Paving the way for further growth

Optimised production processes at core plants and a new factory in the Czech Republic are among the KION Group's plans for further profitable growth.

The KION Group is paving the way for further profitable growth with a long-term capital expenditure programme as the European market for forklift trucks and warehouse technology gathers pace. In total, Linde Material Handling's core plant in Aschaffenburg is set to invest roughly €60 million through 2021 and around €23 million is earmarked for the core STILL plant in Hamburg over the same period.

The further optimisation of production processes and internal logistics will make the core plants run by KION's two premium brand companies even more competitive and cost-efficient and will create the capacity for medium-term growth. This should enable the group to gain maximum benefit from global growth markets as well as the resurgent European premium-product market.

As the world's largest specialist supplier of industrial trucks and associated services, the KION Group also aims to meet the market demand for vehicles in the value and economy segment in Europe even better and more efficiently. To this end, the company is planning to build a new plant near Pilzeň in the Czech Republic, primarily to supply the markets in eastern and southern Europe. The ground-breaking ceremony is scheduled for October and production – initially of existing warehouse technology products – is planned to start in early 2016. Around €12 million will be invested in setting up the plant, where about 200 people will initially be employed.

"Expanding our leading position across the whole of Europe"

"The capital invested in our European plant structure shows that our home market of Europe continues to play a key role in our growth strategy – alongside the USA and emerging markets such as China," said KION Group CEO Gordon Riske. "Optimised production processes in our core plants and the new plant in the Czech Republic will not only play an important part in maintaining the leading position of the KION Group in western and eastern Europe, but will also help us to extend our reach by better meeting the needs of the value and economy segments."

The core Linde MH and STILL plants in Aschaffenburg and Hamburg remain centres of excellence for their flagship IC and electric trucks and reach trucks in the premium segment. The objective of the capital expenditure programme is to enhance the KION Group's medium-term profitability by making the production of core products more efficient. Around 2,600 people work at the Linde site in Aschaffenburg and around 2,100 work at STILL's core plant in Hamburg.

The purpose of the new plant in the Czech Republic is to help the KION Group to supply locally produced trucks for the non-premium segments in eastern and southern Europe, enabling the group's growth to outstrip the market. The group's plan is to manufacture value and economy trucks as well as smaller warehouse-technology products tailored precisely to meet regional needs in these market segments. The current generation of Linde reach trucks will also be produced in the Czech Republic.

Further optimised production processes, proximity to customers and the consistent exploitation of economies of scale form part of the KION Group Strategy 2020 that was launched in March. By 2020, the KION Group aims to have closed the gap with its biggest international rival, and at the same time to have expanded its position as the most profitable player in its sector. The company also intends to make more efficient use of capital employed and to increase its resilience to provide an even better cushion against economic crises.

Ms Neuß, why is the KION Group planning to establish a new Linde plant in the Czech Republic?

The KION Group and its brand companies intend to grow internationally and gain market share. Besides our home market of western Europe and the fast-growing Asian and US markets, we are also targeting eastern Europe. That is why we are planning to set up a new plant near Plzeň in the Czech Republic where trucks destined for the southern and eastern European markets are to be made. The aim is for us to be closer to our customers.

Which trucks are to be built at the new plant?

The plan is to manufacture economy and value products there as these will help the KION Group to fully capitalise on the growth in southern and eastern Europe by offering products tailored to local customer requirements. Production of the latest generation of Linde reach trucks will be relocated to the plant in order to launch manufacturing operations and help the new Czech team get up to speed.

Are these economy and value trucks already part of the Linde portfolio?

The economy and value trucks to be manufactured in the Czech Republic are either ones that were developed in Asia or ones that are currently still in development. The new plant means we have an additional site where they can be built.

Does the new production line have an impact on the Linde core plant in Aschaffenburg?

Relocating the production of the latest generation of reach trucks will enable us to manufacture Linde's core products – IC trucks and electric forklift trucks for the premium segment – more efficiently and competitively. Aschaffenburg will remain the Linde centre of excellence for IC trucks, electric forklift trucks and reach trucks. The relocation will not lead to any job losses. By investing around €60 million at the core plant in Aschaffenburg between now and 2021, we will be able to optimize production processes and internal logistics and structure them more efficiently. This comprehensive programme of modernisation will allow Linde MH to continue to grow sustainably – including in Aschaffenburg.

When is the new factory in the Czech Republic scheduled to go into operation?

The ground-breaking ceremony is planned for October, production is due to start in early 2016. This should ensure that we remain a step ahead of our competitors in this important market. Plzeň was chosen for a number of reasons: we will be close to our end customers, and the Linde core plant in Aschaffenburg and our Linde Pohony operation (LiPo) in Český Krumlov will also not be too far away. On behalf of the KION Group, LiPo has been making electric drive axles in Český Krumlov since 1998 and hydrostatic drive axles since 2010. Another important factor was the proximity to the labour market of Plzeň.

As Chief Operation Officer (COO) Sabine Neuß is responsible for production at Linde Material Handling since 2013. The qualified mechanical engineer has a wide-ranging experience in the running of production plants and product lines.