3/22/2010

Toyota Industries Corporation (TICO) today announced it is formalizing the management and operations structure of Toyota Material Handling North America (TMHNA) to further strengthen the Toyota and Raymond brands in North America. This restructuring allows all TMHNA organizations to better collaborate on business efficiencies and share resources resulting in continually improving levels of quality, service and support.

TMHNA is comprised of Toyota Industrial Equipment Mfg., Inc. (TIEM); Toyota Material Handling, U.S.A., Inc. (TMHU); and The Raymond Corporation.

TMHNA will be headquartered at Toyota's facilities in Columbus, Ind. The new management and operations structure will strengthen North American regional coordination, while continuing to grow the existing brands and maintaining distribution channels for Toyota and Raymond.

TICO formed the Toyota Material Handling Group (TMHG) to leverage the Toyota and Raymond brands. In 2005, TMHNA was formed by TMHG as a framework to support the North American market.

Modern's lift truck industry expert, Tom Andel has been following the campany's developments.  He recalls:  More than ten years ago, Toyota Industries Corporation (TICO) purchased BT Industries, making The Raymond Corp. part of the Toyota Material Handling Group (TMHG). Fast forward a decade. This morning Toyota sent around a press release announcing that the relationship between Raymond and Toyota would now be solidified into one management organization under Toyota Material Handling North America (TMHNA).

To make sure these two entities act as a united team, James Malvaso will be TMHNA's president and chief executive officer. He'll resign as Raymond's president and chief executive officer. Charles Pascarelli will be appointed president of the Raymond Sales division while Michael Field will be appointed president of the Raymond Operations division.

This is interesting news to those who follow the comings and goings of the lift truck industry, but the question that occurred to me when I heard about the announcement last week was, "Why now, after all these years?" The only person who could answer that question with authority is Mr. Malvaso himself, so I had a phone conversation with him last Thursday. In the following interaction, he answers that question and explains the significance of this news to customers and dealers.  

Andel: What's the significance of making this announcement on March 22, 2010-a decade after Toyota acquired Raymond?

Malvaso: At that time it was acknowledged [the two companies] needed to coordinate. Instead of forcing things right away we decided to let things evolve. I see this announcement as the natural result of that evolution. It's the logical next step. You start acknowledging each other's existence, you work a little bit together, you start to see benefits, and as you get more comfortable you combine the visions of the organizations into one and operate as a great company. 

Andel: How will this affect product line development?

Malvaso: Given the economy and the amount of volume available in the market, this is a very difficult time to spend significant resources on new product introductions. That said, the electric truck side has gained a larger percentage of the market than in the past. Motor and control technologies have evolved nicely and there will be more dialog between our R&D organizations to look for commonality in components and see if we can reduce our manufacturing costs and design costs. There will be a continued emphasis on the information side of the business. Raymond's iWarehouse is an example of customers' desire to know more about their operations. I don't think that will go away. But at the industry level there can be less emphasis on product and more on the value that the manufacturer and distributor can bring to the customers to help them reduce operating costs.  

Andel: Through this announcement, what's the message to your dealers and what are their concerns, if any?

Malvaso: The Raymond dealers are less concerned than the Toyota dealers. I'm a known entity in the Raymond world and although they know me in the Toyota world, they don't yet know how I operate. I'm telling them that we have a mutual interdependency. The manufacturer can't survive without a dedicated distribution organization, and distribution can't survive unless it has the products and support from the factory. We have very similar objectives, so it's more a team than manufacturer and distributor. It's an enterprise we have to develop to best serve our customers. 

Andel: Will there be changes or consolidations at the manufacturing level?

Malvaso: In North America we've already done the major consolidation by moving reach truck manufacturing from Brantford, Ontario to Greene, NY. We will assess the offerings we have across the lines and make sure we're manufacturing the right products at the right places. I think we already have it right. We can work better together in procurement and in inventory management and in logistics. We will continue to emphasize continuous quality improvement throughout all operations. Every month we get our manufacturing people together in a room to talk quality and TPS [Toyota Production System] best practices. That will continue. In fact, that will be amplified now that we're one organization.  

Andel: Where does Toyota Material Handling North America fit into the whole Toyota organization?

Malvaso: It fits under the Toyota Material Handling Group, along with Toyota Material Handling Europe, Toyota Material Handling International, Toyota Material Handling Australia, Toyota Material Handling China, and Toyota Material Handling Japan. What is neat about this is we can cut through all these slices horizontally. Wherever our customers go as they get more international and China heats up, we'll be able, with the click of a mouse or the dial of a phone, to coordinate horizontally with any country in the world. We'll be better able to coordinate our production, engineering and product offerings. With national accounts demanding more and more I don't know how anyone can rival us. 

Andel: What's the impact on the dealer networks?

Malvaso: We're still committed to our two brand, two channel approach. If you look at Raymond and Toyota's market positions combined, nobody sells more units in North America. We don't have excess distribution in our channels. We need everything we have and we want to capitalize on each other's strengths to keep advancing our position in the North American market.

Andel: How does this grow the relationship between Raymond and Toyota?

Malvaso: This has been an arm's length family relationship. We've done a lot of work together in advancing TPS and quality principles through our factories. We've worked somewhat together on procurement, and we've shared best practices. We're going to take that arm away and operate as true partners. We'll identify synergy opportunities throughout all aspects of our business. On the dealer side we'll coordinate better and we'll work backwards from there through the factories all the way to the very beginnings of the company. That's where we believe there's good potential to improve our performance and partnering, as well as the operating metrics of our combined companies. This is not a consolidation. It combines two solid organizations so we have a single direction and a coordinated strategy.  

Andel: How does this affect you personally?

Malvaso: Although I'm president and CEO of Toyota Material Handling North America, I will maintain chairmanship of The Raymond Corporation. My major function will be to develop and set forth the strategic direction for the four entities we'll have under TMHNA, including Toyota Sales and Marketing, Raymond Sales and Marketing, Toyota Manufacturing and Raymond Manufacturing. These entities will operate in a highly coordinated fashion. I'm looking to solidify the organization so we have predictable performance, so we're structured properly for the new market size we're in. We need to perform as a team and not four separate players. 

Leadership roles

As part of the reorganization, key management positions will be effective April 1, 2010: