Thorsten Koch, WAGNER-Group
Release Date: 2009-09-24
What is at the core of WAGNER-Group’s business model, and which role has your company played in the development of surface solutions and technology over the past decades?Wet paint and powder coating support lots of basic functions of products. We perfectionize a product idea because customers want to get in touch with a product, and companies often underestimate the importance of the surface. Apart from its protective function it supports aesthetics. What would an iPod be without a perfect surface? Perhaps it would offer a great user interface and a good system, but it would not necessarily be something that you want to get in touch with because of its surface. That is something we feel responsible for, and we tend to believe that when it comes to the perfect surface you better talk to the specialist.
For example, that is why more than 80% of all rims are coated with WAGNER systems. Rim coating is something that is very complex because it is confronted with very aggressive salts and the application process of this mix of powder and wet coating is very complicated. Powder coating offers more resistance to protect and wet coating offers more brilliance. In this process we begin with a powder coating first, then apply a wet layer, and on top of that wet layer offer another powder coat which is transparent to withstand the salt and the very aggressive materials from the brakes. It is a very interesting and complex process for which you have to master both wet and powder coating processes. We are one of the very few, if not the only company offering both wet and powder coating, so that is why we are dominating that area.
Over-spray is one of the big issues that make the process as well as the entire installation complex, and has direct environmental implications. Powder coating itself produces basically no over-spray since you recycle all materials which do not stick to the object itself. It works on an electrostatics base as paint molecules stick to an object that is electrically loaded. The molecules that fall off the object in the cabin will be sucked into the recycling process and are made part of the powder circle again. Basically there is no loss of paints which makes the process very efficient from an economic and ecological point of view. In every wet process you have to deal with over-spray; there is a loss of paint on the one hand while on the other hand you have to make sure that this paint is not made part of the ecological cycle. That is why there are lots of initiatives focussed on water born paints nowadays. We are pioneering the reduction of over-spray in all our segments ranging from consumer to contractors to the industrial applications. Architectural icons such as the Sydney Harbour Bridge as well as objects including cell phones, notebook, TVs, truck trailers, washing machines and all sorts of industrial products are coated with WAGNER products, so the probability that you get in touch with WAGNER products without knowing it is very high. Of course, we always thought about a “Intel inside, WAGNER outside” branding, but so far we have not figured out a way to do that effectively.
We deal with manufacturers, contractors and consumers, which makes us a pretty complex company involved in B2B, B2C and classic big projects, and within that niche we are the only company covering all those areas. While we are very specialized in this niche we do master fast moving consumer goods up to big projects. Our focus is on high technology engineering, but we also try to provide the technology loop throughout those different technologies for different customer and target groups in order to master all price points and different technologies. Therefore, quality, innovation and service worldwide are absolutely crucial. You can imagine that one thing is common throughout all our projects: high user friendliness. The same requirements for usability and ease of use hold for consumer products and industrial applications. Economical efficiency is something that we need to provide for all our products and applications. With around 1400 employees worldwide we reach around US$500 million in annual sales through our two divisions. Our decorative finishing division covers home finishing and professional finishing, such as paint spray equipment for all sorts of different viscosities ranging from very light bodied thin materials up to high viscosities like bitumen and concrete as well as street marking and the like. In the industrial solutions area we offer both liquid and powder solutions. For our liquid media, which consist of up to five different components, we make the dosing and also provide the programming for manual and automatic powder coating systems for all sorts of different applications and industries ranging from pens to wind turbines.
People often underestimate the complexity of what we are doing. The integration of material and air with the complexity and geometry of products is a very complex issue, and that is why there are very few dominating companies in the world actually mastering this process. This is why a rather small company like WAGNER is not seriously challenged by others. The reason is not that we haven’t been challenged, but the issue is that competitors cannot reach our level. This is not just physics, it is also about experience. It took us over fifty years to reach the level where we can be considered a true specialist in surface technology, and it takes the integration of a lot of different technologies to actually master the process. We make sure that our paint applications are in line with the expectations of our customers, which all ask for solution for completely different environments, materials and technologies. We have technology centres in Germany, but also in China, where we conduct applications tests that prove to our customers that we will be able to fulfil their requirements whenever it comes to coating their beloved products. One of the huge benefits for our company in that respect is that we do not need to talk our customers into one specific technology. Lots of competitors for example need to talk their customers into wet applications, powder applications or something they actually offer. We can provide each and every technology that is optimized for every individual customer. We have all solutions in-house and that makes it easy for us to give the best recommendation without preferring any of the technologies. Our technology centres are like a laboratory where we prove that we can fulfil the requirements of each specific customer when it comes to layers, speed, efficiency and productivity to meet commercial requirements. We believe that we can create added value when it comes to paint and adhesives, we do lots of research and development, and we spend lots of resources and money on cooperation and alliances with material manufacturers because the combination of material and technology is absolutely crucial. That is also why one third of our turnover is generated by products that we have introduced over the past 24 months in a rolling cycle, which is a pretty short life cycle for industrial products.
