In JLG’s 50th anniversary year, company president Frank Nerenhausen speaks to Euan Youdale about what lies ahead.
The name John L Grove is synonymous with the access industry, and not just because he invented the first access platform. In equal measure it is a result of his business acumen that set JLG on the path to its position today as the world’s largest manufacturer of access equipment.
Few people in our sector will have missed the fact JLG is celebrating its 50th anniversary this year and, judging by its latest financial results, continues to go from strength-to-strength. At its helm is Frank Nerenhausen, who became president in 2012, after taking over from Wilson Jones. Previously, he headed up the commercial division of JLG’s parent company Oshkosh.
Speaking of JLG’s landmark year Nerenhausen believes the company’s longevity is testament to the vision of its founding father. “We are proud to have been in business for 50 years - that by itself is an amazing feat. From my standpoint, so many ideas and businesses die from the first year. To grow to a multi-billion dollar company means the original idea had some merit, but what’s most important to us, as we reflect on 50 years, is what John L Grove did for the industry and his character that controlled that kind of growth.
“Our founder’s mentality is something that we don’t want to lose. As a big company and a global leader it’s easy to become complex and lose sight of what the purpose is.”
Part of Grove’s mentality was a personal drive to improve the experience of the worker through safety and comfort, while the ambition for profit, although an important element, took a back seat. “I think that myopic and passionate focus on customer requirements, safety and productivity in his own team is the same type of mentality we want to keep going now,” says Nerenhausen.
Steering a multi-billion dollar company on the same course as its founder, who died in 2003, is no easy task and requires checks and balances to ensure the ship stays steady. The most recent review, some 18 months ago, saw a reorganisation of the product team to ensure feedback from the customer was getting through to the engineers.
“Now our product management teams are part of engineering,” says Nerenhausen, “So, it’s a seamless discussion between customers, the product groups and engineering, to leverage the scale of JLG but appear and feel small to the customer. What will demonstrate whether it works is to watch innovations that come out over the next 18 months.” Look out for those at the events leading up to ConExpo, taking place in Las Vegas during March 2020. First up is the biggest show of all, Bauma in April this year, where JLG will present its new Lithium battery-powered booms. (See details in the Articulating booms feature, AI March, and a picture on the cover of the April issue).
Looking forward, Nerenhausen believes there is a bright future for fully-electric MEWPs. “I don’t think electric is going to replace internal combustion machines in totality and I think there is a place for both, depending on the applications. But electric has some significant advantages, and this industry will mature over the next three to five years.”
In fact, Nerenhausen can see a day when more than half of boom sales will be electrically-powered. While the three- to five- year timeframe may be a little too soon for that, it seems access is moving in the same direction as other industries. “One basic advantage of an electric car, for example, is that you remove thousands of moving parts. And you have an advantage of not having oil in your machine. It is sustainable and ecologically sound, it’s not going to drip on a jobsite.”
Production of Lithium, specifically, is expanding rapidly and is becoming more affordable. “I do know that it will be cheaper and more affordable and improve the TCO model to where it will be a significant part of the boom business.”
It all means these first three Lithium-powered models, at Bauma, are just an indication of the range JLG will be delivering in the future. As technology develops other possibilities will open up too like remote sense technology, and specifically remote charging. Nerenhausen adds, “There’s more to electric booms than batteries; there’s other technologies involved. I won’t divulge those things, but you’ll see them at Bauma.”
Other technologies technology are developing just as quickly; one of those being telematics. Nevertheless, there are some hurdles to overcome before telematics becomes truly comprehensive, namely the ownership of data and how to provide it in a user-friendly way.
One of the questions that everyone in the industry is wrestling with, is, ‘who owns the data?’ Is it the buyer or the seller of equipment? On that subject, Nerenhausen believes the answer lies in a sharing arrangement, “some combination of sharing/ownership that allows a win on both sides. Without the data we can’t turn it into useful information. So, we are working through those challenges but that’s all part of the puzzle.”
Complementing telematics, JLG has been expanding is other digital offerings. One of those is its BIM library, which now includes compact crawler booms, making the full line available for download. The 3D system allows architects and construction professionals to more efficiently design and construct buildings and infrastructure projects with equipment being part of the planning.
The company has also extended its ClearSky telematics offering with the new Access Control tool, allowing rental companies to add a layer of protection for end users by preventing unauthorised personnel from accessing equipment. Developments in augmented reality are also being made by the company, along with VR training and a range of others plans.
As Nerenhausen says, the options “go on and on and on. This is the challenge that probably everybody has. We are putting a lot of dots on the map but no one has absolutely connected all those dots together for a holistic value proposition. Some of these are going to work and some of them aren’t, but you’ve got to keep putting dots on the map, with a broader strategy and start knitting them together.
Nerenhausen adds, “As we start coming up with the strategies to connect machines and add predictive maintenance and those kinds of things, there will be a real clear picture of where all this technology takes us. That’s our goal, to lead that, lead the industry into the future.”
For example, the number of units being sold with Clear Sky is steadily increasing, and, says Nerenhausen, will reach a critical mass soon. “The treasure is in the rich data set. Our CAN bus systems will access the data and that’s where you can harvest more information that benefits not only the customer but us.”
That rich data then becomes a conduit to developing more useful solutions for customers. The logical outcome is that all equipment will be supplied with telematics as standard, particularly as electric-powered machines become more mainstream. “It’s possible that electric machines are even more adaptable to richer data sets, to telematics, than IC machines.”
