NPM Capital has invested in Vanderlande Industries – a logistics process automation services provider based in Veghel in the south of the Netherlands – for a record 29 years. Now, following the company’s acquisition by Japanese-based Toyota Industries, it’s time to take stock.
With NPM as its main shareholder, Vanderlande became a market leader in baggage handling systems and process automation systems for warehouses.
When NPM Capital acquired a stake in the Veghel-based company back in 1988, it was a successful business looking to branch out into the international market. At the time, the company boasted a healthy bottom line and a respectable annual net profit of – converted into euros – €2.6 million.
Two years previously, Vanderlande secured a major new contract for providing baggage handling services at Munich’s then newly opened airport. The financial support provided by the new partner could not have come at a better time for Vanderlande Industries, which was just then gearing up for an expansion.
Fast-forward almost three decades, and the company NPM Capital has helped to build is the global market leader in logistics process automation at airports and in parcel handling services, as well as being a leading supplier of logistics process automation for warehouses and distribution centres. More than 600 airports worldwide currently use systems manufactured by Vanderlande, along with twelve of the top European e-commerce companies. The company increased its net profit twentyfold over the past 30 years to nearly €49 million.
The company’s new owner, Japanese-based enterprise Toyota Industries Corporation (TICO), has acquired a healthy and innovative company and will give Vanderlande the opportunity to continue its present growth in the coming years. The acquisition was completed smoothly and to the satisfaction of all parties involved.
However, as Rein van der Lande recalls, the last change of ownership was rather a different story.
As the company’s managing director at the time, he was closely involved in the negotiations conducted with NPM Capital and other potential acquisition partners. Rein van der Lande was the second generation to manage the company, which started out as a family business. Having founded a trading company in 1949 followed by an equipment manufacturing plant some years later, Rein’s father, Eddie van der Lande, entered into a partnership with US -based engineering company Rapistan in 1963, resulting in the merger company Rapistan Lande (see timeline below).
After several changes in ownership, Rapistan Lande ended up being acquired by US private equity firm Forstmann Little in the late 1980s. Van der Lande: ‘We had legitimate concerns that they would sell us and Rapistan to a competitor. Since we wanted to prevent that from happening, we put our foot down and told them we weren’t going along with it,’ Van der Lande says.
“NPM gave the management the freedom and peace of mind they needed in order to do what they do best.”
Although, as Van der Lande explains, no specific goals were articulated at the time, it was clear that NPM would commit to investing in the company over an extended period of time. ‘They gave the management the opportunity to do what they did best – and that gave us the peace of mind we needed to continuing growing at our own pace.’
There was certainly no shortage of growth opportunities at that time: the equipment manufacturing plant from the early days had grown into a manufacturer and developer of automated transport systems for distribution centres, parcel services, and other customers. But the really serious growth turned out to be in baggage handling systems.
The company’s growth was spurred by certain developments at the time. When a suicide bomb exploded aboard a US commercial airliner (Pan AM flight 103) over Lockerbie, Scotland in December 1988, security requirements for checked baggage were tightened. Van der Lande: ‘Airport security processes needed to be overhauled. New types of machines were introduced to check baggage – X-Ray scanners – and they needed to be integrated into the overall baggage handling process. We had spent a lot of time analysing how these types of processes could be organised efficiently and were able to adapt our technology and benefit commercially in the process.’ The 2001 attack on the World Trade Center in New York would see a further enhancement of baggage screening procedures.
“Vanderlande is growing steadily but not consistently.”
This made Vanderlande one of the first companies to recognise the growing importance of IT in automated systems, investing in it at an early stage. Van der Lande: ‘Remember that, besides security requirements, the massive increase in air travel also helped to create an urgent demand for smart baggage handling solutions – I would say it played an even bigger part. The number of people in different parts of the world who can afford air travel has grown in recent years.’
As current CEO Remo Brunschwiler explains, these external trends also ended up changing Vanderlande’s corporate profile. ‘We essentially went from being a supplier to airports of baggage handling systems and sorting machines to a company that provides integrated system solutions to support the baggage screening process. There was a definite need for that, and the global increase in air traffic volumes provides a solid basis for a company to tailor its business operations to.
A similar volume growth was visible in the early aughts in parcel delivery services and distribution centres. The emergence of e-commerce saw a growing number of consumers ordering items such as clothing and electronics online. Van der Lande: ‘The great demand among the public for fast and efficient handling practically compels companies to automate and mechanise their fulfilment processes.’
This created yet further opportunities for Vanderlande to optimise these processes through the use of smart solutions. Brunschwiler: ‘More shipments also means more parcels that need to be collected, packaged, dispatched, and, in many cases, returned. Vanderlande provides state-of-the-art solutions in most of these areas.’
One of the company’s successes has been supplying the packaging and sorting system for UPS World Port, its largest distribution hub at Louisville Airport in the US, which opened back in 2000. The sorting facility is equipped to handle up to 2.6 million parcels a day. Vanderlande has helped UPS in recent years to double its processing capacity to its current size – while allowing operations at the centre to continue to run smoothly throughout.
A third market in which Vanderlande operates, the food industry, has also undergone rapid changes in the past fifteen years, and here, too, the company was quick to provide the smart solutions needed. Brunschwiler: ‘Distribution centres where much of the work is still handled manually are being transformed into automated warehouses. Customers who order items online are reaping the benefits of our technology, which makes it possible to collect a growing number of items from the warehouses at an increasingly faster pace. Online grocery shopping will become more popular in the next few years, which is sure to provide new opportunities for Vanderlande as well.’
“We essentially changed from a hardware manufacturer to an engineering firm, a process developer.”
All these changes in Vanderlande’s various markets compelled the company to evolve, over time, from a manufacturer to a developer of IT solutions. Van der Lande: ‘External changes have greatly impacted operations at Vanderlande. We essentially changed from a hardware manufacturer to an engineering firm, a process developer.’
‘Demand for smart software solutions has only increased in recent years, along with demand for integrated systems and their maintenance,’ Brunschwiler adds. ‘Our markets are growing and we have expanded our knowledge and expertise in these areas. The same is true for our employees, who have also developed their skill set over time, and we have also been able to attract talented people with expertise in highly specific areas.’
The trends in information technology and the company’s early awareness of the significance of these trends for the various markets have helped it to evolve into a multinational with operations on all continents. Fourteen of the 20 largest airports in the world currently use baggage handling systems manufactured by the Veghel-based company.
The acquisition of Vanderlande by Toyota Industries marks the beginning of a new stage in the company’s history. Brunschwiler: ‘The biggest challenge is generating sustainable profit growth. How can we achieve healthy growth while continuing to deliver on expectations and at the same time maintain our leading position in the market?’
Van der Lande: ‘A journalist once said: “Vanderlande is growing steadily but not consistently,” and I felt that observation was dead-on.’ NPM Capital turned out to play an important role in the background. ‘For sure, they have been one of the driving forces behind our success. They helped us reach the next level by remaining in the background and placing their trust in us. NPM has always been a solid partner to the management in that sense, precisely because they give them the freedom they need in order to do what they do best.’
Want to read more about Vanderlande? Please read the full article in Capital Magazine #09