Insight

Böllhoff Group is coming to the end of a three year large-scale €172 million investment package into its infrastructure, with the aim to prepare the Group for future growth opportunities. Editor Will Lowry visited the Group’s headquarters in Bielefeld, Germany, to speak to co-CEO Michael Böllhoff about the strategy behind the investment and the benefits it will offer.

Three years ago, Böllhoff Group made the decision to invest into its infrastructure – including planned extensions, new logistic centres in Germany and France, as well as further investment in its infrastructure in China and India – all of which was based on the Group experiencing growth in the market. “Whilst there may be a current downturn in the economy, it was definitely the right decision to invest in this infrastructure, as we believe technological trends will continue to have a positive impact on the business,” states Michael Böllhoff. “The investment enables us to prepare for the next growth spur and we want to ensure we keep ourselves as a leading company in the fastening sector.”

The largest investment of the project was into the new logistics centre in Saxony, Germany, as a greenfield operation. “The choice of location was based on the proximity to our customers operations both in the southern part of Germany, as well as to eastern European countries,” mentions Michael. “By having a greenfield operation, we could also optimise the logistical and material flow throughout the centre. We have also included a good level of automation, including fully automated and semi-automated processes.”

Michael continues: “Logistics is a core competence for the fastener industry and the requirements from our customers are changing dramatically. For a lot of our catalogue business it is about availability and competitive pricing, which makes having a central logistics centre, such as the one in Saxony, vital. The plan is to open the centre in Spring 2020 and both this centre, and the logistics centre in France, will offer us significant benefits for the future. Our aim is to provide customers with value added logistics and combine this with being a supplier of engineered solutions beyond riveting, self-piercing, thread technology, as well as plastic solutions.”

Being prepared for uncertainty
As a business, Böllhoff is always preparing for future trends as well as developments within the market. “The overall trend for the last two or three years has been different to what we have lived through in the last twenty years,” explains Michael. “Since the 1990s we have seen a push towards free trade and open borders. However, this mindset seems to have changed, and we see this in the USA, in the UK regarding BREXIT, in Spain with Catalonia, in Hungary, even with certain trends in Germany. All these pieces mean we are at a point where we have to think differently and be prepared for more protectionism and the possibility of more border control, and so forth.”

Michael continues: “Whilst we need to think differently, our production network and global structure will still be orientated to free trade. We are not rolling this back. We just need to consider what will happen if the current trend for tariffs continues in the future.”

Regarding the current slowdown, Michael believes different markets have reacted in different ways. “Some markets have reacted earlier than others, with some only just starting to react. For instance, the German market has only recently started to feel the slowdown, whereas the Chinese market reacted a lot earlier, as did other Asian markets such as India. However, I believe a lot of this downturn is cyclical. In Europe we have experienced nine years of growth, so it is not a surprise that we see a certain downturn. It has simply been accelerated by the current geopolitical issues, but you could see a downturn coming, even two years ago.”

A market that has been a key growth driver over the last eight years, but is now feeling a slowdown, is the automotive sector. “It is without doubt very challenging times for the automotive sector. However, we believe the technological requirements regarding e-mobility, autonomous vehicles and carsharing aspects, will continue to give fastener companies opportunities and at Böllhoff we are prepared for this through new products and innovations. We are positive that individual mobility in the form of cars will still be the main driver of mobility for the population around the world in the future, and our innovative products will be able to service the new technological trends of the car industry.”

“We see the push to e-mobility continuing and we are working towards those forecasts that predict 25% of the market will be e-mobility and hybrid systems by 2025. Whilst we are following the developments of our customers towards e-mobility and hybrid engines, we still don’t see the use of diesel engines stopping completely. The reason is pure e-mobility is a great solution for city travelling and the infrastructure for these areas will develop rather quickly. However, I am doubtful e-mobility is the right solution for long distances and rural areas. We need more time to develop the technologies and infrastructure for this in the long-term.”

Working with customers
Thanks to its global network, Böllhoff is able to liaise with customers worldwide on e-mobility projects, whether it is the west coast of the USA, in Europe, or in Asia. “We have a network of global organisations that enable us to work closely with our key customers. We are there to listen to their needs and we have the ability to make the necessary product developments. We have already made some nice developments towards e-mobility with our customers and we are excited about the opportunities it will bring in the future.”

“For instance, there is a huge push towards e-mobility in Asia with a lot of companies developing on this trend and coming into the market, especially in China. Our approach is always to work with them, and if they move into Europe or North America we already have applications on those cars. However, I do believe companies such as VW are also very well positioned to follow these trends with new platforms to push into this market. It shows there are opportunities globally and thanks to our international reach we can follow the trends in all three markets – North America, Europe and Asia.”

Constant innovation
As a 142 year old company, Michael underlines that Böllhoff couldn’t have survived without constant innovations. “An innovation is any new idea; whether it be the way we do marketing; the way we produce our fasteners; or how we develop new products. Since the very beginning it has been a culture that we have looked to keep at the forefront of the business. The market and the customers’ requirements are constantly and quickly changing. We cannot do the same things we did as little as ten years ago – not the same products, the same processes, or the same services. All these things are changing quickly, and innovations are a key factor in this.”

A big part of Böllhoff’s ability to continuously innovate is its commitment to talking and listening to its customers’ requirements and understanding their long-term issues and the technological trends. “You need to understand these trends and requirements and then develop the right solutions through product development,” mentions Michael. “The room to innovate comes from new customer assemblies, our internal manufacturing processes, as well as the increasing quality requirements from the end user customer.”

When looking to the future, Michael is clear Böllhoff’s aim is not to be just an innovation leader. “Innovation is undoubtedly important, but we want to be a competence leader, which is the combination of being an innovation and cost leader. We are dealing with competitors and markets that need the innovation but also need the efficiency and effectiveness of our solutions. We cannot just sit back and say we are specialised in these technologies. We need to have a strong cost culture, be effective, as well as innovative. Only by doing this will we be able to attract new business and opportunities to grow.”

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