Enhancing and harnessing employee involvement can not only boost performance in bouyant times, but can also – as German company, allsafe JUNGFALK, demonstrates – create a proactive environment that weathers tough economic times and leads to global expansion.
Allsafe JUNGFALK has a core company philosophy that espouses consistent customer focus, solution-oriented thinking and efficient quality management. While that might sound like a logical model for a company that has spent 45 years in the load restraint technology and complex logistics solutions sector, it was what happened when the company faced major economic challenges during the GFC that attracted attention. In late 2008, the company struggled after losing 30 per cent of its annual sales volume.
But, rather than seeing the situation as unsolvable, allsafe JUNGFALK harnessed its employee participation approach and applied intelligent management solutions to send sales back on an upward trajectory.
Managing Director, Detlef Lohmann, says that when the downturn hit Germany, overall sales dropped to €20 million. It was, he says, “a tough time.” But, this mechanical engineer by trade, instead saw the company not only remain profitable, but do so without the loss of a single job. The economic crisis became a catalyst to change the staff/ management relationship. A year later, allsafe JUNGFALK bounced back, generating sales of €30 million in 2010 and approaching the €40 million Euro in 2011.
The rest of the industry watched and waited. The way Lohmann describes it sounds too simple. He sums it up in one word – “responsibility.” “We encouraged all our people to take responsibility for themselves, their colleagues and the company as a whole.”
In a time of decreasing sales and mass layoffs around the country, the new mission statement gained momentum from day one, defying the economic atmosphere In Germany.
“During the GFC, the industry’s production volume decreased by 50 percent and the major German body builders faced achieving only about 15 per cent of the 2008 production volume,” Lohmann explains. “Losing more than 80 per cent of the production was a massive shock for the entire sector. allsafe JUNGFALK, however, only lost 30 percent; which, in hindsight, is quite a good figure. Nonetheless we did suffer just as much.”
To navigate the low point, Lohmann asked all staff to pass on 10 per cent of their salaries and waived 20 per cent of his own. “It was a large sacrifice and I appreciate everybody’s help,” he says. To pay back the staff commitment, allsafe JUNGFALK established a long-term profit sharing system. This fostered the identification of the allsafe JUNGFALK staff with both brand and senior management – contradicting the common “carrot-in-front-of-your-nose” demur. “Gain sharing is not about people working more in order to make a little more money in the far future,” Lohmann says. “It is much more than a compensation program. We have experienced the benefits of improved involvement, communication and teamwork first hand.”
allsafe JUNGFALK’s model paved the way for a whole new corporate philosophy. “The staff involvement promoted a better utilisation of the workforce, helped foster cooperation and teamwork and opened information sharing,” says Lohmann. It also prevented the company from losing its carefully selected personnel. The loss of such skill is often a major obstacle for a company to be able to gear back up quickly when economic recovery appears on the horizon. allsafe JUNGFALK had already planned for that eventuality.
“The second key to success is setting the course prior to the crisis while still experiencing a boom,” he says. “We changed our market approach at that time, investing in the sales department. That paid back in the downturn, especially in combination with the gain sharing program.”
This early investment in sales and marketing laid the foundation for not only a successful and secure future, but it has also achieved a higher market share than ever before. “You have to change the course when the business is going well, because then you have both time and money,” Lohmann says. “When it’s going down, it’s too late. The motivation is low, and you have to perform both crisis and change management. All we did was recruit the right people at the right time and establish the right incentive to stick out the low.”
allsafe JUNGFALK’s renown as a specialist for mechanical load restraint, both in the commercial transport and car industry, remains assured. It is also supplying the aerospace industry and helped develop the innovative Airbus A380. “Our OEM experience is a huge benefit for the aftermarket side of the business; and we try to apply the zero defect philosophy of the automotive sector in the transport and aerospace industry as well, which is a very technical approach,” Lohmann says. “More than 20 people are working in the engineering department, using state-of-the-art CAD equipment. For a company of our size, I think we are more of an engineering office than a production site.”
The confidence in its model based on a technological focus, lean management and long-term human resource planning, is now being applied to expansion as allsafe JUNGFALK capitalises on the momentum gained after the GFC to expand globally. This will be based on strategic co-operations. “In Japan, for instance, we are developing standardised fittings for the international aerospace industry,” Lohmann says. “In Europe, we provide OEM load restraint systems for light transport vehicles, such as the Mercedes Benz Viano. And in Brazil, we’ve had a joint venture with a local company since 2002. Our local specialty is developing mezzanine floor and double deck solutions for the South American trailer market and supplying a body kit incorporating load restraint into the body as a standard fitment.”
However, this expansion has produced its own set of lessons. The Brazilian joint venture, for instance, ran into opposition, as the German experience did not apply in South America.
“Compared to Europe, it’s a different world,” says Lohmann. “In Europe, we see ourselves as a company that is specialised in developing and producing state-of-the-art equipment. In Brazil, we act partly as a body builder, as the market requires complete transportation solutions that are ready to hit the road – and the local manufacturing industry is not able or willing to supply such a solution. Fortunately, our local partner is an experienced body builder.”
Although many international companies that are active in Brazil also edge into the Chinese and Indian market at the moment, Lohmann does not feel any peer pressure to move to Asia. “India and China are not markets we are interested in. They mainly rely on low-cost components and we are a small company that is based on quality, not quantity. Plus our market approach is opportunity driven; and you have to wait until you meet the right people.”
Looking back, it is the people focused approach that fuelled allsafe JUNGFALK’s expansion in the past. The idea is simple. Find a potential business partner, recruit them as a representative and use the well-established infrastructure and local know how to promote the allsafe JUNGFALK brand. That’s what happened in Italy, Turkey and also, Australia.
“Six years ago, I met my Australian associate, David Bailey – and based on his expertise, we decided that Australia could be a good market to expand allsafe JUNGFALK. It’s all about people like David. They are the key to success, but you cannot plan on meeting the right people. It’s like meeting your girlfriend. It just happens,” says Lohmann.
It is no surprise that allsafe JUNGFALK’s marketing concept is just as appealing. “We’ve named every product series after a girl,” he says. “It might seem to be old hat, but people like to associate a product with a face and a distinctive name. And, there is nothing wrong about choosing a beautiful face, I think, especially when times are tough.”
Background: A classic management buy-in
Detlef Lohmann started off as mechanical engineer in the automotive industry, developing an active suspensions system on behalf of German company, Delphi, before he moved on to French automotive specialist ,Valeo, focusing on clutch technology. At the age of 40, he decided to leave the automotive industry and become independent, investing into an aspiring company at Lake Constance.
“I didn’t have the slightest idea what the industry was about,” he recalls. “All I knew was that I bought a company employing about 40 people and generating a sales volume of EUR10 million at the time. I was merely 40 and quite naïve; otherwise I wouldn’t have taken the risk. You need to believe in yourself and trust that things will fall into place. I bought the company in 1999 and today I can conclude that it was a successful venture.”