The Logistics Matters podcast: Combilft's Martin McVicar on adjusting operations in light of Covid-19; layoffs in logistics; truckers get a pay bump | Season 1 Episode 8

Supply chain companies face layoffs from the economic fallout from Covid-19. Truck drivers are being shown a little appreciation for their work, in the form of higher pay. And one material handling supplier addresses social-distancing requirements in its manufacturing operations, while finding new ways to connect with customers.

Pull up a chair and join us as the editors of DC Velocity discuss these stories, as well as news and supply chain trends, on this week's Logistics Matters podcast. Hi, I'm Dave Maloney. I'm the editorial director at DC Velocity. Welcome.

Logistics Matters is sponsored by Fortna. Fortna partners with the world's leading brands to transform their distribution operations to keep pace with digital disruption and growth objectives. Known worldwide as the distribution experts, Fortna designs and delivers intelligent solutions, powered by their proprietary software, to optimize fast, accurate, and cost-effective order fulfillment. For more information, visit Fortna.com.

As usual, our DC Velocity senior editors Ben Ames and Victoria Kickham will be along to provide their insight into the top stories of this week. But to begin today, I would first like to introduce our special guest. Martin McVicar was just 29 years old when he was named Ernst & Young's Entrepreneur of the Year. He is the co-founder and managing director of Combilift, a forklift and material handling solution provider founded in 1998 and based in Monaghan, Republic of Ireland. Under his leadership, Combilift has won many prestigious industry awards, while it continues to grow its range of products, and just two years ago opened a new state-of-the-art manufacturing facility. Combilift has sold over 50,000 units worldwide, and the company exports 98% of its production to more than 85 countries around the world. Martin joins us from Ireland today.

Thanks for being with us, and welcome, Martin.

Good morning, David. Thanks for having me.

For our listeners who may not be familiar with Combilift, can you describe the niche that you hold in the forklift market?

Yeah, well for Combilift as a business, we've been exporting to North America for the past 20 years. And the U.S. itself is our Number Two export market, and I'm pretty confident it's going to become our Number One quite soon. On the niche, we focus on is design and manufacturing forklift trucks to save warehouse space, to make space more efficient, and to handle long products more safely. So that can be from any kind of long goods, from timber, steel, etc. And then in the warehousing distribution, making forklift trucks that work and smaller aisles, and more efficiently.

Now, obviously, the effects of Covid-19 has been a worldwide problem, including things you face as well [in] Ireland. Your company's now practicing social distancing in your manufacturing operations there, and you've had to redesign your building to be able to accommodate that. Can you tell us a little bit about some of the steps that you've taken to ensure safety of your employees?

Yeah. And I suppose, the word, it wasn't actually to ensure safety. We just wanted to be proactive in a number of the approaches we took. And our manufacturing plant is 11 acres on the roof. And we have just over 650 employees, and traditionally we would operate a single shift. But since Covid-19, we made the decision to introduce a two-shift operation. So the maximum number of employees on site at any one time is probably 350 instead of 650 plus.

And while we were making the decision to go two-shift, a number of other measures: We shut down our hot-food canteen area. We segregated our plant into different segments, and we set up in different, smaller canteen areas.

And then some of the other additional measures: To be as proactive and make all our employees feel comfortable coming to work every day, we fitted thermal fever cameras at all the door entrances. So when our employees come in to work on their shift, we're checking everyone's temperature. But it's a contactless system, non-intrusive, where if someone has a high temperature, there will be an alarm to that person. It sends a trigger to our HR department, with a photograph, so we know who may have entered with a high temperature. So we're using that as a sort of precautionary.

And then, on entering, we know have introduced a contactless clocking system—which, traditionally we would have had a fingerprint. So we're trying to make as much contactless as possible, even on our doors.

As many manufacturers, you try to keep as many doors open as possible, so we're not all touching door handles. But for the doors that need to be kept closed, we added a copper film to all the door handles, because any virus or bacteria, most of it will disappear within a matter of minutes from a copper surface, while on stainless steel it can take days.

