Back

"Cross-industry innovation was the key to our success"

KHS in the volatile environment of globalisation, digitalisation, market development and competition

Dortmund, Germany

An interview with Prof. Dr.-Ing. Matthias Niemeyer, Managing Director of KHS GmbH

Firstly, thank you for the opportunity to conduct this interview with you before the drinktec fair. The answer to the question “What does the future hold for plant manufacturing?” should be easy to see, experience and perceive at drinktec. Should we expect to see anything revolutionary from KHS?

Niemeyer: You’re really getting stuck in there, opening with a question on the most important event for our industry this year! Of course, drinktec is the technical and technological yardstick for our industry and a multitude of innovations will be seen and experienced by everyone who attends. Nonetheless, those interested will be able to see a little something extra behind the scenes, as at this point in time, we want to collect exclusive feedback from our customers. We want to put our cards on the table and ask them directly: is this the solution you’re looking for? Could you imagine working this way or using this?

Let’s put the technical and technological innovations to one side for the time being and go back in time for a moment. How has KHS developed over the past five to ten years?

Niemeyer: We’ve bounced back well. After the crisis in 2011, which was mainly brought about by cautious and insufficient market cultivation, and resulted in a very low volume of orders and consequently unfavourable cost situation, we’ve negotiated an impressive turnaround and seen positive developments in many areas. For example, our sales have increased by 37% since 2011 and are currently well above the average VDMA reference figures.

How did you manage that? Have you grown disproportionately compared with overall market development?

Niemeyer: We implemented restructur- ing measures that sharpened our focus on relevant topics in the context of customer benefits and, as a result, to very positive sales development. This was down to us adapting to the actual market demands, as well as reflecting on our own strengths. As part of this, we reduced the number of our sites in Germany to just five. You see, we initially tried to achieve a lot by having people hold multiple positions. We had to jettison this organisational model. If the structures are more horizontally organised, and there are thus, fewer boxes on the organisational chart, this frees up resources that make it possible to really concentrate on certain tasks. Our technology and engineering companies in particular need management that focusses on their products. Mr Karell, for example, the managing director of KHS Corpoplast in Hamburg – our distinguished expert on all things PET –, Frank Haesendonckx or Dr. Joachim Konrad, responsible for Plasmax technology, are doing a simply brilliant job. They and their colleagues are enthusiastic about their products and want to set things in motion. And that’s exactly what they have done! Not only have we built two new halls in Hamburg and establish a flow assembly line to deal with the growing quantities, we also have developed a great deal of cutting-edge technology. Or take Brazil, as another example. We’ve really turned business in this country around! Alongside business management, intercultural aspects also played a decisive role. Thanks to strong, new, local CEOs who concentrate on services and after-sales business, which are so important to our customers, we’ve been able to achieve sustainable success in spite of the recession.

While we’re talking about the group’s management, what is the role of the parent company, Salzgitter AG, to KHS or, more specifically, to KHS Corpoplast?

Niemeyer: Ten years ago, after a period of change and insecurity, Salzgitter AG gave the KHS Group solidity, continuity and financial backing. The foundation for this consists of a business leader, Prof. Dr.-Ing. Heinz Jörg Fuhrmann in his capacity as Chairman of the Executive Board of Salzgitter AG. Fuhrmann has known KHS from the beginning of his career at Klöckner and, as a result of his profound technical knowledge, he knows the value of the technology we have developed and that is available. These are excellent conditions for development, particularly also for KHS Corpoplast. 

How does a PET stretch blow moulding and filling machine manufacturer fit into a company which claims, “Steel is our DNA”?

Niemeyer: Just to clarify, Salzgitter AG is a steel and technology group that has made concerted efforts to diversify over the last few years. Recent events show that our investors consider this strategy to be positive and hold it in high regard. At the last but one Salzgitter AG Annual General Meeting, the management report on the successful use of Plasmax technology to ‘coat PET bottles for carbonated soft drinks (CSDs) was met with a round of applause and praised in the speeches given by the shareholder representatives.

KHS Plasmax GmbH has now merged with KHS Corpoplast. Was this prompted by process- oriented reasons or more for economic reasons?

