Executive View -- Crown Equipment Grows Vertically

Nov. 15, 2009

Lift truck manufacturer increases global presence with vertically integrated manufacturing processes.

In October Crown Equipment Corp. unveiled its first internal combustion forklift for heavy-duty applications, marking the company's entry into the "IC" market. The company credits its vertically integrated manufacturing process, in which it manufactures 85% of what it sells, with helping to hasten product development and bring a quality truck to the market.

Since 1957 the New Bremen, Ohio-based company has established a global reputation for its electric lift trucks, but President Jim Dicke III said the company saw demand for a "truly industrial lift truck."

"IC engines in some applications have a huge performance advantage over an electric truck," says Dicke, whose family founded and has operated the business since 1945. "The other thing is if you buy an electric, you have a battery to manage, and some customers don't want to manage batteries. It's easier to swap out a propane tank."

With annual sales of $1.8 billion and 8,000 employees globally, the company continues to look for new growth opportunities.

Dicke (pronounced "Dickey") recently shared with IW some of his company's competitive strategies and ideas.

Vertical Integration: Our vertical integration philosophy is something that gives us a competitive advantage. We have had situations where we've become unhappy with the quality or the cost of the product or just how engaged the supplier wants to be or is capable of being in our continuous-improvement efforts, so as a consequence of one or a mixture of factors we've decided we wanted to switch suppliers and in some cases decided we wanted to be in the business. We have an ability to manage quality that most people struggle with, having to deal with a different company, a different culture, a different quality system.

Jim Dicke III, President, Crown Equipment Corp.

Product Development: First of all, we have creative freedom (being vertically integrated), which is unusual because we are the creator of our own components. And a lot of times in product development innovation can also be highly correlated with speed. You can be un-innovative quickly, but if you're going to be truly innovative, a lot of times what you really need is the opportunity to try some things, to make some mistakes and to quickly figure out what those mistakes are. Just being able to go out to the plant and talk to the people who are building the product or maybe even building the prototypes is incredibly valuable and an outside benefit to the innovation you can bring to the product-development cycle.

China: What we've been doing longest in China is purchasing. That's fairly typical of manufacturing organizations anywhere in the world now. For most manufacturers to think that they can be competitive in this global world and not have at least some of their spend in China, or at least some awareness of what the supply base is in China, that's a dangerous game I think. The second thing we did was open a manufacturing plant. We make our hand pallet trucks there and are in the process of introducing more products there over time. It is a country where you operate at somewhat of a disadvantage, being an outsider. But Chinese folks also like to work for foreign companies, so that's something that works in our favor. As far as sales and service network, we're just getting started and learning about what it takes to satisfy the Chinese customer.

About the Author

Jonathan Katz | Former Managing Editor

Former Managing Editor Jon Katz covered leadership and strategy, tackling subjects such as lean manufacturing leadership, strategy development and deployment, corporate culture, corporate social responsibility, and growth strategies. As well, he provided news and analysis of successful companies in the chemical and energy industries, including oil and gas, renewable and alternative.

Jon worked as an intern for IndustryWeek before serving as a reporter for The Morning Journal and then as an associate editor for Penton Media’s Supply Chain Technology News.

Jon received his bachelor’s degree in Journalism from Kent State University and is a die-hard Cleveland sports fan.