New regime

24 April 2008

The production line at Bison Palfinger's Lobau facility in Germany.

The production line at Bison Palfinger's Lobau facility in Germany.

Harald Hauser, Bison Palfinger's managing director, was previously procurement manager for Palfinger's entire business, sourcing - among other things - 35000 t of steel annually for the Austrian manufacturer's loader crane factories.

This means he is well versed in steel prices - up 50-60% over the past two years, he says - but also ideally placed to undertake the transformation of Bison's Lobau production facility in Germany from a very traditional manufacturing plant to a lean, highly productive facility; one that can match the growth ambitions Palfinger has for the business it acquired in late 2004.

The big change in production has been to outsource fabrication to Palfinger's various production facilities in Eastern Europe. Outriggers and jib booms are made in Bulgaria, the sub-frames and counterweight slewing system in Slovenia, and by the middle of this year the main booms themselves will be produced at a part-Palfinger owned facility in Croatia.

“This means that 95% of components are outsourced from Lobau”, says Mr Hauser, “In the past everything was done here.” The plants are either wholly - or part-owned by Palfinger (for its crane business), which, says Mr Hauser, makes it possible to maintain strict quality controls.

Production doubled

The changes already made have already more than doubled production capacity: the facility produced around 85 machines in 2004 and that rose to 165 last year, its first full year under Palfinger ownership. (Of these, around 30 were the aluminium boom models launched by Palfinger under the Palfinger Access banner several years ago.) Around half of the 150 Lobau employees are currently working two shifts.

Mr Hauser is confident the plant will increase production again this year; “We will get to 225 machines in 2006, mainly by increasing exports.” He is hopeful that the German economy, and the investment climate, will improve with the new government, but hasn't yet seen clear evidence of a real recovery. (Bison does well in its home market, but is competing against two illustrious German manufacturers, Wumag and Anton Ruthmann, both of which still have considerably higher sales in the country, although a lower proportion of exports.)

Changing the way that the machines are produced is just one factor in expanding the business. Palfinger clearly hopes that Bison will become a significant part of the company, contributing more than the estimated €15 million revenues (including trucks) that Bison Palfinger is anticipating this year. To do this it will continue to increase production capacity - Mr Hauser has set a target of 450 units by the year 2009 - and by expanding the product line.

Mr Hauser acknowledges, for example, that Bison Palfinger wants to add van-mounted platforms to its range. The company has already spoken to a potential acquisition target - possibly Gardner Denver Powered Access in the UK, although Bison Palfinger would not comment - but sources at the company now indicate that Bison is likely to develop its own range of van mounts, probably in 2007. “I believe we will be more sure [about van mounts] in two years”, says Mr Hauser, “We have the intention to do it.”

The addition of van mounts would clearly be an advantage in the UK, where the market is approaching 600 units every year, although sales to Germany, France and Scandinavia could well double that potential market.

For the moment, Bison Palfinger is focusing on updating its current range of machines, which encompasses vehicle mounted platforms with working heights from 17 m up to 61 m, including the smaller, lower-cost aluminium telescopic boom models and the distinctive KS counterweight turntable models that are the big differentiating feature of the Bison models. The KS system means that booms can slew within the width of the vehicle and also reduces the length of the trucks - just 11 m on the biggest 61 m model.

A new 20 m model on a 3.5 t carrier is planned, probably replacing the existing 19 m and 22 m models. Richard Tindale, the access product sales manager at TH White, the Palfinger dealer covering England and Wales, says there is a demand in the UK for this size of telescopic boom mounted on a 7.5 t carrier, leaving plenty of carrying capacity on the deck.

The one trailer-mounted platform in the range is seen as something of a niche product and is unlikely to be retained. Mr Hauser says the aluminium booms will be kept because they are popular with customers in southern Europe. There will not, meanwhile, be any investment in platforms above the 61 m height; “You need 3000 working hours to develop and build such a machine”, he says, “The cost is very high and you sell just one a year.”

The company is also offering carrier options for different countries, such as Iveco for the UK and Volvo for Sweden, adding to the Mercedes and MAN chassis that are traditionally popular in the German market. New control systems - software and hardware - will be introduced to the entire range by the end of the year. These systems will be shared with Palfinger's crane business, producing cost savings and also making it easier to obtain service and spare parts. (Palfinger has a network of 160 general importers and seven subsidiaries worldwide.)

The other piece of the puzzle is distribution. Mr Hauser says the Bison business will focus on expanding in Europe before venturing into North America or Asia Pacific. It so far has 27 dealers in Europe, mainly Palfinger crane dealers or companies which had previously taken on the Palfinger Access range.

Dedicated sales

It is Bison Palfinger's intention for these dealers to have dedicated access sales staff, because the crane business does not have the same customers as the access products: between 60 and 70% of Bison's sales are direct to rental companies. There are already over two full-time sales people employed by Bison Palfinger in Germany - sales manager is Alexander Lukas - and dealers in Germany, France, Belgium, The Netherlands and the UK now have dedicated access sales people.

“They are on their way”, is how Mr Hauser assesses the progress made by the dealers; “We are just over a year in the business - we have to give them a chance.” There have been some notable successes, however, including an order for 20 platforms from Lithuanian power company VST and 10 machine orders from rental companies Mateco and MVS Zeppelin.

The increased production would indicate that Bison Palfinger is moving in the right direction. To succeed, and to match its increased production targets, it will be relying heavily on its European Palfinger dealers to add access equipment to their crane sales business.

Whether these dealers succeed or not, Bison Palfinger stilll has in its favour the support of a €400+ million parent company. As Harald Hauser says; “Palfinger doesn't get involved in something if it is not 100% focused.” He will be hoping that the coming years will see Bison adding further to Palfinger's steel and raw materials bill.

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