Proprietary Forklift Battery Chargers
Last week I was talking to an industrial battery charger manufacturer who wishes to remain nameless, and we started talking about ways to replace revenue that was lost in the recession. This person told me about a scenario that exists in the battery and charger market that I was unaware of, and he had some pretty strong feelings about what it means for his business and the industry.
“A couple of years ago, we were approached by a lift truck manufacturer to private-label a charger for them that they could put their name on and sell it through their parts catalog. We talked to our distributors, who said ‘We’d rather fight them out on the street than just have you sell direct.’ Therefore, we declined, but the manufacturer found a French partner, who produced an SCR charger for them with their name on it that they sell as a package with their lift trucks. This was the first time that we had seen one of the major lift truck manufacturers get into the battery charger business.
“At the time, this manufacturer said they were doing it because they need to replace revenue that was lost when new truck sales dropped during the economic downturn. That’s probably true, but I don’t see them stopping now that they’ve developed it and have been moderately successful.”
For distributors, this situation has created a bit of a dilemma. The biggest thing is, it creates a competitive environment, not just between the charger manufacturers like us and the lift truck manufacturers, but also amongst distributors. For a long time, independent battery and charger dealers had the local lift truck dealer as one of their largest customers. Now, if more lift truck dealers are forced to sell what I’m going to call “proprietary” batteries and chargers, that creates some major competitive issues.
At first, it was optional—the distributor could still sell whatever charger they wanted. Then it became mandatory to sell the proprietary charger. Some distributors found ways around it, but in many cases, the charger distributors felt like they were competing with the lift truck dealer. Conversely, the truck dealers were reluctant because they knew they had customers who didn’t want this new charger. They also have long-term relationships with the charger company’s salespeople and distributors. They work very closely, and a lot of them didn’t really want to see that relationship damaged.
If nothing else, it’s caused some changes and uncertainty in the distribution channel. Rumor is that at least one lift truck company has already made a similar request to the battery manufacturers, meaning “proprietary batteries” could be next.
If this does prove to be a viable revenue source for the lift truck manufacturers, it’s only going to become more common. What will this mean for distributors?
I’ve heard for a long time about the impact that proprietary forklift software has on the industry, but this was the first I’d heard of proprietary forklift chargers. I’d like to hear from you. How prevalent is this? What does the future hold?
Tags: batteries, forklift, lift truck, material handling
April 28th, 2010 at 10:08 am
I think this is way over due from O.E.M’s and Dealers. Dealers and O.E.M ’s spend thousand upon thousands of dollars each year in training and for what? So we can give away our business to independents and customer that do there own repair. That takes away the value of the manufacture and the dealer. With the advance in technology over the last couple of decades, if you are not factory trained in the software applications you will not be able properly repair the equipment. In my opinion, dealers need to focus on the lines that they have and support them completely. Yes, that means stock parts for the lines and train their technicians. Everyone has so much focus on the other persons product, they are like the proverbial cow trying to get to the grass on the other side of the fence. Focus on what you sell, that’s what I suggest. O.E.M need to do what it takes to get orders and sales people need to know there products. Unlike pencils, forklift, batteries and chargers are not a commodity, they are, industrial pieces of equipment and when a customer make a decision to purchase the equipment whether it has priority software should not make a difference, but the dealer and manufacture should. Believe me, not all of them can or will.
Not sure this was what you were looking for but when I started typing I couldn’t stop.
April 28th, 2010 at 10:10 am
Although we are not in the forklift business ,many of our dealers are.I have heard about what Chris is saying from some of our dealers.It is a real tough senario for them because they are in the middle.
April 28th, 2010 at 10:11 am
Yes it will effect the charger repair business. Who ever has the market share has the edge.
April 28th, 2010 at 10:13 am
True that proprietary software has had significant impact on dealer service departments and the ability to service competitive equipment. In the end, my personal opinion is that service suppliers should be judged by their ability to perform and not if they do or do not have the proper software codes.
I have heard of lift truck dealers who have some level of private label batteries and chargers but I am not aware at this time of any U.S. OEM’s who market their own brand of chargers. I cant speak to the planning stages. I know that some of the European OEM’s are heavily into this business; we can assume it will begin to occur in the future here.
Again, my personal opinion is that this limits a customers choices for service, but given our industry it also would create a “free for all’ on services. Someone will always do it for a few dollars less, but the lower cost is a reflection of less or no profit as opposed to being able to provide the services at a lower cost due to efficiency and technical expertise improvements.
April 28th, 2010 at 10:15 am
Private label battery chargers have been used extensively by battery distributors for years. Most forklift distributors rely on a local battery distributor for their battery and charger needs. Some, like Tri-Lift, are both a forklift and battery distributor. I do not believe that it will have any adverse impact to a customer. As long as the battery and charger are properly matched to maintain charging and warranty requirements the customer will not have an issue. It does provide the forklift distributor with another opportunity to expand brand awareness in his market.
April 28th, 2010 at 10:16 am
Proprietary software is still a fact of life with some forklift manufacturers, and it has had an impact on distributors service departments’ ability to service competitive lines. I do not think that this practice will last however, based simply on the end user’s inherent right to purchase repair/maintenance service from any qualified distributor and/or technician. I personally believe that practice will phase out, much like “proprietary” software yielded to “open source code” in the personal computer industry years ago.
Another example…how successful would major automotive companies like Toyota, GM or Ford be today if owners could only have their vehicle serviced at the local dealership? While we know that this worked for them many years ago, this type of “proprietary” practice just won’t survive in a modern marketplace, particularly one in which the product (a forklift) is seen by many as a commodity.
As for the “private label” chargers marketed by manufacturers, I do not see this type of action having any significant impact on distributors or end users, but more an attempt by manufacturers to capture a “piece of the pie” in a market sub-segment that they have generally stayed away from in the past. We know that manufacturers have suffered during the ecomonic downturn, and they are likely looking for ways to capture additional revenues. What better way than to “tap into” an existing segment? The pie certainly won’t grow from this action, but at least the manufacturer will have a finger in it!
My two cents worth…
April 28th, 2010 at 10:18 am
As a dealer principal of a forklift dealer, my opinion is that the chargers will have impact in a few ways, all of them minor and will have little or no impact on the end user if the end users request the brand they want in their warehouse.
First of all, dealers who choose to sell these private labelled chargers, need to hire battery service personnel to repair them. It is hard enough to hire technical people these days and it is a burden on the sellers.
Secondly, it is a new service to work on AC powered transformers and fuses and all that goes into a battery charger, so a new insurance liability is now absorbed by the seller if he or she chooses to sell these chargers because the Name Brand Guys will not, and can not warranty private lable chargers unless they also sell that brand. So the end user may experience poor service if the personnel are not hired to fix these chargers .
Lastly, I see a competition arising that has never been there before, between the Name brand Distributors we have been selling for, and us, because now we are the competition for their charger business. And repairs if we choose to hire repair techs. This is not a healthy competition either, and as an owner, I chose not to sell Private Label chargers to my customers, because it is not good for the industry at all and not great for the end users either.
April 28th, 2010 at 10:23 am
A lot of really thought-provoking responses here. I didn’t realize this was such a hot topic. Thanks to everyone who is responding. I don’t know a whole lot about batteries and chargers specifically so this is good conversation fodder. Keep the comments coming!
April 28th, 2010 at 10:27 am
You are correct that propietary forklift software has a negative impact on the ability of dealers to service competetive lines, and on the ability of customers to use competition to reduce service costs. This can manifest itself in several ways:
1. Manufacturer requires proprietary codes, controlled by the manufacturer and its dealer network, to access on-board diagnostic tools needed to determine what maintenance is needed. Ultimately, manufacturers have to provide these codes to the purchasers of their equipment upon request, but they make that difficult and try to convey the message that if the purchaser does not use the manufacturers dealer network, at whatever cost the dealer charges, that the purchaser cannot maintain his equipment.
2. The second form of this scam is proprietary diagnostic tools (external), which are only available to the manufacturer and its dealer network. Some manufacturers make it impossible for anyone outside of its own dealer network to purchase or aquire diagnostic handsets designed to interface with equipment software.
Other manufacturers offer assistance to anyone who needs help maintaining their equipment. Helpful websites with service manual and parts information available for download. Customer service numbers through which the manufacturer assists the owner of the equipment or any maintenance service provider the owner has chosen.
I am aware that some manufacturers have custom batteries put in their fork lifts so that the customer cannot replace the lifts with another brand without buying all new batteries as well but I am not yet aware of the charger scam you mentioned. I trust it is true, however, as it is par for the course with manufacturers that care more about forcing customers to use their service than they do about providing the best equipment at the best value.
April 28th, 2010 at 10:31 am
Yale is not marketing a proprietary battery charger so to us it’s not an issue. The forklift software is certainly more of an ongoing concern for dealers and for customers.
April 28th, 2010 at 1:02 pm
I don’t believe it will have a great deal of impact on the industry since there are already a significant number private labeled chargers in the marketplace. There are actually only a handful of industrial charger manufacturers and all of them sell to someone that is alredy private labeling their product. The manufacturers use the same basic design and put a different label on the door. If there are any differences it is usually just parameter change in the automatic control that affects when a charger turns off or just another bell or whistle. Everyone is trying to give a one stop shopping perspective to their customers and trying to add that incremental 1% to thier bottom line. The fact of the matter is we will see some different labels but it will still be the same products we see everyday.
April 28th, 2010 at 1:57 pm
Battery chargers and in paticular batteries for the lift truck market has been a cess pool of issues in that Battery Manufactures like to play in the OEM, Distribution and Direct Sales routes and in doing that they have compressed the ability for the network to support and profit from battery and charger sales and in doing this they have created a network built on cards that is not loyal or financially sound. As for private label versus OE label it really depends on what is negotiated at the price level and warranty level and if the charger manufacture must reduce or change the performance to meet these points then the market will see performance changes, it is up to end users to do their research and make sensable decisions that meet their business needs, quality products and good technology are in the market in virtually any brand.
April 28th, 2010 at 2:01 pm
So evidently private-labeled chargers aren’t a new thing…good to know.
April 28th, 2010 at 3:56 pm
I wasn’t familiar with this but… I believe a couple of things will happen. As his article points out, sales staff and management will continue to fight it because of customer preference and loyalty to a company, sales rep, or incentive contests. That’s been going on for so long, so hard to shake habits.
Manufacturers are all looking for ways to improve revenue, this seems an odd way to do it, incremental as it is, unless it is Crown or Raymond, both having substantial share in Class 1-3. There is private labeling of batteries, this seems a natural transition, but a “proprietary” charger infers that the charger will only work with a matched truck and specifications. I’d have to know more about why a charger wouldn’t work with an electric truck of another MFG, sometimes they are just kept by the customer, so this forces replacements sooner, when new trucks are sold.
Since dealers are having an increasingly difficult time working on other lines due to the proprietary nature of the diagnostic software, it does limit their ability to perform service on competitive lift trucks. Chargers don’t normally have maintenance problems, so I think the impact on a competitive dealers ability to service competitive accounts would be limited, at best.
Bottom line: Limited impact with most dealers/manufacturers, potential big impact to a Crown or Raymond dealer/mfg/customer as a transition takes place. Electric share continues to climb, charger units sold will continue to climb, if proprietary chargers are “forced” on a dealer/customer, the forklift manufacturer that is labeling it will have some strong incentive contests going to change behavior, and provided the pricing is competitive, the shift will occur over time. But, since competitive repairs is limited already, I don’t think this will have much impact to a competitive dealers ability to service an account.
