The KION Group's material-handling products are machines that have to comply with certain legal requirements in all of the major geographical markets in which the Company operates. These requirements serve to minimise or eliminate the risks for users of the products and for other people, equipment and the immediate working environment. They also help to maintain the performance of the machines.
In the European Union, for example, the products are subject to the machinery directive (2006/42/EC), other technical regulations such as the emissions directives on noise (2000/14/EC) and exhaust gases (2004/26/EC) and the electromagnetic compatibility directive (2004/108/EC). Product-specific regulations also apply, for example the directive on products for use in potentially explosive atmospheres (94/9/EC) and the German Equipment and Product Safety Act (GPSG), which implements the requirements of the directive on general product safety (2001/95/EC) in Germany. The GPSG stipulates that manufacturers only put safe products on the market, i.e. those that satisfy the requirements regarding health and safety and other criteria applicable to these products.
As a manufacturer of material-handling products that are governed by these regulations, the Company must ensure that its products comply with the regulations and must verify and certify this compliance in the prescribed manner. The procedures stipulated by the regulations for the mandatory declaration of conformity vary depending on the product type. Corresponding regulations and standards apply in other countries around the world, and the Company's products sold in those markets must comply with them as well.
The Company has implemented processes that enable it to implement these legal requirements efficiently, document its compliance with them and incorporate any changes in the legal framework at an early stage of development. For example, the Company uses both self-certification (e.g. declarations of conformity) and third-party certification (e.g. EC type-examination certificates). As a result, when customers receive a product, they always have confirmation – in the form of the CE marking – that the product complies with all regulations in force. Many of the aforementioned legal requirements, especially the directives underlying the 'new approach to technical harmonisation and standardisation', are defined in precise terms in product-specific standards and other standards (e.g. EN, ISO and DIN). These standards provide simplified procedures for complying with the defined legal requirements in a verifiable manner, and the Company makes extensive use of them. As a technology leader, the KION Group endeavours to surpass the minimum standards defined for the products that it makes.
The construction and operation of production facilities is subject to certain legal requirements in the various jurisdictions relevant to the Company. In Germany, for example, a permit pursuant to the Federal Emissions Control Act (BImSchG) must be obtained. Many of these requirements impose stipulations on the operators of such facilities regarding matters such as the avoidance of air pollution, noise reduction, waste production & disposal and health & safety. Most of the Company's buildings also require planning permission, which governs not only their construction and conversion but also any changes in how they are used. In Germany, the operating permit pursuant to the BImSchG covers the relevant planning permissions, which means that separate planning permission is only required for buildings whose construction and operation are not subject to the BImSchG. The KION Group has also established stable processes in this regard to ensure that it complies with the regulatory requirements applicable to its plants.
Besides these product-specific and plant-specific rules and regulations, the Company's business activities are subject to the requirements typically placed on companies that have a strong export business (e.g. the relevant export controls) and that work with distribution partners (e.g. EU Block Exemption Regulation). Moreover, the Company's leasing activities in some jurisdictions are governed by particular regulatory requirements. In Germany, for example, a licence has been required for certain leasing activities since the introduction of relevant provisions under the German Banking Act (KWG) on 1 January 2009. STILL Financial Services GmbH obtained the licence in 2011, the year in which it was founded. The KION Group satisfies all the requirements for this licence, in particular certain stipulations regarding the qualifications of senior management, the quality of risk management and corporate reporting procedures. These regulations and the corresponding legislation in sales markets do not place any material restrictions on the Company's business activities.
Technical standards, product & plant safety regulations and environmental requirements are constantly being updated by the authorities responsible for them. Examples include the tighter emissions levels permitted for IC trucks and the requirements and limits placed on employers so that they protect their employees against excessive levels of noise and vibration. As a technology leader, the Company is well placed to more than simply fulfil these requirements. In fact, its products' existing technical advantages create potential for KION to successfully differentiate itself further from the competition. In addition, the KION Group is an active member of associations such as the German Engineering Federation (VDMA) and its working groups in which it helps to continually enhance standards and regulations. Overall, the KION Group does not expect the changing regulations to have any material negative effects on its business model.
