Ask any MHEDA member about the key benefits of membership and that member will point to the opportunity to network with one’s peers in material handling. A by-product of networking with one’s peers is the opportunity to establish life-long friendships with others who truly understand our industry and what we do for a living. MHEDA membership affords material handling distributors an opportunity to connect with peers while developing the alliances which will help seek out new opportunities for business growth.
Two members of this year’s Board of Directors, Robert W. Weeks, president, FloStor Engineering (Hayward, CA) and Michael H. Dubbs, president, Storage Equipment, Inc. (Minneapolis, MN) are forging a friendship while exploring the material handling industry all over the world. Their travels have taken them to Hannover, Germany; Paris, France; and most recently to Taipei, the capital city of Taiwan, the Republic of China. While we are sure both distributors enjoy traveling, their real purpose in these journeys has been to acquire the knowledge needed to grow their companies and to better serve their customers. Both were eager to acquire information about what is being done in other countries. Says Weeks: “Knowledge is power. The more knowledge we possess, the better we can support our customers and our manufacturer partners.”
The Host Company
In 1976 Ching-Fu Hsieh and Chou-Huang Pai founded a company which would eventually become one of six affiliated companies, known collectively as Kenmec. A developer of automation technology, Kenmec continues to participate in research and development projects which include conveyor systems, AS/RS, auto palletizing systems, AGV systems, car parking systems, and incinetory systems. Throughout the past 27 years, the company has focused on the development of total solutions, providing services ranging from design, programming, installation, project management, as well as after-sales service. The company’s customers are located in England, Holland, Turkey, Mainland China, Hong Kong, Thailand, Singapore, Malaysia, Australia, Canada and the United States. In addition to its corporate headquarters, the company operates three manufacturing facilities in the Republic of China, one facility in mainland China and another in Malaysia.
Weeks was impressed with the projects they toured as well as Kenmec’s engineering capabilities. Dubbs agrees, “They could become a world-class material handling manufacturer in the future.” Based on the systems that Weeks and Dubbs have seen in their previous travels, the systems being built in China seem to be on a par with the best in the world. Weeks explains, “We saw a cross belt sorter and it was unique. It did not use motors for the belt. There is only one other manufacturer that I know of that has built a cross belt sorter in that same way.”
The Lay of the Land
Kenmec is headquartered in Taipei, also known as the City of Hope. Located in northern Taiwan, Taipei is the political, economic, financial and cultural center of the Republic of China, not to be confused with mainland China (located less than 100 miles away, across the Taiwan Strait). The Island of Taiwan continues to prosper and is now known as the printed circuit board capital of the world and as one of East Asia’s economic “tigers.” Not long ago, the label “Made in Taiwan” was associated with cheap plastic toys which had a short lifespan. More recently, Taiwanese manufacturers have moved upmarket and are manufacturing high-quality electronics and computers.
The Republic of China has an extremely dense population. While the country is about the same size as Maryland and Delaware combined, almost two-thirds of the country is made up of rugged mountains. The population of over 22 million is highly educated and highly industrialized. 23.5% of Taiwan’s exports, almost half of which are electronics and machinery, are shipped to the U.S.
In September 2002, Bob Weeks received a phone call from a Kenmec representative, interested in exploring the U.S. and a potential distribution channel. Flo-Stor Engineering, a small systems integrator based on the West Coast, seemed a good place for the Taiwanese company to start. Both Weeks and Dubbs, upon hearing of the opportunity, were open to learning more about the company and to learning more about the material handling industry in Southeastern Asia. While Weeks remained curious about Kenmec’s capabilities, Dubbs was interested in seeing the country and learning more about the manufacturing and distribution operations in Taiwan. Weeks explains, “Each year more and more Chinese companies manufacture products for the U.S. market. To some extent we were doing due diligence.” The duo visited a diverse selection of operations. They saw a milk bottling operation, a manufacturer of notebook computers, an oil products distribution facility, a book distribution facility and an air freight company. Weeks says, “Some of the systems we saw were similar to jobs that both of us had worked on in the past. Some were more high-end projects that were 100% automated.” After traveling to Hannover, Germany, both Dubbs and Weeks have concluded that the automation systems in Europe and Asia are often more advanced than the U.S. Both attest to the greater acceptance of automation in Europe and Asia.
Going to Market
Dorothy in The Wizard of Oz claims, “There’s no place like home.” When it comes to the distribution channel, Weeks and Dubbs attest to the fact that there is no place like North America. Dubbs says, “In China and in Taiwan they go to market in a manner similar to Europeans. Material handling manufacturers have their own distinct sales methods.” Weeks alludes to the price wars and the perception of quality issues. “The important point of the story is that you have to know what you are buying. It’s possible to develop an alliance with offshore companies whose product line is not necessarily very good. On the other hand, if we invest the time and capital required for doing due diligence we can uncover superior quality products at reasonable prices.”
Being Proactive in the Future
Dubbs points to the global marketplace and says, “We have evolved into a world economy. Products are available from other continents. We cannot look at products that are only manufactured in our back yard. While the global economy may not affect the storage and handling business in the next year or two, storage and handling will definitely be impacted within the next five years.”
Those who remain at the forefront of our industry do not sit back in their offices waiting for the world to approach them. True leaders in material handling are pursuing the knowledge that will help them to maintain their competitive edge. The duo have traveled to the Hannover Fair in Hannover, Germany, to Manutension in Paris, France and now to China. Weeks laughs, “Who knows where we will go next? I understand that they have a great material handling show in Japan.”