MARCO ISLAND, Fla.—Parker Hannifin Corp. is combining its industrial and hydraulic hose businesses into one division, though officials said customers shouldn't see any difference in their dealings with the company.
The combination of the new Hose Products Division will be effective July 1, the beginning of Cleveland-based Parker's fiscal year, top officials of the hose business said during NAHAD's annual convention, held April 28 through May 1 in Marco Island.
Parker said the consolidated division enables it to:
- Simplify products, services and customer experience;
- Support and grow OEM and distribution channels;
- Leverage resources to quickly design, develop and introduce new products;
- Merge technical expertise across hose platforms; and
- Refine and capitalize upon manufacturing efficiencies.
"The advantages we will have as one large division within Parker Hannifin obviously is the scale of the business," said Dan Barrett, currently general manager of the Industrial Hose Products Division within Parker's Fluid Connector's Group. "With the scale is going to come efficiencies. With those efficiencies we are going to be able to remain cost-competitive and keep growing our business in a global market."
Ben Mather, vice president of operations for the Fluid Connectors Group's Global Hose Platform, said the big picture is that both the industrial and hydraulics hose units have been a strong group for the last several years, with each posting double-digit percentage growth.
"Doing this right now will help us with speed. It will help us with how we develop compounds and new products, and we will be a lot more efficient so we can really take advantage of the growth, and even accelerate it," Mather said.
The Parker executives said they started telling its larger distributor and OE customers in mid-April, and wanted to make a public statement of the plans to ensure that all customers and suppliers received a consistent message.
"It's a good thing for everybody in the business," Mather said. "It's a good thing for our distribution and OEM partners, and it's going to really help us position for the long term."
While there will be internal changes in how Parker will manage its hose resources—combined the Hose Products Division has manufacturing operations in six countries—they were adamant that it will continue to sell the products through the current sales channels. That includes the NAHAD distributors that sell a large percentage of the firm's industrial hose lines.
Barrett said Parker has been in this end of the business since it acquired the Dayco hose business in 2001 and that it has gotten to know the market well in that time. "In order to grow this business, it's important to us to remain in the same growth plane, channel wise and how we manage the business," he said. "So there will be no changes from the industrial hose side when we combine the two businesses as far as how we manage the channel, where we're going in the channel, and with the current distributor agreements."
Doug Howse, current marketing manager of the Industrial Hose Division, said that hydraulic hose typically is sold in the fluid power market and industrial hose in the fluid transfer market.
"It's two different products, two different markets and two different channels," he said. "We will continue to engineer and market with that strategy. The NAHAD distribution will still be the strong distribution channel for industrial hose."
He said the product manager teams will remain intact for both divisions. The sales channels do have some overlap, as the distributors who deal predominantly with industrial hose often sell some hydraulic hose, while the fluid power distributors typically do more with hydraulic and not as much with industrial.
But even where there is that bit of overlap, Mather said the business still will have experts that specialize in hydraulic, industrial and fluid transfer lines.
There will be some shifting in the leadership of the combined unit. Mather said that Ty Doyle will be the new general manager for the Hose Products Division. He will be based at the unit's headquarters in Wickliffe, Ohio, in the same building both were based at previously.
Doyle had worked in Parker's hose business for 15 years before running a division in the firm's refrigeration business the past four years.
Barrett will work with Mather and serve as the global hose manufacturing manager. Matt Pritchard, currently marketing manager for the hydraulic hose business, will hold that title for the combined Hose Products Division. And Howse will run the aftermarket programs for Parker's motion groups, including hydraulics, pneumatics and fluid connectors.
The two hose units have quite a bit of complementary manufacturing methods, where they have been making some products for each other. Howse said with one division it will eliminate a lot of the "inefficient transactions," within the production process.
Mather added there will be one profit and loss statement for the combined business "that's very closely aligned from product development to compound development to raw material procurement."
Barrett said the new structure will help to more easily deal with the ebbs and flows of the business cycles. "We're at a peak right now," he said. "Both divisions are extremely busy right now, with record years for both divisions (Parker doesn't break out sales for individual divisions). We know that next business cycle is going to come, and we want to position both units in a better place for the next cycle. We're going to be more competitive and we're going to be continuing in a growth curve regardless of the cycle, and that's our main ambition."
He added that feedback thus far has been extremely positive, especially because the message is that Parker wants to continue the growth path it's been on. "Distributors know that means new products, new services and new features coming out to them," he said.
Mather said in the past few years Parker has made multi-million-dollar investments into its hose manufacturing to add mixing capacity, braiding equipment, hose manufacturing equipment and CNC machining for metal needs.
Noting that both hydraulic and industrial hose units do the majority of business through distribution, he said it's important to get the message out that there are no plans to change the channel strategy.
"Every piece of that channel is critically important to how we got here and how we're going to get to the next level," Mather said. "There is no way we could get to all of the customers that our products ultimately touch without that distribution channel. This is the model that will continue to be the model going forward."