Manitowoc Defies Economic Downturn

US machinery and food processing group Manitowoc is one of the manufacturing companies defying the economic downturn. Not only is it in the process of completing a £1.3bn acquisition of UK food and beverage equipment manufacturer Enodis, but in the second quarter of 2008 its sales jumped 28% in year-on-year terms.

Having begun as a ship-building and ship-repair organisation, Manitowoc then entered the lattice-boom crane business in the mid-1920s and is now comprised of three segments – cranes, marine and foodservice equipment. Based on the lakeshore community of Manitowoc in Wisconsin, it still bears the town's name but now has operations in over 20 countries around the world.

The Enodis buy-out was ranked as the second-highest manufacturing deal in the first half of the year – the takeover of Biffa by Montagu Private Equity, according to accountants PKF's most recent Deal Drivers report, was the first.

As the deal has only received condition approval by the European Commission, Dean Landeche, vice president of marketing, was unable to comment specifically on the acquisition. Instead, he gives his thoughts on remaining competitive amid rising costs.

Natalie Coomber: Is Manitowoc's further growth strategy based on natural organic growth or acquisition?

Dean Landeche: Historically, we have focused on organic growth of our existing foodservice businesses as our primary growth strategy. As we've demonstrated through the Enodis acquisition, we also pursue strategic acquisition opportunities that provide benefit to our customers and shareholders as an important element of our overall strategy.

NC: How has your business fared in the economic slowdown and what are your predictions for the next 12 months?

DL: With our leadership brands like Manitowoc, Kolpak and Multiplex [respective business lines of ice machines, food storage and high-volume dispensing solutions] providing critical operational functions, our customers have continued to invest in their own effectiveness and future through the economic downturn.

The long-life, low cost of operation and overall value of our leading brands gives our customers confidence that they can invest in our products at any point in the business cycle as a sound business investment and a proven method to improve their effectiveness.

Like all businesses, we're looking forward to improvements in the overall economy, and we're working closely with our customers to spur and encourage overall economic growth.

NC: How has your international business ensured that it has maintained cost competitiveness in the face of rising raw material and fuel costs?

DL: Due to the size of our business we are able to buy in large quantities from our suppliers. We have optimised the use of raw materials, reduced the scrap rate and implemented scrap recycling programmes.

When it comes to transporting the equipment, the consolidation of freight and intermodal transportation has resulted in a lower fuel demand through more efficient shipping methods.

NC: In your opinion, what technological developments is the industry crying out for and are there any geographical areas that are looking for, or producing, more technologically advanced equipment?

DL: Energy savings and resource reduction are becoming more important to our customers around the globe and we're devoting significant resources to improving our performance in our Manitowoc, Multiplex, Servend and Kolpak brands.

Beyond energy, we're looking at other areas including a recent test installation of a beverage dispensing system with a carbon dioxide-based refrigeration system in China. We're working in our labs and with customers on carbon dioxide as well as other alternate refrigerants for small-system refrigeration applications as operators, their customers and regulating bodies consider this category.

NC: Manitowoc has a China-based production site. What were the reasons behind this and how is that area of this business developing?

DL: We've been in China for nearly a decade, and our manufacturing and support presence there continues to grow. Manitowoc understands the importance of having regional supply chains, production and products to best serve customers in different parts of the world.

Our strategy in China, the rest of Asia and around the world is to focus on being the global supplier of first choice serving and to support customers with regional infrastructure near their locations.

NC: Is there a shift in the industry to produce 'greener' products and are environmental considerations becoming a factor by which customers choose their products, or is cost still the predominant issue?

DL: Cost is always an issue to our customers. Foodservice operators understand that investing in greener equipment solutions today will help them deal with future energy and waste-management costs – saving money in the long run.

At the heart of our initiatives are cutting-edge technologies that help reduce energy and water consumption. Where possible, we integrate environmentally friendly foams and refrigerants in the manufacturing process.

Many of our products meet or exceed third-party energy-efficient criteria such as those set by Energy Star, Consortium for Energy Efficiency and the California Energy Commission.

In addition, throughout the manufacturing process, careful consideration is given to environmentally friendly packaging materials, the reduction in the consumption of non-renewable resources and the elimination of hazardous materials.

NC: You provide a newsletter service to customers – how important is it to educate the market on what services are out there? Do you think there enough open forums for you to meet peers and potential customers?

DL: We see direct communication through a variety of outreach programmes as critical to continuing to educate the market about new products, technology and other innovations. Our customers use a variety of methods to get their information, including newsletters, trade publications, trade shows and events so we use all of these to interact with the customer where they find it convenient.

Face-to-face events through trade shows and events are effective but they are also very expensive for all involved. We prefer to provide information and interaction with customers through other methods first.