Amilcare Merlo tells AI why he likes to rely on in-house expertise.

A suite of complementary businesses helps Merlo in developing new technologies. Maria Hadlow meets the company founder and president, Amilcare Merlo and learns why he likes to rely on in-house expertise.

The various costs of manufacturing in house: machine tools, skilled personnel, increased factory space and so on, has led many manufacturers to develop a reliable network of subcontractors, often just carrying out assembly and quality control in their own facilities. Merlo has adopted a different approach.

Amilcare Merlo, who founded the company in 1964 says he respects other manufacturers' decisions to assemble their products rather than carry out the total build, but that is not Merlo's policy.

"Merlo has always been different," he said, "choosing to develop internally the know-how for our products and processes.

"We are very satisfied about this choice, it is certainly more difficult, but that allows us to have quicker responses and control over the processes."

The Merlo Group consists of seven companies: Merlo, Techno, Tre-emme, Project, CFRM, Rent and Cingo. Merlo manufactures and markets the telehandlers, concrete mixers and aerials and Techno the urban solid-waste collectors.

Tre-emme makes the telehandler attachments, of which there are 64 in the standard range, and Cingo makes the small tracked carriers. Project is the research and development arm, and Rent also researches into new technologies such as concepts, special vehicles and customer specials.

CFRM is the training and research centre it is believed to be the first school made by a manufacturer to train all machine users not just on Merlo or telehandlers (that's just 10%). It also trains on mobile cranes, compactors AWPs etc and is an IPAF and ISPESI (Italian safety at work commission) training centre.

Expertise and technologies developed in one company can benefit the others, for example the waste compactors use the telescopic boom technology and Merlo was able to develop a polymer for making the slider pads inside the boom.

The material is less affected by temperature and the new pad has increased its life by four.

Although the core of the Merlo business is telehandlers - 86% of the turnover - each of the seven businesses in the group feeds into the others creating a symbiotic environment. This is why research and development is also a priority at Merlo.

Having spent some 8% of turnover on R&D over past years Mr Merlo's commitment continues, even in the light of falling turnover in 2009, which is unofficially 20% less than 2008.

Mr Merlo said "Our primary objectives are the quality of our machines, safety in working conditions, innovative products and strengthening our position in world markets.

"We pursue these objectives with continuous investment in research and development both in products and in processes. In the next two years we will invest 9.5% [of turnover] each year."

Despite falling turnover in 2009 Merlo has not reduced the 1000 strong workforce or the size of its manufacturing facility in fact the team has grown by 2% and Merlo is planning to increase its 150000 sqm covered area to 170000 by the end of the year.

The history of Merlo is peppered with technical developments which have incrementally moved the company forward: perhaps the most significant have been the Panoramic and the Roto concepts.

The Panoramic telehandler placed the boom so as not to obscure the view of the operator, the Roto - allowed operators to work throughout 360 degrees without moving the machine.

Merlo is still moving forward with a suite of new machines and technologies, which will be shown at Bauma (see boxes).

Mr Merlo believes that investment in high technology machine tools and equipment and in skilled staff will keep the company competitive in the long term better than outsourcing would and assures the long term growth potential of the Merlo Group.

Merlo manufactures to order on a progressive assembly line: each one of the approximately 20 machines produced a day are in response to a sale.

Some 90% of components are manufactured in house using a huge range of high-tech equipment. All the sheet metalwork is carried out in house: laser and plasma cutting, pressing and forming and all the welding. The company uses only Swedish and Italian steel which it believes is the best quality.

Merlo is the largest manufacturer of hydraulic rams in Italy and the forth largest in Europe - all the rams are for its own use and are rigorously tested to far beyond their working pressures.

Gear boxes and axels are also designed and produced in house. There are six different designs of axels for the range of machines and applications and Merlo will shortly be putting in new technology for their manufacture.

Castings are outsourced and are delivered to the production area via the 480 m long rail shuttle system which runs underneath the factory and handles the transportation of heavy materials and parts.

A robotic system designed by Merlo identifies and processes the castings delivering them to the required CNC machining centre.

The machining centres include models from Mori Seiki, Heller and Zeiss and there are 38 robots in total. All the swarf is collected automatically and transported for recycling in overhead channels that run around the factory.

Where necessary Merlo has designed specialised equipment, for example the company was not satisfied with the accuracy of commercial bar bending equipment so developed its own. The machine exerts 50 t of pressure over a 2cm² area and is accurate to within 6mm over a 7 m long bar.

Merlo carries out its own painting in an underground powder coating system which can manage parts up to 10 t in weight. The painting system was developed in conjunction with the manufacturer, the steel needs no undercoat but must be clean and handled correctly.

Merlo has five sister companies in sales and aftersales outside Italy: in the UK, France, Spain, Germany and Australia. The company believes it is the telehandler market leader in Italy, Germany, Sweden, Norway, Russia, Austria, N Zealand and East (French) Canada.

In 2009 7000 units were produced 6000 of which were telehandlers. In 2008 Merlo's turnover was €395 million, 80% of the product was exported and this percentage is growing and, said marketing manager Paolo Peretti , "becoming more important."

By sector, in 2008 31% of the product was sold into construction, 30% to agriculture and 28% industrial. Telehandlers make up 86% of the product mix the rest is concrete mixers, waste collection, forestry and tracked carriers.

Mr Peretti said that Merlo is working on growing the size of the other markets.