And then right through the plant, all our employees wear, as a protocol, we wear face masks. And even in our office administration block, if employees are moving around, it's mandatory to wear a face mask. But if you're sitting at your computer desk, it's not. So that's just maybe a quick snapshot on some of the measures, which makes it very easy to introduce social distancing.

And for our business, we have markings on the floor. So we're trying to keep a six-feet social distancing in any area in the plant

Has that affected how you set up your manufacturing lines, to be able to maintain that six-feet distance?

It hasn't affected our assembly lines, because, you know, our products that we manufacture—forklift truck—are quite sizable. So the distance between one vehicle on the assembly line to the other, six feet plus. But what we've done, we have four moving assembly lines, and on our fourth shift, we operate Lane One and Lane Three. The second shift is Lane Two and Lane Four. And we alternate that week on, week off. So 50% of employees are on morning shift this week, and then the other 50% are on morning shift next week. So, we've kept it quite flexible, so everyone is pretty happy with the routine, and they know they're scheduled for the coming weeks ahead.

Now, that seems like you've made some very good steps there, that have been able to maintain your operations while being the least disruptive to your employees.

Since you make your forklifts—they're articulating kind of forklifts that you manufacture—I would imagine that they're designed, obviously, for saving space and working in narrow-aisle configurations. Your phone has probably been ringing off the hook with customers wanting to expand the available space within their facility by reducing the amount of storage space that they have, or reducing the aisle width within those racks. Can you explain what some of your customers are looking for right now?

Yeah. And that's been our traditional model. You know, we're bringing value to our clients because we're allowing them to do more in less space.

But what we have noticed over the last month to six weeks: Many existing clients, and even potential clients, are calling us to see how can we assist them to increase their production floor area. Not because they want to produce more today, but they want to get back to normal production, with the social distancing in effect. Because as we know, many manufacturing plants, they don't have the luxury to have social distancing automatically built in. 

But the real value of our products: When you look at any manufacturing plant—it doesn't matter what product you manufacture—you have raw materials coming in, your production in the middle, and your finished goods going out. But all businesses need to have space to store the raw materials, the need a space to store their finished goods. So that we can allow our potential and existing clients is to reduce the aisle width where they're storing the raw materials and finished goods so they can free up more production space to allow them to get back to normal production with social distancing in effect.

Now, of course, as we know, there are some industries that are really booming because of Covid-19, but not so many. But for the ones that are really booming, they are really anxiously looking just to get more production space to produce more product.

Right. And I would assume the same would apply to your warehouse customers as well, with wanting to free up more space so that they can be able to pick the orders they need to do, but have those workers separated with social distancing as well. So they need that floor space in addition to that.

Absolutely, David, because—you're absolutely right. In a distribution center, you know, where you're doing your day-to-day picks, in the picking stations, that's usually where social distancing is hard to find. And what our products allows some clients to do is narrow down their aisles in the distribution center so they can free up more production floor area to get on with their normal day-to-day picks.

But of course, we all see the boom in the e-commerce industry, which is really driving the demand for warehousing space. So, in our opinion, across—we deal in 85 countries around the world. But warehouse space is at the most premium we have ever seen and social distancing is one driver, and of course e-commerce in a few other industries is another.

Social distancing also means that you've had to be innovative in the ways that you interact with your customers. Can you explain how you're doing that?

Yeah, because I think any clients that are familiar with our Combilift Aisle-Master articulated vehicles is, where we bring real value is, we have a team of 10 engineers that we prepare free warehouse layouts, warehouse design. And we've been offering that service now for eight to nine years. And, really what we're doing is, even though we're a forklift truck manufacturer, we really are a space-saving solution provider. And with our team of engineers, we prepare free warehouse designs to show our clients what value our products can bring, so they know exactly how many more pallets they can store in the square footage they have.