Long response, hope that helps…
April 29th, 2010 at 7:45 am
As with the automotive market, forklift trucks are becoming more complex due to emission controls, diagnostics, and / or performance settings. This has and will continue to make it more difficult for service organizations to repair all lines of equipment unless they are dedicated to a training program which keeps their technicians current.
Some OEM’s are providing industrial batteries and chargers, but ultimately the success of these programs will be dependant on the after the sale service and competitive pricing the OEM and dealer can maintain.
April 29th, 2010 at 8:12 am
I am not aware of any truck manufacturer private labeling battery chargers, but it would not surprise me. Not sure that would have any real impact on ability to service that type of equipment. Truck software (proprietary) is becoming more common all the time.
April 29th, 2010 at 11:21 am
None of our manufacturers are private labeling battery chargers. However, one of our suppliers offers battery and chargers through their aftermarket program.
In our situation, it is an offer for product that we already have suppliers for and for which our cost is less through our direct supply relationships.
From my perspective, the issue is whether the charger or other equipment is competitively priced for the features and benefits it offers.
Generally we would look to buy the battery and charger from the same source. The price/ value drives our decision making.
I would expect that this type of offering would benefit smaller distributors.
April 29th, 2010 at 1:33 pm
The only private lable charger I’ve heard of is through Crown. The big issue is the manual balancing required each time the customer plugs in. It isn’t a big seller, and no large OE charger manufacturer is going to spoil their multiple distribution opportunies by partering with just one forklift OE.
April 29th, 2010 at 1:35 pm
We have not yet run up against a charger that has proprietary software. One of the manufacturers we represent has a private labeled charger but does not put pressure on us to sell this product exclusively. I’m unaware of any proprietary software it might contain. I think the obstacles to selling a charger with proprietary software would be many. It would seem unwise for any forklift manufacturer & dealer to risk a deal by trying to insert a new brand of chargers who might be competitive to a trusted supplier and servicing company of the prospect.
April 29th, 2010 at 2:00 pm
The closest experience I have with this is what Jungheinrich did a few years back by private-labeling a GNB battery and bundling it with their forklifts. In other words, when a distributor ordered a new Jungheinrich electric chassis, it came from the factory with the battery already in it. I’m not sure if they are continuing this practice since the advent of their association with MCFA. However, this is the first that I have heard of any lift truck manufacturer wanting to distribute their own branded charger. Not sure what the benefit could be to that other than an additional source of revenue as previously mentioned. Yet, with the ever changing landscape in that industry, vis-a-vis fast charging, opportunity charging, higher voltage electrical systems, etc.. I’m not sure it is prudent to align yourself with non-traditional charger manufacturer who would almost assuredly be limited in their product offerings. Lift truck companies are constantly preaching to their customers that they should be focused on their businesses, and leave the lift truck business to them, i.e. maintenance, fleet management, product development, etc.. I think the same argument can be made here. Let the battery and charger companies focus on their business and what they do best, and let them figure out the appropriate path for product distribution. If you’re a lift truck manufacturer, then concentrate on being best at that, and bring your charger professional with you when needed.
April 29th, 2010 at 3:28 pm
My main focus in the industrial equipment market is in selling used product (forklifts, cranes, aerial equipment, whatever). I’m not aware that the mainline lift truck manufacturers are now selling battery chargers that have been private labeled to represent their own brand. I know that this was a practice followed by some back in the 80s but most mfg companies got away from that in the 90s and later.
Certain forklift dealers are also industrial battery dealers as well, representing such names as Bulldog, Crown, Power Factor and other “offbrand” product. The main battery mfg companies (Deka, GNB, Exide, etc) don’t have actual lift truck dealers selling their lines, they have independent battery service companies sell their product.
