More managerial responsibility as a recipe for success

With IKS Klingelnberg, it's not the boss alone who decides which route to take / Interview with Thomas Meyer / Looking ahead - The future of print and paper

(PresseBox) ( Frankfurt, )
IKS Klingelnberg is the operating management company of the TKM Group with Mr Thomas Meyer as managing director and associate. The company, headquartered in Remscheid, manufactures machine knives - above all for the paper industry.

Mr Meyer, your company has been operating independently in the market for more than twenty years. During that time, sales have grown seven fold. How do you explain this dramatic growth?

Meyer: We are now the number one in the machine knife segment in Europe - far ahead of approximately 150 competitors. One reason for this success is our development from a simple knife supplier to a supplier of systems. Let me give an example: In the beginning, we manufactured, among other things, round machine knives which are used to cut paper rolls. We then gradually started supplying the customer with additional parts which he also needs, for instance, sharpening wheels. While we originally bought these sharpening wheels from other suppliers, we now manufacture them ourselves. For us, the question is always which other things may be useful for the customer, and not what our machines can currently manufacture in the best possible way. So, we are not primarily product-oriented, but rather market-oriented. This has brought about this growth.

Another component of our recipe for success is that we are a supplier both to OEMs, i.e. the machine manufacturers, and the end customers, the printing houses, for example.

But the development towards a systems supplier has now become a trend that is followed by many companies.

Meyer: We continuously review our strategy. For some years now, we have done that as a team and not in accordance with the old motto: The boss comes up with something, the employee carries it out. To that end, we had to train staff so that they learn how to identify potentials in the market, how to determine key figures and to use them in order to boost our business. Nowadays, our managers prepare their own budgets at their respective locations, and they are responsible for them. This approach means that you have to go out on a limb from time to time if you wish to achieve the ambitious objectives. In the end, this structure is the crucial success factor for our company.

Aren't you afraid that you will lose these good employees? Payment by companies other than MEs is often better.

Meyer: Employee turnover at our company is very, very low. Our employees feel at ease. This is not primarily due to the salary we pay, which is in line with the market, but not comparable to the sums paid, for instance, in the automobile industry. The decisive factor is that our engineers, product managers and sales managers develop a high level of competence, and, as a consequence, our company gives them a great deal of freedom. This high degree of self-determination is the essential reason why our specialists are so motivated and loyal.

In recent years, many newly industrialised countries have advanced economically, while the growth motor in the traditional industrial countries has come to a halt. Are there some shifts in the sales markets of IKS Klingelnberg?

Meyer: With a 72 per cent share of sales, Europe is still our most important market. Asia accounts for 14 per cent, and America accounts for 14 per cent. Within the next few years, we wish to expand our presence in South America, but the biggest growth market for us is still Asia. We have sales offices in Singapore, Kuala Lumpur and Shanghai and, in addition, a production plant near Shanghai, which is to date the only one outside Europe. This underlines the high importance that Asia has gained for our business.

The Chinese have long ceased to see themselves as the subcontractors of Western companies, but more and more start competing with them.

Meyer: As far as simple technical products are concerned, we don't stand a chance in terms of costs. In the high premium segment, however, as, for instance, compliance with tight tolerances, we still have many profitable business opportunities. We know the market pretty well. I worked in China for a couple of years. We make good money there.

How will IKS Klingelnberg be positioned in five years?

Meyer: At present, we see a clear decline in the demand for graphic papers. This is, among other things, the result of the new means of communication, above all with the use of tablets and smartphones. But we can also make out processes advancing in the other direction. The number of individual magazines is rising continuously. The packaging sector, too, is growing strongly, above all thanks to the increasing volume of the online trade. Hence, the paper sector as a whole will continue to grow. Our aim is to maintain our strong position in the graphic paper segment. At the same time, we also wish to expand our position in the growth markets of packaging and hygiene paper. The demand for hygiene papers is rising everywhere, even in the USA and, of course, all the more so in the emerging countries. For us, the focus is on hygiene papers and packaging.

At a glance

IKS Klingelnberg started manufacturing knives in 1908. Since 1991, the company, which formerly belonged to Klingelnberg GmbH, has been an independent group in which Thomas Meyer holds the majority of shares. In 2012, the group made sales of 131 million Euros, with more than a half being attributable to the paper segment. The number of staff at 13 production plants and sales offices worldwide is approximately 1000.
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