“We are concentrating even more on the customer”

The Röchling Group is preparing itself for the third century of its existence. Röchling magazine spoke with the CEO Prof. Hanns-Peter Knaebel about what this means during an era of digital transformation, weakening global trade, and an endangered environment.

Professor Knaebel, the Röchling Group has been pursuing a strategy of growth for years now and has seen excellent developments in terms of sales, return, and profitability. What is the current situation?
In 2018, the Röchling Group was able to increase its sales by more than 16 percent to 2.14 billion euros. This growth in sales is due to an extremely strong performance by our three company divisions. With enormous effort, they managed existing customer orders and new projects. All of the more than 11,000 members of the Röchling family who have contributed to this amazing performance have earned my utmost respect and, most of all, my gratitude for their dedication to the company.

At the same time, we weren’t able to fully achieve our profitability goals. In the Automotive division in particular, the current volatility in the market negatively impacted our results. But this has only spurred us on to do even better in 2019.

Do the figures from 2018 suggest that any fundamental changes need to be made?
When you look at the key figures of a company, you always have to think about the actual story behind the numbers. This means continuously asking yourself why you got these results, whether they are positive or negative and what consequences will come from them.

The Röchling company has been undergoing continuous transformation for almost 200 years, and for this reason alone we have plenty of ideas for the future that will make us better, that will change us or that will completely reinvent us. But one thing is clear: Röchling is a company in the plastic production and plastic processing industry, and that is something that will not change in the future.

However, it has to be said that the industrial landscape is undergoing significant changes due to external influences. This has led us to seriously consider the future trajectory of the company, because we have to respond appropriately to these industrial changes.

In other words, new demands require new solutions. Or, as the American economist Marshall Goldsmith put it: “What got you here won’t get you there.” This basically means that the recipe for success in the past will not necessarily yield the same results in the future. This motivates us to optimally prepare the Röchling Group for the third century of its existence.

Röchling has already strengthened its position as a system solution supplier. Is that the case for all three company divisions?
Röchling has been producing and processing plastics for various industries for many decades. As a result, we have accumulated an incredibly vast amount of knowledge about plastic. We are convinced that we can integrate this product knowledge and associated service expertise into the industrial value chain in a way that is useful and profitable for our customers. And we can do this for all industries.

All company divisions are reinforcing their position as system solution suppliers and will create more benefits and value for customers. At the same time, this is encouraging the company to develop more new skills or to enhance its existing ones, for example engineering services in the development phase or regulatory com­petences.

“All company divisions are reinforcing their position as system solution suppliers and will create more benefits and value for customers.”

Is this an internal change in strategy or will it affect customers too?
You can’t really call this a change in strategy because we have been building up our knowledge base for decades now. All we want to do is apply it more effectively to give greater benefits to our customers. If we now pool our expertise as a system solution supplier, we can look more closely at the customer’s value chain. We are concentrating even more on the customer and their needs and requirements in their particular field. This is nothing new, but we have reached a new dimension in terms of our focus on our customers’ needs and placing them at the center of what we do. In short, the customers and their needs have our full attention.

To what extent can digitalization help a company make itself virtually indispensable to a customer?
Digitalization is not an end in itself, and this is not how it is being pursued at Röchling. Instead, we are trying to create advantages using new digital tools. Advantages for the company and the employees by making work processes more effective and efficient. By the same token, we can also harness digitalization to generate additional benefits for our customers. This added value, provided it is also perceived as such by the customer, will result in closer and more intense working relationships. I would like to avoid the word “indispensable” in relation to this strategy, because in reality, there are very few things in life that are truly indispensable. And here at Röchling, we are not blessed with such hybris as to think that we are absolutely indispensable.

However, we do strive every day to utilize the tools of the digital transformation in such a way that that the customer no longer wants to do without the added value we deliver.

