Two years later3 February 2003
Two years ago Mike Maddock led a management buyout at Morris Material Handling Ltd. Phil Bishop catches up with him to see how his plans are working out
One of the greatest concerns to the lifting equipment industry in the UK is the breakdown in traditional patterns and channels of distribution. As we have reported in some depth in recent issues, low cost equipment is being imported either directly by end users or by a new breed of traders. The traditional distributors are under threat. Morris Material Handling Ltd, hoist manufacturer and crane builder, has responded to these developments by setting itself up as an additional link in the supply chain. This could be viewed in any one of several ways: it could be seen as a failure to understand that the trend is for fewer links in the chain, not more; it could be seen as an attempt to jump on the bandwagon of importing container loads of product from China and other low cost countries; or maybe it is an attempt to help its distributors.
What Morris is doing, under an initiative very much in its infancy, is buying lifting equipment from other manufacturers, putting on its badge, and selling it at a marked up price. Like many other hoist manufacturers, Morris has always done this when customers have wanted a model outside of its product range, including manual lever hoists. And Morris's own hoists can be seen with at least two other manufacturers' badges on. But Morris is now seeking to develop a catalogue of other lifting gear that is Morris branded but not (necessarily) made by Morris.
At first glance, the addition of the extra link in the supply chain would appear to add cost for customers. Not necessarily so, says managing director Mike Maddock. The vision is that Morris will offer a 'one stop shop' for its 170+ distributors, buying in greater quantities than any single distributor would want to, and using purchasing power to source product more cheaply. In addition, Morris has the facility to test products in its Loughborough factory. From tests, Morris can determine whether these products meet specifications and whether to put its name on a piece of equipment. A Morris catalogue offering diverse product will make distributors' lives easier, Maddock believes.
He emphasises that Morris has no intention of going into the retail business or competing with its own distributors. "We will never be able to cover the country independently, and we don't want to," he says. "Distributors are the best way to get to the end user."
A distribution manager, Michael Gough, has been brought in from the industrial distribution sector to spearhead this initiative.
One of the first products on offer are monorails and light crane systems, sourced in Finland from Erikkilä. Morris branded pallet trucks, weighing systems and lifting clamps are also offered. Sources vary. "We have suppliers all over the place. We have done very thorough checks on pricing, suitability, quality et cetera," Maddock says.
At the moment, this initiative is purely for the UK market. Whether Morris extends it to its international operations remains to be seen.
A pie in many fingers
Morris is a venerable old name in the UK lifting industry but for many years was part of larger companies. Before Maddock and his management team took ownership of the company in March 2001, it was owned by P&H Harnischfeger of the USA (subsequently Morris Material Handling Inc), and before that it was part of the UK-based engineering conglomerate Davy.
Only now, under the ownership of four managers, are entrepreneurial instincts emerging. The branded goods catalogue is perhaps the best example, but there are others. Walking round the factory, Maddock points to runways that are being fabricated, and to humble 3m span single girder cranes fitted with a small S3 chain hoist. This is the sort of work that Morris, in the past, would consider itself too grand to undertake. "But we found that we were good at it," he says. "When we were part of a large group the focus was always on bigger projects, including port cranes."
That's not to say that big engineered cranes are not also being produced. Since the buyout Morris has produced its longest-span crane, at 72m, for a BAE airplane wing plant in Scotland, and its heaviest-lift crane, at 400t SWL for a VA Tech plant. Morris continues to win contracts for a couple of engineered cranes each month, on average.
Another recent project is a hot metal ladle crane for a steel mill in Pakistan, with a 40t SWL hoist to lift the ladle and an auxiliary hoist to tip it. By the end of the month, a three hoist crane will have been installed in a paper mill in Saudi Arabia. The job has complicated control issues as the hoists don't all move at the same speed but need to be co-ordinated, depending on which hoists are working together at any given moment.
Maddock explains what he believes is the key to Morris's success. "If you asked me what Morris was particularly good at, I'd say flexibility - being able to meet customers' needs with standard products customised."
The aftermarket crane servicing and refurbishment business is also being looked after and now counts for about 45% of turnover. When Davy sold Lloyds British Testing to Konecranes, Morris effectively left the service business and only re-entered in recent years with its material handling centres. Having opened five new branch MHCs across the UK over the past two years, it now has 17 of these operating across the UK.
Other developments, as previously reported, include the establishment of a crane manufacturing joint venture in Saudi Arabia, Eastern Morris Crane Company, and entry to the North American market in competition against the former owners. Because rights to the Morris name in the Americas are owned by Morris Material Handling Inc, the UK company has resurrected the dormant Royce brand for that market. Maddock thinks that he has the ideal product for the US market. The 400 Series wire rope hoist, familiar to US customers as the P&H Redilift and now being sold as the Royce Hoist Master, is a good compromise between the super sleek European designs and the sturdy, more traditional US hoists, he says.
At the beginning of February Morris reported its first ever set of financial results as an independent company. These showed that in the 16 months to 30 June 2002 the company (excluding the Saudi jv) had a turnover of £28.6m ($43m) and made a profit before tax of £2.6m ($3.8m). These figures imply an annual sales figure of £21.5m. This number is down on the £25m that the new owners were aiming for in the first year, but they were still able to take out a £200,000 dividend to share.
Over the 16 month period, two thirds of sales (£18.7m) were in the UK, with a further £2.2m from the rest of Europe, £4.7m from Asia and £2.2m from the USA. The US results were particularly low because business halted temporarily after the split from its former parent. Sales have since improved.
Turnover breaks down by business area as follows: £13m from parts, service and refurbishments (aftermarket), approximately £8m from hoist sales (distribution), and approximately £8m from crane building (engineering). The target is to double the distribution business by adding new product lines to sell from the catalogue.