.
Tom Mann, the president of Hy-Tek’s Integrated Systems Division, explained that the acquisition is the first of what he intends to be several acquisitions that will expand Hy-Tek’s geographic reach as a systems integration and consulting firm. “In today’s market, the big materials handling jobs go to the manufacturers,” Mann said. “Our sweet spot is the jobs in the $2 million range that are still handled locally and are done on a personal basis with people you know from the community, church or the country club.”
As an Ohio-based company, Hy-Tek is strong in the Midwestern states. The goal now, Mann said, is to open a number of regional offices that, like Conveying Solutions, handle $15 to $20 million a year in the mid-market. “We can be a strong regional player with a national footprint,” Mann said.
To me, it also illustrates a broader trend: Our industry was consolidating from the top down, with transactions like Dematic’s purchase of HK System a few years ago or last year’s acquisition of Wynright by Daifuku Webb . Now, we’re beginning to see the same dynamic among the middle tier players, including this deal as well as Associated’s purchase of Peach State Integrated Systems.
For his part, Mann expects to see more of these types of deals. “If you look at the small-to-mid-size integrators in our industry, most are owned by 2 or 3 guys in their 50’s and 60’s,” Mann said. “They’re at that age where they’re looking for an exit strategy and unless their families are involved, most don’t have one.”
Mann believes that customers who have relied on smaller systems integrators will benefit from this consolidation as well. “As the industry consolidates, our manufacturing and distribution customers will have access to a greater depth of engineering,” Mann said. “They’ll have a stronger player in the marketplace.”