The first is that the price of a hoist does not (always) matter.
“The hoist business is really more feature-driven, and performance-driven than you might think,” he says.
“Certainly there might be a small fabrication or machine shop looking to buy the cheapest, but the companies on top of the food chain, which by the way purchases most of the lifting equipment sold, feel that if you can offer what they need, where they want it, price is secondary.”
“Once they have it, they want a high confidence in reliability and robust design. In the event of trouble, somebody is there immediately, because the most elite companies are less worried about how much they spend than on downtime. What we are really selling to the most elite companies is continuous lifting service to enable them to do what they care about, getting stuff out their back door.”
The second is that the price of a crane does matter.
Buer joined CM in October 2005 to sort out CM’s crane building business, Crane Equipment & Service (CES), a roll-up of four regional firms acquired in the 1990s, including Abell-Howe and Gaffey.
By then, Buer had years of material handling expertise. After his five-year stint at Zimmerman, 18 months of which were post-takeover, Buer left in 1997 and worked for startup firm Creative Ergonomic Systems until 2003, and then did consulting.
When he joined CM, CES was a “perennial underperformer” he said. “CES lost money every year. We’re profitable now. It took about three or four months to break even, and we’ve been profitable ever since.”
Buer’s CES turnaround tweaked internal processes so the business met cost and time targets, and expanded the crane service side. But a big part of the problem was pricing integrity. Buer explains: “Pricing integrity means not taking orders just to take them. The crane business is very low price, very competitive. It is inherently low-margin, and there are a lot of entrepreneurial single-owner lifestyle businesses that we compete with, and we’re a division of a large company with a lot of infrastructure. We have to be careful not to chase their price.”
“You have to choose your customer. Our customers like the enhanced value proposition that we provide. There is a lot of engineering depth, service people, applications expertise. The elite customers, the Bechtels, the Fluor Daniels, the Caterpillars, these kind of people value the total package and they don’t look at simply the cost of hardware.”
Buer has carried that view over to the CM hoist business, at which he was recently named executive director. Hoists are not commodities, he argues.
“A hoist is a hoist until you take it out of the box and put it someplace. What is not well appreciated is when it is put into service, a packaged tool like a hoist becomes a piece of applied equipment, working in a unique setting, that requires support as such.”
Customers need not pay for all of this service, Buer says. “Application support comes as part of CM’s infrastructure costs for the most part. Certain other field support is usually sold as an extra. The point-of-sale people in the CM industrial sales force are savvy in applications as well. Major end users and some sales channels don’t know much about hoists, and don’t want to. They expect the suppliers to know. That’s a huge advantage that CM has over its competitors.”
This advantage might come from CM Hoists’ unique position within the Columbus McKinnon corporation. CM does not stand for the initials of the corporation, as many people may think, but an abbreviation for a century old, and long-standing Columbus McKinnon brand, Chisolm-Moore. The CM hoist brand is a bigger seller than the other two CM-owned electric chain hoists. Coffing is second and Budgit a distant third, thanks mainly to the Lodestar hoist, the USA’s market leader. The CM Hoists branding is wider as well. Unlike the hoist-centric Coffing and Budgit brands, CM Hoists’ distribution also sells rigging, including Columbus McKinnon-made chain, and attachments and forgings.
“The hoist itself can be commoditized to some extent. What can’t be is the support around it. It’s like when you go to ABC Warehouse to buy some electronic equipment, a computer or whatever. Nobody knows what they are talking about, and if it doesn’t work, you have to go through the whole chain of support to get it fixed. You bought it cheap, now you have to deal with the aggravation. Companies who rely on this equipment to make the business run don’t have time for that.”
Service and support are two of Buer’s big plans over the next couple of years for the Lodestar. He is planning more end-user and distributor training, web-based training, and field support.
The next Lodestar
His other big plans are for the new Lodestar model, anticipated for the middle of 2009.
“I would say that regarding the next generation Lodestar, the mechanical design and some performance features are being partially driven by imminent changes in certain European standards, and these same new models will be used in the US as well. It will meet or exceed these new standards being put in place in Europe in the next few years.
