Scott Technology chief executive John Kippenberger. Photo / Supplied
Scott Technology chief executive John Kippenberger. Photo / Supplied
Scott Technology has gained a beachhead to the huge North American market after signing a US$35 million ($56m) deal to deliver a fully automated warehousing system for JBS Canada's Brooks beef processing plant in Alberta.
The project will be the largest in Scott's history.
It will see the company integrateexisting technology from across the group, together with systems from its joint venture partner, logistics systems company Savoye, to design and build a materials handling solution.
Dunedin-based Scott's shares rallied sharply on the news.
Scott is 52 per cent owned by JBS Australia - which itself is owned by Brazil's JBS - the world's biggest meat processor.
Chief executive John Kippenberger said Scott had signed a joint venture agreement with Savoye in 2020 to use its automated carton storage and retrieval technology to expand its own material handling systems offering.
Scott Technology is New Zealand's biggest robotics company. Photo / Supplied
"Essentially this is part of what is often called dark warehousing - high racking, lots of automated technology running around at speed, picking cartons driven by intelligent warehouse software management systems," he told the Herald.
"For Scott this is important on a couple of fronts because it's our first real foray into the American warehousing automation market."
Once complete, the project will enable picking of 3,000 cartons per hour, shipping of 40,300 cartons per day, high-speed palletising of 120-plus pallets per hour and provide high-density storage for 85,000 cartons.
The "Scott 2025" strategy was about using existing technology from Scott Europe and deploying it in North America.
Kippenberger said the deal would pave the way for development of its US materials handling logistics business.
He declined to comment on the earnings implications of today's deal but said it was "on strategy".
"This is technology that we know, so that is a way to protect your margins and deliver meaningful profits off a project such as this," he said.
The materials handling market in the US is under pressure due to tougher immigration rules, changes to the labour market, and the impact of Covid-19 on the work force.
In addition, the e-commerce companies such as Amazon had taken up a lot of capacity from suppliers of materials handling systems.
"In meat and food processing you are looking for new technology to be able to get product out the door accurately and safely.
"It's not a 'let's dip our toe in the water to test the market' project.
"You need to be able to prove yourself on the ground in America and you need to be able to prove yourself at scale, so this gives us both of those in spades."
The project is expected to take 18 months.
The deal needed to get a waiver from NZX rules regarding "arm's-length" arrangements governing deals between the owners of companies and their customers.
The exchange's regulation arm, NZ Regco, said Scott had been granted a waiver recognising that the transaction have been entered into, and negotiated, at an arm's-length commercial basis and that Scott was not "unduly influenced" to enter into the transaction by JBS Canada.
The JBS facility in Brooks city is one of the largest beef processing facilities in Canada, employing over 2800 people.
The new automated solution will replace a fully manual system.
Shares in Scott traded strongly after the release, recently hitting $3.20 - up 42 cents or 15.11 per cent from Monday's closing level.
