Published in Manufacturing
Dematic Corp. is using its Grand Rapids-based tech center to focus on more advanced forms of automation in order to meet the changing needs of its clients. Dematic Corp. is using its Grand Rapids-based tech center to focus on more advanced forms of automation in order to meet the changing needs of its clients. COURTESY PHOTO

Amid growth, Dematic shifts focus to automation as pandemic exposes new customer needs

BY Sunday, August 29, 2021 06:00pm

GRAND RAPIDS — As an executive at a global company serving firms in the e-commerce, logistics and warehousing spaces, Mike Larsson has noticed the needs of his customers change dramatically over the last year.

“A year or two ago, people would say, ‘If I could order something on Monday and get my parcel on Thursday or Friday, I’m still OK,’” said Larsson, executive vice president of the Americas region for Dematic Corp., a supplier of material handling systems, software and services.

“What’s happening now is they want to order something this morning and have it tonight,” Larsson told MiBiz. “Our customers are working on how (to) not only deliver to them the right thing, but at the right time. … The automation has to follow.”

With high-profile retail customers such as Meijer Inc. and Walmart Inc., Dematic must stay in lockstep with the evolving needs of its clients, a process that has accelerated in pace with the COVID-19 pandemic and is leading to changes at the company’s North American headquarters in Grand Rapids, where it employs nearly 1,300 people.

Grand Rapids also houses the $3 billion company’s tech center and R&D efforts, where Dematic is starting to shift more of its focus to software development and more complex forms of automation to build on its rich history of conveyance solutions.

“As we go forward, some of our offerings are changing,” Larsson said. “As we continue to grow, we’re moving to more software and helping our customers there. They look for more complex automation and we have to follow them and hopefully be the leader in the market. We’re looking at the tech center to reflect that.”

As a result of surging demand from its global clients, Dematic has experienced significant growth, according to Larsson, who labeled e-commerce, food and beverage and grocery as high-growth segments of its business in addition to parcel sorting.

Moreover, the new growth opportunities are also changing the talent needs for Dematic.

“We’re still going to do the core of our business of conveyance, but as we grow into these other areas, we’re going to need new skill sets, new capabilities, new talents in order to make that shift,” said Jenny Ferrell, vice president of HR for Dematic. “That’s what we’re looking to build toward in the future.”

With labor pressures crushing nearly every industry right now, Dematic has done a sufficient job of attracting talent, adding 800 full-time employees to its North American operations during the pandemic.

Despite the good fortunes with hiring, Ferrell said that Dematic has roughly 800 additional openings.

“That does not necessarily mean we need 800 people right now, but we’re planning and ramping up for future growth, as well,” Ferrell added. “We continue to invest in this region.”

Good company

Randy Thelen, president and CEO of The Right Place Inc., a Grand Rapids-based regional economic development firm, said his organization meets with at least 500 area companies every year for business retention visits. This included a recent visit to Dematic, where he got a firsthand look at the company’s growth.

“They’ve added a pretty stable head count during the pandemic,” Thelen said. “Those are not the headlines we’ve been seeing (with other companies). That’s pretty exciting to see. I think top talent likes to work on exciting projects and really have their skills tested and put to the limit. Look at what Dematic is doing to bring technology into their products.”

The business retention visits allow The Right Place to help companies address community needs or facilitate potential growth opportunities. 

In June, The Right Place completed an especially ambitious blitz, visiting 119 companies in one month. Staffers determined that an overwhelming number of those companies find themselves on solid footing. Thelen said 80 percent of the visited companies reported growing sales, 95 percent said they are increasing their employment or remaining stable, and 60 percent plan to expand in the future.

“It’s definitely one of those strange markets where the daily headlines around public health issues are certainly sending a difficult message,” Thelen said. “At the same time, the business community in a number of sectors is having a robust time, and we find ourselves in an extraordinarily tight labor market as a result.”

Seeing through the chaos

As the economy starts to slowly crawl out of the depths of the pandemic-induced downturn, it has yet to shake off the lingering effects of COVID-19, namely supply chain disruptions and a labor shortage. As such, the current climate poses its share of challenges for companies looking to expand, especially since corporate decision makers typically thrive on stability and clarity about the future. 

Still, many firms have forged ahead.

“Great companies find ways to push through,” Thelen said. “Companies that can make investments and see though the noise come out the other side stronger. That’s certainly part of our push when we go meet with these companies, to give them a nudge to make that bold decision.”

Growth stories like Dematic’s have been relatively common around West Michigan as the manufacturing, automation, food processing and medical device industries have been positioned to thrive despite the ongoing noise in the economy.

For instance, Byron Center-based grocery distributor and retailer SpartanNash Co. this summer opened its 55,000-square-foot micro fulfillment center in Caledonia to facilitate surging online orders. Kentwood-based surgical and medical components manufacturer Autocam Medical Devices LLC recently announced that it plans to build a $60 million headquarters and production facility in Kentwood. Meanwhile, storage system manufacturer Speedrack Products Group Ltd. is making a $65 million investment in Walker for a new facility that is expected to create 160 jobs.

“It’s sort of a tale of two economies right now, and those that are in the goods-producing spaces are generally doing quite well,” Thelen said.

Automation companies like Dematic are also booming as the economy emerges from the pandemic. To that end, both Holland-based Mission Automation & Design and St. Joseph-based Edgewater Automation LLC have either completed, or are planning, significant expansions.

“I would say it’s another inflection point for (the automation) industry — it’s been on the rise for decades,” Thelen said. “As you forecast, we’re not going to be growing population-wise. … We’re going to have fewer people to do things.” 

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