On a recent visit to the United States, Daniel Lippuner, CEO of Switzerland-based Saurer Group,
took the opportunity to share Saurer’s new vision and structure with
Textile World Asia
editors. The July 1 sale of Oerlikon Group’s Natural Fibers and Textile Components businesses
to Chinese investor Jinsheng Group made way for the new Saurer Group, bringing back to light a
well-respected brand that fell under the radar after Oerlikon acquired the original Saurer Group in
2006.
As Lippuner explained: “Saurer never was lost. Memories are very long. For the Saurer brand,
it was an open door, so we didn’t have to push hard. People recognize the brand — we didn’t have to
introduce it from scratch.
“We are a European company with European DNA, but with a worldwide footprint — and now, with
a Chinese instead of a Russian investor,” he continued, referring to the fact that Oerlikon Group’s
largest investor is Russian billionaire industrialist Viktor Vekselberg.
Lippuner’s appointment as Saurer’s CEO is in keeping with the company’s determination to
ensure continuity with the prior Oerlikon business units. Previously, he served as Oerlikon Textile
Components’ managing director, and before that, as Oerlikon Group’s corporate controller.
Saurer AG is based in Wattwil, Switzerland. The company traces its roots back to 1853, when
Franz Saurer established a foundry in a suburb of St. Gallen, Switzerland.
Decentralized Business Structure
The new corporate structure is extremely flat and decentralized — a major change from
Oerlikon’s organization. Former Saurer CEO Heinrich Fischer chairs the new Board of Directors,
which comprises four European and three Chinese members — including Pan Xueping, the main investor
and founder of Jinsheng Group, and Ye Guan, president of the Jinsheng Group Machinery Sector. There
is an extremely small corporate layer of about 10 people, mostly in finance, and everything else is
pushed down to the business units, Lippuner explained. “I believe in small units that are very
strong that can make decisions very close to the customer and implement them very fast. That was
very different in the Oerlikon organization — a huge hierarchy with several management layers that
led to very long decision-making processes and very slow speed to implementation. We want to be
different. We have five business units: Spinning, which is the biggest; Twisting; Embroidery;
Pre-Spinning; and Components.”
Within those units are the brands, which will be promoted by Saurer. Business Unit Spinning
includes ring spinning machinery under the Zinser brand, and open-end spinning and winding under
Schlafhorst.
Twisting features staple fiber twisting machinery under the Volkmann brand, carpet and glass
yarn twisting under Volkmann, and tire cord under Allma.
Embroidery comprises Saurer Embroidery — and was the company’s basis when it was founded in
1853.
Pre-spinning features Saurer Jinsheng as a mid-range player for blow rooms and carding
machinery in the Chinese market.
Saurer Components includes Accotex and Texparts in the staple area; Daytex, Fibrevision,
Heberlein and Temco in the filament area; and a non-textile area in which Saurer will leverage the
brands’ various manufacturing capabilities. One example is a dental implant made of ceramic that
goes through the same machine as Heberlein air jets.
“But again,” Lippuner explained, “these brands are decentralized. They have their own
manufacturing locations and R&D. Starting from the beginning of July, people are extremely
excited about this because now they have empowerment to make decisions. They have to take more
responsibility, but they like that. The change created huge enthusiasm among management and also
among all the employees.”
Lippuner went on to say: “There was in Oerlikon times a drive to consolidate. I don’t believe
in that. I think it’s better to have several locations, where the brain is there, the R&D is
there. If you consolidate, you lose all that. In Europe, unlike in the U.S., people don’t move. If
you want to move employees 40 miles down the road, they would rather change their jobs. If you
don’t have the people to innovate the products, you’re lost. And in Europe, it’s not so easy
anymore to find young people to join the industry because we are not the most sexy industry for
university graduates.”
He continued: “We have a footprint worldwide and will keep competence centers that pair
R&D with manufacturing centers. All R&D is in Europe — this will continue. Some
manufacturing will also be in Asia — in India, Singapore and China. We will invest more in R&D.
Without that, you can’t turn out innovation. Without that, our entire reason for being would be
lost – we must keep one or two steps ahead of competitors.”
Saurer Group CEO Daniel Lippuner
Focus: Customers, Innovation And People
“If you have highly satisfied and motivated employees, you usually automatically have highly
satisfied customers, because employees do everything to make the customers happy. And, if you have
highly satisfied customers, you usually have above-average profitability,” Lippuner remarked. “So,
instead of managing profits, you should manage your employees and your customers. We focus very
strongly on customer satisfaction, so we do extensive surveys to ask customers about their
happiness with deliveries and service. We measure our performance for service – repair cycle time,
complaint cycle time, quality measures. We strongly focus on that because of the model I described.
“We have in some areas also some homework to do because we are not on the desired level. We
are working very hard to push that up; to be recognized as a machinery provider that customers can
trust; to be sure that the quality is right, aftermarket service is right, and so on,” he added.
“Innovation is key. We are going to invest more in innovation capacities and capabilities in
Europe,” Lippuner continued. “During Oerlikon times, the R&D function was cut down a little
bit, and we have to reverse that and hire people in order to churn out more innovation in a shorter
time – to cater to the changing needs of our market. We will really focus on our people by
listening to them, which has not always been the case in the recent past, and try to promote people
from within rather than bringing outsiders in. Our tagline is ‘We Live Textile,’ and this is
exactly because our people have been in this industry for so long – many times, half of their lives
are textiles.”
