Exports and Manufacturers and Manufacturing & Technology and International Business

India deal boosts Bastian

October 22, 2007

Little more than a decade ago, Bastian Material Handling had annual sales of less than $35 million. Company officials at the time were concerned about communication between its Indianapolis headquarters and satellite offices in Evansville and Louisville.

Since 2000, its revenue has doubled, to $80 million, and its business interests don't just cross the state, they circle the globe.

This year, the Hoosier-grown company that has become one of the region's largest makers and installers of material-handling equipment received a "record order" from one of India's largest conglomerates--Reliance Industries Ltd.

Reliance is India's largest private-sector enterprise, with revenue in excess of $27 billion. Its business activities are vast, ranging from petroleum refining and marketing to textiles and retail.

With Reliance on board as a client, BMH is poised to make a major international push, which industry sources said could send sales significantly higher.

"They're entering a new frontier," said Geoffrey Sisko, senior vice president for Gross & Associates, a New Jersey-based material-handling consulting firm. "This is a company that started essentially as a mom and pop, and is maturing into an industry leader."

Material handling is a term that formerly referred to simply moving products--often manually--from point A to point B, usually within a warehouse or distribution center.

Today, it encompasses not only moving products, but also sorting and counting goods and integrating data into the company's larger computer system for accounting, inventory and other regulatory demands. It is an industry increasingly marked by high-speed conveyor belts, automatically read bar codes, and identification tags and high-tech robotic sorters and transporters.

Material-handling sales have been growing 3 percent to 6 percent in recent years, according to industry figures, with most companies operating locally or regionally.

Bastian is intent on becoming a national player.

By making strategic acquisitions and diversifying its client base, Bastian avoided the post-9/11 downturn that bit most in the industry. As a result, said President Bill Bastian II, the 208-employee company bounced back even higher than its competitors.

BMH's revenue has been growing 20 percent annually since 2000, with its international sales climbing at a 30-percent clip, company officials said.

New generation leader

Bill Bastian II, a U.S. Naval Academy graduate who earned an MBA from Harvard University, deserves much of the credit for the company's growth, said Al Reigart, partner with St. Onge Co., a Pennsylvania firm that helps clients design and build manufacturing plants and distribution centers.

St. Onge has hired BMH to work on several of its projects, including Becton Dickinson and Co.'s 800,000-square-foot facility in Plainfield.

Bastian led the acquisitions of Michigan-based Handling Systems in 1995, Kentucky-based ASAP Automation in 1997, Hytrol of California in 2003, and Missouri-based VanPak in 2005.

He formed a new software development company, ASAP Automation India Private Ltd., in Bangalore, in 1998, and launched a custom fabrication company, BlueArc Engineering, in 2003.

"They're not just selling pieces and parts anymore," Reigart said. "[Bill Bastian] has grown the company into an integrated systems supplier."

Founded by Bastian's maternal grandfather, Elgan Stark, in 1952, the company started by selling hand trucks and carts. Now BMH designs, engineers, installs and services complex computerized conveyors and sorting and tracking systems.

On average, Bastian said, an effective material-handling system can save a company 20 percent to 30 percent in product manufacturing costs.

"Bastian has become known as a very progressive and aggressive company," said Jim Indelicato, publisher of DC Velocity, an Illinois-based trade publication covering the material-handling industry. "One of the reasons they've been able to sustain such growth is they can show their systems help a company operate more efficiently."

When Bastian's father--Bill Sr.--took the company over from his father-in-law in 1962, he began to spread the sales footprint to Evansville, Fort Wayne and Louisville. Later, BMH was able to broker a deal with Anheuser-Busch Cos., which gave the firm a presence in St. Louis.

Bill Bastian II, 49, took over in 1992 and expanded sales efforts into Michigan, Missouri, Southern and Northern California, South Carolina and Florida. More recently, the firm made a push into the Baltimore and Washington, D.C., area.

The elder Bastian stepped down as the company's president and owner, but the 76-year-old remains one of the firm's key salespeople, monitoring some of its longtime Midwestern accounts.

Bill Bastian II now owns a majority of the company, with five key BMH managers also holding an ownership stake.

BMH does custom fabrication from its Greenfield facility, but some of the hardware is purchased from other vendors.

While BMH markets itself through trade shows, specialty publications and the Web, Bastian said the best marketing is word of mouth.

"The initial bidding is usually a bit of a beauty contest," he said. "It's the second and third orders that are the real metrics of how you're doing."

Engineering growth

To facilitate growth, the younger Bastian steered the company toward serving the pharmaceutical industry and other prospering markets and invested in research and development in emerging technologies, such as high-tech control systems and radio frequency identification--or RFID--systems.

As clients' demands changed, BMH began to help monitor inventory information. BMH's acquisition of Louisville-based ASAP Automation, a supply-chain-execution software developer, was a critical step, Bastian said.

"We learned this industry was becoming increasingly technological," Bastian said. "It was a situation of, either you move forward or get left behind.

"Now, half of our employees are engineers. We don't do fork trucks. Our specialty is automation, robotics and RFID."

Bastian, who is said to run the company with military precision, also concluded that, to sustain growth, the company would have to move beyond U.S. borders. The company first entered Canada and Mexico before venturing to India in 1997.

But international expansion can be a risky strategy, industry experts said.

"To broaden your footprint, you have to really know your vendors and suppliers in every area," said Greg Meyer, president of Indianapolis-based Meyer Material Handling. "You also have to understand not only your customer, but the region where they do business and the economic climate there."

Expanding sales offices and technical support nationwide, let alone globally, can be expensive, said St. Onge's Reigart, and is attempted by a select few in the industry.

Opportunities in India and other locales, Bastian said, are too good to pass up.

"India has a great growing middle class, and they want goods," he said. "A lot of U.S. companies are finding it's a good place to do business, and they're opening manufacturing plants and distribution centers there."

Growing globally and locally

While international business is only 10 percent of Bastian's sales, it's the fastest-growing sector. Bastian said business in India, where the company now has a satellite operation and 30 employees, is growing 40 percent to 50 percent annually.

Business in Mexico also is starting to take off, and Bastian said the company is just now getting a foothold in Japan. He expects 40 percent of company revenue to be foreign business in five to 10 years.

But Bastian isn't ignoring his own back yard. Within a month, he expects to sign a deal to provide material-handling systems for Honda's new Greensburg plant.

"It should be a significant deal," he said.

Neither is Bastian turning his back on the small and midsize projects that have been the company's foundation.

Major capital projects occur only every two to four years, Bastian said, and need to be supplemented with other business. Forty percent of Bastian's revenue comes from projects that range from $500 to $50,000.

"If all you do is look for elephants, that's a scary way to do business," he said.

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