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Home » Dematic acquisition positions Kion as end-to-end North American material handling giant
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Dematic acquisition positions Kion as end-to-end North American material handling giant

June 23, 2016
Ben Ames
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Germany's Kion Group AG has just taken a very big bite of the North American material handling market.

By buying Atlanta-based systems integrator Dematic Corp. for US$2.1 billion, Kion, the world's second-largest manufacturer of industrial trucks, will extend beyond its core businesses of forklifts and associated warehouse technology to enter the lucrative segments of warehouse automation and logistics systems integration. In adding Dematic's expertise in designing fully automated warehouses, Kion said it plans to become a "one-stop supplier for intelligent supply chain and automation solutions," with a catalog of products that "ranges from manually operated industrial trucks to complete, fully automated warehouses."

Kion said in its announcement that it acquired Dematic also to position itself for the rapid growth of e-commerce fulfillment and for "Industry 4.0"—a European term for the application of the Internet of Things (IoT)—to the industrial and logistics sectors.

"With the acquisition of Dematic, we are substantially changing and enhancing what Kion Group is and does—for further profitable growth in a quickly changing industry and digitalized world," Kion CEO Gordon Riske said in a statement. The company did not respond to additional requests for comment.

Dematic delivers strength in high-growth e-commerce category

Acquiring Dematic will allow Kion to tap into fast-growing areas such as online commerce fulfillment and warehouse optimization software just as third-party logistics (3PL) providers scramble to build offerings that capitalize on these high-growth segments, according to Clint Reiser, an analyst with consultancy ARC Advisory Group. "The market for pallets and automation is growing more slowly than e-commerce, and Dematic has a leading presence in a market that is growing more quickly than the forklift market," Reiser said in an interview. "Also, Dematic is pretty entrenched in North America and in Asia, which have had faster growth than Europe in recent years. So you combine faster-growing technology and faster-growing regions, and this is pretty attractive for Kion."

Buying Dematic allows Kion to gain a foothold in each and case handling, which are higher-growth areas than Kion's foundation sectors of forklifts and pallet-level material handling, Reiser said. Dematic shifted its resources away from metal-based mechatronics toward high-value intelligence in recent years as it sought to reinforce its presence in the fast-growing sector of retail fulfillment, he said. "Dematic has a strong control layer with optimization software, which is a differentiating quality when a business is automating a warehouse, so that provides Kion with high-value intellectual property," Reiser said.

Kion itself cited similar reasons just four months ago when it purchased another U.S. systems integrator, buying Retrotech for $40 million. Once the new deal closes sometime in the fourth quarter, Kion plans to operate the two companies together, combining Dematic and Retrotech in a new operating unit that will be led by current Dematic CEO Ulf Henriksson.

Material Handling
KEYWORDS ARC Advisory Group Dematic KION Group Retrotech Inc.
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Benames
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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