The combination of a pandemic and preparations for Brexit has resulted in many a business casualty but at Combilift they make them tough – and that’s not just the trucks.
While the company has undoubtedly had a challenging year, it has still forged ahead, achieving a record number of sales to the UK in January and launching a new forklift to cater for the sudden accelerated growth in the ecommerce market (ttjonline, February 3).
Speaking at an online press conference in early February, managing director Martin McVicar outlined how, despite a three-week shutdown during April 2020, the company had recovered lost production and that revenue and output were slightly up on 2019.
“It’s not where we hoped it would be but it’s pretty reasonable,” said Mr McVicar, adding that the company produced 6,830 units in 2020, as against 6,750 units in 2019.
This performance is particularly laudable when seen in the context of the overall sales of forklifts in the UK – Combilift’s largest export market – in 2020, which were 25% down on 2019.
“The British Industrial Truck Association and World Industrial Trucks Statistics show that sales of new forklift trucks to the UK shrank quite considerably in 2020,” said Mr McVicar. “We ended up with a 7% decrease in sales to the UK market [down from 1,667 units in 2019 to 1,549 in 2020] but at least we were above the average.”
This year has started well, with the aforementioned record-breaking 226 orders from the UK in January and judging from the order book and opportunities that are in the pipeline, Mr McVicar is very confident the company will see significant growth in business with the UK during 2021.
The drivers of this growth have included clients’ preparations for Brexit and Covid-19 coping mechanisms – such as switching to ecommerce – and Combilift has been proactive in tapping in to this new demand.
The UK’s decision to leave the EU “was not the outcome Combilift would have preferred” but its status as the company’s number one export market – around 100 shipments a day – encouraged it to put procedures in place to allow it to deal with any disruption.
So Brexit management has been on Combilift’s radar for the last four years and particularly over the last few months as images of warehouses with stockpiled product became prevalent. Companies stockpiled prior to Brexit to create a buffer but it has continued post-Brexit as they try to mitigate disruptions with supply chains and logistics.
Combilift knew that if it could supply its products seamlessly to the UK, there was a good opportunity for it to capture demand, so it decided to ship all its trucks and spare parts to UK dealers Delivery Duty Paid (DDP).
“We take care of all the customs clearance and any documentation needed, so our UK customers’ trucks arrive the same today as they did in December 2020,” said Mr McVicar. “The only difference they may notice is that we have registered to process UK VAT and for a number of companies we do invoice VAT but the client can claim it back.” Combilift doesn’t charge an administration fee for handling customs clearance, nor has this affected the price of the product.
“It is a little bit more admin for us to do but we export products to 85 different countries, so we are very familiar with customs clearance around the world. And we know the origin of all our components, so if we are sending spare parts we already have the paperwork in place for other export markets outside of Europe.
“We have 78 UK suppliers of components to us and we did notice some challenges in getting those parts to us in a timely manner, much of which was down to customs administration. It has been a learning curve for many of those businesses.”
To counter that, Combilift has renegotiated some of its incoterms and now takes care of customs clearance on its imports as well.
“We have found this has allowed our components supply to run more smoothly and we are using a combination of suppliers delivery and – in many cases – collecting our components from UK suppliers.”
Another move that has enabled Combilift to ease the flow of goods is achieving Authorised Economic Operator (AEO) certification in June 2019.
“It means we’ve become more like a ‘trusted trader’ for both Irish and UK customs and our goods travel across the border more freely,” said Mr McVicar. “We’ve also noticed that our goods have been travelling more freely across other customs borders, outside of Europe, with fewer checks taking place.
“The message for the UK market is that having AEO certification will make it much easier for companies to ship their products across borders. There is a cost involved and we now have a full-time employee managing that AEO documentation but it’s very valuable certification to have.”
Mr McVicar added that although Brexit had thrown up these extra challenges, the last minute deal between the UK and the EU had been very welcome.
“It meant that WTO tariffs didn’t come into effect, so there are no tariffs on our products going to UK customers and there are no tariffs on the components coming from our suppliers in the UK.
“The other positive is that the customs border is in the Irish Sea and not on the island of Ireland, which is a great relief to many of our employees who live in Northern Ireland and cross the border daily to get to and from work.”
Another major change for Combilift in the last 12 months has been the massive increase in demand for its free warehouse design service – another indication of how important freeing up space, warehouse management and logistics has become.
“Enquiries for our free warehouse design service doubled last year compared to 2019,” said Mr McVicar. “They haven’t all translated into orders but we’ve seen those increase in the last three or four months. Much of this is a result of the work we have been doing with businesses to optimise their spaces so they can implement social distancing measures within their facilities.
“Storage doesn’t generate revenue for a manufacturer but if they can reduce the storage aisles and free up more production space, that’s where we can bring real value to our customers.”
Combilift has also been on the front foot in terms of its own Covid-19 measures. Very early on in the pandemic last year it introduced thermal imaging temperature checks for employees entering the plant; contactless clock-in systems; anti-microbial copper coverings to all door handles; mandatory wearing of face masks; and social distancing.
“We’ve now introduced weekly serial Covid-19 testing for all our employees and this started on January 18. It’s a highly accurate saliva-based PCR test and the big advantage of this over a swab-based PCR test is that it’s not intrusive, it only takes seconds, it’s sent away to a laboratory and we have the results in 24 hours. The results are sent to the employees via SMS – or if Covid is detected they get a phone call.
“In the first week of introduction we identified five positive cases in our plant of more than 600 people and they were asymptomatic. The second week we identified two and the third week there were none. It has given our employees great relief and peace of mind going home to their families.”
Combilift’s production lines will be turning out a new product this year, the Aisle Master Order Picker (AME-OP), which has been developed in response to the rapid growth in ecommerce over the last few months.
Office for National Statistics (ONS) figures showed the anticipated percentage share of ecommerce in total retail sales as rising from 18% in 2019 to 32.8% in 2029. The reality is that the last six months have seen the share rise from 18% to 32.4%.
“For ecommerce to be as efficient as possible, goods need to be stored in warehouses and satellite distribution facilities, not on production floors and this has definitely led to increased demand for our products,” said Mr McVicar.
The AME-OP would have been launched at ProMat and Modex in the US, but had its first public outing at the virtual press conference.
It is a stand-on electric powered model that combines the advantages of a narrow aisle articulated forklift and an order picker for versatile operation in warehousing applications.
A main feature of the AME-OP is the step-through operator compartment. The low floor height of just 280mm enables convenient, single step access from both sides of the truck, which speeds up order picking compared to the operator having to get in and out from a seated position. The AMEOP truck has all the key advantages of the conventional Aisle Master – indoor/outdoor operation for loading/offloading and for stock replenishment at other times during shifts when order picking is not required.
The AME-OP is available in a number of variants, with lift capacities from 1,500kg to 2,500kg, lift heights of up to 15m, and it can operate in aisles as narrow as 1650mm. It features a patented chain steering system, which allows the truck to articulate more than 205°, and an inline drive motor and front drive axle, all of which enable narrower aisle operation.
“This is a major innovation in the warehousing sector,” said Mr McVicar, “and the versatility to use the one Aisle Master for multiple applications – narrow aisle operation, truck to rack handling, bulk picking and item order picking – will result in healthy demand for this new product in our home and export markets around the world.”
Mr McVicar added that he expected demand for the AME-OP to increase over the coming years, thanks largely to the rise in ecommerce and said he anticipated the company could be manufacturing more than 300 of the units per year in 2022.
“There is real market pull there,” he said.
