CMME visits Linde MH’s headquarters and main factory in Germany.
Building an array of Porsche-designed forklift trucks, Linde Material Handling is finding growing success in the Middle East, with its products sought after by major companies.
While in some areas of the forklift truck market the product is seen as purely as a commodity, where price is a major determiner of purchasing decision, at the premium end of the market the companies who dominate do so by producing finely engineered machines.
Linde Material Handling, one of the three largest forklift manufacturers in the world, comes with an impressive design and engineering pedigree. There is a 30-year association with Porsche, starting in the early 1980s when Porsche designed and engineered the planetary and chain drives for Linde. Today the curved lines of the trucks come from the design board of Porsche Design.
CMME visited the headquarters and main European factory for Linde MH, in the sleepy town of Aschaffenburg, some 40 minutes’ drive from Germany’s finance centre, Frankfurt (the company also has additional European factories in Germany and France, and production sites in North America and China). Linde MH built its first forklift with hydrostatic drive in 1960, and from the start it was focused on building in innovation and efficiency into its products. In 1972 it introduced its variable displacement pump, and in 1984 load sensing technology made an appearance. In 1985 it began production of the 351-series. The truck was built with a rounded counterweight, to improve rear visibility, and the shock absorbers were placed between the chassis and the cab, rather than only in the seat, reducing shocks on the driver – developments which are today the industry standard. The 351 series would go on to become the bestselling lift truck in Europe up to 2003.
Visit their main factory, and you’ll see forklift trucks across multiple weight classes being built concurrently on several production lines. Perhaps one thing that sets this factory apart from others that produce machinery or vehicles though is the profusion of forklifts on the factory floor, and the distinctive red of the Linde lift trucks is seen transporting steel parts and kits all around the facility. But then, with the forklift categorised as a machine tool, it’s therefore within its rights to be in the thick of the production.
If there’s one area of production where Linde excels, it would be in the hydraulics. The hydrostatic transmission has been a major design feature for its IC machines. A variable displacement pump uses the oil flow to drive one axial piston motor per drive wheel, a clutchless system allows the operator to control speed and accelerate continuously without gear shifts. Forward movement is controlled by a single pedal, and a second pedal controls reverse; the dual pedal control means the driver uses the same feet. While it is easier for the operator, there are also less wear parts than with a mechanical transmission – no differential, coupling or gearbox, which ultimately means lower service costs. In the case of the electric forklifts, the electric drive traction motors are integrated into the wheel axles. In the factory, the hydraulic section is somewhat crowded, with a long line of workers installing components into the hydraulic systems. In addition to supplying its own factories, the company also supplies a volume of the hydraulic systems it manufactures to other OEMs. But the product line as it stands is soon to be replaced by something bigger and better: in 2012 the company signed an agreement with Weichai Power, which bought a 70% stake in its hydraulics business unit for $359 million. A new factory is under construction, to be completed in 2015, which will greatly increase the output.
On the truck bodies, structural beams are made from high strength bent steel tubes, while the bodies themselves are built from tough steel. And the red paint jobs aren’t just for show, but, remarks the factory tour guide, operators are more likely to be careful of machines that are in good condition. Safety is always a key concern in the business, with forklifts a potential cause of accidents in a warehouse or factory. Linde MH has invested in safety features including the BlueSpot, which shines a bright blue light ahead of the truck on the floor, to warn any pedestrians walking around a shelf or object that the truck is approaching. And this year it launched Linde Safety Pilot, which uses a load detection system to automatically prevent the driver lifting loads to a height that would cause the truck to tip, especially important when lifting loads of unknown weight. Other notable innovations in the range include explosion proof electric lift trucks, a significant engineering undertaking, and the fork arms are coated in brass in order to prevent spark formation.
While it’s clear that on the manufacturing side of things the quality of Linde MH stacks up, we spoke with the company’s managing director and chief sales officer (CSO), Christoph Lautray, on the brand’s penetration in the Middle East. Lautray says they’ve seen steady progress in the GCC, where they are distributed by well-known partners – FAMCO in United Arab Emirates, Qatar and Oman, and Alkhorayef Group in Saudi Arabia.
