Clark Back from the 'Dead'

Kevin Reardon, chief executive officer of Clark Material Handling Co, says his competitors in the lift truck industry had his company dead and buried for a few years. But with the recent announcement that Young An Hat Co. Ltd. (YAHC) of Buchsan, South Korea, acquired Clark's assets, ending Clark’s Chapter 11 status, the company is preparing for a major U.S. comeback. Material Handling Management interviewed Reardon to find out more about the next, more profitable chapter in Clark's story. -- Tom Andel, chief editor

MHM: It was great news that Clark was purchased and is now out of Chapter 11. How does it feel?

Reardon: The competitors had us buried for so long, it's nice to come back from the dead. But even two years ago I realized we couldn't sit in bankruptcy for long, even if we could afford it. It kills you in terms of marketshare, your dealers and customers. It's a huge cost because the minute you go into bankruptcy you're protected from your creditors, but some say, 'Going forward, you'll pay me for putting this product into my schedule. You have to pay me cash before production, and then there will be surcharges.' You can't ask for cost reductions when you're in Chapter 11, so your cost of doing business goes up. Since we've come out of Chapter 11, we talked to our top 125 vendors, and 99 percent of them gave us 30-day terms on what was past due. Our relationship with vendors is significantly better and the dealers feel better that we'll be around.

MHM: How does this development affect Clark's operations into the near future?

Reardon: When we had all these reductions, we tried hard not to change anybody on the technical side of our organization or anybody who spoke to a dealer. Even when we were bankrupt we were paying our warranty claims to our dealers within five days. The things we could affect haven't changed. Even from a product development perspective, that never stopped because the Asian company was not in bankruptcy. Asia continues to develop new product. A year ago we introduced the Gen 2, a brand-new 2- to 3.5-ton machine, to the world. By the end of this year we'll introduce the same family of truck, but smaller, 1 to 2 tons. We continue to improve electric product, and within the year, all our products will be AC drive. About a year before the company went into bankruptcy, we moved most of the R&D to Asia anyway, so there's been an ongoing program there, and it hasn't slowed much. Now that we have some cash, the parts availability will be getting significantly better and we expect within a year to be back to our historical rates of providing parts to the dealers.

MHM: So has all that's happened to your company been transparent to the customers?

Reardon: It hasn't been a big deal. Asia was always profitable and the bankruptcy affected only U.S. cash most of the time. From last year on, we'll probably have introduced more products than companies that weren't in bankruptcy. Looking back, moving R&D to Asia was probably one of the smartest things we did in the last several years.

MHM: What's the management philosophy of the new owners? Will they be hands-off?

Reardon: They're learning more about non-hat businesses. In the last couple years they acquired a bus company in Costa Rica, and they just finished closing on the Daewoo Bus Co., which manufactures in Korea and China. They control about 75% of the world's hat market, so there isn't much room to go from there in the hat business. The owner also bought a pharmaceutical company, he owns hotels, he has about 700 acres of land on an island where he raises cattle, so he's been diversifying. He's also one of the largest wholesalers of cars in Korea.

MHM: Are there potential synergies between the automotive side and the lift truck side?

Reardon: I think on the bus side there may be; we have some common suppliers, with wheels, tires and brakes. We use similar companies for transmissions. That may not lower costs, but it will hold them, which is just as important in this business today. Clark has been sourcing globally for the last seven years. We bring in steel from Germany for the uprights on the lift trucks because that's the highest-quality steel in the world. Engines come from Japan, England, GM in the U.S.; transmissions come from Europe and Asia. With the additional volume for steel, transmissions and engines, it will help the company.

MHM: You mentioned AC. Is that the most promising technological development right now?

Reardon: Yes. We're in a fairly mature market, so nobody will invent something that's unique, but AC drive has been in Europe for the last 10 years in the warehouse trucks. Now we're seeing more of the products that are sit-down machines going to AC drive. Our intent is that in the next 12-18 months, all our electric product will be AC drive.

MHM: Is the U.S. market ready for that?

Reardon: Users are looking for something that's lower maintenance and better battery consumption, and a little better performance. It's like years ago when they went from carbon pile technology to SCR then to transistors, so, yes, I think they're ready.

MHM: Are there areas of this technology that still need perfecting to be used across all lines?

Reardon: The only difference you see is in how they mount the motors today. In the old electric trucks, you had a differential and the motor plugged in perpendicular, like a T. In the newer ones, the motors are actually parallel with the drive axle. That gives you more space, so you can shorten the trucks. The big issue before was the motors were cheaper, but the controls were very expensive. In Europe, on the bigger trucks, they run 72 and 80 volt, and the controllers are not as costly. When you start getting down to 48, 36 and 24 volt, which are more predominant in the North American markets, the cost of the controllers have been higher. But now we're starting to see a settling of that, and the trade-off price-wise is about the same, but you'll get a little better performance and less maintenance.

MHM: Have the heat issues been solved?

Reardon: They run fairly cool because they don't draw as much. They normally run at higher voltages, so the higher the voltage the cooler the motors run.

MHM: Will fast charging be more popular soon?

Reardon: That technology is 15 years old. We could never get it to work. We tried it on AGVs, with opportunity charging. Every time it was in a waiting area, a plate would hit the bottom of it and begin charging. The technology is there; it has always been the batteries that were the challenge. I hope it does work. For the companies that are doing two and three battery changes in 24 hours, it would be unbelievable for them.

MHM: What about the future for fuel cells?

Reardon: That's probably the next technology. We still have to get the batteries working with opportunity charging and fast charging. Can you use existing batteries? Probably not. You need newer technology batteries. Before, they said if you took the new charging systems and used old batteries they would burn them up because of the stirring of sediments on the bottom. I've been around too long to get overly excited about it. We tested fuel cells with Ford Motor Co. about two years ago, and Ford loved it because they run three shifts a day. The only issue was, can you use existing batteries or do you have to buy all new? What you save in one area you'll spend in the other. It will get here, but the batteries have to catch up with the electronics. Our electronics technology is far superior to the battery technology. The other benefit with fuel cells is you wouldn't have to put them all in one area and you could configure a truck where you could strategically locate fuel cells around the truck, so they could improve the configuration. Counterbalanced battery trucks have always needed minimum battery weights. In U.S. technology, the battery is above the wheels. Everywhere else in the world the battery is between the wheels, so the trucks are longer but lower in Europe, making them easier to get on and off of. With fuel cells you could put some under the floorboard or on the side, and the electric trucks could be configured differently, even a little more compact. Put the counterweight in the steer axle or in the frame as opposed to dragging it around.

MHM: What can we expect to see in the near term from Clark?

Reardon: You'll see more fleet management. We'll give customers feedback on performance, costs and maintenance, taking them out of the lift truck business. Fleet maintenance is a wave of the future. We'll also deliver two or three new models a year for the next three years using leading-edge technology like electrohydraulics, hydrostatic transmission, the Eurocabs, which are much quieter compared to the U.S. cabs, and we'll use ergonomic principles that will help us compete in global markets.

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