If it was up to Dr Klaus Strautmann, Managing Director of German OEM, Langendorf, the old saying that ‘there is no such thing as bad weather, only inappropriate clothing’ would also apply to business management – especially in the trailer manufacturing industry.
“Quite often it’s not the business that is bad, it’s the strategy behind it that is inappropriate,” he says. “A good management team can handle even the worst setbacks, including those the trailer industry experienced after the GFC hit Europe in 2008-09.”
Strautmann’s tough and remarkably strident view on leadership in the transport equipment space firmly placed him on the map when he shared it publically in late 2014 – little more than a year after a last-minute management buy-in saved the Langendorf operation from the second insolvency in the company’s 126-year-long history.
Since then, the straightforward executive has written an astonishing success story around the brand, which gained global renown in the 1980s after introducing a new kind of ‘in-loading’ technology that is still used in the glass and precast concrete industry today.
“When I bought Langendorf in 2013, the company was in a severe financial strife, but there wasn’t anything fundamentally wrong with the actual brand,” he says – pointing out that it is has since fully recovered and will proudly present itself at the upcoming IAA trade show in autumn. “The problem was that the product range didn’t really reflect the positive brand image anymore, and there was no entrepreneurial spirit left to turn it around. It was a case of mismanagement, not bad business.”
To overcome the lag and turn the business around, Strautmann says he had to “dust off” the company’s product portfolio, and with it the entire organisation. “There was no sense of urgency left in the business, no energy, so we decided to re-assess every position from top management down to the workshop and start afresh with those who were open to change.”
Strautmann explains that the resulting rationalisation regime helped rebuild the proud family business and brought it back into the black within a short 12-month window, yet not without sacrifice. “When I first came in, we had to let some 40 people go, which was about 20 per cent of the entire workforce,” he says, sounding much less grave than in his verdict of the company’s previous management strategy.
“Even though we’ve taken 30 of them on again since then, I still remember how tough it was. For example, we lost around 60 per cent of our sales team during the restructure; and seeing ambitious, well-connected people leave is always a hard pill to swallow. Then again, we worked around it and replaced all of them – it’s just a question of how you manage it.”
Looking back, he says determining whether or not to lay off staff is the most emotionally taxing element of rebuilding a business, but maintains that being tough on the management team is especially crucial to resetting a business and achieve maximum buy-in.
As part of that process, he says addressing the innovation backlog he’d identified was personally challenging, but strategically unavoidable. “When I arrived the whole business was in a state of shock. Since the GFC, nothing much had happened in terms of product development, especially in the all-important tipper segment. Luckily our Inloader model was still very competitive, but that can only carry about 45 per cent of the business. It was like the tipper division had stopped believing in itself.”
To end the trauma, Strautmann says radical measures were needed. Of the old management team, only three key people remained in the business: “We kept on the head of sales, because he did a good job and is incredibly well connected. We’ve also retained the old head of engineering, and we asked the previous General Manager, Jens Daniel, to take on the material sourcing and procurement division. I think all three really supported my vision for the business, which was important, and still embody it today.”
He adds, “To bolster the actual manufacturing business, we then went on to integrate the workshop leaders into the R&D process again, something that had been forgotten about in the past. To me, that was a key decision.”
Two years on, Langendorf’s rapid turnaround is now widely considered a lesson in modern leadership and a prime example of how to maximise return on brand equity in the manufacturing space. “Without such a strong brand equity behind the Langendorf name, the restructure would have been much more complicated,” Strautmann says, explaining that tough decision making contributed to his success, but ultimately didn’t determine it.
“I’ve been very straightforward during the restructure, because that’s my nature. But when entering into such a project, it’s not about how tough you are. Instead, it’s all about careful analysis, and that’s often forgotten. I had done my homework when I committed to investing in Langendorf, and I knew how strong the brand was. From here, the key was selling the restructure to the team in a way that would rekindle everyone’s fire for their job, so making tough calls alone would have gotten me nowhere.”
To illustrate his commitment to the brand and its people – even in a climate of change and uncertainty – Strautmann’s first action was to invest in the development of a new, insulated tipper model to catch up with local German legislation. During the Langendorf restructure, the country’s Federal Ministry of Transport had passed a new road construction law that would mandate insulated tippers for transport companies working in highway construction. Langendorf had nothing to sell that would comply, so the project seemed the ideal starting point after a phase of radical re-shuffling.
“The key was to not just react to the new legislation, but set an industry-wide benchmark that would live up to the famous Langendorf name. So the brief was to develop the best solution in the marketplace, simple as that,” Strautmann recalls. “The buy-in from the team was fantastic – the insulation capacity we achieved is second to none in the German market, where most OEMs simply fill the empty space inside an existing wall with some sort of foaming agent.
“At Langendorf, meanwhile, we’ve re-designed the whole wall to avoid thermal bridges and managed to de-couple the floor from the wall to avoid any temperature exchange in that critical area, so it’s much more efficient. And, the whole thing is only 150kg heavier than a standard model.”
Building on the success of that crucial first project, Strautmann says the team quickly shook off any remaining GFC dust and started bringing new ideas to the table again. “To be honest, it’s been somewhat annoying seeing how many resources the insulated tipper project blocked when we commissioned it, mainly because it was so urgent. But it turned out so well that it gave the entire brand a much-needed boost, so I must say it’s been a blessing in disguise.
“We’re now back to working profitably, albeit it at a low level. What’s positive is that cash flow is sufficient to fund our R&D efforts again, which I see as a real milestone for a manufacturing business in such a situation. Now we can focus on overhauling our entire tipper range. The goal is to develop a standard chassis for both steel and aluminium trays that will work in two and three-axle layouts, as well as with specialty bodies. That’s how we think we’ll be able to create new synergies and, eventually, economies of scale.”
Strautmann says after the insulated tipper reveal, the business bounced back so strongly that a lot of R&D work still has to happen after-hours to ensure production doesn’t fall behind. To alleviate some of the pressure, the expansion of the existing factory has already been decided on, and the construction of an all-new facility is on the cards for the near future.
Across all product groups – next to Inloaders for various industries and a growing range of tippers, Langendorf also builds low loaders on demand – Strautmann says annual growth of around 10 per cent is realistic, with a six per cent rate of return. “We believe that growth must come from additional model releases and global expansion,” he elaborates. “Already, about 50 per cent of Langendorf sales are made abroad, but I still don’t think that’s enough. The Inloader, for example, is so unique that it should gain much more traction globally as markets continue to recover.”
What may be holding back Langendorf’s international expansion – at least for now – is a patchy sales and service network, Strautmann admits, but work to expand on existing co-operations is reportedly already underway. “I think I have proven that I’m not here to do things by halves, so I’m confident the right framework will be in place very soon,” he says.
Determined to retain the highly pragmatic, straightforward attitude that helped him turn around the Langendorf brand in the first place, Strautmann says there is little doubt the company will dramatically expand its presence in the global glass transport market until 2020 and rise to a top four spot in European tipper sales. “The dusting off is done and Langendorf is back on track. I firmly believe that with the right management strategy, there is no such thing as a bad economy – so I don’t see what could be holding us back from here.”