The Slovenia Times

Interview with Christof Droste: A Question of Speed

Nekategorizirano

6


You made a bit of history this year, becoming the first foreign manager to be named as Slovenia's Manager of the Year. How does that make you feel?
It makes me feel proud. I was extremely confident about the company and the team, but nevertheless I didn't expect to be chosen because I'm foreign and thought a Slovene would win. I was very surprised. [That said] I'm committed to this country... even though I still don't speak Slovene!

It's been quite a year both for you and for the company you manage: increased revenues and profits, the Manager of the Year award, the 90th anniversary of Hella Saturnus existence. How do you plan to top that next year?
Very difficult. At the moment the global economic situation is at a high point, so we'll need to consolidate a bit next year. I'm sure the business will go down a bit next year. However, I'm also sure we'll do a great job. I think all of us should do that.

The revenue of Hella Saturnus has almost doubled since 2008 - from EUR 134.6m in 2008 to EUR 253.5m in 2010. In addition, last year the profit of the company amounted to EUR 16.8m, an increase from the year before by half. Are these results in line with expectations?
We're very satisfied. The results last year, both revenues and profits, are above expectations. It was a tricky task for the whole team to put the growth into profit. Having a steep growth like that, you can easily fail and make negative profit.
So far if you take our complete budget it's exceeding expectations but the next months are going to be different so I expect to run the next year on budget. At the moment a realistic expectation is to finish three to five percent over budget.

What are the main reasons for the company's growth - new markets, new clients, new products?
Firstly, it is based on the good job we have done in the preceding years: we convinced our customers and we convinced our mother company that we are in the right location. That is why we got new projects. Secondly, the small car business increased during the crisis. This is the reason for the growth in quantity.
Success takes a whole team. We improved a lot of our processes to enable us to use our resources more efficiently and it was the ambitious approach of every member of our staff that made it possible, and the company made a nice profit out of it. Looking at the first six months this year, percentage-wise we are the most profitable Hella lighting company in Europe. And this includes competing against countries where the hourly labour rate is much lower than in Slovenia.
 

The average company in Slovenia's automotive industry invests five percent of its turnover in development and 12 percent in new technologies. On the other hand, Slovenia's government invested just 2.1 percent of gross domestic product in research and development in 2010. What is your view on that?
Whether you're investing 2.1 percent or more, it is not necessarily indicating that you are investing in innovation. You're investing into research or into development. What I mean by innovation is real innovation: we have to be different from others. We have to think like our customers, think about what they need even if they don't know it themselves right now. We have to have a vision and be different in products, processes and in services. That is innovation. As most of us are in the commodities industry it's not easy to be different in products.

Is it enough to have an innovative product to be ahead of the competition?
No. If you have a very nice product but you are not reacting to your customer's wishes or complaints, he will not be choosing you the next time. Customers want business to be smooth. The smoother it is, the fewer problems he has with your product, the more often you're chosen.
 

Competition has become much stiffer since the crisis. How do you cope with it?
Well, the best thing is not to complain about how hard the situation is but to simply deal with it. We are feeling that the price pressure is increasing. There is an overcapacity in the market and customers are taking advantage of it. We are recognising that if we thought something was our advantage in the past, our competitors today are not sleeping and are catching up with our pace. This shows us that we should not reduce our speed, quite the opposite. We can never be relaxed and rely on old innovations. We need to be a step ahead of our competitors. The tougher the crisis, the faster the competitors react. Pressure is increasing. It's a question of speed.

What are the current trends in car lights technology and what are the expectations for the future?
LEDs will happen in the future. We didn't expect that, but the demand for LED technologies is increasing so fast, it is unbelievable. It is also giving us a nice chance. This is the only field in automotive lighting where there's a lack of development capacity. We have a good chance to be more efficient and faster than the others in this area.
 

Hella Saturnus has invested EUR 85m in research and development since 2008 and you plan another EUR 60m in the next five years. What will be the focus of your future investment?
That slightly depends on how Slovenia sees us. If we invest that money here, we will invest a certain part in new technologies in this location. We have a chance to invest in a new lacquering plant inside this plant for inner lacquering of lenses. Traditionally the plastic lenses of head lamps and fog lamps have been outside lacquered. This is a hard coating which protects the lens against scratches - you have to do this otherwise the lenses glare other drivers.
What the coating also does is offers UV protection - the material of the lenses is polycarbonate which is very sensitive to ultra violet light, it becomes yellowish with time. Another problem is with head lights is that you will never be able to develop a fully tight system. A head lamp system is always a breathing system. As the system breathes, you get humidity inside the head lamp and, in certain circumstances, you get condensation on the lens. This is certainly not appreciated by us, our clients or by the end user.
Inner lacquering prevents many of these problems. It helps absorb the moisture, and breathes it out again. This can be repeated for a number of times. This will be the first plant inside of Hella group having this kind of lacquering plant. This technology is very much requested by General Motors.
That is one focus and there are also going to be many new developments in LED technology. Inside the Hella group we are the competence centre for fog lamps and auxiliary lamps, we are a competence centre for sports car projects, we are just starting to build a competence centre for single function lamps from January next year. That's brand new. Because of our performance in the last few years we were chosen for that competence centre.
 

What do you expect from the new government both in terms of your company and in general?
I expect that the new government will immediately start working to secure the country and its people.
In terms of the company, I hope that the negotiations we started with the old government on financial support for investments will be accelerated. I expect to get a commitment very soon from the government, and recognition that we're an important company for Slovenia. We created 1,000 working places without any incentives, but now we need to keep them. That's a lot of working places. At the moment the situation is relaxed which it's not a nice signal but I understand that the political situation is frozen. I have high expectations from January to start discussion again and to get commitment.
More generally when it comes to business, I have very simple recommendations for the new government: let's stop discussing and start working. A master plan, a vision, a short and clear strategy is what is needed. Everybody should take the risk, be committed to a chosen direction. What is important is to have a dialogue - we are dependent on politics, they are dependent on the industry and we have to work together.
 

Hella Saturnus currently has a 12 percent global market share of additional car lights and fog lights and a 2.4 percent share in automotive headlights market. Do you plan to increase this?
During the last financial year, we sold 8.5m fog lamps, in this financial year we will increase this to 10m. Worldwide we're working intensively on expanding the Hella group market share on head lamps but with the quantity we have here in Slovenia, we are very much satisfied.
 

What do you see as the main challenges in your business for the future?
Just recently I was listening to a presentation on the "Cradle to Cradle" concept. This is a new concept which envisages bringing our resources in a loop. We're exhausting our resources and we should slow down, get them in a loop. We don't have endless resources. We have to use what is there, and we have to use it again and again. The challenge is how to do that.
We're focusing on recycling materials, which is also cheaper. It is a nice business for us - taking care of the environment and making more profit. It's an ideal situation.
So this is one challenge - the environment. The other is to stay at the same speed which is not so easy. We need to keep the company fresh-minded. This is a continuous challenge for the future for all businesses, and also in politics. And a task for all of us in Europe it is to keep Europe strong. We need to keep our region strong and be able to compete equally. If we're not able to keep Europe together, we're not strong and we're not able to face global competition. That would be the worst-case scenario.

Share:

More from Nekategorizirano