BAR CODES ADD UP.

Byline: Sherri Buri McDonald The Register-Guard

Datalogic, the Italian company that bought Eugene-based PSC 1 1/2 years ago, has blended and reshaped the companies to become the No. 3-ranked power in the global bar code scanning industry.

Now, a stronger Datalogic will go head-to-head with Motorola, which recently bought market leader Symbol Technologies, and No. 2-ranked Intermec, based in Everett, Wash.

"We automatically have some clout in the marketplace by virtue of being the No. 3 player," said Bill Parnell, CEO of Datalogic Scanning, one of three business units in the reorganized Datalogic, and the only division based in Eugene.

"It's a prime opportunity to take market share from No. 1 and No. 2," he said.

Bar code scanning and mobile computing is a $4.24 billion market worldwide, growing 7 percent to 8 percent a year, said David Krebs, mobile and wireless group director at Venture Development Corp., a technology market research company near Boston.

Datalogic plans to hold its own against Motorola by keeping its focus exclusively on scanning, Parnell said.

"Motorola is a very large company and this activity can sometimes get lost in a very big company," he said. "We're smaller, quicker on our feet, more nimble."

Rick Morgan, editor of Scan: The Data Capture Report, a trade publication based in Erie, Pa., said he thinks the market has room for smaller players, depending on their product offerings.

"Not everyone wants to deal with a company the size of Motorola, nor do they need to," he said.

Besides grabbing market share from its competitors, Datalogic plans to grow by using PSC-established sales channels to introduce Datalogic's scanners to the United States, developing new products and finding new applications for existing products, Parnell said.

Just selling Datalogic's handheld scanners through PSC's U.S. sales channels should add $10 million to $15 million in revenues in the next 18 months, he estimated.

Those scanners are manufactured at Datalogic's 150-employee factory in Trnava, Slovakia, but will be configured and customized in Eugene before being shipped out to customers in the United States, Parnell said.

That should create more fulfilment jobs in Eugene, paying $9 to $11 an hour - a bit more than entry-level production jobs, he said.

Datalogic also will be on the lookout for companies to acquire that could help fill market niches or gaps in Datalogic's product line, Parnell said.

Through Datalogic's own growth and potential acquisitions, "we believe we can double the company's sales in three to five years," he said.

The Datalogic Group has annual revenues of roughly $500 million, Parnell said.

Revenues in the first three months of 2007 were about $135 million. The Datalogic Scanning unit accounts for about half of the total group's sales, he said.

Growth for the overall company means growth in Eugene, where Datalogic Scanning has its 110,000-square-foot headquarters at 959 Terry St.

Datalogic Scanning's main product is the fixed-position scanner that stores use in their checkout lanes. Home Depot, and grocers Kroger and Safeway are among the company's customers.

The Terry Street facility has 463 employees - 63 of whom are temporary workers. Factory workers start out as temporaries, earning $8.50 an hour, and the best performers are converted to regular employees after three to six months, Parnell said.

Datalogic Scanning has added 20 temporary production workers since April, he said, and the company has posted six professional openings, including a mechanical engineer, training specialist and financial analyst.

Another Datalogic business unit, Datalogic Mobile, which focuses on mobile and wireless products, has 110 employees at Westec Business Park in west Eugene. The division is headquartered in Bologna, Italy, but "the intention is to keep a design center and operations center here in Eugene," Parnell said. "We'll be developing next generation products and we'll continue to manufacture products here."

The market for mobile and wireless products, which are used in retail back rooms, warehouses and distribution centers, is growing at about 15 percent, compared with about 7 percent for the traditional scanning industry, Parnell said.

Out of all of Datalogic's business, the mobile/wireless segment is "probably the most fragmented," said Krebs, the market researcher. "My expectation is that there will be some challenges in terms of executing that business and being able to maintain the strong growth they've experienced there."

PSC and Datalogic didn't have a lot of overlapping business, which made it easier to merge the two companies. Datalogic's main market was Europe, and PSC's biggest market was the United States. PSC was the world market leader in fixed retail scanners, while Datalogic's forte was in mobile scanning.

That helped protect the companies from the cost-cutting ax that typically swings through companies following an acquisition.

Datalogic also hired plenty of expert help to guide employees and operations through its transformation, Parnell said.

John Kotter, a professor at Harvard Business School, worked with Datalogic Scanning's management team on how to deal with change. Ernst & Young provided management consulting.

"We wanted to make sure we did these things right," Parnell said. "I think that's paying dividends now. The groups are off and running."

Datalogic's strategy of creating three independent business units - the third is Datalogic Automation, based in Bologna, which deals with large institutional customers - differs from its competitors' strategies.

Symbol Technologies has become part of Motorola's massive cellular/wireless business. Intermec recently restructured to cut costs.

"We're not trying to save our way to profitability," Parnell said. "We're trying to build a foundation and to grow our way to profitability."

Six years ago, Littlejohn & Co., a private equity firm, bought a financially ailing PSC. Just four years ago, PSC emerged from bankruptcy and went from a publicly traded company to a privately held company.

"It feels good to have all that well behind us now," Parnell said. "Littlejohn really watched the dollars and cents. Now we're owned by Datalogic. They take a more long-term, strategic view."

DATALOGIC

The Italian company bought Eugene-based PSC 1 1/2 years ago

Eugene operations: Datalogic Scanning, Datalogic Mobile

Annual sales: $500 million, about half from Datalogic Scanning

Local employees: 573