Labor Costs Will Drive ENGINEERED SYSTEMS

Distributors who provide Engineered Systems predict a 5.6% aggregate increase in sales. This group of distributors will introduce the most new product offerings, compared to other groups of distributors. They are pursuing robotics and automation opportunities, as customers seek labor-saving solutions. Many ES distributors may agree with one distributor’s comment, “We are well on our way to getting back to the good old days,” as companies respond to a slight increase in manufacturing.

Pete Lauder
“We are keeping things lean and are cautious about expenses.”

Pete Lauder
McCombs-Wall

Bob Weeks
“I like the way young people in our industry think, the way they go about managing, the tools they use, and the sophisticated way they look at things. It’s a control-focused process, not technology-focused.”

Bob Weeks
FloStor Engineering

Mark Nelson
“Our single biggest focus is continuing education because we have a young force that requires a lot of attention.”

Mark Nelson
Nelson Equipment Company

 Daryle Ogburn
“We are first evaluated on the web, and we have to make it easy for people to find the value there to want to contact us.”

Daryle Ogburn
Advanced Equipment Company

“Every single project we are involved with, every single one, is for a reduction of labor costs,” says Pete Lauder, president of McCombs-Wall (Orange, CA), who is doing more robotics and automation work. He recently took on a new CRM program and is upgrading his website and improving marketing strategies. “We’re going after new markets, including food processing companies.” Lauder expects that sales will remain level, given customer uncertainty and the lack of bank financing. He did, however, hire a project manager and electrical controls engineer to be ready when the economy starts turning around.

“This economy requires exceptional sales ability to be successful,” says Bob Weeks, president of FloStor Engineering (San Francisco, CA). “Business is hard to find, and salespeople can get very frustrated.” Parcel handling will drive sales, and Weeks anticipates a growth of 9%. He notes that the order process is taking longer and it’s not unusual for customers not to respond for a while after being given a quote. A new warehouse-control software product will be introduced in the 4th Quarter.

Pete DiLella, president, Superior Handling Equipment (Ormond Beach, FL), indicates sales will be similar to last year’s amount. The company’s biggest challenge will be trying to expand its business. DiLella says, “Lead times from suppliers have increased. Therefore, it is important to purchase merchandise timely, and it is also necessary to hold more inventory than desired.”

Mark Nelson, president, Nelson Equipment Company (Shreveport, LA), expects sales to be up 16% over last year’s numbers based on bookings that are 6 to 12 months old or older. IT investments will improve marketing and information gathering, and he is gradually moving business to the cloud. Servers will be updated and field engineers will be using iPads. “The iPad will help us better paint a picture to customers during the conceptual and finalizing stages. The website will be rebuilt in order to provide better technical information. Says Nelson, “We’re increasing our marketing efforts and using these tools to drive business to our website.”

Daryle Ogburn, president, Advanced Equipment Company (Charlotte, NC), recognizes that “customers are still afraid to let go of money.” Not deterred, he anticipates growth of 5% and points to the challenge of “breaking down the walls.” “If you don’t have an appointment, and you don’t know who you’re there to see, you don’t just walk in and talk to reception and get in to see someone anymore.” Most of AEC’s business is with manufacturing plants, a world that Ogburn points out wants to get back to doing business, but is still tenuous. The company thrives on smaller systems business, and to complement this, Ogburn looks for additional “home-run projects,” those that come from automating processes for expanding companies. In the 1st Quarter, the company will upgrade hardware and software.

An increase in demand for consumer products is good news for Bob Iwrey, president of McNichols Conveyor Company (Southfield, MI), a company that works with all three tiers of automotive suppliers. Iwrey anticipates sales to be up by 5-10%. He is improving the workflow as well as the backend and is looking to hire marketing/data support. Product lines are being tweaked to eliminate what is not making money. “As a small company, we don’t try to be everything to everybody.” Iwrey describes his biggest challenge as keeping up with demand. “The other side of this sword is that if we staff up and spend up to meet that demand and the demand falls, the overhead remains with the associated costs.”

Bob Iwrey
“Projects quoted one to three years ago are now starting up. Customers are like wolves at the door, and they need the equipment now.”

Bob Iwrey
McNichols Conveyor Company

 Will Egerton
“Customers want to maintain equipment for a longer period of time, so after-sale service has become very important.”

Will Egerton
Wecon Systems Limited

George Pimpl
“A lot of people hide behind email. It’s mandatory that when we send a customer an email, we follow up within two hours with a phone call.”

George Pimpl
Reno Forklift

With larger projects driving sales, Charlie Hillebold, president, HCM Systems (Willowbrook, IL), expects to maintain sales activity. “Customers are trying to achieve efficiencies inside their operations in order to reduce labor,” says Hillebold. “As customer resources begin to shrink, the expertise we bring will separate us. But the double-edged sword is that the more complicated the solutions we put into the field, the more internal resources it takes to support those installations.” He plans to enter new markets using high-speed robotics for the packing industry. “We’ve done robotic palletizing with case and will move further upstream with picking and placing parts.” This will require a different toolset from the field engineering standpoint, and Hillebold will add mechanical and software engineers.

Chris Castaldi, manager of business development, W & H Systems (Carlstadt, NJ), forecasts sales to be up, but did not offer a number for publication. He points to a strong retail market, with a good holiday season, and continued growth in wine and spirits. “Customers are looking for labor-saving products, and we are focusing on ROI and value.” He adds that the company will be listening hard and communicating more with clients so there is a clear understanding of needs.

“So much has been in the fire for so long, it has to come to fruition.” Looking at customers’ pent-up demand, Will Egerton, vice president of operations, Wecon Systems Limited (Mississauga, ON, Canada), expects sales to be up by at least 10%. He is purchasing a new service vehicle and refining the product line to emphasize service, preventative maintenance and installation, what he refers to as non-project-based work. “Because we are so project-driven, we deal with peaks and valleys, ramping up and down. So after a large project is completed, we have resources that need something to do.” He’s streamlining processes, putting new procedures in place and refining the company’s internal workings.

Automation will drive sales during the new year at Reno Forklift (Sparks, NV). George Pimpl, president, explains why: “With all the costs related to personnel, like hiring, health insurance, etc., companies want to move the labor out of warehousing and replace it with robotics. Robots don’t call in sick, they don’t take vacations, and they’re not paid overtime.” Opportunities for service will be pursued, which means sending additional techs to school, including forklift techs for cross-training.

INDUSTRY FORECAST Distributors

Material Handling Equipment Distributors Association