Genie Industries Plans for Global Expansion

 

GENIE: More space for growth needed in U.S., overseas

 

Out of expansion space in Redmond, and with its sales growing rapidly overseas, Genie Industries Inc. is stretching in new directions to sell its machines around the world.

 

For decades, Genie Industries was one of Redmond’s best-kept secrets. Its blue people-lifting machines were ubiquitous at construction sites around North America, but the once privately held company remained nearly invisible in the local community, eschewing press coverage.

 

But now, five years after being acquired by Westport, Conn.-based Terex Corp., and 10 months after getting new President Tim Ford, Genie is rapidly changing into a global company, and one that’s much more accessible to the outside world.

 

“We’re making the transition from Genie being a company, which it is ... toward philosophically thinking about Genie being a brand. That’s a big transition to make, for the organization,” said Ford, 45.

 

Tucked into an industrial area just blocks east of Redmond’s bustling Whole Foods Market, Genie Industries’ 10 leased buildings cover 843,350 square feet. The company employs 3,200 people in Redmond and 5,000 worldwide, making it the city’s second-largest private employer after Microsoft.

 

BUSINESS JOURNAL Photo/Patrick Hagerty

Tim Ford, president of Genie Industries, demonstrates a boom lift at the Genie showroom in Redmond.

 

 

And Genie is growing fast. It makes up 75 percent of Terex’s Aerial Work Platform division, which grew 41 percent between 2005 and 2006, and hit $1.7 billion in sales in the first nine months of fiscal 2007. Terex itself, headquartered in Westport, Conn., grew 20 percent last year to $7.6 billion in 2006 sales.

 

Genie’s machines lift workers, and to a lesser degree materials, up to job sites. The machines are the ladders of the 21st century, and Genie makes them in a wide array of sizes and configurations. Small battery-powered scissor lifts can operate within existing buildings, while the largest machines are driven by internal combustion engines, and can reach more than 100 feet into the air. Nearly every machine Genie makes is the same cyan blue, chosen by the founders in the 1970s.

 

“What these products do is replace the need for scaffolding, in a more productive, and safer manner ... Boom products are much safer, in terms of worker safety,” Ford said.

 

Genie is one of the two largest producers of people-lifting equipment in the world, each controlling about 40 percent of the global market. Its main competitor is JLG Industries Inc. of McConnellsburg, Pa., which is of similar size and which makes a similar line of products. JLG is owned by Oshkosh Trucking Corp., of Oshkosh, Wis.

 

Around the world, Ford is re-creating Genie into a global entity that is developing a significant manufacturing presence in Europe and Asia, to serve its customers there. Most of Genie’s current growth is from overseas markets, particularly in Europe, where sales this year are up 46 percent over last year. While the company has historically sold two-thirds of its production in North America, Ford said the Asian and European portions are growing fast enough to eventually account for two-thirds of the total.

 

Guy Ramsey, publisher of Lift and Access magazine, based in Iowa, said the European and Australian markets show potential because the per-capita penetration of lift machines is about half that of the United States, despite a similar standard of living.

 

But, while he stretches Genie, Ford also is working to draw the company’s people into association, in part by developing a new 39,000-square-foot Redmond headquarters. For the first time, the company will have a central cafeteria large enough to hold all the employees. It also will have a company store.

 

“We wanted to have a place where we could gather people together,” he said. “One of the biggest challenges as a leadership team, is learning to deal with each other and customers, when we’re not all in one campus.”

 

But, while Genie grows, its directors pust cope with the fact that its Redmond facilities are essentially out of growth space — despite a vigorous lean manufacturing program that has squeezed more production into the same buildings.

 

Visit Genie’s Building 3 assembly plant in Redmond, one of four assembly buildings on the site, and the constraints on local growth become clear. Two entire assembly lines are crammed into just 91,000 square feet, with space so limited that one short feeder line, where the machines’ main lift booms are assembled, must go backwards to marry up with each machine.

 

Several hundred workers hustle to mesh parts and assemblies with the moving line, installed only a short time ago, in September. A giant digital board on one end of the building counts off minutes until the next completed machine emerges. Building 3 pumps out 70 machines a day, each of which drives out under its own power.

 

All this works only because of Genie’s lean manufacturing program, in which workers for years have been reconfiguring all of Genie’s plants for maximum efficiency. At the end of every shift, workers meet to evaluate their process, and together they decide how to restructure the factory floors though periodic “kaisen” events, the same system used by Toyota Corp. to achieve that company’s vaunted efficiencies.

 

Following the Toyota model, the factories have been rebuilt around what’s called a “pull” system of inventory control: Parts and assemblies are supplied only as workers ahead signal that the parts are needed, just in time for production, eliminating the inventory buildup that used to occupy much of the factory floor.

 

Employees called “waterstriders” move quickly through the plant, grabbing parts carts as soon as they’re emptied, and moving them back to points of production for the carts to be filled again. Outside suppliers are part of the pull chain, and some of them make 10 deliveries a day, taking away empty containers to be filled and returned again. Almost the entire process works by visual signals.

 

“We’ve quadrupled production without any increase in the footprint, we’re about at our limits,” said Terex Chairman and CEO Ron DeFeo, adding that Genie’s lean system is so advanced that it has set the standard for the rest of Terex.

 

And while Genie in 1998 opened a facility in Moses Lake, giving it more room to grow within the state, it’s up against another issue: replicating its tradition of service to newfound global customers.

 

While Genie has worked hard to stay price-competitive and to innovate technologically, the core of the company’s success has been offering impeccable service, and instant response if there are problems with its machines.

 

“This is not an innovation business, this is a customer-relations business and service business,” DeFeo said. “I think Genie has always had a very strong culture of customer service, and excellent relations with customers.”

 

Ramsey agrees.

 

“They’re fairly simple products, they’re not Boeing aircraft,” he said of Genie lifts. “They (Genie) have good products, but customer support has always been superior to their products. If you build a fairly standard piece of equipment, what separates you from everyone else is customer service.”

 

Ford already has launched the company’s solution to maintaining the company’s growth while keeping its service reputation intact: moving production for overseas markets closer to those customers.

 

In January, Genie opened a boom production line in Italy, and will soon start a second plant there. The company also is preparing to start production of scissor lifts in the United Kingdom, and expects to be manufacturing in Asia, for the Asian market, by 2009.

 

“Around here, this globalization thing is new, difficult and uncomfortable,” Ford said, conceding that it requires employees to think of themselves differently. “When the company was growing up it was all here. We (now) have customers around the world demanding us and requiring us to serve them more locally.”

 

Ford expects that most U.S. manufacturing will continue at the Redmond site, adding that the plant will also take on new roles as the center of research and development for the expanding company.

 

“We will be the design, engineering and technical support, and manufacturing center," he said.