Jonathan Dawley was named president and CEO of Kion North America in 2020. In that role, he is responsible for all financial, commercial, engineering, and operational activities. Since then, Kion has undertaken an operational expansion, doubling production capacity and installing deep vertical integration.
Before joining Kion Group, Dawley was the Americas CEO of German pump manufacturer Putzmeister Holding and also led the global aftermarket business at JLG Industries. From 2005 to 2014, he held several positions at Hyster-Yale Materials Handling, including president of Hyster, president of the Large Capacity equipment division, and vice president of marketing. He also spent 10 years in the automotive sector, working at Ford Motor Co. and DaimlerChrysler.
Q: What is the current state of the material handling industry?
A: After multiple years of overheating due to Covid dynamics, industry demand is normalizing to more traditional levels. The significant drop in volume certainly makes manufacturers feel as though the sky is falling, but a quick study of historical market trends reveals that we need to adapt. It was inevitable that we’d see a settling from the impact of extremely high backlogs, leadtimes, and customer demand. However, the insatiable desire for higher volumes certainly now exists after having run our businesses at much higher levels of output. For now, each manufacturer needs to deal with the whipsawing volume, managing its supply chain and ensuring sustainability for customers.
Prior to Covid, we had seen a growing interest in the use of technology to improve productivity and safety. Customers are focused on reducing cost, improving sustainability, and achieving productivity in the face of uncertain employment. In times past, we’ve also seen interest in technology from a broad customer base; however, when labor challenges abated, the mass demand for automation, for example, lessened. I think we’re in an exciting time now as most employers see long-term limitations with employment and an inability to achieve productivity gains from traditional means, thus opening the door for a technological shift in the industry.
Q: What is the value for a distributor or manufacturer in working with a company like Kion that offers a variety of systems, including forklifts and a wide range of automated equipment?
A: Kion is in a unique position as it has extensive experience in the intralogistics environment versus solely being a lift truck manufacturer. We design and assemble our own automation, collision avoidance, telematics, fleet management platforms, and energy systems, making us an extremely advanced supplier. We’re able to advise a customer from the point of site design to multi-site fleet optimization to a complete redesign of business processes.
In the case of automation, we may redesign the entire site layout or completely redefine with a customer how the site operates, ultimately eliminating headcount, increasing output, and reducing cost. In the case of safety management, we may deploy technology that controls travel paths and activates alert systems, or we may simply control speed in zones.
Our goal is to meet the customer where they are in their maturity cycle. There has been a significant rise in the number of customers interested in how to leverage technology, but not everyone is ready to take advantage of a system’s full potential. In most cases, we deploy systems on a phased-in basis to address both budget and change-management dynamics.
The benefit for end-user customers is a one-stop-shop for everything from consulting to execution. The benefit for our dealers is the ability to partner with an innovative OEM who can not only deliver technology, but also can train them to deploy the equipment and service the end-user in a high-quality, sustainable manner.
Q: You began working in the forklift industry in 2005. What are the most significant changes you’ve seen during your time in the industry?
A: Over nearly 20 years, the development of globalization has had an impact on both our approach to business as a manufacturer and how our customers operate. In looking at impacts on us as manufacturers, a significant amount of effort was put into supply chain in a bid to optimize the landed cost of goods, leadtimes, and inventory. In some cases, complete machines are imported from offshore markets. As a result, a strongly diversified supply chain environment has been developed.
The advent of tariffs and susceptibility to rapidly fluctuating freight costs has created yet another new dynamic, and re-sourcing or localization have become key focus areas to maintain customer target pricing and/or protect margins.
When looking at our customer base, we’ve seen significant growth in the number of accounts who operate and buy globally. Customers advancing their business models through acquisition or organic growth want to have their share of the North American market, thus opening the door to harmonized contracts. In some cases, customers that were already operating globally but had not synchronized their purchasing model are now doing so.
The maturing of technology and lowering of costs have enabled more customers to have access [to advanced systems]. Automation has become an achievable solution for a much larger segment of the market, and the North American customer base is seeing automation not as an “if” but as a “when” solution. I see technology becoming more stackable in the near future, making the leverage of multiple use-cases in a single site possible. Currently, customers have to choose between telematics, collision avoidance, and automation; however, I foresee this all becoming one technology stream with different layers.
Artificial intelligence is starting to be deployed in limited application. With this, we will go beyond scanning, thus enabling equipment to make real-time decisions. The key to rapid adoption of AI is achieving processing speed and adaptability that mirrors human performance. We see that advanced customers already have threshold standards in place defining the optimal intersection of cost and performance. AI systems are close to achieving expectations, if not crossing that boundary right now.
Energy solutions once considered unique are now commonplace. Lithium-ion batteries are all but standard in Class III (pallet jack) product lines, and pricing on other equipment categories reaches down to 2x the price of lead acid. Just in the past three years alone, the number of customers asking about lithium solutions has escalated dramatically. The focus on energy efficiency, safety, productivity, and sustainability has taken full effect. Customers have become more comfortable with lithium solutions, and the business case has become clearer for multi-shift applications or even the right one-shift application.
Hydrogen fuel cells offer extremely fast recharge times and continue to grow in popularity, especially with large accounts or three-shift applications. In general, the industry is now approximately 70% electrified. The remaining part of the industry, which is IC-based counterbalanced product, will continue to shift as vehicle performance increases and energy cost continue to come down.
