| INTERVIEW
H. Gammer - INTERVIEW WITH KLAUS
RIEMENSCHNEIDER
GGI: Endress+Hauser has experienced
a fabulous development in this decade. Between 2003 and 2006 revenues
grew by 35%. Since 2001 the company has grown by roughly 50%. It
has consistently grown considerably faster than the market. EBITs
have risen from around 8% in 2003 to about 13% in the most recent
years. What is the secret to your success?
KR: There is no secret –
we had put a strategy in place and consistently worked to meet its
milestones. Now our consistency and hard work is bearing fruit.
GGI: What are the key elements
of your strategy?
KR: Our strategy rests on three
pillars:
1. Geographic expansion. As an example, ten/fifteen years ago Endress+Hauser
basically was an unknown quantity on the US market. Over time, hard
work, sweat and consistency have made us one of the household names
of the industry in North America.
2. We keep investing a lot of money in R&D and product development,
not only in our existing portfolio of products, but we also try
to introduce new complementary products or products with new functionalities
to the market. These often are rounding off our existing product
offerings or they are new products and technologies with functionalities
that are unrelated to measuring and controling in the narrow sense.
However, in today’s market environment they would be crucial
features for certain customer segments. A failure to provide those
features would lead to a loss of market opportunities: Very hot
and exciting is wireless communication right now, where –
alas - the industry finds itself torn again by competing standards
– each being promoted by powerful industry groups –
a discussion that is reminiscent of the “bus” wars.
3. As the industrial world has adopted “lean and mean”
stripping itself of its in-house maintenance and installation units,
the suppliers needed to migrate from products manufacturing companies
to “one-stop products, service and installation companies.”
We had – like some of our major competitors – recognized
the pending shift early on and made the ‘complete customer
approach’ one pillar of our strategy. Its execution requires
us to follow our globally active customers to the most remote corners
of the world, providing sales, services and often even local production
facilities.
GGI: Are there still any regions
in the world where Endress+Hauser feels it does not have an adequate
market penetration?
KR: Yes, definitely, we feel
that Latin America is one of those regions where we ought to do
better. In addition, there are some countries in Asia that deserve
more attention from us.
GGI: Some of your competitors such
as Emerson started to adopt similar strategies (viz a “one-stop-shopping,
service and installation” philosophy) early on as you have.
And yet, Endress+Hauser is growing faster than market?
KR: Even though Emerson often
is mentioned as one of our competitors, their focus is slightly
different from our core activities in water, waste-water and environment.
So, it is not truly comparable.
We are taking market share away from small and medium-sized companies
that have not been able to adapt to the new product functionality
and market requirements or who do not have the financial wherewithal
to follow the customer to new manufacturing sites overseas.
GGI: What are the mega-trends in
the industry?
KR: The new wave of communication
technologies (such as wireless) has started to tear down the wall
between factory and process automation: we see a gradual convergence
of both fields.
GGI: When will this happen?
KR: It is already happening.
For instance, we already have a major market position in the packaging
and food machinery industry. This convergence of markets will result
in a complete reshuffling of the automation landscape. Manufacturers
of factory automation instruments will penetrate the process industries
just as we gain market share in the discrete products manufacturing
markets. At the end of this process you will have a handful of big
suppliers straddling both markets, other vendors will continue to
be suppliers to specialized niches and yet another group will not
be able to keep up with the new requirements of the market and disappear.
GGI: Will Endress+Hauser be one
of the winners of this industry-reshuffling?
KR: Yes, Endress+Hauser will
be among the winners. As in the migration towards "one-stop
products, service and installation" vendors, we have recognized
this trend early on and have been adopting strategies and initiatives
to address the new challenges and opportunities.
GGI: What are some of those initiatives?
KR: Apart from internal market
and products iniatives we closely cooperate with leading vendors
to the factory automation market place. As an example I would like
to point out our cooperation with Rockwell. Together we expand device
connectivity and configuration capabilities for standard technologies
such as Foundation field-bus and HART: we implement and test Endress+Hauser
devices with Allen-Bradley controllers and FieldBus software.
GGI: The future is bright. Is the
Endress+Hauser management wearing shades?
KR: We are indeed very optimistic
that we will see a continued annual growth of 7-8% in the medium-term,
and – as in the last 10 years – we expect to grow faster
than the market. The only clouds on the horizon are the disputes
about communication standards. We hope that these disputes will
get resolved and will never reach the intensity of the “bus-wars.”
GGI: Endress+Hauser is owned by
the Endress family. In recent years, there had been rumors on the
market that some members of the family would like to see cash and
– as a result – the family would decide to take the
company public?
KR: Indeed there have been
rumors but they were unfounded. Endress+Hauser now has about 40
shareholders that are all family members. There is a unanimous agreement
among the shareholders to keep the company independent and wholly
family-owned.
GGI: Of course, a unanimous decision
today may have to be put in perspective next year. Some shareholders
may change their minds and vote differently the next time around.
KR: In order not to make the
company the playball of the various rumor mills, the shareholders
have unanimously adopted a “generational contract” or
as it is more appropriately called “the Endress Family Charta.”
By putting their signature to this contract, the shareholders pledged
to keep the company private and family-owned. In addition, the Charta
clearly lays down the rules as to how the individual shareholders
relate to the company.
GGI: Will the next CEO be a member
of the Endress family?
KR: The Charta instituionalizes
the decision-making process within the family which in turn exerts
its influence over the company through its representatives on the
Supervisory Board. As a result, it is not a family requirement that
the CEO must come from its ranks. In fact, the age difference between
the current CEO and the next Endress generation would suggest that
the next CEO would not be a family member.
GGI: Mr. Riemenschneider, thank
you very much for this interview. |