Niemeyer: You’re right – the two companies have merged. This proved very popular, both in the market and with our staff. The main reasons for the merger were to avoid interface overlaps and to establish more efficient, streamlined processes. This, in particular, is against the backdrop of blocked systems – FreshSafe in this case – in which the stretch blow moulding, barrier and filling technology form a single compact system. Integrating KHS Plasmax has strengthened KHS Corpoplast’s position as a supplier of block systems and as a “PET Technology Centre of Excellence”. This has put us in a good position for the future, so that we can smoothly handle the imminent increase in volumes and the expansion of the service business.

What’s the latest on the Plasmax project?

Niemeyer: Wine, beer and juice are now being joined by CSDs. The advantage is particularly clear when it comes to small PET bottles, with their unfavourable surface to volume ratio. We have increased the shelf life of small bottles with 22-mm necks six- fold for the Indian market. This is proof of how much progress we’ve made. The market is very price sensitive. One single-serve 250 ml bottle, made using Plasmax top technology, costs 18 Indian rupees (approx. 24 euro cents). The first Plasmax machine for CSDs is in India, and the second machine was also delivered to India in blocked design.

Where do you see further potential for the barrier technology that has existed for some time now?

Niemeyer: Aside from sensitive and carbonated beverages, I see great potential with wide-neck containers. The change from glass to PET posed certain challenges, especially regarding batch pasteurisation, though we were able to overcome this hurdle. This application is predestined for converters, whom we are therefore focussing on. It said that I had already overtaken ten of them, in terms of how long I’d been in my job. I’m not saying this out of vanity, the point is really that stability is extremely important for KHS’s existence. In the past, nobody would have believed that a KHS CEO would be celebrating having spent the longest time in this position. This is precisely why we’re so very grateful to our parent company. Certain topics, such as a drastic standardisation, modularisation or comprehensive IT solutions can’t be dealt with in just two years, which is why continuity is absolutely necessary. Horizontal standardisation such as, for example, a consistent introduction of Siemens drives and controllers for all machines, cannot be successfully completed in three months. The heterogeneous structure we previously used, which has developed over the company’s history spanning 149 years, did not give us the best starting situation. With ClearLine Design, which we presented a while ago, we have demonstrated that we can make lines from a single source. Salzgitter AG gives us continuity, puts us back on a stable path and – along with this – allows us the time to develop. They believe in us and are counting on us define our claims clearly.

What is this claim and can you put it into figures?

Niemeyer: Given that key account customers make up 50% of our transaction volume, it is quite difficult to achieve long-term success in such a market. Especially in this day and age, characterised by mergers and large- scale restructuring of customers or, for example, the introduction of the sugar tax and the resulting transformation in consumer behaviour. This presents opportunities and risks. In addition to that, there’s the oligopoly on the supplier’s side. All these factors lead to significant pressure on the market and, therefore, on prices. Our core expertise and key technologies such as, for example, PET stretch blow moulding, Plasmax barrier coating or direct printing are technologically challenging and require intensive research and development that customers only recognize to a certain extent. This is simultaneously a challenge for us, and our ambition. We have worked our way up to second place in our industry through technology and continuity. We don’t just want to keep this place, we want to build on it.

Staying with the comparison to the “others”, how do you set yourselves apart from the competition?

Niemeyer: A crucial difference is evident in our global footprint and here in particular, in our production network. Take TriBlock, for example. Our positioning allows us, for example, to build the filling machine in Bad Kreuznach or have it built by KHS India in Ahmedabad. Local production has the great advantage that our knowledge can be used on the ground with our customers. There is also often a desire for local content – particularly in these times of increasing protectionism. As we build to a global standard, complete functionality is always guaranteed. In addition, we are definitely of the opinion that it is no longer possible to develop the best technology simultaneously in all areas by yourself, so we think outside the box and ‘adopt a stance of “open innovation”. In this context, we always actively involve our partners in our development processes. In doing so, we’re constantly trying to seek out the global or technological leaders in each area of specialisation. Ideally, they will also be a good match for us culturally.

So, flexibility in the development process also plays an important role. Can you give us an example?