The strategy seems similar to that used by a sister company. In 2006, Columbus McKinnon company Lift-Tek launched a third version of the Shaw Box World Series/Yale Global King wire rope hoist that was designed to European FEM standards, but sold worldwide.
But the new design goes deeper than new markets, Buer says. “It will have a new mechanical design, and it will also be smarter in the way the hoist interfaces with controls. It will have an interface with automation – PLC controls and motion control.”
“The object is to have modular options to provide as straightforward or as sophisticated a solution as the end user might like to see. We are not going to be an integrator. We want to provide at least enough interface to make motion control and data collection simple for people who want to do those things, and we will do it with some pretty robust technology within the hoist.”
Buer says that not only the high-end markets are pushing for hoist computing power. “Entertainment uses hoists in a very sophisticated way. We also know that in the manufacturing industry, some of the more sophisticated businesses do things like understanding how many loads have been picked and what their weights are. If the ability to do some things with the hoist from an automation standpoint is not required now, it is going to be.”
He adds that the company has no plans to start moving production of the Lodestar hoists – made in Damascus, Virginia – offshore. But he adds: “We do brand some imported manual products, such as some of the lever chain hoists and pullers.”
The other big change in hoists is a demand for larger capacities.
“The infrastructure of the world is being rebuilt as we speak, and the demand for heavier and more robust lifting seems to be a trend that is not short-term.
That does not mean that the larger hoists are working as much as smaller units did, though. “Sometimes heavier doesn’t mean a severe duty cycle. Many times the duty cycle is less, lifting a heavy load only occasionally. It depends. There is a need for variety, a continuum of classes of service. In some industries, such as mining, there might be needed a heavy lift twice a month, where the duty cycle doesn’t matter. A long lift and high capacity is a typical requirement there.”Service key for Buer
As president of the CM crane builder Crane Equipment & Service (CES), Buer has expanded service. He explains why he sees service as a vital part of the business. “The service revenue is not only a good source of leveling out revenue performance, but the thing is that in the crane business it leads to better access to more business in terms of new cranes and new hoists.”Divesting Larco
Although Columbus McKinnon got Ontario, Canada-based crane builder Larco when it acquired southeastern US crane builder Gaffey in the 1990s, it sold it earlier this year. Buer explains why. “Larco was not core for us. It makes very heavy cranes focused on steel processing. First, it is only a one-market company, unlike the other crane builders, which are strong in oil and gas, power generation, steel warehousing, equipment OEMs and in construction. Second, one of the strategic values of the crane buiding business for CMCO is that it is a large consumer of CMCO hoist products. The capacity of cranes that we built in Canada are so high that Larco was not a consumer of the CMCO family of hoist products, so there was little strategic leverage.”Building a profitable business
It only took Buer a few months to turn around CM regional crane builder Crane Equipment & Service (CES). He explains how he improved the business’s project management processes to make the business profitable.
“Project management starts with quoting the right stuff, estimating and understanding what the requirements are, and that follows all the way to making sure each department works against the estimate, that the materials are purchased properly, the hours are managed in the engineering department, and the shop and the field installation, so that going through the project, we are meeting each gate at or under budget. Any time capital equipment is supplied, especially turnkey systems like cranes, there are several steps – engineering it, manufacturing it, installing it – there are material flow issues, and making sure that things come together at the right time. You need to manage the process so that materials, engineering resources, plant people, sales, and contract administration are all working on the same page. If you don’t have that kind of a structure or process, you’ll be losing money 80% of the time.”
Gene Buer has big plans for the new Lodestar model, anticipated for the middle of 2009 cm 1 CM does not stand for the initials of the corporation, as many people may think, but an abbreviation for a century old, and long-standing Columbus McKinnon brand, Chisolm-Moore cm 2 Gene Buer joined CM in October 2005 to sort out CM’s crane building business, Crane Equipment & Service (CES), a roll-up of four regional firms acquired in the 1990s, including Abell-Howe and Gaffey CM 3
