Jost: Conservative innovation

By continually improving a tried and tested product range, the Jost Group has proven that some of the most lucrative innovations are essentially conservative. Jost CEO, Lars Brorsen, is a man who is as adept at looking backward as forward and has the skill and patience to achieve the most commercially attractive balance between the proven and the new.

Appointed as chairman and CEO of the JOST Group at the beginning of 2000, Lars Brorsen is leading one of the most successful suppliers of advanced trailing equipment in the world. Knowing that most new technologies take hold slowly and have to advance through a long series of technical and market barriers, Brorsen does not like rushing headlong into the future. Instead, he found a way to innovate conservatively, combining cutting-edge engineering and crisis-proof management at the same time. In an exclusive interview he reveals that “conservative innovation” is no oxymoron, but an idea that deserves to be a part of every company’s thinking.

Q: How do you continuously manage to translate market trends and customer feedback into a real life production process?
The trailer industry is much diversified with a tremendous amount of players fighting for market share. There is no simple way to monitor such a vast industry; it’s just a lot of hard work. I believe that learning, filtering and acting are the key words.
When it comes to implementing new products, especially when we are the first brand on the market, we have to rely on our own judgment. As products gain acceptance, we need to observe every local market individually and keep developing our range accordingly. Fortunately we have an extensive global network to support us.

Q: How does your vast experience influence that process? How much “gut feeling” can a multi-million company allow?
As far as the continuous development of existing products is concerned, the key to success is a combination of listening carefully, modular development, and testing, testing, testing. But, if you want to be a true market leader, you also have to introduce new product solutions that have not existed before. In doing so you can only rely on your own judgment. Just keep testing, testing, testing.

Q: How does that strategy work out for you? What is your market share today?
Today we are represented in most countries around the world, so we have a certain “voice” in the global marketplace that can influence market development. At the end of the day, though, our customers determine what we do and, eventually, our market share. That’s why we consider it our responsibility to keep developing solutions for real life problems and maintain a quality everyone can rely on.

Q: In your opinion, how do end-users rate attributes such as performance, weight, price etc? What’s the key to their decision-making?
I truly believe that it all comes down to the lifecycle cost of a product, even though our customers’ requirements differ widely. Lasting quality, low weight, minimum downtime – including scheduled maintenance – and residual value are common indicators of a good product.

Q: So, when can we expect the next big leap in technology?
The nature of our market is one of continuous development rather than big leaps – even new sensible developments take years to gain acceptance. Therefore we don’t jump from one hot item to the next but try to be a consistent, stable organisation which continually tries to do things better than yesterday. Sorry, I know it sounds boring, but that is how we continue to run our organisation.

Q: What does that say about your company culture?
As I said before, we believe in continuity. Most people are here, or come here, to stay. We are in a process of continuous learning to grow our understanding of the global transport market, using our roots in German engineering to translate that knowledge into new and updated products which our customers experience as a reliable help in their everyday life.

Q: Despite that determination, the euro-zone debt crisis has become a significant drag on the real economy. Are you prepared for a second slump?
Since 2008 we have re-learned how to deal with economic uncertainty, which is all about finding the right balance between being able to supply your customers when needed and not having too much cost and inventory when demand goes down. We have a lean organisation now, and we have learned to react to changing market demands. Such flexibility is an increasingly important component of our way of doing business.

Q: How does the current situation affect your business? A recent forecast report issued by consultants CLEAR predicts that the uncertain economic outlook in Europe will hit sales of heavy trailers in 2012…
First of all, we know the truck and trailer business and we know it is a cyclical industry, so we are well prepared to adapt to a short-term slow down. Due to the current insecurity only what is immediately required will be added to or replace the current capacity. However, we are confident that the demand for transport services will continue to grow and thus, also the equipment market.

Q: What must now be done to restore that confidence?
I think all governments involved have to restore a common Europe-wide goal and motivate us to work towards it. Internally, we are well prepared for a prosperous future. Since the Global Financial Crisis we have established a stable worldwide team that is prepared to endure short-term sacrifices for staying of the pack in the long term. A good team is a real asset.

