By Euan Youdale04 December 2018
Major changes are under way at Palfinger, designed to significantly grow revenue over the next few years. Euan Youdale spoke to CEO Andreas Klauser, who joined the company earlier this year.
Palfinger is on the brink of a structural turnaround that will see the company change the way it operates globally.
Known as the Global Palfinger Organization (GPO), the new structure is designed to reduce complexity and harness potential across the Group when it is implemented by January next year.
There is also the promise of expansion into new product and service areas that will come through organic growth and new partnerships, and see the company strengthening its collaboration with Chinese construction equipment manufacturing giant Sany.
Heading it all up is Palfinger Group’s relatively new CEO Andreas Klauser, who assumed the role in June of this year. He took over from the company’s longstanding leader Herbert Ortner, who stepped down as CEO at the end of 2017, although he remains in a consultancy role to the Palfinger family.
Klauser’s leadership experience is considerable; his previous position was as global brand president of Case IH and Steyr, as well as member of the Group Executive Council of CNH Industrial. He managed and restructured large business units in Europe and the USA and as the COO of CNH Industrial for the EMEA region, he was responsible for the integration of 12 brands and business units in Turin, among them Iveco, New Holland, Case IH and Steyr.
Comparing Palfinger with his former place of work, he says, “The size of the business is smaller, nevertheless the brand value of Palfinger is huge. Altogether, it has a strong, solid brand with a strong, solid and famous heritage.” Nevertheless, the complexity of products in Palfinger’s portfolio has created a challenge. “In the past we [Palfinger]had different business units acting quite independently; different locations did similar things but with different processes. I saw that we are not using the potential synergies across our different plants and product ranges.”
In response, the company has overhauled its global structure and areas of expertise will be clustered into global competence centres, for R&D, manufacturing, engineering, human resources and purchasing, for example, rather than different parts of those areas acting independently from each other, as in the past. The result will be a far more centralised company.
Ultimately, says Klauser, it means each employee will know what is expected of them. “Everyone will understand their KPI (key performance indicator) and will be accountable to that and bound by the common Palfinger structure around the globe, interacting with each other.”
The company employs more than 10,000 staff and turnover was €1,471.1 million in 2017. In the first three quarters of 2018, the Palfinger Group’s revenue increased by 8.2% from €1,093.1 million to €1,182.6 million. The new vision, however, is not just about KPIs and synergising, “There is still a family spirit,” says Klauser, “and we want to expand that globally too.”
Klauser confirms that this intensive restructuring will not lead to job losses or depot closures. “It’s like in a football team, he explains, “The coach brings the players into new positions, but does not change the number of people. This is what we are currently doing. We are really focusing on consolidation, bringing businesses together but not laying people off.”
On the subject of growth, which these changes would inevitably lead to, Klauser says will be significant, and will come primarily from organic growth and through new partnerships. “The general focus is not to open businesses which are completely new but to find partners and businesses that supports the existing product range; for example, bridge inspection with drones, and in the Marine business. But this is too early a stage to talk about it in detail.”
In terms of organic growth, how will it play out in coming years? “Organic growth is about being closer to customers and more efficient. For example; currently the entire industry is suffering supply issues. We need to have better planning on one side and, on the other, we need to be more flexible in shifting internal capacity, that’s one of the reasons why we are rolling out the global structure. “In terms of productivity, or pricing, we will do whatever we can to generate additional volume and grow market share. Even in a market that is at its peak, if the market slowed down, market share growth would offset a big proportion of that.”
As a target, market share gain for a company that it is already dominant in many of its key markets is not easy. This is certainly the case for Palfinger’s articulating loader crane segment. “We still want to grow market share on our home turf,” says Klauser, “It’s more difficult because in some areas we are already at 60% market share, and to go to 70% is a challenge, still, between the lines we have opportunity.”
When it comes to new products in its existing segments, launches will reflect changes found in their relevant industries. For example, in the cranes segment, the manufacturer has launched its first model on tracks. The PCC (Palfinger Crawler Crane) made its debut at the IAA Commercial Vehicles exhibition in September in Hannover, Germany. Three models, between 50 and 150 tonne-metres, are available initially. The idea is for the crane to be able to work on sites with difficult terrain without a delivery truck struggling or reaching its limitations.
Combined, these growth strategies should result in revenue reaching organic revenue of $2 billion by 2022, and 10% EBIT over the cycle. “It’s a target, which is out there. Myself and my management team need to make it happen,” says Klauser. The plan is for this revenue to be split equally between the company’s three regions of operation: EMEA, North & South America, and Asia & Pacific.
On the subject of access equipment, how significant a role will Palfinger Platforms, which specialises in truck mounts and now accounts for around 10% of group revenues, play in the group’s expansion plans?
Frank Bürschgens, global product manager for platforms, says it is “definitely high. “We see a growing global market; there is still a lot of opportunity. Also, if you look at the global regions, they are not really covered by platform solutions.”
Bürschgens forecasts the platform segment of the company will grow in line with the global market for truck mounts, which he believes is around 5% annually. “It depends what happens in the world and on what I would call the megatrends. If you look to Asia, there is a lot of manual work but if the legal requirements change, in terms of safety, then things will change dramatically.”
