The KION Group shut down production temporarily at STILL in Hamburg for two weeks in April. In an interview with HaJo Schlobach, editor-in-chief, STILL’S Chairman of the management board, Henry Puhl, discusses the impact on the intralogistics expert and OEM of forklifts and what the future might bring the Hamburg-based company.
How are you doing? KION recently shuttered production at all their sites in Europe. What did you do during the shutdown across the industry?
Firstly, I am pleased that the KION Group’s manufacturing plants and our component plants have resumed operations as planned after the production break ended. In Hamburg, production resumed again April 20 and our sites in Luzzara, Italy, and Châtellerault, France, are also back up. I was in my Hamburg office every day during the break and now that the quiet days are over, it is good to be experiencing life, activity and productivity on the plant premises again.
We used the plant shutdown to accomplish three key tasks: Firstly, we implemented a new occupational safety standard, which goes beyond the regulations recently published by the German Federal Ministry of Labour. It ranges from floor markings and stickers, which make it easier to maintain a safety distance of 1.5 meters (roughly 6 feet), to construction measures such as the installation of additional lightweight walls to give the workplace an even better structure.
Next, we further secured our supply of materials for the coming weeks during the 2-week break. Since suppliers have increasingly also gone back to production, the availability of materials, which were recently rather tight, has also generally improved. Lastly, during this period, we put technical equipment into operation ahead of schedule to optimize our production processes. For instance, we have new automated welding machinery up and running, and we introduced new production software. As we were getting all of this done, I was very impressed by how quickly everyone involved was able to switch over from the initial ‘coronavirus shock’ to a ‘roll up your sleeves and get to work’ mentality.
What has been your strategy for dealing with the crisis?
For over 100 years now, the core strategy at STILL has been to focus on customer needs – everywhere and all the time. I am convinced that precisely this strategy have never been more critical than now. Of course, some of the current needs have changed since a few months ago and that is why we are looking very closely at where and how we can now support our customers in the best possible way to keep their businesses running. Many companies now need fast, flexible and cost-effective solutions. It explains why our rental experts are currently in great demand. They are working 24/7 on customer-specific solutions to ensure that the vehicles required are on site as quickly as possible.
What makes you optimistic about the future today?
The fact that despite physical distancing, people everywhere have joined together, showing solidarity and finding very creative solutions, both privately and professionally. Whether it is a grandson recording a podcast for his grandmother so she doesn't feel so lonely, or a virtual training implemented by our product trainers. It involves a combination of a video chat, screen sharing, group work, chat rooms and a live camera stream directly from the vehicle in the training room. We have held these virtual trainings with participants from over 10 countries.
Do you think there will be a return to "carry on as usual"? If not, what does the future of intralogistics look like for you as an opinion leader within the industry?
The pandemic is going to change both our society and our business world. It will be a "carry on, but differently" mindset. Every crisis holds opportunities. We have the opportunity to now question many of the behavioral patterns cemented over many decades; How many business trips do we really need? Where do we need to physically come together and where can decisions be made more easily and efficiently using which digital tools? We are currently seeing how many things can be solved differently than before. After the crisis end, this knowledge will help us to rethink many things and in a better way. Many logistics processes are also going to be questioned. I can imagine that parts storage will once again become more important. For all the benefits offered by just-in-time production, in many sectors of the economy, we are currently experiencing the adverse impact it can have when some segments of the global supply chains become unstable and how quickly a domino effect can happen.
COVID-19 has created considerable disruption in the global economy and it is not yet done. However, there are many who also see an opportunity here. Where do you see the opportunities? What the ones for STILL?
Intralogistics is an important factor that keeps our economy running. Particularly now, when it means keeping vital sectors, such as the food or pharmaceutical industries, running. Once the pandemic is over, it will be important to get our economy moving again and intralogistics is going to play a key role. It is a great opportunity for us to play our part by turning current experience into new solutions.
It applies both to new business models, such as in the logistics-as-a-service area as well as to the further development of existing business areas. Take the e-commerce market, which has been growing rapidly for years. Online trade has been recording annual growth rates of around 10 percent, and, in 2018, global sales amounted to around EUR 1.5 trillion. E-commerce is even likely to receive an additional boost due to the current situation. Solutions for flexible, fast-moving and detailed handling of goods up to Batch Size 1 will continue to be in demand. High-bay warehouses with intelligently networked movement of goods and information, process automation, a digital real-time service - we have a real opportunity to continue leading the way with our solutions.
