Insight

Fastener + Fixing Magazine last visited CELO in 2015, when Spain was just starting to take its first steps out of the catastrophic 2008/09 crisis, which had seen new construction drop 85% in the country. Editor Will Lowry therefore travelled to the outskirts of Barcelona to speak to CEO Ramón Ceravalls about how the Spanish market has continued to develop and the steps CELO has taken to keep itself at the forefront of the market.

Ramón gets straight to the point: “The crisis we had in 2008/09 was a disaster for Spain and had a terrible impact on the country. As a business we suffered a sales drop of 55% and we were one of the lucky ones. Some bigger companies were affected even more and ten years later, as a country, we have not yet recovered from the impact. For instance, residential construction is still at very low levels and there are very few civil engineering projects in Spain, as the local governments still have a big debt. We are also still spending a lot of money on unemployment in Spain and on social benefits.”

So, what has been the strategy that has enabled CELO to prosper after such a devastating time? “Throughout our history we have always excelled at adapting to changes within the market,” states Ramón. “This is underlined by the fact that some of our most successful years have been right after recessions, as during the hard times we have made decisions that have proven very positive for the long-term progression of our business.”

The first example was in 1974 when there was an oil crisis, as well as social problems within Spain. “My father decided to move from the industrial quarter of Barcelona to our current location in Castellar del Vallès, where he imagined a huge factory,” explains Ramón. “During that time, we could build the factory at a very low cost due to it being an up and coming location outside of the city. It was a big decision, but the low costs meant it was the right decision and it enabled us to build a factory that has been able to handle our growth over the last 45 years.”

In 1982 there was another crisis and CELO needed to decide whether to reduce the number of employees to help lower its costs. “Luckily as a business we were young and brave enough to focus on what would happen after the recession. If we lost our people, we would miss them once the market picked up again,” mentions Ramón. “We did not want to lose our employees, so we decided to keep our production activity levels and build our stock in preparation for when we came out of the recession. It proved the right decision as after 18 months everybody was calling and asking for screws and we could say ‘yes’ and deliver quickly – of course for a little more margin. This led to us becoming the largest wholesaler for screws in Spain and saw us enter the distribution market.”

By 1992 there was significant competition from Asian imports, which led to CELO developing its strategy to not only work with standard parts, but also dedicate its factory more to special screws for the industry. “This is when we started developing screws for plastics, as well as Trilobular screws, which saw us split the company into two divisions – Industry and Construction,” explains Ramón.

Two halves of a whole
The Industry division is specialised in the industrial sector in diverse areas such as the automotive, consumer electronics, household appliances and electrical industries. Whereas the Construction division focuses on the construction sector, including linked activities such as plumbing, electrical, wood and metal carpentry, isolation, roofing and façades.

“Industry and Construction are two divisions that have very different needs, which means the strategy for each is totally different,” mentions Ramón. “To ensure we have the right strategy for each we look at where we think the market will be in ten years. For instance, in Industry, robotics will play an increasingly important role in assembly lines, which will result in higher needs for technical and quality screws. As a business we need provide technical screws that contribute to assembly cost reductions, with spotless quality, at a competitive price, and with short delivery times. To do this you need to have a well trained and experienced team and machines that are efficient and effective at supplying high-quality products on a consistent basis.”

That is why for over 40 years CELO has been committed to continuous training of its employees and to a maintenance schedule that ensures every machine is rebuilt from scratch on a 6 – 7 year cycle. “This philosophy has enabled us to continuously supply high-quality products to our customers,” states Ramón. “However, from a technology point of view there are some limitations, which are not allowing us to have the fast set-up times necessary in today’s market. As a business we want to reduce our PPM level, improve our efficiency, and be much more reactive to the customers.”

That is why CELO is planning a significant investment in its machinery, which will see it introduce sixteen new machines over the next 12 months. “You only have so much money in a company and you have to decide whether to put it in developing new markets, stock or in machines,” says Ramón. “At the moment we are planning to focus on investing in machinery, so we can reduce set-up times and produce quickly, which will reduce stock levels and help us to continue to improve our production process.”

The first batch of machines will arrive in October, followed by another batch in February and the final lot will arrive in June 2020. “We have been able to make some small customisations to the machines to meet our needs and we are confident these machines will enable us to meet the needs of customers over the next decade and more.”

For the Construction division a big focus for CELO is on fixings and support systems. “We want to be leaders in fixings and support systems that help reduce installation times – this is our goal,” points out Ramón. “This is why we are also dedicated, mostly in Spain, to visiting construction sites, and installers, and demonstrating the capabilities of the products. We can visit sites and help with calculations, as well as support them with what anchors and support systems are the most effective. Once the end user is aware of the products, we highlight the relevant distributors we are working with and how they can order.”

Ramón continues: “By working with end users on the construction site we can show them the capabilities of our products, but we also learn about their requirements and what they need. Our role is to then to answer these needs by improving our existing products or by introducing innovations.”

