Sumitomo (SHI) Demag stays focused on strategic core competences – Structural changes in production at the German sites
In the two-year market weakness, the solidarity pact with short-time work and bonus waiver was the successful means of choice for crisis management for Sumitomo (SHI) Demag. Further measures are now needed due to the significant market weakening this year at a level of 50%.
The company, which continues to be regarded as one of the greatest contenders to directly address manufacturing productivity challenges across the globe, is realistic about the investment headwinds that lie ahead. The market weakness results from a further decline in investment willingness in the automotive, electronics and construction industries. “In the medium term, a revival of investment activity in these sectors is not expected. The slumps being experienced have been exacerbated by market conditions beyond our control. Like these industries, we must prioritise how we adapt and adjust our core competencies and production capacities to best support our customers and these wider industry transformations,” explains Christian Maget, CEO of Sumitomo (SHI) Demag.
Having access to a global production network, with sites in Germany, Japan and China, means that Sumitomo (SHI) Demag is in a strong position to diversify the company’s relative strengths in order to yield cost reductions and efficiency gains. “These decisions we are taking today are in order to ensure our future in Germany and optimise production efficiency across the entire production process,” adds Christian Maget.
The company’s new CEO is resolute that concentrating on engineering and automation expertise in Germany and reducing simpler production tasks was always the strategic direction being taken. “There is a clear competitive advantage for basing our areas of expertise in these production-experienced locations and benefitting from established supply chains. The current market challenges have simply urged us to re-evaluate and pull these plans forward by a couple of years,” says Christian Maget.
The solidarity concept continues to be at the forefront of the planned staff reduction with structural changes in production at the German sites. The primary goal is to offer attractive early-retirement packages. “After 4 years of market crisis and the disappearance of important markets such as Russia, our strong increase in market share and our positioning as market leader for fully electric machines are no longer sufficient to compensate for this market crisis. We do not see any current market recovery in the mentioned sectors either this or next year. Since the market crisis in the injection moulding machine sector is not limited to Germany, but affects large parts of Europe, the USA and China, we can no longer compensate through our international business,“ comments Anatol Sattel, CSO of the Sumitomo (SHI) Demag.
As a result of the strategic synergy between the company’s Japanese headquarters and production sites in China, the benefits of this new production framework are multiple. The cost reductions and efficiency improvements not only accelerate machine build throughput times, but also improves global availability of the company’s all-electric machine portfolio. Enabling Sumitomo (SHI) Demag to adapt to changing market momentums more fluidly and expand its global reach.
Anatol Sattel adds: “This gives us a distinct strategic and customer-focused advantage as it allows for agile production and localised automation and mass-customisations based on customer and service demands. Although the archetype model for building machines is constantly changing, all-electric remains our competitive and efficiency advantage.”