To which extent do you expect green technology to transform your industry?
Environmental technologies are absolutely going to become key in our industry, not just to support tomorrow’s population and protect our world but also they are an innovation driver. It is not accidental that a lot of these initiatives are born as a consequence of the current economic crisis. It has some sort of evolutional character as it is part of human being’s desire to adapt to problems and be most creating when facing challenges. The so-called ‘greenobalization’ is going to be the fastest growing industry worldwide and I believe that German and European companies have a huge opportunity to be at the forefront of that industry. For example, the installed bases of wind, solar and other technologies are majorly dominated by European companies so far.
Let me give you some other examples of what environmental technologies are all about and where we come in. There is an interesting Australian initiative where scientists are actually developing a dye that makes energy out of sunlight, so it basically mimics photosynthesis. Try to imagine that you could make use of all the space created by walls to actually create energy. Today walls are just walls and protect us from wind, cold, rain and sun, but if we can make use of walls in a different way by using different surfaces we could use this huge space as a membrane. Just imagine that walls get coated by this dye. With similar developments in photovoltaics, geothermal power, wind energy and bioenergy this is a huge trend that describes the start of a new industry. These trends in the European Union will soon be beaten by the US and China, and we can only imagine what it means when these trends are truly being supported by these huge nations. As a company you have to be part of these trends to make sure that you will also exist in fifty years.
Another interesting initiative is focussed on cool roofs in California, where Arnold Schwarzenegger has implemented legal requirements to make sure that people make efficient use of roofs. In California you could lower the outside temperature by 3°C by just turning black roofs into white roofs. It is simple physics and you would not have to cool down real estate and houses that much if roofs are just made white from the beginning. The whole world applauded the initiative of president Obama to support a target of 2°C temperature increase as a result of industrialization, and here we talk about 3°C by simply turning black roofs into white roofs. That does not even take into account the potential impact of light streets, nobody talks about white streets but do they have to be black? If we come up with the most efficient way of changing street colour then that would be fabulous. However, this is a lot more complex than many people believe because roof coatings are pretty heavy to work with. Once again, you really need to cooperate with the material manufacturers. These are huge initiatives which could really bring fundamental change to how people think about surfaces. These initiatives are born because of the need to reduce CO2 emissions. Just to give you an indication of what we are talking about, 100m2 of cool roof compensates the annual CO2 emission of one human being, which is pretty substantial. These initiatives will have a huge impact on our ability to use energy in the most efficient way. As a company we have to make sure that we are part of these global trends and offer the optimal solutions. I believe that meaningful technical innovations have always been driven by social needs and changes as a result dramatic events, and one of those events is the global financial crisis and the other one is climate change. These challenges bring out the best in human beings. It is not just about business, it is a really nice part of business.
You stated that European companies have the opportunity to set standards in the ‘greenobalization’, but that the US and China are expected to catch up quickly. What does this mean for the business strategy of a company like WAGNER is they want to remain among the frontrunners?
We all have to be on our toes anyway because education level, demand and financial resources will trade lots of the current dynamics. China is one of the best examples of a country with well educated people and lots of technology in place, but in Europe we are at the forefront in those areas where we have been involved for decades. Many initiatives have been born in Europe, not because we have the most brilliant engineers but because of needs: In no other part of the world have fuel and oil been as expensive. Our markets, technologies and knowledge are born out of certain needs and pressures. I strongly believe that focussing on these technologies will help us to stay at the forefront of these technologies, also as a service to regions that have a demand for these technologies such as China and the US.
Josef Wagner, the founder of the company, continues to be an inspiration for WAGNER-Group. Which role does his philosophy play in the ability of WAGNER-Group to punch above its weight?
