Q&A: Passing the baton
Peter Neumann, chairman and CEO of injection molding machinery maker Engel Austria GmbH, Schwertberg, began his retirement at the K show in Düsseldorf, Germany. On the evening of Oct. 25, 500 industry friends gathered to wish him well.
For Engel, it is the end of an era but also a meticulously planned transition to new Chairman and CEO Stefan Engleder. Neumann has been CEO since 2003 and has been with the company for 35 years. He joined Engel in 1982 as the head of purchasing and logistics, and in 1985 became head of worldwide sales. He deftly maneuvered the company through two major challenges: a devastating flood at its headquarters factory in Schwertberg in 2002, and the financial crisis of 2008-2009.
Today, Engel is in growth mode with 1.3 billion euros ($1.37 billion) in sales for 2016; its five-year strategy involves a continued emphasis on Inject 4.0, lightweighting technologies and the completion of the redesign of hydraulic clamping units across the range of its injection presses. There even could be a time when the company starts building presses in the U.S.
Neumann has shepherded Engel from being a provider of machinery to being viewed as a technology leader focused on driving innovation. During the K show, he sat down with Plastics Machinery Magazine Managing Editor Angie DeRosa.
Engel is introducing the completely revised hydraulic injection units in its victory and duo series. What was the impetus for that change?
Neumann: Our hydraulic injection unit already was in place for more than 15 years. It was, I think, time to change or to design an even better one. Our engineers had some new ideas to improve it and we said, yes, that is really a benefit for the customer. We want to give the good ideas to our customers, the benefits, such as the higher output of this injection unit, it’s much easier to change the screw and barrel, the energy efficiency with ecodrive, so there are a lot of benefits for the customer.
You have a reputation as being a steady leader with a commitment to the customer. How do you feel that has contributed to Engel’s success?
Neumann: Engel is a family-owned company. I would say that the tradition and culture of the Engel family is always that your promises, you do and keep. This is a long-term commitment, not just following a short-term success. It’s really to build up long-term relationships with full trust. This, I think, is our basic value in a family-owned company because as a family member of the company, you are there, as I am, for 35 years, and if you lose trust from your customer, you will lose it for a long time. But in a family-owned company where you are connected with the family, you cannot escape and say, “I’m not there anymore,” and also this handover to Stefan Engleder is very long-term planned. And I am handing over also all those relationships, all those promises I have given that they will be kept also afterwards. I think that this is a special touch of family-owned companies.
Especially after the financial crisis where you saw that there were a lot of changes in the industry, I think you need suppliers with a certain stability, with a certain “handshake” quality.
You have to have products where the customer can say, “This is for my production and benefit.”
What are the downsides to a family-owned business?
Neumann: The risk is always there that is there a next generation which is willing to do it, is ready to do it and is capable to do it? This is always the risk. In a company that is not family-owned, you have a wide variety of people in the market that you can attract for top positions. In a family, you have, let’s say, just a few people that are there, and do they really have all those characteristics? This is a risk. Do you have them? And do you have them at the right time? If the wrong decision is done, it’s not so easy to kick out the family member in the position.
It sounds like you really groomed Dr. Engleder. Can you tell us more about what that involved?
Neumann: Yes, he is the right one. Besides this, he is a nephew where I have seen him grow up. Also in his career, we just discussed very openly about what he should do. After university, he went to Mold-Masters Ltd. [Georgetown, Ontario] and I had given him the advice: Go into the plastics industry, have a look at what is the benefit, of let’s say, a hot runner. Then he went in the machine industry, with one of the companies that is one of the best — Trumpf Gruppe in Germany. Then he started in R&D for automation, and then he moved into production. It was really good communication between us. I am absolutely confident that he is ready for this.
You also encouraged him to become a plant manager. Can you talk about why that step was important to you and to his education?
Neumann: We are a manufacturing company; we produce machines. I think it’s good to have a clear understanding of what is behind it. What are the processes? Also, there is a need to understand the needs of our employees and our type of production. You have to have the feeling for their needs and how can you treat them in a way that they are motivated to do a good job and produce good quality.
In 2002, a flood caused massive damage at Engel’s headquarters. Engel turned the disaster into an opportunity to completely change its production philosophy. What did you learn from that experience?
Neumann: I think what I learned most was don’t give up. Because you can imagine when you came to the factory, it was completely destroyed, more or less. Then to say, how can I do it so that this will work again? If you want to do it, there is a way, and really, I also learned that some people who had the top management positions were not able to handle this. And others, who you may have not seen as having big potential in the company, they did a great job. Those people who were able to handle the situation, they were then afterwards also our best managers.
Would you identify that as the biggest challenge of your career?
Neumann: I would say, yes, in my career, this was the biggest challenge. Second was then the financial crisis in 2009. It was a completely different situation. What to do with your employees, what to do with all your factories, and how long can you survive in such a situation?
Now, Engel is in growth mode. What is it like to see the company now versus where it was in that 2008-2009 period?
Neumann: Engel really became a global company. Engel always was technology-driven, but let’s say, we have been in the European field, same level as some others. Today, I would say, we absolutely are a leader. Yes, on figures, we are the biggest one in the market with our turnover of 1.3 billion [euros] this year. But this is only a figure, I would say. It’s more important what is behind it, how the customer can see you and what presence you have worldwide.
Engel has recently made large investments in its factories in the Czech Republic and China. Where else do you see growth opportunities?
Neumann: For me, I think I would say the most important was to be strong in Asia, or to become strong in Asia, because Asia is, in the plastics industry, the biggest market. If you want to be a global company, you have to be strong in this region. We still are quite very far away from being very strong in this market. But as a Western company, we are the strongest one. We have huge potential to grow there. This is, I think, one of the good things I’ve done for the company — to go to Asia, to start with production in Asia, to establish really a company that is already seen as a technology supplier also in Asia.
Do you ever see a time when Engel would manufacture equipment in the States or in the North American market?
Neumann: We had two factories, and we
still have the factory in York, Pa., this factory for sure is ready for any production we do. We do a lot of automation now here. For me, the only question is can we build machines there in a cost structure that is competitive, competitive also to our internal costs from China, and from Europe? If the U.S. market is stacked with 4,000 or more machines now, if this keeps on, I would say it’s worth [it] to think about starting production again in the U.S.
What will you do once you retire?
Neumann: I have to be careful not to start too many things at the same time. I have two grandchildren who are now 3 years old, twin boys, and I have private projects, like sports and sailing, so there are a lot of opportunities. Also, to travel. In business, you travel a lot, but you don’t really get to see a lot.
What do you want your legacy to be?
Neumann: The message for the future, I would say to keep on going in that way that our customers are happy with Engel. This I think is most important for us. Engel is a family-owned company with a long-term approach, with a moral obligation to the customer, and what we promise, we want to keep. We are here tomorrow and they are here tomorrow.
Second, we see that our industry has so many challenges that we want to give to the customer as much support as possible and help so that they can do their job easily. We build up a relationship, which is also important for long-term business. Third, with our employees, we really have [the] same relation as to our customers — that they feel as members of our family. We ask them that they treat all their partners on a fair level, and not just saying it, really living it.