Material Handling Management was recently invited to a press briefing at Toyota's Indianapolis manufacturing plant to learn all about the company's new 7-Series three-wheel AC electric lift truck. We had the opportunity to sit down with Shankar Basu, CEO and president, Toyota Material Handling, USA, to talk about market trends. Here's that interview. -- Tom Andel, chief editor.
MHM: We've been hearing recently a lot about the closer competition between electric and internal combustion engine lift trucks. Some say electrics are developing capabilities that enable them to do more of the demanding tasks that IC trucks are famous for, others say there's no way electrics can replace IC trucks in heavy duty outdoor applications. What's your take?
Basu: Both sides are correct, the question is, which one takes hold faster? Electric trucks are performing closer to IC's capabilities. Legislative-wise and trend-wise users will move closer to electric trucks across the map. On the other hand, the cost of changeover from IC is expensive and that will slow the trend down.
MHM: Do you see growing competition from other forms of material handling, like conveyors and automatic guided vehicles?
BASU: The biggest advantage of lift trucks is flexibility. When the economy becomes more dynamic, conveyors, racking, shelving and AGVs take a lot of time as well as money. If you're not sure which way to go, you're better off with lift trucks. But people are always looking at the possibility of replacing lift trucks with something else. Automotive plants are great examples. They are looking at lowering the number of lift trucks.
MHM: How are you responding to that challenge?
Basu: In our three year plan, the objective is to move from just being a lift truck manufacturer to being a full line manufacturer, then to a national account and fleet manager. That means providing the hardware, plus taking care of all your fleets. We'll take a look at how you operate your business and make recommendations on how you can reduce cost and increase efficiency and flow-through as a solution provider. Toyota Japan has already moved to third party logistics.
MHM: How do your competitors shape up?
Basu: Yale does a good job with fleet management, offering a 15 percent cost reduction guarantee. That is their forte. We will devote a great number of resources to fleet management. Our business in national fleet management is 12 percent. We're looking to grow that to 20 percent. We have defined fleet management as buying the trucks, surveying what you need, and what we don't have we'll get from outside. We'll do all the maintenance and leasing, taking it out of the front end, so all you do is write a check. We may even supply the operator in two or three years.
MHM: Do you see a trend toward lift truck registration?
Basu: There's a proposal that every year users would get their trucks checked through several points of inspection, then receive a certificate for that truck. That's a law in Europe, various provinces in Canada and in Japan. After much discussion, the Industrial Truck Association [ITA] decided it was not appropriate. We still have to figure out the interaction between that and preventive maintenance. There are also legal ramifications regarding liability arising out of something you inspected.
MHM: What are some of the positive aspects?
Basu: Through annual inspections, on the user side you promote safety, while on the dealer side they'd have another way to generate revenue by making the truck safer.
MHM: How would it work?
Basu: You'd have some wireless mechanism in the truck that monitors activity on an ongoing basis. If it's registered to a person, we will know how many times in a day they performed certain functions, and that information can be translated into operating costs. All national fleet account managers want to be able to determine, on this particular truck in this particular operation, how much is it costing? With the wireless communication device registered to a person, you can see how the person's driving affects fuel consumption. If you have 10-15 trucks, it's worthwhile to have a way to find which trucks you need to rotate out. You can capture actual number of hours, and what is spent in parts and labor on a truck. It can also tell you when a truck has gone over its life cycle.
MHM: How much use can someone expect to get out of a lift truck?
Basu: We see at least three lives for lift trucks. The first is when a customer leases it for three years. 65 percent of our business involves leasing. Then it comes back and goes to the used truck market for $6,000-$8,000. The end of that takes you to the 7-10 year period. After that there are markets in third world countries. So a truck can last 15 years.
MHM: We're living in troubled times where world events can cause supply chain interruptions. How does Toyota deal with this challenge?
Basu: The drive is toward getting components from local markets so we aren't dependent on a supply chain that stretches to another continent. Our lift trucks are made here and used here. On the design side, one of the huge benefits of using Catia 3D modeling software is it has cut our product development time. It used to be five years, now it's 18 months.
MHM: How close are we to seeing global lift truck standards and what would that mean to the customers?
Basu: Having a global standard would make the OEMs global players and it would reduce the cost of production. We'd have a single engineering platform upon which we could make minor modifications for local market requirements. That drives down the cost of manufacturing and translates into lower cost for the end customer. Secondly, many of the large national customers, like United Airlines, buy locally here for global distribution. If we could produce exactly the same truck everywhere, there'd be fewer servicing problems. Having a standardized truck for multi-national corporations, even with market-specific requirements such as different voltages, would also make training a lot easier.
Brett Wood, national product planning, research and marketing manager for TMHU, added his take on the likelihood of our seeing a global ISO standard for lift trucks in the near future:
"We're down to 19 sticking points between the ANSI and ISO bodies. Not too long ago there were 40. I think we can have a global standard, even with a few of these sticking points. As chairman of the Industrial Truck Association's General Engineering Committee for the next two years, my philosophy is, let's not keep going against each other, let's move forward with a standard. If it needs to be modified with an A after it, for America, or J for Japan, at least we'd have this base standard that covers 90 percent of the design of a lift truck, leaving just 10 percent that needs to be modified for the US market. I heard 2005 would be a realistic goal for getting this done. There'd be one year to implement it, so maybe 2007 would be a realistic timeframe. If we in the ITA just took 5 percent of our day to focus on some of the remaining sticking points, make some conference calls to get some agreement, we could get there."