Chain of Thought

Toyota’s Growth in Indiana Exemplifies the Secret of Material Handling Longevity

When a city captures new jobs and those jobs help employers serve new markets, it’s a match worth celebrating. And a celebration is what took place in Columbus, Indiana yesterday at the site of Toyota Material Handling USA’s (TMHU) formal ribbon-cutting to its new North American headquarters. You can judge how important this media event was to both the city of Columbus and to Toyota because they both sent their top VIPs to explain to the world why it was important. They are reasons to which cities and companies around the world can relate.

The ribbon-cutting ceremony at Toyota Material Handling's new Columbus, Indiana headquarters involved VIPs from the company and the community: from left, Toshiya Yamagishi, president, Toyota Industrial Equipment Mfg.; Brett Wood, president & CEO, Toyota Material Handling North America; Indiana Governor Mike Pence; Tetsuro Toyoda, chairman, Toyota Industries Corp.; Jeff Rufener, president, Toyota Material Handling USA; and Kristen Brown, mayor of Columbus, Ind.

Toyota wanted to show it’s walking the supply chain talk of some of its biggest clients by improving communication and collaboration among the links in its own internal supply chain. With this move, Toyota’s sales and marketing team moved from Irvine, Calif. to share the same newly expanded 1 million square foot campus with those who make the lift trucks they sell and market. TMHU President Jeff Rufener said this will help his company be more responsive to customer needs.

“The material handling industry has recovered from the recession,” he noted in his remarks to the press. “Last year lift truck sales were up 8%. This year we’re up 10% and by the time we get to the end of the year we’ll approach the industry’s high. When the recession started many predicted it would be a long slow recovery, probably 2014 before we got back to where we were and that prediction looks prophetic. Next year we’ll probably set a new record for our industry. We’re excited to introduce our 8 Series lift trucks which have new Toyota engines. The ideal customers are the paper, lumber and concrete industries and those with large DCs. Our customers are moving up in capacities. They want to handle that weight in the same confined space.”

In many ways, those with large DCs have large DCs because of the growing volume of paper going through them—paper in the form of packaging that’s being generated by growth in e-commerce.  During a break in the festivities, Rufener told me he credits Amazon for a great deal of the DC market’s interest in higher capacities.

“I think there’s a market for a small 8,000 pound cushion truck in distribution where they’ve been using 6,000,” he said. “It’s economics. “They want to be able to move more weight per shift owing to the growing volumes. There will still be facility consolidation in many industries, beverage as well as paper.”

That means larger facilities and possibly larger, heavier loads flowing through them.

But even the paper and pulp industry by itself represents a big opportunity for innovation in lift truck design. Niels Ostergaard, sales, product, parts and CSSR training manager for TMHU, put the size of this industry in perspective during his presentation.

“The paper and pulp industry in North America accounts for 2.8% of our GDP,” he said. “The automotive industry is 4.5%. The pulp and paper industry also employs about 600,000 on any given day, compared to automotive’s 700,000. And the industry produces $32 billion in payroll. If we can help them with their efficiencies they can continue to grow.”

Columbus, Ind., Mayor Kristen Brown explained how those numbers translate into the numbers TMHU’s 20-year presence in her community generates.

“Toyota has investing over $100 million here, employing over 1,000 people and is in the top 10 employers in our community,” she noted. “That’s why we have the fifth best GDP in the country which means we have the fifth fastest job growth and employment is at an all-time high.”

Indiana Governor Mike Pence expanded on the importance of partnership to his state’s economy, particularly with companies that have international scope.

“When I became governor I said we’d make job creation job one,” he said. “Japan is Indiana’s most important bilateral partner in the world. Even beyond TMHU’s national headquarters, the Toyota’s commitment to our state can be seen, including its mark on Princeton, Ind. There are only four Toyota automotive manufacturing facilities operating in America and the company chose Princeton many years ago. The company recently announced plans to increase production of its Highlander midsize SUV. We’ll grow this relationship. You’re decision to move your national headquarters was made without state incentives and is a testament to the people of this community. They share with the people of Japan a belief in hard work, integrity and a culture of excellence and concern for neighbors.”

That may sound like stereotypical politician-speak, but in explaining his own company’s culture, Tetsuro Toyoda, chairman of Toyota Industries Corporation, used the opportunity to address the employees at TMHU’s headquarters.

“When associates push beyond their limits and allow themselves to dream, that is how true innovation is generated,” he said. “They find new combinations that didn’t previously exist. The key is trusting in the potential of our selves. With humility and respect for others, respect [for the company] will continue to shine for years to come.”

The partnerships between industries and communities, as well as the expansion of technologies into new markets, are great examples of finding new combinations that previously didn’t exist. And the fact that this model of innovation is being showcased in our mature material handling industry is a tribute to its longevity.

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