"The chaff separates from the wheat - And we are the wheat"
The second audiogram with Materials Services CEO Martin Stillger focuses on current challenges and opportunities for the business and how Corona is changing the way we work with customers.
Felicia Mutterer: Welcome to the thyssenkrupp audiogram. This is already the 9th edition. I am Felicia Mutterer, and as in episode 8, Martin Stillger, Executive Board Spokesman of thyssenkrupp Materials Services, is our guest. In the last issue, Martin Stillger made a clear commitment that in the Group the protection of people is paramount. But what does this mean for the businesses? What matters now? That's what the next few minutes will be about, among other things. But first: Hello, Mr. Stillger. I'm glad you're back.
Martin Stillger: Hello, Ms Mutterer.
Felicia Mutterer: As I just said, in this episode we want to look at the businesses. What has changed in the last few months due to the Corona pandemic? Which markets or which businesses have collapsed? And which new ones have emerged, Mr. Stillger?
Martin Stillger: Yes, it has taken a very interesting course regionally, because we took the first hits in the Asian business. Next came the problems in Europe, initially also very strong in Italy - and Italy with our plant there also hit us very hard. Then the problem of Europe and with a slight delay, the problems also started in North America. That hit us in all these regions, one after the other. And then, of course, in addition to that, in specific industries. In our automotive supply sector, we obviously suffered a severe blow, because demand collapsed virtually overnight.
Furthermore, we are a major service provider in the aviation sector. We supply both suppliers and OEMs in the aircraft construction sector. And this industry was already affected before the crisis. As was also reported in the press, there were problems with particular models, for example with the Boeing 737 MAX. That led to a decline in orders. And then the crisis came on top of that, this really is a total disaster. On the other hand, there are many other areas that are running along very well. I am surprised how well our trading is doing in the general industrial segment. And our colleagues who operate in the plastics segment are having a special boom, because of the fact that many people and many companies need protective equipment - plexiglass panes, which are needed in anall kinds of shops, gas stations, banks and other places - we have a hype in the plastics business at the moment and have exceptionally high sales.
Then there is another point I would like to mention: That is that many people - we know this from our own private lives too - do not go to shops but like to buy online. Everything that we do online is currently at record levels.
Felicia Mutterer: Apart from the cost situation, what is particularly important for a group like thyssenkrupp in the crisis?
Martin Stillger: In every crisis and for every company it is particularly important - apart from the question of employees and customers - to make sure that you have enough cash. And we are in a very special position with our business model because we have tied up a lot of cash with our inventories. And if we run into a crisis, we can sell out, we cannot reorder. This reduces our inventory levels and frees up cash. We have set ourselves the goal of releasing hundreds of millions in cash within a few months, which the Group urgently needs in this crisis. And we at Materials Services are particularly well positioned to do this, and we are making our contribution.
Felicia Mutterer: How do these positive sales increases and business profits relate to the slump?
Martin Stillger: Unfortunately, the good business and the good news we have cannot fully compensate for what is lacking in other industries. But we are fighting every day and doing our best to keep earnings as high as possible.
Felicia Mutterer: What does this fight look like in concrete terms?
Martin Stillger: First of all we have to remember our virtues. That means, how do we actually operate? As always: fast, on schedule, complete, with full power, with maximum proximity to the customer. We must act resolutely, at every point. We must not doubt, we must not wait. We have to keep the customer in focus, be it through a new process, from the home office or however contact can be established. We have to keep at it. And we also notice that our customers are grateful that we are doing so. In a crisis, just like in normal mode, it is important to keep performance as high as possible.
Felicia Mutterer: Could you elaborate a little bit more on what changes have been initiated and what is important now?
Martin Stillger: You know, in a crisis, the resilience of an organization reveals itself more or less like in a pressure test. Now all welds must hold, everyone must perform, everyone must stand together, everyone must work. We have a lower level of incoming orders. That is a fact. We cannot discuss it away and we have to adjust our capacities accordingly. In other words, the drop in order intake is followed where it occurs - and only where it occurs - by short-time working, for example, in order to use our capacities as sparingly as possible and also to reduce costs. This is different in every country, because every country has different formats. You have to be familiar with them and be able to act accordingly. Beyond that, in general: very strict cost management. At the moment, we cannot afford to pay anything, to do anything that might be superfluous or that we can do without. Or what can simply be done a year later.
Felicia Mutterer: To what extent has the customer approach already changed and how will it continue to change in the wake of the crisis?
