Gigant on the rise

From the August 2016 issue.

Axle specialist Gigant, now part of the Krone Group, may be a giant by name, but there’s still some way to go until the business itself will reach Goliath status. With a new factory about to open, the next growth spurt could be closer than expected, though.

Technically the word Gigant, German for giant, doesn’t quite capture what is, in essence, an archetypal German Mittelstand business with some 195 staff and revenue around the €50 million mark. Then again, the northern German axle expert doesn’t quite subscribe to the traditional ‘small thinking’ still prevalent in the SME field, with annual growth well beyond the industry standard and an ambitious future vision that could see it become the world’s leading specialised axle brand as early as 2020.

As such, Gigant may well be a giant in the making, according to Managing Director, Markus Gehle – even though he does take his own, lofty aspiration with a grain of salt. “There’s no doubt we’re doing very well at the moment, just like the rest of Germany, and sometimes people ask me how we actually manage to remain so consistent,” he says with an air of humility in his voice that is typical for the northwest of Germany. “But we shouldn’t get ahead of ourselves. I always reply that we’re still very much a niche business, even though Krone’s in-house axle has given us an incredible boost. We’re definitely poised for growth, but we need to be smart about it and stay level-headed.”

With a focus on innovation, brand continuity and – most importantly – customer service, Gehle says the company has gone from strength to strength since €1.5 billion juggernaut Krone took over in 2013 and asked the family business to develop and produce a Krone-branded axle and suspension system. Much of it goes back to a business development plan titled g300, which Gehle designed jointly with the experienced Krone management team.

“At the heart of the g300 project was the target to produce 300 axles a day by 2018,” he explains. “We’ve reached that milestone ahead of schedule in 2014 – mostly because the Krone axle was so well received and the integration of the two businesses went so seamlessly. For the current Financial Year, we’re now aiming at a record 30,000 units all up.”

Certainly not a David anymore, Gigant could have grown even more since the much publicised Krone deal, Gehle reveals, but production capacity maxed out earlier than anticipated. In October 2016, following the IAA Commercial Vehicle Show in Germany, the company will therefore open a new, €5 million facility adjacent to the old one in the town of Dinklage – laying the foundation for what Gehle simply calls ‘phase two’ of Gigant’s maturation into a truly global brand.

With the company going strong in Germany and the BeNeLux region, he says the next growth market could lie across the Atlantic in the US – especially since Russia and Eastern Europe are still underperforming after the Crimea crisis. “For us, the United States have become a very interesting target market since they started placing more value on trailer technology during the recession. There is a lot of potential, a lot of volume, and need for a product that will perform under pressure. We think we now have the right portfolio as well as sufficient production capacity to respond to that.”

On the product front, little will change once the new factory goes on stream post-IAA. “The Krone product is doing exceptionally well, so we don’t want to change that formula just yet,” he says – pointing out that the company’s current line-up in the heavy equipment market has reached an equally mature state. “It doesn’t mean we’ll stop working on the next generation behind the scenes, but it says a lot about the quality level we’ve reached.”

Gehle says for the immediate future, the company will increasingly focus on R&D and explore how it can digitise the axle and integrate more sensors without compromising reliability. “I think that’s where the future lies given the hardware itself has become so reliable. Naturally the market will decide, but I think there’s some genuine potential in using telematics to ensure a trailer only has to be serviced when it’s really necessary. Quite often these parameters vary depending on driver behaviour and road surface, so why not assess them individually to minimise time off the road?”

According to Gehle, the focus in the axle market is now firmly on uptime, with high technology expected to simplify fleet management and maintenance scheduling. “We’re on the brink of a very exciting new era,” he says. “But we shouldn’t get carried away with technology as well. Our core competency will always be axle and suspension design, and we have to make sure we maintain that focus amid the hype around Sensierung (sensor-isation, ed.), as we call it in German.”

In line with that credo, Gehle says the next evolutionary leap in axle and suspension design may be mechanical in nature and involve the expansion of independent suspension technology into the standard trailer market. “The technology itself is not entirely new to us as we’ve already presented an independent system called DSL – developed in unison with Tridec – back in 2008, but I think it could now become more interesting for the broader market, too, so we’ll be looking into it. We believe that any innovation that can be backed by a genuine business case should be explored.”

GFRP or carbon fibre-based axles, meanwhile, won’t leave the Gigant factory any time soon. “The market is currently too price-focused to see the value in it,” says Gehle. “We’ve shown that we can handle the technology in the past, but it’s just not feasible for most businesses at the moment. I think the kind of growth we’re aiming at will have to come from understanding steel really well and knowing how to get the most out of it. We’re certainly developing our skillset in the background to ensure the technology is available when there is demand for it, but at the moment, Gigant will focus on what does best, and that’s high performing axle and suspension technology.”

With the new factory about to open shortly and the odd surprise reveal planned for the company’s IAA outing in September, Gehle has every reason to envision Gigant as a new industry heavyweight towering high above the competition, but as a humble northern German, he has no interest in stirring up the market: “We know what we’re capable of and I am sure it will show in the near future.”

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