Systems based strategy beats de-industrialisation
Offering sub-systems or solutions as opposed to singular products or components is the route to success in tackling the trend towards de industrialisation in the UK, according to David Jarvis, managing director of UK subsidiary of fan and motor specialist ebm-papst
The diminishing manufacturing capacity in the UK has been the most fundamental influence on how ebm-papst, pioneer in EC technology, has changed the way it does business.
Jarvis says: 'By supporting all our customers over the last four decades, we have achieved a leadership position of 50 per cent or more in, for example heating and ventilation, refrigeration, air conditioning and domestic appliances markets.'
'But the more market leadership you have, the more your customers are sensitive to your strengths, and the more dependent you become on the growth of that market for your success. Last year our customers had a tough year and didn't grow as much as we thought they would but they've managed to come back much stronger this year consequently we've had a phenomenal year.'
The ebm-papst alternative is to try to give more value to customers by offering a sub-system or solution rather than just a product.
'What that means in practice is in domestic boilers, for example, instead of offering a boiler fan, you tag on to it a logic system, a gas valve, manifold, any kind of sensing and then you've got something that used to give say £10 in value to a customer which is now realises £50 in value.'
'It is clear that when you're going from something the customer buys for a low price, then adding value, the sales price increases as the value to the customer increases. The success rate of that for us has been really impressive across our customer base. For example, in the domestic boiler market, we don't have a single project now that is for a simple fan component.'
Then there is the 'EC premium effect', which Jarvis explains as the sales value increase due to the higher cost of EC technology when compared with its equivalent fan driven by AC technology. 'Customers now know that a high quality, high efficiency, technologically advanced EC fan could reduce energy consumption by at least 30 per cent, sometimes a lot more.'
'We have every confidence in our customer's ability to grow their businesses, despite the shrinking manufacturing sector in the UK. Our customers recognise speed and flexibility as a key strength, and we must strive to meet their daily expectations.
'Our major challenge is to look for new customers and new markets, and focus on our existing customers who have the ability to do a large degree of customisation. We're working with those in the refrigeration and heating & ventilation markets who offer a service to their customers, who make highly unique finished products.
'It's impossible to be successful as a fan manufacturer if you haven't got the ability to add value in an effective way. It would be impossible to compete and to grow those new markets and develop them without fully supporting customers' ambitions.'
The specialist in fans and motors, ebm-papst started as EBM (Elektrobau Mulfingen) in 1963 and as it grew it acquired a German company called Papst (the German word for 'Pope') in 1992. About 10 years ago it decided to use the strong branding of Papst and combine it into the name of EBM to give it brand
recognition. There are plans to expand the brand yet further not only in the UK but also in the world, by presenting itself as a 'global' company, rather than just an 'international' one.
The technology-driven company, founded by Gerhard Sturm, has subsidiaries all over the world with strong positions in China and the US which are considered key strategic markets. India and South America are also key markets in which the business will expand in future to drive growth globally.
There are 18 manufacturing sites across the world in Germany, including China, Hungary, India and Slovenia.
ebm-papst has always taken its environmental responsibility seriously and back in the 1980s Gerhard Sturm would drive his employees to work in his Ford Taunus. Now a whole fleet of company buses does the job instead in an effort to be kind to workers' pockets and to the environment at the same time.
'We actively look for things to save in terms of reducing waste and energy. Anything we can do that is good for the environment we have done,' says Jarvis.
In the UK
The ebm-papst subsidiary in the UK is 40 years old. Formerly an agent, it later became a joint venture with a competitor and is now a wholly-owned subsidiary of ebm-papst Germany. In the UK ebm-papst operates in several markets principally heating and ventilation, refrigeration and air conditioning, industrial engineering, telecomms, as well as domestic appliances, which is a key sector in which the company is dominant.
Operating from a position of market dominance, the company has enjoyed sales of approximately £40million in 2013 but also has about £25 million 'under management', making a combined UK only sales value of £65 million. 'We smile when we say that our UK sales represents £1 for every man woman and child living in the UK,' says Jarvis.
Employing 78 staff members, the staff complement is divided into teams focusing on design (segmented into markets), manufacturing, warehousing and operations, finance, marketing and a strong commercial function which works with customers, monitors competitors and develops relationships that are important to grow the business.
The Chelmsford-based facility occupies a floor space of 7,000m2, which includes warehousing and manufacturing and an additional 1,000m2 of offices.
A natural customer trend towards energy efficiency is impacting ebm-papst's business positively. This means it strives to introduce products that are economically better than the previous product in terms of its environmental impact and the way that it consumes power.
In its 50th year it has marketed the AxiTop diffuser, a product which smooths the air through the fan, and is described as a breakthrough for greater efficiency. It is said to offer a financial payback in less than a year and has drawn much interest from retailing and property groups.
Added to Axitop is FlowGrid, which eliminates noise-generating disturbances in the fan. This was launched in October.
RadiPac - an energy-saving fan system for ventilation technology - is described as a revolutionary new compact solution incorporating high performance impellers, EC motor technology and control electronics, all allowing efficiency gains.
1 December 2013