Martin Stillger: The way we approach customers has of course changed because our employees are no longer sitting in the office at our companies and the customer's buyer may no longer be sitting in the office either. So that both of them can act a little more virtually from home, from the home office. But that works brilliantly. IT has given us sensational support in enabling these employees to do their jobs. I am often a critic of processes that take too long or are perhaps too inflexible. But what the IT department has achieved for our company in two or three days is unbelievable. So I must also say very clearly once again in the direction of IT: Thank you very much for this support of the business. When it really mattered, at the right time, people were there and developed solutions that we would probably never have developed at this speed without the crisis. That's astonishing, but we did it. And that, too, is a sign of the efficiency of this division.
When I think of more extensive, in-depth discussions with customers, which were normally held at a table with several people, perhaps with drawings on the table and some materials experts present, they also take place virtually today. And the customer appreciates and takes advantage of this very much.
Felicia Mutterer: So you can say that the crisis is an opportunity. What opportunities do you see in concrete terms and do you want to take advantage of for thyssenkrupp?
Martin Stillger: Well, the first big opportunity we always have in this crisis is to outperform our competitors. We have competition, even in the crisis. We have to embrace it. And it turns out that not every dealer, not every competitor that we have - we're not just talking about big international ones, we're also talking about competition taking place decentrally somewhere in the world with a local dealer and a local competitor. - For example, they do not have such an IT department, and they are not in a position to adapt as quickly to a crisis and change their work so quickly. And I assume that we will gain market share as a result of the performance we are now showing, even though we have a declining order intake. And that is what it is all about, every day. Competition every day, challenges every day, wanting to win every day.
Felicia Mutterer: And you have already noticed that perhaps so-called hidden strengths are coming to the fore...
Martin Stillger: That is correct.
Felicia Mutterer: Do you see potential in other areas where you think there are such "hidden champions"?
Martin Stillger: I said that our customers are also trying to react to this changed situation, and of course we offer them digital possibilities. For example, we ran a promotional event for digital ordering tools, digital apps with which we can operate, our customers can reach us much more easily than via the traditional channels. These have been enormously well received. We also pointed out to customers with a direct mailing that there are other possibilities. And also, our customers' reactions are much quicker than they would be without the crisis, which means that we have gotten much more into these tools. And if you are more stronger engaged in these tools, then you are also not so easily replaced by someone who calls on the phone without a tool and says: "Can I get you something?" That's what builds customer loyalty. A satisfied customer and a satisfied employee also lead to better margins. And that's what we're trying to do right now.
Felicia Mutterer: So you can say that the crisis is raising the level of the workforce?
Martin Stillger: Absolutely. The crisis strengthens the agility and changes the agility of our actions, our activities, our employees, but also our customer relationships. And that is the opportunity that lies in this crisis. When we come out of the crisis, processes will look different from what we had before the crisis. The speed of change has increased enormously, and the chaff is separating from the wheat - and we are the wheat.
Felicia Mutterer: What is your personal situation? How agile have you become now, are you on a new level?
Martin Stillger: Yes, I was surprised myself how agile I can be and how virtual I can work. I think there is a difference between going into the home office voluntarily and structuring your day, or being forced to work from the home office. In my perception this is something completely different. And I am structured in such a way that I like to look into people's faces and also perceive their feelings and reactions. That's important feedback for me in my work and actions, and I have noticed that this is incredibly difficult via telephone conferences and even via video conferences. I am missing something there. But you learn to do it, you learn to deal with it, it's just different.
And as I said, the change is happening faster than I thought, and the Martin Stillger after the crisis is also a different one than before the crisis. Especially in terms of working methods and how I deal with them. I have also tried to explain this to my employees, to discuss it with my colleagues. These are interesting personal dialogues you have there, about people's perceptions in certain situations. But this is also a sign of the maturity of an organization, that you can share this with each other, exchange it, get tips from others on how to best deal with it, so this is also something valuable that I can take with me.
Felicia Mutterer: We also talked to each other only via telephone, we couldn't even see each other, also one of those "remote processes". Thank you, Martin Stillger.
Martin Stillger: Thank you, Ms. Mutterer.
Felicia Mutterer: That was audiogram number 9 with the Executive Board Spokesman of thyssenkrupp Materials Services, Martin Stillger. He has become more agile thanks to Corona, as has his entire division - just like you, perhaps? Thanks for listening. Until next time.