Niemeyer: The development of our Nature MultiPack is an example of flexible development in the truest sense of the word. One day, Christopher Stuhlmann, who’s responsible for the KHS Kisters Packer in Kleve, sent me a video he’d put together at the weekend. He had spent his free time sticking drinks cans together with a hot glue gun. A brilliant idea! Now, our development projects are laid out precisely and well documented. For such ground-breaking innovations, you also have to take other, unconventional paths to ensure there aren’t too many people in the know at the outset and to develop faster than usual. Yet, in our industry, structural adhesives are not necessarily one of our core competencies. This is why we looked for support from Salzgitter steel research, for which I was responsible for many years, as adhesion is a common joining technique in modern steel engineering. This gave us the necessary speed and the right approach. The term “business” is closely connected to the word “busy”, in contrast to “lazy”. It should also be mentioned in passing that this resulted in the first very successful application for PET. Cross-industry innovation was the key to our success.

So “cross-industry” means that experience in one industry inspires developments in another?

Niemeyer: Exactly. If we remain with Nature MultiPack as our example, adhesive bonding is an important topic in steel engineering today. For instance, every modern car has over 100m of bonding. But, is that also possible with PET bottles? This is something special, something very specific, so, I asked some specialists – my colleagues from steel research – which bonding concepts could be applied to stick PET bottles together and then unstick them again. This is what “cross-industry” means. Collaborating with the right partners from different industries to create new developments and innovations and drive them forward. With the Nature MultiPack project, in the end the adhesive development project took the longest. We’re good engineers, after all, but at the end of the day there’s a technical solution for everything. Along the way, we often asked ourselves: “is this at all possible?” “Would it be better to call it off?” Then it’s often a case of taking a step back, looking at things systematically and concentrating on the essentials. We tested almost 180 different glue recipes from various manufacturers. The technical solution is generally a function of time and the resources used (in terms of quantity and quality). It was our clever employees who added the final touches, as they discovered that bottles that are joined by a handle do not require an upper adhesive point. This was the eureka moment. As an engineer, I’m almost annoyed I didn’t see it myself!

How’s the system doing on the market?

Niemeyer: To date, we haven’t had a single complaint from our customer, Evian, or any of their end customers. During acceptance’, just one in 240,000 packages was not stuck down properly. That’s a 99.999% success rate! You could call it typical German efficiency. A little less would also have been acceptable. It all took time, but it was time well invested in the first application. 

What does KHS have in the pipeline to support bottling companies and converters better in the future to help them achieve their goals?

Niemeyer: Let’s take a look at preform handling. Not only can the background noise be reduced, but also production stops and problems caused by insufficient handling of the preform tipping process. Even if we’re only talking about 0.2%, we can easily extrapolate the results for these quantities – micro-stops of the unscrambler or the stretch-blow moulding machine, the filling machine or the labelling machine – can quickly result in the loss of 50 bottle packages that are then missing from the pallet. We’ll be presenting something new to help eliminate these stops at drinktec. The highlight at the fair, alongside many other innovations, will be our TriBlock Aqua M, which was specially developed for water in small bottles.

How well do customers accept technical and technological innovations?

Niemeyer: That’s a very interesting question. The short answer is that it varies. Let’s take the performance per cavity in a stretch-blow moulding machine: 2,500 bottles per hour. We’re really pleased with that! We can divide 81,000 bottles per hour between numerous bottling machines at the same time without any hesitation. The plant is situated in India, and even just two years ago, nobody in India would have thought this possible – but KHS made it possible. On the other hand, take a look at our shrink packer, which we converted to run on gas. This cuts energy consumption, thus boosting sustainability. But so many customers claim that the technology is alien to them. We’ve been emphasising the advantages for three years now, almost preaching about them. At the end of the day, our success is also clear here. When it comes to technology there is always room for growth, e.g.: progress in IT. The stretch-blow moulding machine adapts itself using the immediate feedback on quality information about the bottles produced. This is the basic concept behind Industry 4.0! Fundamentally, we need a holistic approach. The question is: “How far can we go?” The customer’s interest is clearly defined. Ultimately, they are interested in the bottles on the pallet and the resources used to produce them. This is why we’re examining other aspects of the production chain, so as to thrash the whole process out again and make further improvements. What’s going on in preform technology, forinstance with Husky? Or what are start- ups, with their bright ideas, up to?

What do you think of additive manufacturing? Will we ever see a 3D-printed PET bottle?