Could the crisis trigger a surge in automation? After all, machines can only break down, they do not get sick and they do not spread viruses...
For the medium term, the transport of manual goods will remain unchallenged, but the emphasis will no doubt continue shifting. However, you do not need viruses to trigger a surge in automation, as the trend to shift to automation has long since begun. The market for automation is the fourth-fastest growing industrial market worldwide. Most recently it was worth EUR 4 billion and it has grown by more than 25 percent from 2019 to 2020 alone. Illness-related absences play a much smaller role here than demographic changes and the lack of skilled workers. Many companies simply no longer find drivers who are willing to sit in an industrial truck on weekends. Yet we also have an increasing number of enquiries from customers who, due to the pandemic, want to focus more on the automation of their trucks, logistics centers and the remote maintenance of machinery in the future.
Will the crisis drive the digital transformation forward? How will transformation take shape? What do you think needs to change?
Even before the crisis, digital transformation was one of the most influential economic mega-trends. For years, we have seen it as our task to make it work for our customers. A particularly exciting area which is rapidly developing is digital fleet management. Our vehicles use GSM modules to send a wide variety of data to the fleet management system: When is it running? When is it lifting? When is it charging? When and where are there jolts? The analysis and correlation of such digital data results in a wide variety of added values. Capacity utilization analyses, process optimization or maintenance planning are just a few examples.
Of course, the current situation is going to further accelerate the digitalization of internal work processes, especially in communication. There will be fewer business trips, fewer face-to-face meetings, more interaction through digital tools. Even before the pandemic, the digital transformation was helping us enormously to overcome spatial boundaries. In development for example. Our international teams work with virtual reality technology and digital mock-ups. In virtual space, our engineers can exchange ideas on the vehicle at a very early development stage. They can work on the same vehicle across borders in 3-dimensional space in real time and they can interact with the model and define the practical technical design. By networking the vehicles, individuals can also communicate with and about vehicles in real time.
Working remotely from home and many other digital options have been very common during the shutdown. Where will the journey for STILL in this area take us? Are you thinking about new ways of working? What might they look like?
STILL began introducing working remotely even before the coronavirus and we will continue to do so after it is over. In addition to existing time schemes such as flexible work and work time accounts, we are currently developing other work models to exploit the potential of digitalization even further.
What have been the greatest challenges for you in maintaining – or in rebuilding - STILL’s business? Such social distancing, the internationality of orders, supplier problems, posting employees abroad, cancellations and payment defaults?
Almost all our employees have had to come to terms with a completely new work routine in a very short time. Our rental and sales teams began very quickly to work remotely from home and remained available to our customers around the clock. For our sales team, the normally vital on-site contact at our customer's premises came to an almost complete standstill. But they were quick to adapt and managed warehouse inspections and production facility inspections via video conference. Our service technicians are constantly on the road in the field, ensuring the flow of goods for our customers. They contact the company by telephone before each visit and learn all about on-site safety regulations and bundle upcoming ‘to do’s’ where possible.
Right from the start, it has been clear to everyone here at STILL that we must be there for our customers right now, even if the general conditions are sometimes challenging or simply different. In the process, a sense of ‘being there for one another’ has grown even stronger. We have made a clear promise to our customers on our website which we renew every day: Wekeepyougoing.
How does the cooperation within KION Group work during the crisis?
Excellently. We are in daily contact, cooperating and finding solutions together. We also make sure that all sites learn from each other and support each other to find the best solution for everyone.
STILL is known for a staff of highly skilled professionals and a very low fluctuation rate. Are there already plans set up to keep the skilled workers in the future despite the difficult situation?
STILL is regarded as a very attractive employer and we are doing everything we can – regardless of the current situation – to ensure that it stays this way. Flexible work routine schemes are certainly going to play a greater role here. In addition, we offer responsibility and we are looking for team players. Our professionals appreciate the freedom in implementing their own ideas and common visions. We are going to continue building on this.
How does the cooperation with the labor partners come into play here?
Our cooperation with the works councils is very constructive and cooperative and we work together at – and for – our company, and we are all proud of this.
Currently, it is very difficult to make a prognosis. Yet, I would like to ask a question: Where do you see STILL by the end of 2021?
At our customers' side, as a strong partner with innovative ideas and unique solution capabilities.
Thank you very much for this insightful interview.
You can read these and other answers and what benefits we can draw from the current situation here.