Let’s Make a Deal

Aug. 8, 2018
Equipment manufacturers are utilizing mergers and acquisitions to improve their position in the GSE market.

Whether it’s offering a broader range of products, increasing production ability or reaching a more diverse segment of the market, ground support equipment manufacturers are benefiting from acquiring other companies and/or merging with complementary businesses.

Each individual example varies, but the goal behind most mergers and acquisitions is often the same – providing customers with more.

“Tronair’s principle goal as a company is to help our customers continually optimize their operations. All of our efforts, including the acquisitions we make, are intended to achieve that goal,” says Josh Green, EVP of strategic planning at Tronair, which acquired Eagle Tugs in 2015 and added Columbus Jack, DatcoMedia, Malabar and DAE to its portfolio in 2017.

“All of our acquisitions allow us to better serve our customer base and deliver incremental value to them, which in turn delivers incremental value to our employees through increased business model strength,” he adds. “It’s a win-win.”

Similarly, when Goldhofer sought to expand its range of equipment offerings, it looked for a company that built vehicles that would complement its existing lineup of towbarless tow tractors. So in 2013, Goldhofer purchased Schopf.

“Schopf’s material handling vehicles and conventional aircraft tractors, in particular, were the decisive factors in the decision to integrate Schopf Maschinenbau GmbH into the Goldhofer Group,” Lothar Holder, head of airport technology, Goldhofer, says.

Seeking to enter the ground support market, Textron GSE (and parent company Textron Specialized Vehicles, Inc., a division of Textron Inc.) acquired TUG in 2014. Company officials say the move was a natural adjacency to their existing business in vehicle technology.

“The subsequent acquisitions of Douglas(in 2015), Premier and Safeaero (both in 2016) enabled the company to rapidly expand its product offerings in the GSE sector, and increase its global footprint, so that the company could offer more products and provide an enhanced level of service and support to its customers around the world,” explains Matt Chaffin, vice president, Textron GSE.

Elsewhere, Vestergaard Company and Kalmar Motor pursued a business deal they believe solidifies both entities. Last year, Vestergaard purchased a 25 percent stake in Kalmar, while the remaining 75 percent remains with majority owner Magnus Johansson.

“From Vestergaard’s point of view, we engage in M&A activities because we would like to be able to offer our customers a broader range of high quality products,” CEO Stefan Vestergaard explains. “We want to take an active approach when it comes to the consolidation which is happening in the industry. Our objective is to strengthen our portfolio with the best and most innovative products in selected categories.”

“The main objective for Kalmar Motor AB was sustainability and after-sales support. Since 2013, sales of Kalmar Motor towbarless tractors had increased three fold and extended through Europe, USA, Middle East, Far East and Australasia,” adds Sean Bryan, technical sales manager, Kalmar Motor. He says with Vestergaard’s support, sustainable company growth – including possible new facilities to increase production – is possible.

Working Together Has Its Advantages

After acquiring and partnering with other companies, manufacturers are able to realize numerous advantages.

Textron GSE, for example, can provide its customers with a variety of equipment.

“The creation of Textron GSE from the combination of TUG, Douglas, Premier and Safeaero has enabled the company to offer a robust line of products to its customers worldwide, including conventional and towbarless pushbacks, baggage and cargo tractors, belt loaders, deicers, ground power units, air starts, mobile HVAC units and more,” says Chaffin.

What’s more, Chaffin explains the integration of multiple companies into one has increased access to capital and other resources.

“We have more engineers, more sales, service and customer support personnel, and more and better facilities than before,” he says.

Likewise, with Schopf, Goldhofer has increased production and established a larger reach into the GSE market.

“Thanks to the continued operation of the complete Schopf production facility in Ostfildern, we have also been able to expand our production resources with an eye to the future,” Holder says. “Through the acquisition, we have achieved a meaningful combination of our respective strengths and potential in various market segments.”

Goldhofer also purchased a majority share in its long-standing sales and service partner Flite Line Equipment, strengthening the parent company’s presence in the United States and North America. Following the latest acquisition, Goldhofer intends to expand on the service offerings in the region and further develop its product portfolio.

Beyond its additional product offerings, Tronair boasts a new centralized headquarters and manufacturing facility. The new plant is larger than any of the previous individual manufacturing locations, and Green says it allows Tronair to vertically integrate operations to drive quality initiatives and shortened lead times throughout the company’s supply chain.

“Our entire supply chain was widened after the acquisitions, which gives us more flexibility for design, manufacture and testing capabilities,” Green points out, adding Tronair has the ability to wrap manufactured products with software products (EBIS) through DatcoMedia to ensure customers are deriving additional value.

Similarly, Kalmar and Vestergaard are celebrating new routes to market and a larger presence. Kalmar has more sales resources, specifically better access to the US market. Meanwhile, adding Kalmar allows Vestergaard to offer a broader range of products in more markets.

“For our engineering teams, we are able to share our knowledge and experience, especially with the electric vehicle development,” Bryan states.

Collaborating to Overcome Challenges

Regardless of the size of a particular acquisition or merger, there are issues that must be addressed in order to successfully combine forces.