Q: In contrast to most of the world, Turkey and Eastern Europe as a whole seem to grow at a steady pace. What’s your strategy to capture that market?
We already have three plants in that region; the first is more than 20 years old and our market presence goes back to a time before all those political changes occurred. We are, of course, prepared to expand our presence as the market demands it.

Q: At the Solutrans fair in France, JOST’s focus was all about improving safety and reducing maintenance. Will this approach also influence your work in 2012?
Yes, both in 2012 and beyond. Our strategy is all about increasing safety and reducing both maintenance costs and CO2 emissions, which we see as the main challenge for the coming years. Our Lubetronic product was introduced as an OEM production line fitment in 2011, as was Sensoric. This will expand to additional OEMs in 2012, and some even more advanced features are about to be released too.

Q: On the downside, raw material prices are growing rapidly – prices for crude oil, aluminium, copper and steel have increased significantly. Will that affect your future plans?
Yes, the rapid increase of raw material prices as well as the fluctuations in demand, combined with the competition of capacity, indeed creates a demand for a resilient long-term sourcing strategy.
We are happy that we expanded our capacity in the markets that we have grown into very early on, while also developing solid supplier relationships in these markets.
This balancing effect has helped us in being able to react extremely quickly and flexibly to changes in demands in individual markets.
To also cope with this situation financially, we are in a process of restructuring our long-term supply agreements to reflect the new reality.

Q: What other issues do you think are facing your home market and the global one in the near future?
First of all, we consider the entire world to be our home market. That’s why improving safety, creating low-maintenance products, reducing carbon emissions and increasing flexibility – what we call “global-local” – are always on our agenda. Also, securing supplies is one of our main topics right now.

Q: Which role do country-specific developments play in that respect?
Local specifications are very important for the acceptance of our products. We pursue a worldwide strategy defining how products are developed and adapted to specific requirements in a modular way to meet specific demands in a fast and cost-efficient manner. We service a conservative market and believe that regional differences may only disappear slowly.

Q: How does the joint venture with German axle manufacturer Gigant in India fit into that scheme? Which goals do you pursue in the Indian market?
We first entered the Indian market in 2005, primarily concentrating on the truck-side of the business, and today we consider ourselves to be the market leader in that sector. We also spent considerable time developing a market strategy for the trailer market.
Due to various reasons we think that having a German-designed, locally manufactured axle is a very important element in a successful business strategy, and in Gigant we found a professional joint venture partner to design and manufacture such a product. Jost India will be the sole distributor of the axle in the Indian market.

Q: Please tell us more about the product you’re developing for the Indian market – you’ve chosen a sturdy drum design with mechanical spring suspension. Why?
India is a vast country with mostly poor roads, and service stations are few and scattered. In order to succeed in such an environment, you need a product which can easily be maintained on the roadside, and where parts are easily available. The outboard design allows the brake linings to be replaced without the need to dismantle the hub unit, which is perfectly suited to such conditions. The same arguments apply to the suspension.

Q: Will you introduce a more “westernised” version in India any time soon?
Our next steps will be the introduction of further weight ranges, but as soon as we see a requirement for further designs we will act immediately. But first of all we have to introduce the new axle successfully.

Q: Looking ahead ten years, where will Jost be?
We have spent a lot of time thinking about this question over the past 12 to 15 months. Under the code name Jost 2020, we agreed on a corporate vision that will double our worldwide sales by 2020. This was followed by the development of a product road map, regional and functional strategies – and the definition of midterm goals for 2015.
In general, I think we are well prepared to deal with every scenario. We were able to meet high demand in 2007/2008, and we managed to cope with the slump in 2009. Ever since, we have expanded our capacity both in China and in India and also increased the output of our new Polish factory. Thanks to our integrated design and manufacturing philosophy, we will always be able to deliver.

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