JLG has been enjoying an excellent set of financial results, which have been reflected in its most recent first quarter 2019 figures. (See www.khl.com for details). “We have had a good start of the year, we grew 25% on 2018, we had a real good quarter,” says Nerenhausen.
“Any given year, I get asked the same question. Are we topping out or not?” The answer, he says, is in the positive, “I think there’s room for growth in the market. Our machines are being used and adapted to more applications. So, you have organic growth and we are also adding segments.”
A relatively recent addition is Power Towers, the innovative UK-based low level access specialist. “Low level access is an underappreciated section of our business. Really, the UK is the only place that has accepted that in quantity; you extrapolate that to the same number of injuries and fatalities on ladders across the world, and you have significant opportunity. And I think we have a technical advantage with our products.”
On the subject of finances, Nerenhausen is realistic about cyclical market conditions. “I think history would tell us at some point there will be a correction, whether it is mild. “I don’t think anyone sees another 2009/10 on the horizon, but at some point it’s probably going to correct a little, then start taking off again.”
Further to that point, JLG sees the potential for a tailwind from replacement sales. “When you think of a rotational cycle of these machines coming out of 2009/10 to 11, 12 ,13, 14 – those are some pretty high-volume years, that will turn into a tailwind.”
North America, the largest of all access markets by some distance, is also on a roll, “We just raised our guidance for the year on our last earnings call. If fundamentals continue there’s upside to the year even from that data point.”
Adding an extra dynamic to the North American mix is the new US ANSI standards. The long awaited, and well-documented ANSI rules represent significant changes to the industry, and for those who operate the equipment. However, Nerenhausen says it won’t represent such a shock to the system as some believe. “We spent a good chunk of last year educating customers,” But, he adds, “I have been talking to customers, and I don’t see anyone interested in pre-buying or anything like that.
“I think the brand also gives a sense of assurance things will be right when it comes out in the market space even if we don’t touch every small/mid-range player. I think if it’s a JLG it’s not going to cause them problems, and it won’t.
“As a matter of fact, I think in many cases they will appreciate it. They won’t have a seat of the pants feel. I think there is a sense of comfort having a smart machine to protect unsafe situations that you would otherwise put yourself into, especially with less trained folks coming into the market.”
And, as Nerenhausen adds, the requirements leading up to ANSI have not been a bolt on exercise, “They have designed a fairly intensive number of pieces into the machines, load sensing is one of the main features but that is not a technology that is new to us.”
“But it [ANSI] is finally here, coming in December 12 2019, and we are ready for it.”
Another challenge comes from the Tariffs imposed by the Trump administration in 2018 on steel. “We had some trepidation coming in to the year as we had to pass along a steel surcharge and price increase more significant than we had in the past,” says Nerenhausen.
This was borne out in the company’s steel surcharge strategy. Rather than just passing on a price increase that included the increased steel cost from the tariff, JLG separated the steel charge and the standard machine price. As steel drops back down over what could be a considerable time – due to the lag period between buying steel and it manifesting into a new product - the steel surcharge will be reduced and hopefully eliminated.
“Some parts of steel have made movements; others have been very stubbornly high. Hopefully those things will get sorted out, and over time those tariffs go away. And that is why we were very transparent with the steal surcharge strategy, because we wanted to let those go away if steel stabilizes and we can take that off the table.”
Showing as much in potential as North America does in actual sales, is Asia. Unsurprisingly, the continent is providing the highest percentage growth of any global market, yet it currently provides less than 10% of total company sales, and, for that reason, “Given the growth rate, it could become a significant business.”
Does this mean the company will expand its existing footprint in China? “We look at a five-year plan, by regions, by model, very granular, and if that calls for expansion, then we expand,” answers Nerenhausen. “Given the growth in China, you could expect there are plans on paper to grow there but nothing specific I’m prepared to mention.”
Parent company Oshkosh has most of its production facilities inside the US, meaning there are few opportunities to use group facilities to expand JLG’s global footprint. “We manufacture more outside the US than Oshkosh, so we have more facilities.
“We leverage everything we can with the broader company, whether its supply chain, or anything like that, but largely JLG has JLG manufacturing footprint outside the US.”
JLG’s policy is to increase local production across its global markets. “That can backfire too,” explains Nerenhausen, “But we take prudent steps where the volume makes sense to localise products and localise supply chains.”
Changing subjects, consolidation in the rental sector has been one of the hot topics in very recent years. Does Nerenhausen believe it will continue at the same pace. “It’s hard to say. I think the good news is, the market is very healthy – they wouldn’t consolidate if there wasn’t a strong financial motive.”
And, with the likes of Power Towers being brought under the JLG umbrella in recent years, it would seem the company is also ready to join the acquisition trail when necessary. Nerenhausen says future growth is more likely to be organic, although buyouts are never off the table. “I don’t think it’s any one source, it’s going to be through innovation, through targeting new industries, like Power Towers. “I won’t rule out M&A in the future but that’s not our primary vision. If something comes up that makes sense we’ll look at it but I think primarily we are focusing on new opportunities for products, new opportunities for innovation, new market openings, like Power Towers.”
Taking the thought one step further, would JLG ever be up for sale? “It’s certainly not in my radar screen, we are a public company and, if you go through the rigors of what a public company would have to do if they were provided with such an offer, I don’t see anything like that happening in the near future. I would discount that to a great degree.”
It seems clear then that John L Grove’s foresight 50 years ago will be felt for many more years. “It is the same basic principles this is going to take us to the next 50 years.
“The derailer will be in getting too big and too complex and focusing on things not associated with looking after the customer. AI