One of the greatest challenges in the truck mount sector is the integration of the platform on to the vehicle. “You have to have the knowledge to mount the platforms on to every kind of vehicle in the world. I think this is one of Palfinger’s Unique Selling Propositions (USP) USPs - we have a long expertise in exactly that.”
Starting at the top of the working height spectrum, specifically Palfinger’s Top Class product range, Bürschgens says there are no immediate plans to extend it. The range includes the 103m working height P 1000, one of only two in the world in this working height category, used mainly for wind turbine maintenance, and the 90m working height P 900, which has a variety of applications.
“We are not focusing on further heights. There are requirements for 125m and even 150m, but if you go into that height then there are a lot of challenges and legal requirements, particularly in the US, with different rules in each different State.”
He adds, “If you consider the transport of a 125m platforms, for example, then you have a lot of costs that go with it for the customer. This is a very specific niche and the question is, is it really an area we want to focus on?”
Achieving greater working height is also fraught with technological challenges. “The Top Class is already a high-tech series, and while we definitely concentrate on high-tech, right now we are fine with the working heights we have, and we will work and improve the existing portfolio.”
At the other end of the Spectrum is the Smart Class, including products with gross vehicle weights (GVW) of 3.5 tonnes, or below. “We want to push the Smart range more in North America. I think the products will fit in there; the whole range is ANSI regulated and a good addition to what we already have in the US with our company ETI in Oklahoma.” ETI is already 100% owned by Palfinger and will soon be fully integrated into the group as part of the GPO strategy.
The Smart Class is produced by Palfinger Platforms Italy and is one of the company’s fastest growing product segments. “A few years ago we were doing 20 units a year,” says Bürschgens, “Last year we had 570 units and in 2018 we believe we will see further growth. “And the segment has growing potential globally, not just in EMEA and the US. In the future we will look at applications across the globe.”
Not forgetting the company’s medium working height range, there are plans there too, with an update of the Jumbo Class NX set for the near future.
These initiatives are a good example of how the company plans to evolve overall. “On one side, you have the product, but what else does the customer need to be more efficient? “They need a complete solutions package, where they can get status information on their Smart phone, and proactive maintenance information, for example. This type of customer convenience is a long-term activity that we need to focus on.
Another action in GPO is to strengthen the company’s sales and service offerings in each region. “Through that we will push more platforms from our global portfolio in North America.”
New technologies are also pushing the product agenda. One such area is hybrid and electric. Earlier this year, Palfinger launched its first electric-powered truck mounted platform, the P 370 KS E. It combines a diesel and electric drive system but can be operated for one full working day in electric. Using an external power supply, charging can be performed on site during downtimes.
The intelligent charging system with an integrated quick-charging function shortens the charging time by 25%. After one hour of charging, the platform can be operated electrically for up to one and a half hours. Like the existing P 370 KS, the electrical version P 370 KS E offers a maximum basket load of 500kg, a working height of up to 37m and a lateral reach of 31.5m. Vehicle length remains compact at 8.35m.
Bürschgens says the launch is a clear signal that the company will be focusing on such innovations. “It is one of our long-term strategies, and a megatrend that we want to jump in to, maybe in combination with electric trucks.”
On the subject of trucks, Bürschgens, adds, “At the moment, from an environmental perspective, it’s not that efficient but it’s definitely something that we need to have. And, in terms of pollution, governments are more concerned with it, so producing hybrid and electric equipment will be very important in the future.”
That said, Palfinger is remaining tight-lipped about specific future electric or hybrid models. “Palfinger never sleeps,” he says, “But the P 370 KS E is the status for now.”
The platforms segment of the company will also benefit from the group’s expansion of new and existing partnerships. On the Sany Palfinger front, there are plans for deeper cooperation in China. The Sany Lifting Solutions partnership currently includes crane and access equipment production. On the access side it currently produces a range of self propelled scissor lifts, with a maximum working height of 21m. This range is focused on the Chinese market. There is also a range of knuckle- and stiff- boom cranes.
Palfinger and Sany now hold a 7.5% share in each others’ companies, which has been adjusted in recent times from 10%. This adjustment, mentioned in Palfinger’s third quarter financial results, reflects a new era of equal partnership, rather than it being a sign of reigning back from it, explains Klauser.
The newly-invigorated partnership will include the China plant manufacturing products for global distribution, including one of the company’s main targets North America. Klauser picks up on the subject. “We have cross investment and we have agreed on a long-term relationship, apart from further premium products being brought to the China and those products being produced in the country, we have also looked at joint-engineering of key components. If you can imagine the size of Sany, it is very interesting for us. We see the company as an important partner and Sany sees Palfinger as an important partner.”
Beyond partnerships and Palfinger’s other current core areas of activity, there are, as mentioned, significant plans. Klauser sees it heading in the direction of inspection of buildings and bridges using drone technology. “This is something that we are working on, in terms of inspecting buildings and bridges in real time, along with all the data management.
“And we are focusing on digitalisation in general terms, not just the product itself. We need to have the appropriate customer relationships and management tools to make sure we are reaching out to our customers properly.”
Klauser concludes, “Our claim is being the preferred partner in lifting solutions.”