Always innovating
One such innovation, and another idea that initially came during a crisis, is CELO’s ‘Pick & Mix’ concept. “Previously, most of the products we sent to distributors were kept in ‘cold stock’ in the bulk warehouse,” points out Ramón. “However, we could see the habits of the installers had changed during the crisis. Now they were making smaller orders that were resulting in distributors having to go into the warehouse and open boxes to take out a handful of products to meet customers’ needs. We needed to adapt to the situation and we therefore came up with the ‘Pick & Mix’ idea – so that the consumer had the ownership of the products.”

CELO’s ‘Pick & Mix’ system involves a point of sales display with variety of different loose products. Customers can then choose from a range of different sized bag options, which they then fill with any product mix or quantity. “As long as the bag closes, the customer can pick whatever product they want – all for a set price,” explains Ramón.

“It was a unique concept and when we first discussed it, I was not convinced if it would really work. We spoke to our distributors and, at first, they did not look very enthusiastic about our idea: They said they were happy with the blister pack products; they were worried about people stealing products; and they were not sure how they would control the stock.”

“However, we persevered to test our concept, and once we started to trial the ‘Pick & Mix’ system the distributors were very positive. Rather than having to go back and forth from the bulk warehouse to meet the customers’ needs, the customer could find the products on the shelves themselves. The customers also feel like that they are getting good value because they are getting the exact mix of products they wanted and so sales were actually increasing.”

Last year CELO installed over 250 systems in Spain – with each one adapted to the needs of the customer. “We have 600 ‘Pick & Mix’ stations in different layouts – from 2m up to 40m – and we now have a small but dedicated sales team who are only working on growing the market and developing the system.”

Another big development has been the company recently combining its brands within the construction market to all become CELO. “Over recent years we had acquired Apolo – a specialist in in the electrical and plumbing sector – and MEA Befestigungssyteme GmbH – an expert in mechanical anchors and fixings – to expand our capabilities within the construction market,” states Ramón. “When we first acquired the companies, we thought about changing the names straight away, but they both had good reputations within their respective markets, and the name CELO was not as well known – so at the time we decided to keep them as three separate brands.”

“However, as we have incorporated the three brands into the group, customers have started to ask why they have three different brands in the same shelf when the manufacturer is the same. Different brands sometimes confuse the end users and even makes it harder to find our brands and products on the internet,” mentions Ramón. “We therefore reached a point where we asked ourselves what is more important – the reputation of those brands or making it easier for customers. We carried out an independent study and from the feedback we decided to bring everything together.”

Now the company is known as CELO with the motto ‘Small Things Matter’ to convey the message to customers, but also to all its employees, that CELO manufactures very small screws and fixings that make an important contribution to the final product. It is for this reason every single detail from design, to production, to installation, is very important to Celo. This concept is so important that it has produced a one minute video where it explains its ‘Small Things Matter’ concept.

Becoming international
As the CELO Group has grown, the company has looked to become more international. “This did not mean an increase in our exports, but to become international as a business,” explains Ramón. “In the late 1990s we saw many factories of our customers moving from Spain into the eastern European countries, but this was not too much of a concern as we could follow the customer whilst still producing in Spain.”

“However, a few years later the same customers decided to move to China to further reduce their costs, and we felt very privileged to learn that they wanted us to follow them again to China. One of our major customers asked us to supply their new production facility near Shanghai and committed to impressive volumes, but they only gave us six months to set-up a new factory in China – which just wasn’t feasible for us. We were very sorry as they were a big customer, but there was nothing we could do, so we ended up losing their business.”

Ramón continues: “We then thought ‘ok this cannot happen to us again’, so we started the process of setting up our own factory in China – from scratch. For a small company like us it was a significant investment, and a lot of personal effort, but we managed to do it and I think we were one of the first European screw manufacturers to have our own factory in China.”

After setting up the Chinese factory, CELO initially tried to connect with its Industry customers in the electronics sector, which had been its main focus in Europe. However, the company soon realised it was very difficult to compete with the local manufacturers. “Whilst the electronics sector was proving hard, we found we were really competitive in the automotive industry,” points out Ramón. “At the time the automotive division had just started to focus on incorporating electronics such as automatic wing mirrors, chair adjustments, etc. Our ability to manufacture screws for plastics, and thread rolling screws for metals, gave us a competitive advantage.”

Being in China also enabled CELO to meet international customers’ needs in both China and Europe. “At the end of the day the value of small screws is nothing, so the people purchasing them just want things to be easy. They don’t want to have three different companies in Asia, Europe, and America, for the same screw – it is not worth it. They prefer to have one supplier that can manage everything. Our Chinese factory gives us a real competitive advantage against companies who are similar size to us.”

CELO now has factories in Spain, Germany, China and also in the USA, where it acquired a company in 2016. To add to this the company also has warehouses in Hungary, Poland, France, and has recently opened a warehouse in Chile with plans to add another location in the USA.

“In both of our divisions we have always looked to develop alongside our customers and ensure we can provide them the products and service they require,” concludes Ramón. “We have faced challenging economic conditions, but we have always come out stronger and more determined to succeed. Through the internationalisation of the business, plus our dedication to innovation, we are in a strong position to grow as a business whilst ensuring we continue to focus on every little detail – because ‘Small Things Matter’.”