Maybe the big manufacturers are going back to the private label practice. The only way that makes sense is if they can offer the product a lot cheaper than a battery dealer can.
May 1st, 2010 at 10:18 pm
I have not heard of this, None of our competitors are doing this in Wisconsin. Too many customers have relationships with certain battery makers. I don’t think this will have any impact on dealers and customers. I work closely with Storage Battery Systems and I will bring this up the next time I meet with them. The chargers they are talking about in the article mention they are SCR chargers which is old technology. Thanks for bringing this to my attention.
May 1st, 2010 at 10:19 pm
In my opinion, this will have no effect on the customer. It looks like proprietary in this instance means branding and not a unique product design that will restrict the customer from buying the truck, charger or battery that they want. Just because a lift truck company has a branded battery, they will also sell the brand that the customer prefers. This is really a non-issue for the customer.
May 1st, 2010 at 10:20 pm
This is the first that I have heard about lift truck manufacturers marketing a private label battery charger… As we know if these chargers have proprietary software this will also impact distributor’s ability to service the product.
May 1st, 2010 at 10:21 pm
It would not surprise me if the truck manufacturers are developing, engineering and / or have prototypes of proprietary battery chargers and OEM batteries designed specifically for their equipment. I can see this coming simply due the hybrid lift trucks and a few other types of lift trucks. The impact on the dealer selling the product will great due to developing a captive market, however, your dealers focusing on repairs of all makes and models will slowly start to be halted in their abilities to provide a full service for all makes and models of trucks. As you know, if there is a will, there is a way but typically most dealers are not going to or have the ability to invest the capital to create this type of scenario. The industry is becoming more specific and more specialized everyday. Technology is forever changing and with manufacturers it is always about dominating and capitalizing any market they deem possible.
Those are my thoughts from my 12 years of experience and growiing up in and around the industry.
May 1st, 2010 at 10:25 pm
Just to be clear, I may have used the word “proprietary” incorrectly. In this case, the chargers are not specifically functional with only one piece of equipment. THe forklift manufacturers are selling it as a package with only their trucks. It would work on any truck, but must be sold with the manufacturer’s truck. FYI.
Thanks for the continuing outstanding feedback on this topic. I am learning a lot!
May 3rd, 2010 at 9:48 pm
YES – there are OEM lift truck factories marketing to their dealer networks a “private labeled battery charger. Regarding the impact it will have, that’s an interesting one and I’m not so sure how best to answer it in a “politically correct neutral way.”
For a VERY LONG time the battery charger manufacturers have been shafting the forklift dealers with ridiculous prices, incentives to the salesmen, vacation trips, cash rebates, etc.
I think from the view of a dealer principal/owner it is to their benefit to purchase a charger in this instance direct from their OEM factory at a reasonable price (as this will increase the gross profit of the forklift dealership)
I’m positive the BIG battery/charger companies will come up with all kinds of “scare” tactics to prevent the dealership from purchasing direct from their OEM Factories.
My personal opinion from a Jamco perspective is I’m happy to see this, as fair competition in the market place is good for everyone. For many years we also have been unfairly attacked and our customers have been fed false info/scare tactics by fellow MHEDA members (specifically battery charger manufacturers) to control the battery/charger business to the forklift dealerships.
May 18th, 2010 at 10:08 am
The important issue is what is best for the end user. A lift truck, battery & charger should be sold to the user as a complete & matched system. That can best be done by the lift truck dealer aligning themselves with a reputable local battery & charger professional representing a quality battery & charger product with service support available before, during & after the sale. If the end user has issues, they contact the lift truck dealer and between him and his battery/charger supplier, they solve the problem instead of finger pointing between the truck dealer with his private label charger and the battery manufacturer. We have already witnessed many situations where batteries & chargers were mis-matched to the end users and after market product installations on those products were at best sub par and worst case cancelled the product’s UL certification. We respect the lift truck professionals. Battery & charger professionals deserve the same!