Growth rates in the Middle East and North Africa has been “very impressive” over the past few years, says Lautray, running in at 9%, where GCC makes up 80% of the MENA total. This growth rate is expected to continue over the coming years, he says. Linde MH itself has seen its market share grow roughly 50% over the past three years. With the market segmented between warehousing equipment, and internal combustion and electric counterbalance trucks, Linde MH’s main presence in the Middle East is in the electric and warehousing equipment, but with lower presence in IC market.
Lautray says that across the region they’re seeing a shift to the purchasing of higher value and more sophisticated equipment. Linde MH customers in the Middle East are typically big name logistics, warehousing and manufacturing businesses, as well as state institutions. Smaller companies typically tend to be more focused on up-front purchasing price of equipment, and will therefore buy from cheaper brands, says Lautray.
After all, there is a huge spread of prices in the forklift market, as much as one to three, meaning that customers can buy three basic brand forklifts for the same price as one premium brand machine.
“Of course if you don’t know the market, and the needs of material handling, you will not understand immediately why it pays off to buy a truck which is three times more expensive than a cheap product. Those companies which are new and are buying trucks for the first time tend to buy cheaper, whereas companies that are more mature and more experienced, and know that efficiency and service capability is the name of the game, will buy premium equipment.”
With Linde MH selling first to the big name companies, a single major sales contract can have a major impact on a country’s market, creating a snowball effect, since smaller companies and suppliers notice the machines being used.
In Morocco, Linde MH won the entire contract to supply lift trucks to a brand new Renault factory. Lautray points to a similar contract win in Saudi Arabia, when three years’ ago it completed a deal as sole supplier with the Ministry of Health, who were building 30 new warehouses around the Kingdom.
“This enables us to start doing service, even in the remote parts of Saudi Arabia, and the trucks are seen by other customers. The business model is typically the same, we start with a big international company or an institution, like the MoH, and then around that we build our network and market.”
This model is necessary since it requires significant expertise and also diagnostic tools to service a Linde machine. “We can’t just sell an isolated machine into a remote area without service support.”
Dealer support is needed both for service support, but also to act in a consultant role and explain to potential customers the benefits of purchasing a Linde. It’s clear when you can’t outbid your competition on price, there’s more skilled sales tactics at work. Indeed, leaf through a Linde MH brochure and you’ll see in-depth comparisons between their product and the average of the competition. While upfront cost is higher, the overall cost of ownership and operation can be lower through better fuel efficiency, faster truck loading times, and higher residual values.
The standard across the machinery industry is TCO (total cost of ownership), but Linde talks about
TOP – total operating performance, a metric which looks at both TCO and performance. Cost-to-load and unload a cargo truck is lower, meaning less fuel and lower operator costs per truck, not to mention more trucks filled per day, and therefore greater utilisation. In the field of warehouse equipment, the use of very narrow aisle (VNA) machines can increase the storage capacity of a fixed space such as a warehouse, as well as performing more lifts per day. But it’s the type of talk which mainly appeals to larger customers, and the lift trucks need also to be used continuously if customers will see the real benefit, less likely with a smaller customer. Across the GCC there are a number of major sites for logistics, distribution and manufacturing, both those that are well-established and the new. Jebel Ali in Dubai remains the largest, but many newer projects are online and growing, such as KIZAD in Abu Dhabi and the huge King Abdullah Economic City (KAEC) north of Jeddah. KAEC has signed on a large number of major light manufacturing companies, and is positioning itself as a natural hub for trade into north and east Africa, from its vantage-point on the Red Sea.
Asked about some of the bullish projections in the region, Lautray notes that the example of Emirates airline proves the need to take them seriously:
“Emirates started from more or less nothing and has become probably the largest airline in the world. They have captured all the traffic from Asia to Africa, and has been re-routed through Dubai. Emirates has been a huge success in the airline business, so why not the same success in logistics?”
One caveat however is that projects in the GCC tend to take a lot longer to execute, he says, with often a long timeframe from the initial announcement through to completion. “The speed is not there – yet – I would say. But the intention is clearly there.”