What really makes a company is its culture and history. Many German companies have been founded by inventors, engineers, fascinating people, and Josef Wagner was one of them. He had a background in aviation, torpedoes and the likes, but when he founded the company in the 1940s he was not allowed to develop airplanes. Therefore, he came up with fantastic innovations to make a living, but always had in mind getting back into airplanes. For example, he developed the first certified helicopter in Germany, with two rotors and no back rotor needed, and he had the vision of the flying car. Today, there are still flying cars from WAGNER around. This illustrates the ultimate desire of somebody to change the world in his way, not necessarily to make it an economic success, which was not what drove that generation. Josef Wagner was really striving to make his dreams reality and this is what he has put in our company. This is also what differentiates us from others; we are dedicated to engineering, passion, and perfectionizing a niche to offer something very special to other industries which others cannot provide. This is something that always stays with us.
Josef Wagner had the dream of flying and the flying car, but what is the dream that you have for WAGNER-Group? Of course you have to ensure the company’s economic success, but what is the dream that should guide this success?
My dream is to offer very special surfaces to products that invite customers to connect with a brand, while working with material manufacturers to ensure that our products are long lasting and economically sufficient. If we can provide that we will have achieved quite a bit.
What will the main challenges be in entering into the ‘greenobalization’ industries of the future?
Getting into these new industries will require an additional effort of 10-20% over what we have done before. Coating a pipeline is not all that different from a windmill tower, so we can start from a certain base while working with different materials. It is not all new to us, we are to a certain extend staying in our comfort zone as we remain focussed on surface solutions that are applied to new industries. We are not developing our competence from scratch.
We need to make sure that our people having the expertise in-house always stay open for new industries. We have to make sure that our people and our organization stays at the forefront of industries such as wind, solar and cool roofs, which mean that we need to know about architecture, roof construction, materials used, and structures and expertise of contractors. We need special people for this process and have created special groups that are really getting into these new industries and develop the engineering knowledge required to cope with new endeavours and industries. These developments take place at a global level, so we have to be present in China, US and any other fast growing market. Industries such as the wind industry are very international industries, and companies such as Vestas produce wherever they will install their wind turbines. You cannot ship generators, blades and towers all over the world, especially not in a fast growing market, so you need international expertise, local knowledge, sales and service.
Of course, China is this year becoming both the largest manufacturer and market for wind turbines. While companies such as Vestas, Gamesa, GE Wind, and Nordex have been present in the Chinese market for years, local manufacturers have become the dominant players in the Chinese market. How are you going to convince these companies operating at a different cost competitiveness level to invest in superior coating solutions?
It is not the first time that we are confronted with that challenge. We are working with industries that have gone through that development already, such as white goods and brown goods, and everybody knows that those industries moved to Chinese manufacturing at some point in their lifecycle. In that respect, it always took us a little bit of time to get certain standards in place. We all know that today the vast majority of Chinese wind turbines are still manually coated. It does not take an awful lot of effort to make sure that people understand that it is a worthwhile investment to increase efficiency, productivity and getting production more in line with industrial standards. The dramatic growth of their business will take place on the operational side, while on the other hand everybody understands that efficiency will also drive quality. Wind turbines have to produce power for thirty years, therefore it is important that the fundamentals are set, that the standards are in line with international requirements and that wind turbines will not have to be taken down for maintenance. It is not the first time that we go through his process, and we do have the resources and competence in China to support these industries in the best, most efficient and cost productive way. On top of that, driven by our business volume in China, we make Chinese requirements when it comes to cost, efficiency and handling part of the functional requirement specification as well as our product life cycles from the very beginning of every product we develop. We meet Chinese specifications, needs and requirements to make sure that we are not trying to sell Chinese products with European specifications and German costs.
Overall we are very well set up to meet the Chinese requirements of our customers; we do everything to give them the best technology available but also provide the right service to increase their productivity, efficiency and make their business develop fast. China is one of the oldest and fastest growing organizations that we have in place worldwide.
If Josef Wagner would still be here today and you would seek his advice on your development strategy, and the role that China should play in the company’s future development, then what do you believe he would be advising you?
For sure he would say “go for it”. You should not forget that when he started business in the US, thirty years ago, this was a very difficult place to work at that point in time. He invested everything he had in building a brand and a certain expertise in the US. What do you think he would do nowadays? He would invest everything he got in those markets that offer sufficient future for his vision. He moved all of his assets into a foundation to secure the future of our company and really make his dreams come true. Most probably he would really invest in China, and other future giants. He would also invest in industries and businesses that will give future security mixed with exciting technology and engineering challenges. He would not go the easy way; he would seek a mix of opportunity, engineering and a very challenging environment. What he would do is not any different from what we are going to do.
| Company: | WAGNER-Group |
| Position: | CEO |
| Country: | Germany |