We’re also seeing much more parity in the industry. It used to be that a handful of players had a corner on innovation and product platforms serving certain verticals. However, we’ve seen both capabilities and quality advance across the industry. We’ve also seen a number of manufacturers acquire their dealers in certain markets, while others remain with independent dealers. Regardless of the model, consolidation of local networks with larger operating groups and more robust local capabilities is a clear transition.
A major transition for the industry is moving away from what is essentially a bifurcated approach, with lift trucks on one end of the spectrum and fully automated storage system systems at the other. The industry is advancing toward the idea of fully integrated intralogistics offerings. The objective is to enable handling a customer’s needs end-to-end throughout their entire lifecycle. For many years, we’ve seen manufacturers talk about a fully integrated model fulfilling customer needs from consulting to AGVs to high density to storage and conveyance to traditional material handling equipment. Only a few manufacturers have achieved this capability by acquiring systems and automation companies. Kion is one such organization. Kion acquired Dematic in 2006, making Kion one of the most advanced manufacturers in the global material handling market.
Q: When will we see widespread adoption of automated forklifts, and what are the barriers that remain to achieve it?
A: Automation is taking many forms and enabling customers to get started on their own journey. We reference vehicle automation in three forms: AMR, AGV, and AGF. We’re seeing a significant pickup in the autonomous mobile robot (AMR) environment as both the cost to get started and the complexity are low.
Goods-to-person implementation is the most prevalent version of AMR and is commonly seen in consumer-goods fulfillment. Given the inherent flexibility of an AMR, these systems can be scaled and configured to the environment. Palletized versions of AMR offer a clear use-case, especially when paired with storage and sortation systems.
Automated guided vehicles (AGVs) are unmanned bespoke-designed fork or tugging vehicles moving palletized product in a predefined traffic pattern. The benefit of these vehicles is that they are designed to work exactly the way the customer wants and can be customized to meet a wide variety of applications. These can even handle very heavy-duty cycles or unique job functions.
The barriers to entry on this product typically have to do with achieving an ROI against vehicle cost and implementation expense. Enter the automated guided forklift (AGF). These are standard industrial lift trucks mounted with automation kits and integrated into a traffic management system similar to that of the AGV. The intent of the AGF is to enable a much lower cost of acquisition and the ability to use the truck as a hybrid vehicle (leveraging either the manual or automated features on demand).
AGFs have been used in EMEA (Europe, the Middle East, and Africa) for many years and have a great track record of reliability, safety, and productivity. A number of very large logistics companies have been working with AGFs in North America. Recently, the general customer base has become much more open to the AGF potential, particularly as employee turnover and other challenges persist. We expect this interest to [grow] exponentially over the next few years.
The next stage of development for the AGF is the release of self-directed and self-managed systems. This AGF product enables customers to purchase an off-the-shelf standard lift truck fully automated along with a standard software package that can be configured by the customer. Certainly, training is needed, but the goal is to enable point-to-point operations, offer continuous configurability to flex with customer demands, and to make automation useable by the masses.
At the end of the day, acquisition cost, return on investment, and ease of implementation are all key factors that will increase the automation adoption rate. The customer’s business has to be ready for the changes that will be driven by an automation program. Given the employee constraints we’re seeing across industries, the falling cost of automation, and the increase in ease of use/flexibility, we expect to see the adoption rate of automation pick up dramatically in the next three to five years. I daresay there will more adoption and development in the next five years than there was in the last 20 years combined.
Q: Kion broke ground last December on a $40 million expansion of your facility in South Carolina to reshore manufacturing of some of your components. What do you hope to achieve with this investment?
A: In the past three years, Kion has made significant strides in North America. A heavily redesigned product portfolio specifically for the North American market gives us a very youthful but broad range to cover most applications. We specifically targeted warehousing/logistics in our portfolio redesign, given the shift of the North American market. However, even our counterbalance products have benefited from improvements in cost of ownership, ergonomics, and energy conservation. Yet even with this expanded portfolio, we did not have local capability to scale operations, achieve competitive leadtimes, and keep material cost under control.
We’ve been very purposeful about the operational capabilities we’re setting up in South Carolina. Raw material vertical integration will give us the ability to customize products to customer needs on demand while controlling quality in-house. Localized sourcing improves leadtimes and cash flow. Expanded assembly lines enable us to achieve new levels of capacity, while on-site warehousing enables much more efficient sequencing of materials.
Operational processes improvement and ERP enhancements are just as important as our physical plant expansion. Without a culture of continuous improvement and customer centricity, these improvements are of little value. I am extremely proud of how the Kion NA team has not only driven all these operational and product improvements, but also truly works to serve our customers daily.
Q: You have been very involved in many industry groups, including the Industrial Truck Association. Why is this important to you?
A: As we saw in June with the recent National Forklift Safety Day, the ITA is a major advocate for employee safety. Operating in and around industrial equipment is dangerous no matter how experienced an operator or what technology we deploy. Proper training and awareness are keys to remaining safe and healthy. ITA management works closely with OSHA to influence policy and ensure that we as manufacturers are aligned to standards that keep the public safe. I appreciate the effort the ITA leadership and board puts into this endeavor.
Perhaps one of the most important roles for the ITA is government advocacy. Over the past five years, we’ve been faced with tariffs, a pandemic, a global supply chain crisis, and a war between Russia/Ukraine that spurred downstream effects in EMEA. The ITA has effectively represented the needs of its members to Congress, the Office of the United States Trade Representative, the Department of Commerce, and other agencies.
In addition, senior leadership connects to other major trade associations, such as the National Association of Manufacturers, to coalesce around common agenda items, thus giving us all a stronger collective presence. The ITA gives us both a voice and access to our country’s leadership.