Bernd Kirschey, CENTA Antriebe Kirschey GmbH
Release Date: 2009-12-16
Centa Transmissions is a family owned company founded by your father; therefore I would like to give you the opportunity to introduce the company and explain the role that your business philosophy has played in its development.My father founded the company almost 40 years ago; in fact our 40th anniversary celebration is soon approaching. At the beginning, he started with flexible couplings for diesel hydraulic applications, which was a strong growing market focused on building machinery such as excavators and earth moving equipment. Over the years, the product portfolio was further developed to meet other applications and a higher power range. In the late 1980s we started to supply to the wind industry, particularly in Denmark. At the time wind turbines had an average power generating capacity of about 250KW. If you compare that with the current power rating of up to 6MW then it is clear that huge developments have been made in this market. We were among the first companies to supply flexible couplings to the wind power market.
We have always stressed the fact that Centa Transmissions is family-owned company, guided by long term thinking and a strong focus on our employees, who play a large part in our success. Our very dedicated and motivated staff at our HQ in Hahn and in our global subsidiaries – loyal people who have Centa “in their veins” – continue to contribute tremendously to our success. Our employees are part of a bigger family and I must say for me personally that it adds a lot of value to my work; it is more than just a job since I am amongst friends.
At the same time, our employees’ horizons are widened by having friends from all over the world. We have always been lucky to find the right people in the right places. This is also the case in China where we launched the company in 2006 after having operated a representative office there before. The head of the representative office is now the Managing Director and even shareholder in our company there, and we are very glad to have him on board. Particularly in the last two years, we have seen extreme growth in the wind application business in China. Of course, we do cover many other application areas; there are hundreds of application areas which represent markets in themselves. Our main areas of focus are wind, marine for ship propulsion, and diesel hydraulics. Of these three markets the wind industry is certainly the most dynamic, not just in China but also in other markets such as India and the US we expect to see much more growth in the near future.
When Centa entered the wind industry it was still in an early stage of its development. What has been the role that Centa Transmissions has played in the development of the industry? How have you interacted with other players in the value chain to drive innovation?
For us, as a supplier of a system component, the conditions or demands are mostly set by the customer. If the torque increases dramatically then we have to develop a coupling, or in this case a flexible shaft, that can transmit that greater torque under given conditions such as available room or power density. A lot of the specifications are defined by the customer, but of course we have to find the solution that fits best in terms of technology without neglecting cost competitiveness. It has never been our approach to be the cheapest; we have always focused on high quality products.
Over time, our CENTALINK product has become the standard in many customer applications Since the rating of the wind turbines reached several hundred of kW or came into the MW range, the CENTALINK became the leading flexible shaft between the gear and the generator and has been integrated into more than 15,000 wind turbine applications over the past 15 years. CENTALINK is a unique, patented and well proven design that allows for a lot of misalignment, which was initially not developed for wind turbine applications. Over time we found it to be a suitable and long lasting application for the wind industry, and nowadays CENTALINK is a widely applied design for wind turbines up to 5 MW. We also provide other solutions with rubber couplings which offer different advantages and are preferred over more rigid couplings by some customers. Again, that reflects our customer focussed business philosophy: we try to always find the solution that fits the customer’s needs. It is important to remember that there is always more than one solution to a problem. At Centa Transmissions, we aim to devise a solution based on our customer’s preferences.
Who were your initial customers in the wind industry?
We started supplying the Danish companies Vestas, Bonus and NEG Micon. Since then the picture has clearly changed: Vestas bought NEG Micon and Bonus has been acquired by Siemens. We have also been in close contact with German companies with a long tradition, such as Nordex and Fuhrländer.
Was your internationalization process and the entry into the Chinese market guided the internationalization of your customers?
