"Being a company customers can count on whatever, whenever, wherever"
Diversification, standing out from the competition and developing markets with a healthy future – Jörn Winkels, Chairman of the Management Board, Markus Ketelhut and José Pinto, Business Development & Processes, talk about change and transformation at Salzgitter Mannesmann Line Pipe and discuss the current state of affairs.
All companies are subject to societal, political and economic influences. What are the focal factors for Salzgitter Mannesmann Line Pipe at the moment?
José Pinto: On the societal side, environmental awareness and the responsible use of resources are growing. Climate protection and sustainability have long become political objectives on a global scale. The transition from fossil nuclear energy to renewables means we have to develop marketable products for these new applications. Here we see major potential for growth.
Jörn Winkels: Our core business – steel tube and pipe - is largely dependent on exports for the energy sector. Recently, investment activities in this area have taken a downturn, due to the low oil and gas prices. Other key factors of concern include increasing international competition, global overcapacities in standard tube and pipe production, which are partly subsidized by governments, and impending protectionism.
How does the company respond to all this?
J. Winkels: The challenge for Salzgitter Mannesmann Line Pipe is to develop our product portfolio in a way that significantly reduces our dependence on strongly fluctuating markets, such as the oil and gas industry. As to the changed scenario in the energy sector, we are affected only secondarily. Many of our customers have to face new challenges. And, as a supplier, we want to accompany the required change processes involved in a proactive manner. Therefore, a central issue in our current strategic orientation is the development of markets with a healthy future. At the same time, regarding our traditional markets, we intend to differentiate our company even more strongly than before from the competition by offering customers new premium products that bring them a clearly identifiable added value compared to conventional run-of-the-mill.
Markus Ketelhut: For example, to show our customers how responsible Salzgitter Mannesmann Line Pipe handles energy and raw materials, we have compiled life cycle analyses for our products and prepared Environmental Product Declarations to ISO 14025 and EN 15804. These provide our customers with a solid data basis and information about our use of energy and resources. In other words, they represent an ecobalance for the products of Salzgitter Mannesmann Line Pipe. Incidentally, we are the first manufacturer of steel tube and pipe in Germany to be able to present EPDs to its customers.
Change and transformation are steadily progressing processes. What progress has Salzgitter Mannesmann Line Pipe made so far?
J. Winkels: When you look at Salzgitter Mannesmann Line Pipe's history with all its restructurings and mergers, it becomes apparent that the company and its employees have always been able to adjust themselves very well to the most varied situations. What I mean is the company has always responded efficiently to continuously changing market conditions and customer requirements. Innovative coatings, 24-inch pipes or hardening and tempering heat treatments are just a few examples. Focusing on our customers' needs has always helped us to overcome generally weak market situations and downturns.
M. Ketelhut: However, the current situation in the energy sector and its ramifications inevitably call for a strategic reorientation in the interest of a viable future for Salzgitter Mannesmann Line Pipe and its workforce. We have therefore initiated a transformation from a functional to a process-driven organization. Here, too, customer benefit is at the focus of the associated changes. The first step was to establish a customer center and central bidding and order processing. Now we have to develop the new processes in this area further.
Many of our customers have to face new challenges. And, as a supplier, we want to accompany the required change processes involved in a proactive manner.Jörn Winkels
We have therefore initiated a transformation from a functional to a process-driven organization. Here, too, customer benefit is at the focus of change.Markus Ketelhut
In what way are you affected by change and transformation in your own area of responsibility?
J. Pinto: In the beginning, change always encounters resistance. Success depends on whether all employees feel totally involved in the change processes both mentally and emotionally. Which is why we considered it particularly important to plausibly explain how our employees benefit from the changes we are aiming at. If the employees can go along with the corporative objectives, they will confidently work with greater conviction.
J. Winkels: We want to transfer the positive effects of our customer focus philosophy to the markets of the future. Talking strategy with customers, congress presentations, traveling to customer sites, sharing ideas and experience with potential users are therefore right at the top of our agenda. To be able to adapt to fast-paced market dynamics, we have established our Business Development & Processes department. Among its jobs are the preparation of market analyses in support of sales operations, a proactive search for new business areas, development cooperation with customers and industrial partners, as well as the generation of new corporate processes and the optimization of existing ones.
M. Ketelhut: As a newly established department, Business Development & Processes has expressly committed itself to communicating information about processes and structures as fully and as transparently as possible. An important factor we've already realized is that the new organizational structure can only reflect the situation at a given time and that this situation is subject to dynamically changing requirements in the market, from customers, and politicians. So change and transformation will be with us for some time, here and elsewhere.
How are goals and objectives defined and how are they coordinated and implemented across departments?
M. Ketelhut: As I've already said, we want to - and have to – become less dependent on the oil and gas business. Diversification through new products and new customers, meticulous development and marketing of premium products, and increased economic efficiency are what we need to achieve this.
J. Pinto: To pool efforts, we organize regular meetings of working groups across departments and locations. We discuss individual solutions to concrete customer requirements, as well as developing new products and working on enhancing the economic performance of our production locations. Other objectives emerge from the implementation of measures and actions in the context of our MLP2020 and MLP2021 projects. These mainly concern internal decisions of general relevance to the company.
Does the fact that Salzgitter Mannesmann Line Pipe is a Salzgitter Group company impact on change and transformation processes in any way?
J. Pinto: The closely knit, robust network of Salzgitter Group companies is of course extremely helpful when it comes to sharing ideas and experience. There's a lot we learn from each other and support is always forthcoming. However, where specifics are concerned, our own skills are called for in adapting and adjusting to what confronts us. Still, it's certainly an advantage to belong to the Salzgitter AG Group, where new processes are initiated time and again and followed through to completion.
Where do you currently see the biggest challenges and opportunities of change and transformation?
M. Ketelhut: Firstly, a realistic assessment of current market conditions as a guide for our company in thinking ahead and readying itself. With the newly established Business Development & Processes department, we are well on our way.
Secondly, it is certainly challenging to move off the beaten track and do things differently. As managers we must conduct ourselves as coaches rather than know-it-all authorities! We have to groom our employees for them to successfully cope with challenges now and in future.
J. Pinto: We have realized that our profitability must not depend on individual sectors or markets, which can always be subject to cyclic fluctuations or political influences. We must see change and transformation as an opportunity to shape the future of our company by adapting to the market conditions prevailing at a given time.
Will Salzgitter Mannesmann Line Pipe have to re-invent itself under the current conditions?
J. Winkels: We must not lose sight of our traditional virtues and strengths, but neither can we rest on them. That's nothing new. I think we must never stop to continuously question and – partly – reinvent and redevelop ourselves. Today's winners are not the biggest and most powerful but rather the fastest and most innovative. At the same time, we're not about to chase the latest fad but rather assess carefully by drawing on our wealth of experience what's right for Salzgitter Mannesmann Line Pipe. What is important, irrespective of any change and transformation, is that we remain a company customers can count on whatever, whenever, wherever. This policy, I feel, offers more rewards than risks. I see change and transformation as opportunities for self-development rather than passive acceptance.
Our profitability must not depend on individual sectors or markets, which can always be subject to cyclic fluctuations or political influences.José Pinto