But the challenge—as you can appreciate, with international traveling pretty much non-existent, domestic travel has been restricted in many countries, and even, I'm sure across the U.S. and North America, there, in the last number of weeks. We—it's more challenging to get in front of customers. And then on top of that, there are certain companies do not want to have vendors walking through their production areas or walking through the distribution centers.

Using very simple technology, such as FaceTime or WhatsApp, where we will call a potential client on a social call using FaceTime or WhatsApp and say, "we're gonna call you," arrange the time, ask the potential clients if they're happy to walk through their warehouse. And because they know what we're planning to do, they're very willing to put their phone or smartphone into video mode, walk around their warehouse or their production floor, show us the pinch points and challenges they're encountering. And, taking some snapshots, that gives us a lot of data that we can figure out, "well, what can our product, how can we bring value?" And within 24 hours, we can come back with a proposal drawing up, if a potential client was using our vehicles, how many more pallets they can store in their building.

And using that simple technology has allowed us to get in front of clients that it would have been very difficult otherwise because of Covid-19. And we believe with this little bit of technology, we're going to continue to use this even post-Covid-19, because as we all know, traveling is going to become more expensive, particularly when it takes earnings, in at least over the next coming year or two

So there's very good innovation being applied to the kinds of technology that allows you to do that.

Speaking of innovation, like many companies in our space, you stepped up to offer your manufacturing capabilities to help hospitals and medical professionals. And your team developed a splitter device that turns one ventilator into multiple ventilation stations. Could you tell me how it works, and how you came about with that solution?

Yeah, well, in fact, my last flight I took was, I was at Modex in Atlanta, early March. And on my way back from from Atlanta, it was very much in the media. Didn't matter whether you're in North America or in Europe, or in Asia, there was really many countries were getting concerned about the potential lack of ventilators because of Covid-19 ramping up. And, you know, many countries, including North America, got General Motors, NASA, and you know, different different organizations came together to develop and build ventilators.

And in Combilift, we're thinking, how can we really assist either Ireland or the world in terms of building ventilators? Say rather than being another me-too manufacturing ventilators, we like to always analyze what is the real challenge here? And the challenge is—in our opinion—was that it wasn't just that there was a potential lack of ventilators, but there's a lack of units there to ventilate patients. And my first encounter with the Irish HSE Health Authority was to analyze how ventilators operate, because, as you can appreciate, medical devices is not our core business. But when we analyze the details, there is enough flow from a standard branded ventilator to do up to maybe four or five patients.

So very much with the Combi-Ventilate, which is a ventilator splitter we have developed, a bolt-on or an attachment that goes onto a standard branded ventilator, but it can ventilate two or more patients. And not only can we ventilate, but we can actually control the flow of oxygen and air to Patient A and Patient B and monitor, the same as you'd have with a conventional ventilator.

And the other plus is, what we've really brought to the world stage is, a splitter unit that is about one-quarter, or 25%, the price of a standard branded ventilator, but it allows countries that are challenged—facing challenge with a lack of ventilators to double their capacity very cost effectively to deal with this Covid-19 challenge.

But we very much set this up as a non-for-profit business. Because for us, we don't want to be profiting on this. But it is an opportunity for Combilift that we feel we make to ... develop more in this field going forward, since we've got more of an understanding of that medical factor.

Thank you, I appreciate that you've done your part to help in this pandemic. Thank you, Martin, for your time today. We really appreciate you spending time with us.

We'd like to encourage our listeners, if they'd like more information on Combilift, please visit Combilift.com.

Now let's turn to some of the other supply chain news from the week. Ben, you wrote a story this week that companies are balancing the economic impact of Covid-19 shutdowns with the pain of potential layoffs.

That's right, Dave. As Martin was saying, it's been very clear how the impact of the coronavirus has really hurt the results of a lot of companies in every corner of the world. And we came across, this week, a survey of employers that indicated, a little bit, how that impact was really hitting them on the bottom line, there, which is their employment practices. And the most painful part of that, which is layoffs.

