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“The balance of the markets has shifted”

What’s behind the solid business figures for 2018? And what will it take to lead the company to a successful future? An interview with Klaus Endress and Matthias Altendorf.

Interview with Klaus Endress and Matthias Altendorf.
Klaus Endress, President of the Supervisory Board (left), and Matthias Altendorf, CEO of the Endress+Hauser Group,
provide their insights.

Mr Endress, Mr Altendorf, the process automation industry had a good year – and Endress+Hauser had an excellent year. What characterized 2018?

Endress: We got off to a very good start and maintained this pace until the end of the year. We can be very satisfied. For us, 2018 was another ‘best year ever’, and of course we’re pleased about that!

Altendorf: The manufacturing industry experienced a strong global economy. People want to eat, drink, consume and stay healthy, but also save energy, conserve resources and protect the environment. These factors have always been in our favor. There were virtually no unpleasant surprises, regardless of the industry or region.

The strongest growth occurred in the Americas and Asia…

Endress: It’s worth noting the way the balance of the markets has shifted for us. Germany has been our market with the highest sales ever since Endress+Hauser was founded. The US took over this position in 2018. 

Altendorf: That of course represents the size of these markets. The US still offers great potential, and the same goes for China. The fact that we’ve had a manufacturing presence in these markets for more than two decades, and that the customers also view us as a local company, has paid off. 

For the first time since the company was founded, the USA leads the list of the top 10 markets.

Compared to the industry, Endress+Hauser experienced above-average growth and gained market share. Which are the reasons behind this?

Altendorf: We have outstanding, extremely dedicated employees who take care of our customers around the world, plus we boast a highly innovative portfolio. We introduced 54 new products last year to support our customers even better in improving their business processes. We accomplished a lot in the area of digitalization and our investments in analytical technologies pay off. We’re making good progress in this field and all of this is contributing to our growth.

Endress: It makes a difference if people enjoy their work. Other suppliers have good products as well, so that can’t be the only reason for our results. When people feel at home in a company and their work is valued, this is when they are capable of excellent performance, and that goes for the area of innovation as well. Even products that have proven their worth over decades can be improved.

Digitalization is electrifying the industry. How relevant is the topic for Endress+Hauser?

Increasing industrial digitalization provided additional impulses last year.

Altendorf: It all begins with the fact that the manufacturing of our measurement instruments is to a large extent digitized. From the first entry in our device database, we monitor every step and can make this information digitally available. We provide connectivity, both wired and wireless, via a variety of communication protocols. And with Netilion, we offer customers an ecosystem for the Industrial Internet of Things that enables them to exploit the potential of digitalization for their own purposes, for instance in web-based applications or by using entire packages for certain tasks. From a technical point of view, we’re very advanced. As a next step, it will take joint efforts with our customers to develop useful applications.

How does this approach differ from other suppliers?

Altendorf: One key point is that we are independent of the control system. We offer whatever benefits our customers, and not just what fits neatly into our own system architecture. Furthermore, we have always relied on open standards and we collaborate with a wide range of system partners. Just one example: Our partnership with SAP helps to get the information from the field instrument into the ERP system.

The topic of analytics is also getting a lot of attention. Does Endress+Hauser make progress in strengthening process analysis and bringing new analysis and measurement methods for quality-relevant parameters to the field?

Altendorf: We’ve had consecutive record figures in the analysis business for ten years running. Why? We focused on making it easy for customers to deploy analytical technologies. Our philosophy is to integrate the complex parts into instruments that are quite easy to use. Where possible, we have also established standards, so that customers have to learn things only once. The new technologies that we gained through acquisitions are developing very well. They help our customers reduce costs on a massive scale.

What’s the situation in the field of laboratory analysis?

Altendorf: We will continue to enhance the laboratory analysis area, which on the one hand impacts our offering. The Analytik Jena products that are designed for chemical analysis will be enhanced with further innovations and supplemented with new technologies. On the other hand, we’re reinforcing the sales area. We’d like to address the market more broadly and offer customers superior service. It will take some time before this strategy completely takes hold, however.

Endress: This area is certainly a challenge, but we are still convinced by our strategy. With that in mind, the changes within the Executive Board are a positive development for Analytik Jena. When the CEO of the Group puts emphasis on laboratory analysis, this is a clear signal that we want to make this business a success.

You have just touched on the changes within the Group management… Andreas Mayr now has responsibility for the operational business as COO. What’s behind this step?

Andreas Mayr took over the responsibility as COO of the Endress+Hauser Group.

Endress: This frees up more time for Mr Altendorf to work on issues that are important to the future of the company. And with Mr Mayr, the day-to-day business couldn’t be in better hands.

Altendorf: We want to focus on three areas in particular. When it comes to digitalization, we want to stay out in front: with our products and processes and in our own systems. Second, we want to strengthen the laboratory analysis business and bring laboratory technologies to the field. Third, we want to strategically develop the company over the long term. These are the issues I want to focus on. But that will require time and effort, and Mr Mayr is giving me exactly the space I need. On top of all of this, Endress+Hauser has grown over the years. Today the Group has 14,000 employees, a presence in 50 countries and production facilities on five continents. One of the key tasks is to convey and anchor our corporate culture across the world so that the customers perceive us as one company. The corporate culture binds us together and builds trust with the customers – that’s extremely important for us.

The Family Charter was revised. One of the changes involves working at the company. Where does this stem from?

Endress: Family members had limited career opportunities at Endress+Hauser, because it’s not a simple thing for a shareholder to hold a normal position within the company. For this reason, we always said that members of the family are only allowed to work as a managing director at one of the companies, or as CEO of the Group. In hindsight, however, we have to admit that we haven’t been particularly successful with this approach. Only one member of the third generation of the family took this path. My nephew Steven Endress is currently Managing Director of the UK sales center. If we want to have more members of the family active within the company – and that’s important because it helps them identify with Endress+Hauser and reinforces the bonds – then we have to open the door at all levels.

The Endress family during the family day in 2019.

How will this work?

Endress: In principle, we will treat members of the family like all others. They will have to contribute and perform just like every other employee. The Family Council will supervise these people very closely and the Executive Board and Supervisory Board will be involved as well. Mr Altendorf and I gave this issue a lot of thought and developed the concept together. We are in total agreement.

Altendorf: This is the biggest responsibility that we have: handing over a healthy and sound Endress+Hauser to the next generation of the family – not only with respect to the operational business, but also when it comes to the relationship with the shareholder family.

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