No. Frankly speaking, our internationalization was not driven by a single market application or any one customer. Rather, it was a general strategy to enter Chinese market based on targeting all areas where our product range could be applied. We did not go to China because certain huge customers had asked us to do so; we successfully entered the Chinese wind industry by focussing on Chinese customers. I have to add that many Chinese wind turbine manufacturers are using licensed designs based on German technology. Our strategy is based on working with the design offices in Germany and manufacturers in China, so we cover both sides.
As you said, CENTA has a strong commitment to quality and does not aim to be the cheapest option in the market. How have you found the competition in the cost-conscious Chinese market? And how do you convince potential customers that added costs can also mean added value?
This is always difficult. Of course, we prefer to talk about technology rather than focus purely on price. We find the same competition all over the world; it is a niche market in which German niche manufacturers play a global role up until now. This is one of the faster growing industries in the world at the moment which means that it attracts the attention of a lot more players who did not necessarily consider it in the past. It will be the same in other parts of the world, and we can expect competitors to enter the market in increasing numbers in the coming years. But we try to convince customer by not only looking on initial cost but to also consider quality, reliability and life cycle cost.
How does that change the dynamics of your industry and what is your plan to remain at the forefront?
I think we have an advantage, along with other competitors, because we are already well-established. We have a lead position compared to companies that are just starting now. Of course, we cannot rest on our laurels and have to go forward. First of all, increasing investment in R&D is essential to continuously improve our products both in terms of technology and cost competitiveness. Customers of course appreciate if you can offer cost savings but they also appreciate higher utility.
What are the lessons that you have learned, as the Managing Director of this company, from entering the Chinese market and doing business in the country?
Be careful! But on a serious note, I have also learned lessons in terms of the pace at which business is conducted in China. Before entering China we analyzed the situation, and I would recommend any German company to do the same; first establish a sales or representative office and put someone in charge who can explore the market potential and build up connections. In China, as in many countries, it is very important to establish face-to-face relationships with your customers and define the big targets to shoot for, so you start off with a limited number of people in the beginning and get a return on investment within a reasonable time. Another thing I recommend is to accept external advice. We have not gone to China alone but were supported in this process by partners from Hong Kong and Japan who already had experience in China. I think it is good when you go into such a completely new area – a “white spot on the map” – that you have someone who already knows the path a little better and can help you in avoiding some mistakes. In that respect I think we had good guidance and found the right manager for our operation which together turned our China experience into a success in a very short time.
What has been your growth rate in the Chinese market in recent years, and what is your outlook for the coming years?
Over the past years we expanded our business by about 100% annually. Although we will not grow 100% in 2009, we still anticipate nice growth in China. We have established our local production facilities in China, which we see as a necessary step to meet local content requirements as well as reducing freight costs, transportation costs, and lead times for delivery. We are well equipped for growth and we can certainly double our size without having to expand our facilities.
In all our past operations in Germany and other countries we have never hesitated to go forward with investments if we think they make sense. We don’t expect return on an investment to come in the fraction of a second. I am of course exaggerating, but the point is that we always think in the longer term and so far this approach has been very successful. As demand in China increases we will invest more, employ more people, and continue to keep pace with growth.
What is the role that you foresee China playing in the development of your company?
I think China will be our number two market worldwide in terms of sales, and possibly number one. The other big player in this field is he US, and we have our own subsidiaries in these two key markets.
China will greatly contribute to our group’s success and our global market share, China is a very important and strategic market for us.
What is the role that Centa Transmissions would like to play in the development of the Chinese wind industry?
We supply our best technology to all of our customers and then, of course, it comes down to pricing. Our local supply capabilities can provide some advantage since costs in China are more competitive than in Europe or the US.
I think that the global goal of developing clean energy is of tremendous importance. It is a very good step that China and Germany cooperate to achieve this goal. Every big project begins with a first step, so it is good that this first step is taken by the politicians and that we in industry are ready to follow and support them.
| Company: | CENTA Antriebe Kirschey GmbH |
| Position: | Managing Director |
| Country: | Germany |