“Integration of companies with different DNA is always a challenge,” Vestergaard says, noting that a number of shared values between his company and Kalmar made the task easier.

“Choosing the right acquisition partner is, for all company acquisitions, one of the most difficult decisions, and can be very complicated in its contractual obligations,” Kalmar’s Bryan agrees.

He says Vestergaard and Kalmar benefit from both being located in Scandinavia, so relocation wasn’t necessary.

Conversely, Tronair’s equipment businesses are now headquartered in Toledo, Ohio. Green says there has been very little effect on distributions channels. While production experienced some small speed bumps along the way, Tronair was able to increase volumes to scale with the integration timelines.

“Acquisitions are a logistical puzzle that must be solved in a time-sensitive manner. Too many companies buy and then never build because it’s too difficult,” Green explains. “Integration requires cooperation and coordination from various groups, beyond what most people expect, which prevents most companies from ever unlocking the value of the transaction.

“We have taken several steps, including hiring dedicated transition teams, to ensure that we can fully integrate quickly and with as little interruption to our supply chain as humanly possible.”

“The most significant challenge in any acquisition, of any size and in any industry, is building a single, cohesive company culture based on shared values, processes and objectives,” Textron GSE’s Chaffin adds.

Textron GSE’s business is headquartered in Kennesaw, Ga., but the company has maintained operating facilities in locations used by each of the acquired companies that now make up the company.

“We have made some strategic changes in our global distribution channels to enhance our worldwide reach and ability to service our global customers,” Chaffin says. “We have also enhanced our production, in terms of throughput, capacity, efficiency and quality control, through access to additional resources, knowledge and talent provided by Textron.”

Goldhofer's Holder says tried-and-tested production routines are still performed by each branch’s workforce, and established structures continue to apply to the management of day-to-day operations.

“At the same time, various centralization measures were gradually implemented at group level and workflows adapted accordingly, where necessary,” he says. “In the process, one or two obstacles were overcome together, and distribution channels in particular had to be combined – and in some cases augmented.”

Approaching the Market Collectively

Beyond internal organization, it is important for companies to inform its customers about its latest acquisitions and enhanced product lines.

Because of the positive reputation Schopf has, Goldhofer took a gradual approach when transferring the parent company’s label to the acquired business.

“In the first few years, we operated with the Goldhofer and Schopf brands to give our customers time to adapt to our new corporate structure,” Holder explains. “Since, we have created a full-line supplier in the field of airport logistics with a unique range of conventional and towbarless aircraft tractors, baggage and cargo tow tractors, and aircraft recovery systems. As a next step, moving towards a simple brand strategy on a product and corporate level helps us to further increase visibility in the GSE market and sends a clear and consistent message to the market and our customers.”

Tronair markets itself as one large company, but Green notes each of the six sister companies contributes value to the overall brand.

“We call ourselves the Tronair Group, but that does not mean that Eagle Tugs, Columbus Jack, DatcoMedia, Malabar or DAE are any less important,” Green explains. “We are keeping those brands alive and well under the umbrella of the Tronair Group. If a customer has been loyal to one of our brands, we allow them to maintain that relationship with that brand, and we inform the customer that we are now, indeed, one group with more resources at our fingertips.”

Likewise, Textron GSE markets itself as a single entity, but has retained the product brands due to the level of awareness and equity that those brands already had in the industry.

“We have found that our customers and the industry quickly learned and adapted to this change,” Chaffin says, noting customers understand the brands they’ve known for years are now backed by a larger company.

Making an Impact in the Industry

Recent acquisitions and mergers that have taken place within the GSE industry have altered the landscape of the marketplace.

For example, instead of companies like TUG, Douglas, Premier and Safeaero vying for market share individually, these companies now make up one of the largest GSE manufacturers in the world.

The companies making up the Tronair Group have a similar advantage.

“We look to acquire best-in-class companies that can positively impact customer success. The market has taken note of that fact pattern, with various companies approaching us on their own volition to explore a transaction with the Tronair Group,” Green says, noting more activity is likely in the company’s future. “Additionally, customers appreciate that we can drive value that other companies cannot via our product expertise breadth, wide-ranging manufacturing processes and vertically integrated operations, all under one roof.

“The acquisition of Schopf in 2013 attracted great interest in the media and the industry itself, and, in our view, was met with a very positive response on the basis of two long-established and successful companies with their different core products," Holder says. "We have formed a powerful and well respected set-up providing a unique range of products and service under the umbrella of the strong Goldhofer brand.”

While Kalmar and Vestergaard’s partnership may not have as large of impact on the industry as a whole, the companies have still realized key advantages such as reducing costs by sharing stands at trade shows and providing shared services between the brands.

“We trust our customers will see the benefits of our merger and be able to gain from the continued quality of our products and ever-growing after-sales support,” Bryan says.

“Vestergaard is a niche player, who has teamed up with another niche player in Kalmar. Therefore, the overall impact is probably small, but we hope we represent a trend, which will have an impact,” Vestergaard adds. “We want to offer our customers an even broader range of high quality GSE products, and we believe stronger together is the way forward.”

About the Author

Josh Smith | Editor