So, this was a survey that was conducted between April 13 and May 5—so quite recent numbers—by LeadersUp, which is a Los Angeles-based staffing agency that focuses on youth and diversity. They had looked at some specific logistics-sector employers, particularly those at LAX and Van Nuys airports in California, and also a number of employers who run a freight and commercial trucking division of a transportation and distribution company. They did not specify the company. And, some of the numbers were really striking. The air-travel industry, as a lot of us have heard, has been really impacted by coronavirus in terms of its hiring here. So, there were 80% of the companies in the air-travel sector that have either laid off employees, closed operations, or furloughed employees. And that's compared to just 35% of non-air travel sector employers who've done those things. So, 80% to 35% really shows that there's some incredible job loss going on in certain sectors.

That actually fit in well with some other information that we've been tracking on the magazine. Just as Martin was saying that a lot of the logistics companies are taking some extraordinary steps to help out during the pandemic, and take a pause in looking at profits, necessarily. We have come across a number of examples of that, in terms of some executives in the sector. For instance, at FedEx, the founder and CEO Frederick Smith, who's a very well-known figure in the area, had received, by his request, a 91% pay cut for the next six months. And similar things had happened at Knight-Swift Transportation, also at Manhattan Associates. So, it's really that there have been some extraordinary efforts by companies to try to lessen the blow of some of those painful layoffs.

Yeah, while products have been on the move throughout the pandemic, it certainly still has affected, greatly, the industry, and that's something we'll continue to watch.

Turning now to Victoria: You reported on how pay for truck drivers—who, of course, are instrumental in being able to deliver all those products that we're ordering, ordering for home delivery, as well as getting products to stores—you reported how truck drivers are bringing home higher paychecks now, on average. Can you share more about that?

Sure. Earlier this month, the American Trucking Associations came out with their driver compensation study, which showed that, you know, fleet owners are really stepping up to, in their estimation, after surveying their members, to come up and pay drivers more, compared to their previous study, which was done in 2017. So what they found was that truck drivers earned an average $58,000 in 2019—that includes bonuses—which was about a $6,000 increase compared to the previous study in 2017.

And what the researchers sort of surmise from this—and there's a whole lot of data that is available to members—so, what we know, according to what they said the members said to them, was that this is a real response from fleet owners to attract drivers in what many have called, the last few years, a driver shortage, nationwide. So they're seeing that fleets are stepping up and paying more in terms of pay and benefits.

Another interesting factor that they found was that more large fleets are hiring, or they hired more entry-level drivers last year, which they say is most likely a result of industrywide efforts to attract and train drivers.

Another story that you've also tracked, too, is the American Logistics Aid Network, or ALAN, is opening their nominations for the Humanitarian Logistics Awards. Can you share about that?

Yeah, sure. So the American Logistics Aid Network just opened up this week the nomination process for its fourth annual Humanitarian Logistics Awards. And these are awards that recognize companies and individuals for their supply chain relief efforts—efforts of logistics companies to get needed supplies where they have to be in a disaster or crisis.

So, you can nominate yourself, or you can nominate an organization or academic. There are four different award categories. The nomination process is open till July 10. And you can just go to ALANaid.org if you're interested in that.

And they're really expecting, and I think hoping, for a lot more award nominations this year, just given the past hurricane season, and certainly the pandemic and the heroic efforts that we've seen across the supply chain.

But we also want to remind you of our continuing Covid-19 coverage and our list of resources that are available on DCVelocity.com. Go there to check them out.

Thank you, Ben and Victoria, for sharing the highlights of the news this week.

Thank you, Dave. Appreciate it.

You're welcome.

And again, our special thanks to Martin McVicar for being our guest today. If you'd like more information on the stories we discussed on Logistics Matters, be sure to check out DCVelocity.com for details.

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We'll be back again next Friday with another edition of Logistics Matters, when we will take a look at what it takes to be part of Gartner's Top 25 supply chain companies. Be sure to join us. Until then, please stay safe and have a great week.