Niemeyer: In the past I have worked quite intensively with materials science, and have a doctorate and a post-doctoral degree in the field. You have to understand that I can see certain technical limitations for mass production, however format parts, shapes and engraving are all conceivable.

Do the customers appreciate these developments?

Niemeyer: Our customers are not always willing to invest in innovation, i.e. also put more money on the table for a profitable solutin.. Most say that they readily welcome a 20% increase in performance, but not if it costs more.

So what it ultimately boils down to is the price?

Niemeyer: We could talk about that for hours, but perhaps we should point out that we’re still seeing growth in our sector; increased performance, smaller containers, a diverse range, new products. Our market is an oligopoly that is creating an extremely challenging competitive situation, which benefits our demanding customers. From our point of view as suppliers, this results in immense pressure. What we invest in additional technology is no longer appreciated. What I hear, time and time again, is, “It’s good that you’ve done that, but...” We face the same challenges as our competitors. In my opinion, it should be obvious that it is acceptable for technology that helps to reduce operating expenditure in the long-term, to cost more to begin with – this hasn’t filtered through to the market yet. Fundamentally, you want a smaller TCO, as this provides a lot of leverage.

What can you do to address this situation?

Niemeyer: I’ve already said what I think about cross-industry and open innovation, about thinking outside the box. Joint research projects in initial research would be one idea to pool interests and generate collective added value. In Germany, we have an excellent foundation, the VDMA, where I started the first joint research projects. This is something which is yet to be achieved at European level. At the end of the day, we aren’t alone in the world. The competition from Asia, particularly from China, isn’t exactly sitting on its hands doing nothing. In my opinion, it will be hard for our competitors in the Chinese market to expand internationally. This burden has to be borne, financially too. Nonetheless, we would do well to join forces to counter this. We should deal with these topics, get joint predevelopments off the ground and set new standards. At the end of the day we will, of course, each be distinct when it comes to translating ideas into new products and technical solutions in the interests of fair competition. If you’re setting standards, you’re at the forefront. The seeds are being sown by our ABMI. I’m convinced that we could do more.

What is KHS’s position on digitalisation?

Niemeyer: We need to distinguish between how we use this for our own production and how much we integrate – so to speak – into our products for our customers. We have formulated our vision for digitalisation in our digitalisation strategy in terms of our core industry with a focus on 2021. We will be presenting some of our flagship projects at drinktec for the very first time as part of the KHS Future Lab. Three-dimensional assembly planning, virtual commissioning and augmented reality solutions to assist engineers are just a few examples of what is in store. Additionally, we’ll also be demonstrating some very practical solutions in Munich, such as RFID recognition of format parts and the first applications of condition- based maintenance with integrated data analysis and the machine as a cloud. All in all, digitalisation offers huge potential benefits that we can tap for our customers. 

Mr Niemeyer, many thanks for talking to me. As a final thought, can you take a critical look into the future for us?

Niemeyer: In our business world, we have to recognise that entirely new business models are not a threat. Rather, we should see them more as an opportunity and remain a trendsetter, a front runner. Things are picking up speed and we shouldn’t get left behind so that we don’t ultimately end up going the same way as the Neckermann business model, which Amazon pretty much eradicated at the stroke of a pen. I don’t see things going that way for us. We need to constantly scrutinise ourselves and should not be afraid of making new discoveries, even if we are already in an excellent position. From my point of view, this also means recognising that we, as representatives of German engineering, can no longer think and act like they know it all. We practice over-engineering, in part, operating according to the motto “the more, the better”, which far exceeds technological development. Why shouldn’t we ask our Indian colleagues more in-depth questions, which we’re already doing in part, and carry out our development work there, in order to benefit from frugal or reverse engineering. Sometimes, less is more. This is clear from the Nature MultiPack example. We have done away with the film – an excellent idea. Our customer, Evian, can already sense that their end customers accept it – sales are increasing. This pleases us, as the supplier, and personally I’m thrilled about it.
PETnology's Resource Guide
comPETence center

The comPETence center provides your organisation with a dynamic, cost effective way to promote your products and services.

Find out more

Cover
Our premium articles
comPETence
magazine

Find our premium articles, interviews, reports and more
in 3 issues in 2023.

Find out more
Current issue