April 20, 2015

Swisslog acquires Forte Industries in bid to meet e-commerce demand

Merger will allow high-end automation company to provide goods-to-person material handling products.

By Ben Ames

High-end warehouse automation equipment supplier Swisslog announced today that it acquired the system integrator Forte Industries, a move that enables the Swiss firm to expand its presence in e-commerce fulfillment and the midrange material handling segment of the U.S. market.

Forte will continue to operate out of its Mason, Ohio, headquarters as a standalone unit and will maintain its own name. Terms of the deal were not disclosed.

The biggest immediate impact of the deal will be the departure of company founder Gene Forte, 65, who created the company 35 years ago and stepped down as CEO on Monday to assist with the transition in an advisory role, said Tom Rentschler, vice president of sales and marketing for Forte.

Forte has been replaced by A.K. Schultz, a 15-year industry veteran of engineering and automated material handling positions who had previously served as vice president of customer service in Swisslog's North American headquarters in Newport News, Va.

"I am enormously proud that a global systems integrator with the stellar reputation of Swisslog sees Forte as such a valuable addition to their team," Gene Forte said in a release.

Aside from the change in leadership, the merger is not expected to lead to staff cuts; in fact Forte expects to maintain its full staff and even continue its trend of recent hiring, Rentschler said.

Swisslog's decision was driven in part by the rapid expansion of the e-commerce market, which has boosted demand for piece-picking equipment in warehouses to fulfill the growing number of small orders sent to individual customers, said Bill Leber, Swisslog's director of business development and marketing.

Swisslog sells advanced automation systems such as AS/RS products in the global, top-tier market sector. By acquiring Forte, it gains a valuable presence in the semi-automated systems used by many midtier warehouses to ship smaller orders and meet the demands of omnichannel distribution, Leber said.

"E-commerce affects all the piece-picking operations and drives more business to the space of a distribution center," Leber said. "A lot of the physical purchasing that used to happen in stores now takes place in the DC."

By adding Forte's expertise in midtier material handling systems such as pick modules, conveyors, and sortation systems, the combined company will be able to meet increased demand for goods-to-person capabilities.

The move represents continued growth for Swisslog, which itself was acquired in 2014 by the German robotics firm KUKA for $356 million and has since kept expanding. The company's Warehouse & Distribution Solutions (WDS) division has increased the number of North American employees by 25 percent over the past two years, to nearly 190 people.

Swisslog has boosted its hiring to meet steep growth in its pharmaceutical, refrigerated, and frozen-food lines, as well as e-commerce, Leber said.

Changes in the healthcare industry have put similar pressures on warehouse operations. Hospitals are focused on driving down costs, shipping more unique SKUs, and demanding just-in-time delivery to minimize inventory bloat.

It all adds up to warehouses getting a greater number of orders with less material per line—a bad fit for Swisslog's powerful automated equipment. By working with Forte's midrange piece-picking ability, the two companies hope to build a stable of expertise in warehouse equipment to meet the new demands of the omnichannel economy.

That progression would mark the achievement of a long-term goal for company founder Forte.

"This was the culmination of Gene's career," said Forte's Rentschler. "He was interested in finding a strategic acquirer, not just a financial acquirer. He wanted to see what he built to be not only perpetuated, but to be positioned to continue to grow."

About the Author

Ben Ames
Senior Editor
Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.

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