Magnetising the world
Piet Veenema, CEO of Kendrion, and Bernd Gundelsweiler, business unit manager of the companyÔÇÖs Passenger Car Systems division, talk to Jayne Flannery about what it takes to make an impact in the world of electromagnetic components.
In the rarefied world of electromagnetics, Kendrion is a name that stands out. The company is recognised as one of the worldÔÇÖs leading manufacturers of electromagnetic components. Headquartered in the Netherlands, the company has more than 1,000 employees.
There are two distinct facets to demand for electromagnetic technology. Automotive and industrial markets have very different drivers and their needs have been met by a careful segmentation of the business and a structure that mirrors the marketplace. ÔÇ£We are an extremely focused niche player in this technically driven marketplace,ÔÇØ states Piet Veenema, CEO of Kendrion.
Veenema goes on to explain that focus, above all else, is responsible for the impact Kendrion is making on the global stage. "The common thread that links all our activities is a shared focus on electromagnetic technology. It runs through everything we do, but each of the markets we serve consists of different customers with very different requirements and different applications. That is why it made so much sense to structure the company into four business units,ÔÇØ he explains.┬á┬á
The two business units that deal with passenger car and commercial vehicle systems are self-explanatory and serve a relatively narrow customer base. Industrial applications are far more diverse. The Industrial Magnetic Systems unit develops, produces and distributes holding, locking, spreading, controlling and vibrating solenoids for a multitude of industrial applications. ÔÇ£These solenoids are primarily used in the machine building industry for many kinds of applications that require precise steering and control. We have customers drawn from mechanical engineering, safety technology, materials handling, medical engineering and high and low voltage engineering,ÔÇØ Veenema says.┬á
Lastly, there is the Industrial Drive Systems unit. This relies on a rotary technique for electromechanical brakes and clutches, targeting industrial drive applications that deal with accelerating, decelerating, positioning, holding and securing movable drive components, servo motors and loads. Customers are drawn from the world of robotics and automation technology as well as elevator technology.
Veenema reveals that the way the company has been structured guarantees outstanding solution-oriented customer service. The household names which Kendrion serves, such as Siemens, Daimler, Continental, Bosch, ZF, Evobus and Hyundai, demand the highest possible standards of their suppliers.
ÔÇ£We are very dedicated to our markets. That is why we have adopted this particular structureÔÇöso that we can concentrate better on our customers,ÔÇØ Veenema continues. ÔÇ£Each unit has a key manufacturing facility, mostly in Germany, which is where our technical and engineering expertise is based. Each unit also has access to low cost manufacturing opportunities in Eastern Europe and the ability to service a global customer base.ÔÇØ┬á
The same level of focus is also evident in the way that manufacturing operations are organised. ÔÇ£We also believe in having totally dedicated manufacturing plants,ÔÇØ he adds. ÔÇ£You should never confuse a high repetition automotive environment with components for industrial processes, which require less investment in plant, but have a much higher requirement for labour and customisation. Each type of operation has its own distinct drivers and they should never be mixed. That approach has been fundamental to our increase in productivity.ÔÇØ
Central Europe is today the most important marketplace, but Kendrion is a global player, with additional manufacturing sites in North America and Eastern Europe as well as China. ÔÇ£These are very fast growing production plants,ÔÇØ he says of the latter. ÔÇ£But we do not manufacture in Asia because it is a low cost activityÔÇörather, to be near our customers,ÔÇØ he says.
Eastern Europe is the low cost manufacturing base of choice for KendrionÔÇölogistically it also makes the most sense because of its proximity to the key markets. ÔÇ£We have had a very successful facility in the Czech Republic for many years. Recently though, we realised that we needed to go a step further to continue reducing our cost base. This led to an additional extended workbench in Romania. We now have manual production capability there, whenever there is a requirement for a high labour input.ÔÇØ
An intensive review of manufacturing costs was undertaken towards the end of the last century. In many instances, an outsourcing model was introduced along with global sourcing and a number of lean initiatives. Veenema believes that making these changes before the economic recession took hold has paid big dividendsÔÇöthe company is in excellent financial health with a lean, low cost manufacturing base.
