“Success is a journey not a destination.” Michael Link, President, Sales General Industry (GI), kicked off a two-venue Freudenberg Sealing Technologies (FST) sales meeting with this observation from Mark Twain. FST’s North American sales team gathered in the United States in mid-March, and the European, Chinese and Indian teams followed suit in Spain at month’s end. For the first time since 2018, the staff were able to attend large “live” gatherings in person. The involvement of division managers and key partners from the FST corporate functions proved to be valuable, especially in light of the new three-year strategy period that starts in 2024.
Link praised his sales teams, describing them as globally coordinated entrepreneurs operating independently in their regions. He said they have the expertise and understanding to carry out Sales GI’s global segment strategies successfully in their local markets. “Even with global trends such as sustainability, renewable energy and automation forcing sectors to transform themselves and sometimes demanding totally different products or systems, the project pipeline for our 13 different segments is remarkably well filled,” Link said. With more than 60 percent of the 2022 sales level, the project pipeline is at a record level and promises a strong performance surpassing the market’s growth in coming years.
Creating Transparency
“The crucial factors are the continued, consistent alignment of our product portfolio with benefits to the customer and the ongoing sharing of views and information with lead centers on competitiveness ,” he said. Digital tools are creating transparency and enabling effective dialogue between partners. “This is giving us the chance to transform the complexity of FST’s industrial business, with its more than 100 different primary applications, into a competitive advantage.”
Implementing the GI strategy has proven to be a challenge for the sales teams. They have had to deal with the pandemic along with various economic and geopolitical interruptions.
For example, customer communication had to take place digitally and in phases due to the pandemic. Employees had to negotiate with customers repeatedly and systematically so they could pass increases in energy and material costs on to them. They also had to manage supplies proactively, in close contact with all the lead centers and customer service due to the many pandemic-related lockdowns and the interrupted supply chains. “In the end, the effort was the basis for another record year in 2022,” Link said. “The rapid, successful adjustment to changing conditions showed that we at Sales GI were able to live up to the guiding idea of adaptability – each of us in our own crucial roles.”
As he began his speech, Claus Möhlenkamp, FST’s Chief Executive Officer, thanked the participants for their accomplishments. He said the company has made it through the pandemic in good shape and its prospects are extremely promising.
The company’s industrial business is certainly less affected by the first phase of the powertrain-related transformation that the auto sector is going through, he said. But there are changes in the industrial sector as well, and new business will have to cover any sales lost in this area.. Möhlenkamp cited products for hydrogen applications, fuel cells, battery management and electrolyzers as promising examples. He also noted that FST supplies various components for electrolyzers, which produce hydrogen. For example, five and one-half kilometers of sealing profiles are installed in a 10 megawatt facility. Accordingly, business is on the rise in the segment. FST is also on the upswing in solar and wind energy. Möhlenkamp highlighted FST’s exceptional innovation rate: One quarter of the products that FST supplies are four years old or younger.
He called on the sales team to press ahead in the service sector along with its efforts with manufacturers and suppliers. Services promise good earnings without the need for heavy investment. He pointed to the successes of a competitor, Trelleborg, in this area. The service business is less cyclical and thus less vulnerable, he said.
The new strategy period takes effect in 2024 and focuses on Southeast Asia. FST plans to especially engage with Thailand, Vietnam, Malaysia and Indonesia, along with China and India. Möhlenkamp said FST is ready to invest substantial sums in the markets and regions targeted for development. At present, no additional acquisitions are planned for China, although the company expects continued growth there.
Focusing On Key Components
In his speech, Möhlenkamp highlighted excerpts from the FST strategy book, where products are evaluated from launch to exit scenario. Products no longer in demand have to be replaced with innovations, he said. In his view, it is important for new business to have a strong strategic focus. FST wants to concentrate on key components and not have “a finger in every pie.” Above all, FST must provide its customers with greater added value than its competitors are offering.
All in all, Möhlenkamp said General Industry’s business represents a very important mainstay for the company. The revenue for the 13 segments is expected to rise to 1.3 billion euros by 2035.
When asked whether FST plans to withdraw from China, Möhlenkamp made it clear that FST has absolutely no plans to do so. Its businesses are doing well there and making a profit, he said, and more growth is planned. But FST also plans to develop other markets in several Southeast Asian countries and build production facilities for local markets there.
Over the course of the meeting, sector managers presented their areas, and FST’s division managers talked about the current situations in individual divisions and lead centers. Representatives of various corporate lead functions offered insights into their work and future projects. Expanding on their presentations, the speakers fielded questions in small groups the next day and set their joint strategic direction for the years 2024 to 2026. Among other topics, discussions covered the looming restrictions on per- and polyfluoroalkyl substances (PFAS) in the European Union (EU) and the risks to FST that could emerge from them in the next few years. The questions included other cross-functional topics such as innovation management, business development, the drafting of contracts, and staff development.
