Germany: A tradition of excellence

You do not often hear of a German company with the motto or philosophy ‘pile them high, sell them cheap.’

That business plan has worked, and has sometimes worked well, in other countries and for other industries: it has turned, for example, supermarket chains into giants, and no-frills airlines into money spinners for their owners. In the wood based panel industry there are companies, particularly in the Far East, who will sell you a press or an ancillary machine very cheaply. But in engineering in general, and in the wood panel industry in particular, the unique selling point of German-speaking manufacturers is quality.

Labour costs and the like mean they cannot compete with such places as China in the immediate price of their products. But the quality, the reliability, the robustness of German machinery – these have a reputation that is unmatched.

Mercedes do not make cheap cars; nor do BMW. But their cars are in huge demand. The same is true in the panel industry. Customers are willing to pay a premium, sometimes a very large premium, for German engineering.

That willingness comes from history, from the generations of expertise, from the passion that goes into their making, from the recognition that no corners will have been cut. The quality of the steel, and of the workmanship, will be the best. The care that went into the design will be outstanding.

Fewer parts will wear out and need replacement, more years of reliable service will be obtained.

All this can mean that paying a premium up-front is more than justified: the extra money will be recovered in the long term and sometimes in the medium term and even the short term, too.

Grecon claims that its customers get full return on their investment in a year or less. It is not hard to see why. A machine stoppage through breakdown, or a machine needing more frequent stops for servicing than another, can disrupt production all down the line and can cost millions of dollars.

In our visit to Germany, Austria and Switzerland we found the same philosophy in all the companies we saw. ‘Good enough’, one suspects, is not a phrase in their vocabulary. Nothing remotely less than excellent would be allowed through. They are all aware that their reputation is their livelihood: if they lose that reputation buyers will go elsewhere.

I mentioned ‘generations’ of expertise. That was a factor all these companies had in common: all the firms we visited were family run. Some were into their fourth or fifth generation. For the difference that they believe this makes, see the case studies that follow.

The other common factor was niche excellence. All were determined that their core competencies should be the best. Niches are all very well for a company; but the niches expand.

Steinemann used to sell sanding machinery. Now they sell sanding expertise. Of course they sell the machines as well, but as a part of the package.

Schelling used to sell sawing machinery; now it sells sawing ‘solutions’ – a tired word but an accurate one.

Customers do not want to pay money for a sawing or a sanding machine any more. They want to pay to have a board cut to size, or smoothly sanded. The machine is part of that of course; but the end product – the smooth, cut board, with no problems on the way to it – is what the customer really wants and what these companies really sell.

Today what sells is knowledge.