Normality is the exception
Hans-Jochen Beilke has had enough of discussions about the scale of the crisis. Instead, the CEO of ebm-papst Group recommends drawing the right conclusions from the turbulence of recent months, and pleads for organic growth
Mr Beilke, what do you mean by organic growth?
I am convinced that healthy growth in the global economy can only be organic. Artificial bubbles will always burst. We all run our companies at full load while business is booming, so it is natural that the crisis will hit hard when it hits. By contrast, organic growth is orientated towards, for example, population growth. The world population is increasing at a net rate of just under 80 million per year. At some point in time, these people will become consumers. They will want a television set, a refrigerator and a car. organic grow is derived from this. But taking account of innovation to satisfy the new latent needs, I consider growth of between three and four percent per year to be organic. Only on this scale is growth sustainable and largely free from setbacks.
But we will not be able to escape the cyclical ups and downs?
We have just experienced 20 successive quarters of growth. At the moment we are in a period of decline. In truth, we all knew that the growth couldn’t go on for ever. McKinsey has followed 400 companies over the last 30 years. The result: After three to seven years of above-average results, even the top performers drop back to the pace of industry in general. Even though we at ebm-papst are relatively invulnerable because we have the benefit of being an innovation leader, we still have to learn how to stay in the fast lane, and to view normality as the exception. otherwise, we risk losing our appetite and becoming sluggish. Accordingly, the consequence is to use the period of decline to set the foundations for future growth. It is worthwhile using the time to shake off bad habits and to carefully scrutinise established processes. This is easier to do in times of decline than it is in times of growth.
How does ebm-papst compensate for market fluctuations?
Like many other companies in Germany (and unlike ten years ago), we are able to adapt better today by making use of working time accounts and short-time working. These instruments give Germany a relative advantage as an industrial location. Two further facts give ebm-papst additional advantages that will lessen the impact of the crisis. Firstly, we are globally present and broadly diversified. This allows us to compensate for developments in different industrial sectors. Secondly, growing environmental awareness around the world helps us to market our energy-efficient motors and fans, even in times of crisis. We were the first to recognise this trend.
Which key markets do you have in your sights?
The solar industry, pellet heating systems, wind power, heat pumps and condensing boiler technology – in these five future segments alone we can offer appropriate solutions for all issues relating to air, climate and drives.
Many companies are looking for the right strategy. Have you found the optimum solution?
Differentiation is considered to be the means of choice for the strategic orientation of our company. The resulting distinguishing characteristics are an important commodity for maintaining market share and for exploiting new terrain. For this reason, we deal with the strategic development of our business model systematically, without the use of external consultants. For example, we are well on the way to transforming ourselves from being a component supplier to being a systems partner. Our subsidiaries in Great Britain, Italy and the USA have successfully shown us how to accomplish this. Because we see ourselves as a learning company, we have drawn the right conclusions from their success models for the benefit of our customers.
What else creates competitive advantages?
Above all a “creatively uncomfortable” culture of innovation. That is why we again have many products that will be launched in the near future. That is the result of continual basic research and permanent dialogue with our customers. 90 percent of our innovations are created from analysing the requirements of our customers. Incidentally, a positive corporate culture with values that are laid down in writing and practiced every day is a staunch pillar in difficult times.
How can these values be manifested?
On the one hand by dealing with all market players and with our employees
fairly and in a spirit of partnership. On the other hand with loyalty and solidarity within the company. For example, our leading employees and the management are all voluntarily forgoing part of their salary to show their solidarity with the production staff, who are on short-time working.
Cue supplier management: Do you deal with suppliers differently in these times?
Absolutely not. We have long been concentrating on our core competences, and we need reliable partners along the entire value-added chain. For this reason, we continue to support individual suppliers if they get into a critical situation that is not of their own doing. There are individual cases in which we unbureaucratically secured liquidity for longstanding partners. In the long run, that pays dividends for our partnership network. Intensification in sales and closeness to the customer are considered by the media to be supreme disciplines in the crisis. Let us put this nonsense to bed once and for all. If you have only just realised how important the customer is, then you have already lost. We are not doing anything differently today than we did one year ago or three years ago – we are just doing it with a more lasting intensity and closer to the pulse of the markets.
Competition for the best talents is ongoing. What exactly is ebm-papst doing to recruit qualified staff?
Despite a general recruitment freeze, we took all trainees and BA students on board in 2009. At the end of the day, we know what dedicated workers we are getting there. We are also maintaining our many different commitments. Endowed chairs, university commitments or initiatives such as “Youth research” and the “Knowledge Factory” – together with other companies, we are laying the foundations here for qualification and technical enthusiasm. In this way, strategic talent management creates a competitive edge in times of growth.
Do you dare make a forecast? When do you expect to see growth again?
I think we are experiencing a return to the organic growth we talked about earlier. That means it will take two or three years until we get back to the level of 2008. However, optimism will be on the agenda again from the turn of the year 2009/10.