Chairman of the Board of Directors Heinrich Fischer
Jinsheng
When asked for more information regarding Saurer’s investors, Lippuner replied: “Jinsheng
Group is a young company formed in 2000 by Mr. Pan Xueping, who came from a textile machinery
company and started a spinning company that today has 420,000 ring spindles running in China. In
2009, he invested in EMAG — a German company that makes CNC [computer numerical control] machinery.
He also has investments in real estate and pharmaceuticals. Jinsheng Group had about $1.2 billion
in sales without Saurer. Now Jinsheng owns Saurer, which will be managed through the Board. Mr. Pan
wants to keep the European DNA intact – day-to-day management will be left to the European
management team. And Mr. Pan wants to maintain the skill and experience levels at their peak.”
Global Market
Regarding the global spinning market, Lippuner provided perspective: “Fifty percent of the
installed base is in China. In ring-spinning, there are 220 million spindles globally — 110 million
in China, 45 million in India, and 8 million to 12 million in mid-sized countries like Pakistan,
Bangladesh, Indonesia, and Central Asia. Turkey has 5 million spindles; the U.S., 2 million — in
the U.S., you have a big open-end market. Brazil has less and less — it also is an open-end market.
Because of denim but also for other reasons, more ring-spun is going to denim for high-end jeans.”
Looking more closely at the Chinese market, Lippuner continued: “The Chinese government set a
minimum price for cotton about 30-percent above worldwide cotton prices to support cotton farmers
in China. It gave them a higher living standard, but it hurt the Chinese spinning industry. It
created a tectonic shift, and a lot of this market went to other countries. India is exporting a
lot of cotton yarn to China. Pakistani, Indonesian and even some U.S. yarn is going to China. Is
this sustainable? Short-term, probably not: Chinese spinners are suffering so much that most
probably, the government will reduce this artificially high price. Mid-term, however, in China’s
five-year plan, they want to go to higher-added-value industries. They consider ring-spun rather
low-end, and they are encouraging spinners to upgrade machinery — which is definitely necessary —
or go to other places than the coastal regions, where you have today labor shortages. So either you
go to Xinjiang [in northwest China], or you go abroad, mainly to Vietnam.”
Lippuner noted that many Chinese spinners choose to upgrade their equipment. “This is great
for us because upgrading means they are going towards automation,” he said. “We have known
automation since the 1980s, when the U.S. and Europe automated. In China, the local competitors
don’t know automation, and they struggle to adopt the system because here, they can’t just
copy-paste. They have to understand a little bit more about the process than just taking a drawing
and doing the same.”
He continued: “The idea is that spinners can have the same or more output with fewer people,
so you free up people for other added-value industries or tasks. In India, it is the same, but not
because of a labor shortage — about 85 percent of newly installed spindles are autodoffed with
linkages between ring and winder even though labor costs are extremely low.” He noted that Indian
workers today have more choices as to where they will work and can choose, for example, to work in
an automotive plant rather than a spinning plant.
Capacity Expansions
When asked about global spinning capacity, and the potential for growth and investment,
Lippuner responded: “There is new capacity being built up in other Asian countries because Chinese
capacity is not fully utilized and production has moved to these other countries. And in India,
about 30 percent of yarn produced is exported to China, so the Indians are building up capacity.
The Chinese want to go to higher added value, and the Chinese government prefers investments in
man-made fiber, not in natural fiber. In India, it’s the opposite: the Indian government is
strongly focused on natural fiber because 15 percent of the population lives somehow from natural
fiber.”
“The U.S. has two things happening,” he continued. “First of all, everywhere, labor costs are
going through the roof from their respective levels, so it’s not that cheap anymore to run a mill
in China or in Indonesia if you have labor at all, and in China, most of the installed base is
manual, so the output is significantly lower than in more advanced economies. So, if you look at
the labor cost per unit, the gap between China and the U.S. is not that big anymore.
“The other thing is energy,” he said. “Energy costs in the U.S. are among the lowest in the
world. Everywhere it is increasing – also in the U.S., but from a much lower base. So, we see now
some projects in the U.S. that I wouldn’t have thought of two or three years ago. It’s not big yet,
but who knows? Maybe things can become bigger. There’s also this excellent agreement with Central
America [CAFTA-DR], which is great for the local spinning industry.”
Saurer And The U.S. Market
“Here in the U.S., we are very well-positioned,” Lippuner said. “We have an excellent setup
with our sales office in Charlotte; and in the U.S., we have one of the highest customer
satisfaction levels. Our guys here have a very close relationship with their customers. They also
walk the last mile and do everything for their customers, and we’re very, very pleased. This is one
way we keep our market share, not only by providing the best machinery for this market, which we
always have done, but also by excelling in our services.”
When asked about a recent visit to the floor covering mills in Dalton, Ga., Lippuner replied:
“I love it. This is a typical cluster development. Now, there are two or three huge companies that
basically serve the world — yes, the U.S., but the U.S. is more than 50 percent of the world market
for carpet. It makes life easier for me because I don’t have to travel so far, and I can visit
three or four customers in one day. And you have this tightly knit community — everyone talks about
the same industry, everyone knows one another. I’m particularly keen to be in the U.S. — I
crisscrossed the country twice when I was younger.”
Conclusion
Saurer is quickly implementing its decentralized corporate structure, with its reliance on
local leadership and decision-making to enable it to respond quickly to customer needs with
innovative solutions. The new structure and the continued recognition of its brands in their
respective markets are expected to serve the company well as it settles in to reclaim its position
in the global textile machinery marketplace.
October/November/December 2013