28.04.2009

Hiab and Kalmar to merge

Cargotec owner of Hiab loader cranes and Kalmar port handling equipment says that it will combine Hiab and Kalmar sales and services networks in Europe, the Middle-East and Africa.

The company says that the plan fits in with its ‘One Company’ policy and that the stronger customer frontline and service organisation will further improve its customer focus and efficiency.

In addition to the merger Cargotec plans to close the Hiab loader crane factory in Meppel, Holland which employs around 100.

The reorganisation will allow the company to cut around 350 employees in current Hiab and Kalmar operations during 2009 with an emphasis on management and back office. The personnel reductions will be initiated locally in employee co-operation procedures in each country. The target is to achieve annualised savings of €15 million by the end of 2009, with a further €5 million in 2010.

A further long term move will be the opening of a new multi-assembly production facility in Stargard Szczecinski, Northern Poland at a cost of around €20 million.

Cargotec says that it will strengthen the company's presence in the region, lower production and transportation costs and boost its sourcing activities in Central Eastern Europe.

The land purchase is planned to be finalised in early summer with production scheduled to start, initially in rented premises, later this year. The first products to be assembled are spreaders and medium range terminal tractors. The recruitment has started and in the initial stage the focus is on recruiting the key personnel and setting up the training of product assembly.

The aim is to add further group products once the facility is fully up and running.

Vertikal Comment

Merging loader cranes with reach stackers and port tractors is not the easiest move, although one can understand why the group wants to do it. The businesses are quite different with different customers and different commercial habits.

Efforts to do something similar at other companies in the past has ended in tears with both businesses being spoilt. Cargotec says that the savings are intended to reduce backroom staff and eliminate duplication of management and facilities.

The secret to success is the selection of the senior management team, it is important that the senior managers understand that commercial practices and business culture are totally different, any attempt to mandate a common approach will play into the hands of those competitors who are totally dedicated to one or the other.

If Cargotec can get it right then of course it will benefit from spreading its overheads over a larger more diversified revenue base, making for a stronger business.