Strategy for the Future

In order to make sure Freudenberg can continue to maintain its position in a demanding market environment, the company regularly goes through a comprehensive process of strategy development – for the entire group and for individual business units.

Freudenberg Sealing Technologies (FST) translates group-wide themes for the future into its own requirements, analyzes market-related changes in detail, derives options for action, and carries them out in concrete strategic initiatives and projects. Each company strategy is in effect for three years. The current period runs from 2021 to 2023.

FST’s six most important strategic initiatives, which it has successfully undertaken for about a year, are the e-transformation, the focus segments, the expansion of the service business, the company’s global footprint, CO2 neutrality, and digitalization.

01 Focus segments for the new strategy

A new strategy period is not the same as a completely new strategy. Rather, the current strategy ties seamlessly with those from previous years and, in many fields, presses ahead with developments that have already been launched. For example, FST intends to keep growing in electric mobility, energy, and robotics, along with the food and beverage field. These focus segments, which are already well-known, are being joined by pharmaceuticals and the health and safety sector.

02 E-transformation

In the electric mobility field, FST is turning to batteries and fuel cells for heavy duty vehicles on the one hand, and to products and components for the classic automotive business on the other hand. The company is convinced that a smart combination of batteries and fuel cells will achieve the greatest ecological and economic benefits. FST is also supporting the transformation to electric mobility in general industry – and not just in the automotive sector. Some examples are commercial shipping, railways, construction and agricultural equipment, and energy production and storage.

FST has already brought the first components to market successfully. They include eCon and the pressure compensation valve DIAvent. Various major projects with well-known partners in the battery and fuel cell feels have been launched. But it is clear that these are only the first steps on the way to the goal – the e-transformation is going to require stamina.

03 Service business

FST sees great potential for growth in its commercial businesses – Corteco and Industrial Services. The same is true for the services sector and the maintenance, repair and overhaul (MRO) business. This mostly involves products with low order value but frequent orders. The service business is expected to account for about 25 percent of revenue by 2023.

04 Footprint

FST is looking into the global value creation structure – that is, how and why the company manufactures a product at a particular location. The company’s regional customer focus is due to be strengthened, with greater balancing of regional production. The philosophy will be “in the region for the region.”

05 Carbon-neutrality

By 2025, FST is planning on a 30 percent reduction in CO2 compared to the year 2020, raising the prospect of CO2-neutrality. To accomplish this, energy and material consumption is expected to be decreased with the help of greater energy efficiency and less scrap, due to new, material-saving production methods. FST is also turning to electrification, the use of green energy, and projects to compensate for CO2 emissions.

06 Digitalization

FST continues to invest in the digital transformation. This involves the entire value creation chain and all business processes. The goals of the digitalization initiative are more efficient internal processes, revenue growth and benefits for the customer. Productivity increases in manufacturing are expected to be achieved with the help of data-based decision-making, that is, through automation, robotics and equipment networking. The harmonization and automation of sales and administrative processes will lead to greater efficiency and speed. Online sales operations are being strengthened, and available solutions are being developed further and standardized – for a better digital (purchase) experience for customers, who will be able to find the information relevant to them more quickly.

Revenue growth by 2023

The corona pandemic, which FST has weathered comparatively well, has nonetheless left its mark on revenue and profitability. So the company is striving to achieve organic revenue growth to the pre-crisis level (2.5 billion euros by 2023). Profits in the classic sealing business involving combustion engines are essential for FST’s financial strength. Profitability also helps to expand the business into new sectors. The keyword here is electric mobility.

Success multipliers

No. 1 with 20 %

We want to maintain our number-one position in the global sealing business during the current strategy period. To accomplish this, we are aiming for a market share (revenue) of more than 20 percent.

25 %

Bis 2023 wollen wir unser
Servicegeschäft auf
We want to expand our service business to 25 percent of revenue by 2023.

30 %

A long-term view, social responsibility and sustainability are the cornerstones of our mission: In the context of climate change, the goal is a 30 percent reduction in CO2 emissions by 2025.

From 19 to 39 million

Out of all the regions, India is expected to record the strongest growth on a percentage basis, doubling its revenue from 19 to 39 million euros in three years.