Does Röchling already have something to show for this? Please give us a couple of examples.
We divide the digital transformation into four areas: Smart Production, Smart Administration, Smart Products, and Smart Sales. We are working tirelessly in all of these areas to move the company forward. We have fully networked manufacturing units in our three company divisions with modules that we can extend to other production sites. In the area of company administration, we are closely examining which processes can be systematically automated, in order to relieve employees of monotonous work and to create free space for other activities at the same time. We are using new technologies, for example sensors with associated data management systems, in order to make our products more intelligent, more foresighted, and safer. It’s also worth mentioning aerodynamic components on cars here, which automatically adjust to environmental influences, thereby reducing fuel consumption and CO2 emissions. Or intelligent pharmaceutical packaging that can help patients with the dosage and therefore prevent incorrect treatment. Finally, we are also continuously exploring new sales channels, and in 2018 for example we set up some of our portfolio on a digital trading platform to make it easier for our customers to order our standard products, therefore accelerating the processes in the supply chain.

We still have a whole range of other products in our development portfolio.

“We are using new technologies, for example sensors with associated data management systems, in order to make our products more intelligent, more foresighted, and safer.”

On the Executive Board, you are responsible for the Medical division. Are you satisfied with the way this division has progressed since you took on the position one and a half years ago?
When I took over, we had three locations in Brensbach, Neuhaus, Germany, and Rochester, New York/USA, which operated in relative isolation from one another. We now have six locations. Two of them – Lancaster in Pennsylvania/USA, and Waldachtal in the Black Forest, Germany – we have acquired; we established the site in the Chinese city of Suzhou ourselves. All of these sites offer an extremely complementary technological competence profile and well-balanced customer structures. There has also been an extremely positive development in the collaboration between the sites. The added value that we can now provide to our customers as a global supplier in the medical industry has risen sharply.

I am very happy with the progress we have made so far. And I am proud to be able to work with such a fantastic team. We are well equipped for further growth.

Where is the journey in the medical sector heading?
Medical science has been following some significant trends for several years now, and these are heavily influencing our business. The trend towards minimalization will continue to grow. This involves achieving the desired therapeutic effect for patients using minimally invasive procedures with as little surgical access trauma as possible. Then there is the trend towards personalization or individualization. The patient receives an array of treatments that are tailored to their needs based on increasingly specific diagnostics. There has also been a consolidated effort to use increasingly modern materials and biomaterials. The diverse and positive material properties of plastics are still not being fully exploited in many areas of medicine. Finally, there is the trend towards biologization. This involves traditional materials being adapted to the biological requirements of the patient, so they are not only integrated into the body gently, but also biologically effective, for example when fighting against an infection.

We are working on all of these trends and providing solutions for them. So the journey in the medical sector remains exciting and thrilling. We are happy to be part of it.

Experts are lowering their growth predictions, confidence indicators are on a downward trajectory, and global trade is showing weak development. What does the Röchling Group need to be prepared for as a leading supplier of technical plastics? Where do you see the biggest challenges?
As banal as this answer may sound, for us it is the main driving force: the top priority for the Röchling Group in the future is to offer products that customers really need, that can be optimally integrated into the value-added chain and that are available easily, quickly and at a high quality standard wherever industrial value is being created – just as it always has been in the past. If we follow this premise in the future as well, then we will continue to be successful against all odds in the future.

Over the past year, the geopolitical stability in many regions has been in decline. These uncertainties also result in global trade ceasing to freely develop, which has an influence on our business. However, we have no choice but to play with the hand we are dealt. Accordingly, we accept every challenge we are given.

For this reason, we are also concentrating on continuing to defend and develop our technological lead and on finding solutions for all other challenges. I am not worried about the future.

“We have the highest respect for our environment and act accordingly.”

Are you concerned with the topic of sustainability? What action is Röchling taking in this regard?
We are aware of the environmental problems being caused by plastic waste, even if we do not manufacture any of the products associated with this problem. We are following the principle of “zero waste production,” whereby we strive to utilize any production waste somewhere else in the value creation cycle – if it can’t be used in the same product group, it could at least be used in other products. In many cases, this is already working excellently. However, this is just one aspect of sustainability – of course, we need to be responsible when it comes to all the resources we use.

In addition, the material cycle, from production to ­returns with recycling, is an important issue for us in various projects. We want to ensure we stay abreast of a healthy and sustainable material cycle, as well as of our customers’ needs. There are also countless other projects in the company and in the Röchling Foundation, which is entirely independent from the company, that ­address the topic of sustainability with a focus on ­plastic. ­Röchling has conducted its business very responsibly for the past 200 years, and it will continue to do so in the future. We have the highest respect for our environment and act accordingly.