HANNOVER MESSE: E+H turns its entrepreneurial energy to – energy
‘A climate of innovation’ helps drive growth and a sense of connection to customers.
Michael Ziesemer’s boundless energy for process manufacturing is evident in his enthusiasm for the growth his company has achieved in the last few years. But since energy itself is not boundless, the Endress+Hauser COO and executive board member sees his company and other automation providers having many ways to help companies address their energy management issues through automation.
“All process industries are energy intensive – chemical, steel, even food and beverage, where about 8-9% of the operational cost is energy,” Ziesemer said. “It’s a big topic from a cost standpoint, but customers also are asking about the sustainability of their business. Our customers want to improve and reduce their carbon footprint. Automation and instrumentation can do that.”
One of the first keys is to begin treating energy more like a cost center and less like a utility bill. “Energy monitoring creates awareness about your consumption profile,” he said. “When I can take measurements, I can see that consumption was highest Tuesday morning. Why was consumption highest Tuesday morning?”
By improving the technical infrastructure around energy, Ziesemer said manufacturers can first understand and then reduce their energy spend. It also has a residual benefit around maintenance activities. “You can operate your plant closer to its optimal productivity, and its optimal energy efficiency,” Ziesemer said. “That means more precise measurements and more advanced control, and the investments are not big in order to do that.”
A privately-held company, Endress+Hauser understands the concept of return on investment, and moreover is patient with measuring that ROI when it comes to its own products. The infused entrepreneurial sense infused in the organization has resulted in more than 200 patents being issued in 2010.
“A lot of that has to do with our culture. You cannot implement that kind of culture in months or years. It is in decades,” Ziesemer said. “We want to be innovative. Our people know that. We do not count on a fast return. We have to count today's business today, and we need to have sufficient profits to operate the business, but we know new technologies need their time to develop.”
An example is the increased Endress+Hauser portfolio in wireless technology. “Wireless is a very strong trend with our customers,” said Ziesemer. “Have we made money at it? No. How long until we do? A few more years, maybe. But we feel it is very, very important.”
Ziesemer credits the continuing support of the Enders family for what he calls “a climate of innovation.” This organization is eager to recognize innovation. We meet once a year with our inventors. Our top management is there, even our supervisory board members, and we give out awards to the most successful new innovations.
“For most people, you want to reward them in financial ways, but the recognition of innovation creates real miracles,” he added.
The growth of the oil and gas business continues to be a crucial manufacturing issue worldwide in the coming years, Ziesemer noted. “Look at what has happened in the U.S. The U.S. turned from being a net importer of. Amazing. There have been a lot of investments in energy in China.
Endress+Hauser’s business in China dates back 14 years, with many of its major projects then and now focused on oil and gas development and recovery. Yet there are only minor differences in this market when compared to the rest of the world, Ziesemer said. “Business is business,” he said. “There also has been a lot of investment from Western company in China. I don't see a significant difference between a Shell plant in China and anywhere else in the world.”
After two years of double-digit growth, Endress+Hauser sees solid single-digit growth for 2012. That was able to achieve growth as quickly as they did is reflected in its decision at the height of the recession in 2009 to maintain employment and R+D levels.”We are not firing in 2009, and our profits suffered. But we still were profitable,” Ziesemer said. “We really were not expecting the business to come back as quickly in 2010, but we were able to get up fast and we were able to deliver,” he said. We gained some market share in 2011 as a result.”
While growth has slowed in some sectors, Ziesemer points with his persistent enthusiasm to the one somewhat surprising leader in the global economy. “When you look more in-depth at the business, the patterns have changed,” he said. “There have been weaknesses in southern Europe, but France and Germany are growing. We see some difficulties in China, but China is not as much of the locomotive of the world’s economy. The U.S. is absolutely great. The business climate is absolutely great.
“It is amazing to see flexibility of the U.S. economy. It is the best in the world. It is unparalleled,” he said. “Sometimes they do things terribly wrong, but then they bring things around very quickly. They’re growing in oil and gas, but also pharma, and food and beverage. We see the recovery in OEMs and machine building. The Administration has pushed a sort of New Deal for industrialization. We’ve invested a lot in the U.S. and in our U.S. factories.”
Ziesemer’s outlook for the rest of 2012 remains very positive, with the volatility of the world’s financial markets an area of some irritation. “I frequently think the financial industry is decoupled from the real world. They just see the crises, and I think this will continue,” he said. “We can concentrate on our strengths. Frankly, we are very happy that we do not have to deal with the banking guys very much. I trust them less and less.”
Endress+Hauser is clearly happy to be a fish in the pond. Issues such as the size of the fish and the size of the pond do now really concern them. “We want to grow. We have to grow. The question is, how?’ Ziesemer said. So our strategic focus is, let’s do business we really understand, and not something else. Let’s grow organically. I don’t believe in the megamergers. Even with the small ones, it can take years to fully integrate. So yes for growth, but let’s do it organically.”