Unlike most competitors, Kendrion is not under private family ownership, but listed on the Dutch stock exchange; and Veenema sees a number of advantages to this. ÔÇ£Demand is moving towards the need to meet more complex engineering challenges coupled with a global presence. Many of the smaller solenoid companies are excellent in their field of competence, but they cannot compete as effectively as a company like ours which has a global footprint.ÔÇØ
Owing to the earlier productivity and efficiency drive, the company has emerged from the economic downturn with very little debt and Veenema believes the time is right to be making acquisitions. Three of the four business units are actively considering acquisitions. ÔÇ£Our major shareholders are very supportive and we have an excellent balance sheet when you examine our solvency and debt rations,ÔÇØ he declares.
At present, organic growth within the Passenger Cars Systems unit is expected to be very strong, because of the start of various new product lines. Veenema wants to see it consolidated before integrating other companies. The increase in turnover in the next few years will spearhead the groupÔÇÖs recovery.
Bernd Gundelsweiler is business unit manager of Kendrion Passenger Car Systems. He is keen to explain the factors that have contributed to the unitÔÇÖs rapidly growing success in the automotive market. ÔÇ£As a brand name, Binder is widely associated with excellence in the automotive markets we serve. The company was originally founded in 1911 which means we will soon be celebrating 100 years in this business. It is a track record which no-one else can match,ÔÇØ he declares.
While the unit can look back on a proud heritage, it also shares a keen innovative capability, along with the rest of the group. ÔÇ£We put a lot of effort into innovationÔÇöit is more and more important to the future of the overall business,ÔÇØ states Veenema, who explains that Kendrion has recently created an Innovation Board, drawing on the electromagnetic talents from the worldÔÇÖs best universities.
No other industry is experiencing such rapid change as the automotive industry. Developments in technology, growing demand for environmentally friendly vehicles and strict emissions requirements pose a challenge which Kendrion Passenger Car Systems, as a supplier to the automotive industry, has risen to.
ÔÇ£Our division passionately identifies with the products of our customers. The ability to identify with the customerÔÇÖs requirements and preferences as a result of our strong customer focus and competence differentiates Passenger Car Systems from its competitors,ÔÇØ Gundelsweiler says.
ÔÇ£The division stands out, due to its innovative power and top efficiency,ÔÇØ he continues. ÔÇ£We develop, produce and distribute worldwide high-tech components for many of the major automotive manufacturers and system suppliers. Our offering covers a broad spectrum of electromagnetic, pneumatic and hydraulic components and systems. Allied to this broad portfolio, we can also offer a global footprint to be near to our customers.
ÔÇ£Energy saving has been the big focus of our latest work, along with a drive to cut CO2 emissions and reduce fuel consumption,ÔÇØ continues Gundelsweiler, who points out that new projects account for a high proportion of the increase in turnover the unit is currently witnessing.
Several years ago, a corporate decision was made to emphasise the lead in diesel technology. ÔÇ£We believed that this was the opportunity of the future and we invested accordingly. However, it is a long process with long lead times due to the time that must be spent on development, trials and testing. Now, we are seeing the rewards come through and we expect to see a much bigger increase in turnover next year.ÔÇØ Gundelsweiler is convinced that the penetration of the diesel driven engine is unstoppable and that the new generation of diesel engines with the Emission Norm Euro 5 and 6 will increasingly carry Kendrion parts.
KendrionÔÇÖs distribution network and production locations guarantee worldwide availability for its customers. The headquarters of the Passenger Car System group is in Villingen-Schwenningen (Germany), with further locations in Eibiswald (Austria), Prostejov (Czech Republic), Suzhou (China) and RÃÄdÃÄu┼úi (Romania).
ÔÇ£We are now starting on what we have termed our leading years,ÔÇØ concludes Veenema, who points out that prior to the current downturn, Kendrion was seeing year-on-year growth in the region of 15 per cent.
ÔÇ£Already we are returning to levels of organic growth around the 10 per cent mark,ÔÇØ he says. ÔÇ£We are clearly seeing the benefits of restructuring and segmenting the business and we anticipate a big rise in turnover over the next two years. Kendrion is going to ÔÇÿMagnetise The WorldÔÇÖ and we have a clear strategy for achieving that goal.ÔÇØ
