Quality is the business

Quality is the business Since 2002, Trützschler Textile Machinery has been supplying the Chinese market with top-class textile machines and is market leader in China amongst the international suppliers. The success is based on the quality of the Trützschler systems and services as well as the company s highly productive manufacturing facilities in Shanghai, where they put their trust in Bystronic systems. Text: Justus Krüger, Photos: Jan Siefke China and textiles, they have always belonged together. Even before the turn of the first millennium silk was one of the most-coveted commodities from the Middle Kingdom. Today, China is the largest textile manufacturing nation worldwide even though trading and production have changed radically, as have the range of materials. In the past, the breeding of silkworms played a central role. And the knowledge associated with the production of silk was a carefully kept secret. Then as today, a high level of know-how and technology was essential for the optimal manufacture of textiles from the finest cloth for noble clothes through to the coarser jeans materials and widths of polyester. The processing of the raw materials, such as a bale of cotton, to produce a high-quality cloth is a difficult process that consists of numerous individual steps. The decisive part, because it is the basis for the complete process, is the slubbing. This drawing out and slight twisting of the fibers is the basis for every other process. In the complete process, the slubbing is a small but important part, says Harald Schoepp, Managing Director of Trützschler Textile Machinery in Shanghai. It s here that the actual quality is determined. And quality is Trützschler s business. It is no coincidence that the Trützschler Group, with its registered offices in Mönchengladbach, Germany, is world market leader in the field of slubbing, and technologically the undisputed number one. The factory in Shanghai lies in the far west of the metropolis in the Qingpu district. On the local in- Harald Schoepp, Managing Director of Trützschler Textile Machinery in Shanghai. The German Trützschler Group is world market leader in the field of slubbing. 7

The Trützschler factory in Shanghai produces slubbing machines. In sheet metal processing, the company uses Bystronic equipment. The precision, the speed, and the flexibility of the systems were crucial for the investment decision. 8 BystronicWorld 2/2009

dustrial estate, numerous branch offices of other international companies have also been established, also companies from Germany. For example, the Heidelberg printing machine company. Hence it comes as no great surprise that the Shanghai German School is also to be found in Qingpu. From the window in Harald Schoepp s office one has a view of the equally prosaic and bustling scenery consisting of factories, warehouses, and highways. If one did not know that this was a branch factory in China, it would be almost impossible to guess on which continent one was currently situated. There is as little of the glamour of downtown Shanghai in the air as there is of the exotic atmosphere of the old silk spinning mills. Number one foreign supplier Overall, measured by the production and investment volume in China, Trützschler Shanghai has a market share of 15 percent. Hence amongst the foreign suppliers, they hold position number one. However, the domestic Chinese manufacturers sell larger numbers since they offer their machines at distinctly lower prices, machines that on the other hand cannot compete with the Trützschler equipment in terms of quality and productivity. We don t bid in this price segment, and don t want to go in that direction, says Harald Schoepp. The cheaper systems are interesting for investors who are working with a relatively tight budget and for whom the price is therefore the prime factor. On the other hand, larger companies that are primarily interested in what productivity they get for their investments buy from suppliers such as Trützschler. In addition to the slubbing machines, the group of companies also manufactures systems for the nonwoven industry, in which fleece and other nonwoven materials are manufactured and processed. The factory in Shanghai, however, exclusively manufactures slubbing machines. These are used to process the raw materials to form a coarse, finger-thick roving which is rolled onto large spools and packed in barrels to be brought to the spinning mill. Just how high the quality of the yarn is, and finally of course the cloth and the clothes that are manufactured from it, depends largely on the raw material s journey up to the roving. This journey first takes the material through the cleaning shop where it is freed from foreign matter, such as grease with wool or seed vessels with cotton. From here it continues to what is known as carding where the fibers are pulled so that they are oriented in the same direction. If you check your clothing and find small knots or varying thicknesses in the material, you re not pleased, explains Harald Schoepp. Thus the objective is to achieve the highest level of regularity. The challenge is to achieve the best quality with high production figures. Naturally, you can also do it manually, jokes Harald Schoepp. You simply take a handful of cotton and comb it, which will keep you busy for a whole day, since a single gram of cotton is made up of around 300,000 single fibers. Using a Trützschler machine on the other hand, 120 kilograms per hour can be processed. And the combination of extremely high productivity and firstclass quality is the core of Trützschler s success. Rapid expansion The business model with the focus on quality has paid off. The company in Shanghai has developed very rapidly even faster than those at headquarters had expected. At the beginning, the subsidiary The production precision of the subassemblies is of paramount importance. Harald Schoepp, Managing Director Trützschler Textile Machinery in Shanghai was above all intended to be a center for customer service. Today, however, Trützschler manufactures most of the machines for the Chinese market locally in Shanghai. In the meantime, Trützschler Shanghai contributes about 15 percent to the Group s total turnover. At the same time the subsidiary in the Chinese metropolis is the youngest in the Group. It has been active since 2002. Trützschler s oldest subsidiary is in the USA, which was followed by branches in Brazil and, 30 years ago, in India. The fact that a factory was necessary in China became clear only at the beginning of this decade. During the period from 2000 until approximately 2003 there was massive expansion here with extreme investments, recalls Harald Schoepp. One simply had to be present. The business attained its peak to date in 2007 before a clear dip occurred in the growth curve in the second half of 2008. The reason was the global downswing as a result of the BystronicWorld 2/2009 9

In terms of technology and quality, Trützschler machines are outstanding. In order to reach the required manufacturing precision, the sheet metal processing remains under Trützschler s control. international financial crisis. Because, as a general rule, the textile industry feels the effect of economic developments much earlier than other industries, this also means that an upward trend makes itself felt very quickly as well: Trützschler Shanghai is once again on course for growth. In addition to the service activities, the subsidiary in Shanghai was initially conceived as the start of manufacture in China. At that time, however, this was primarily the case for the manufacture of subassemblies from Germany for a single machine type. Soon it was expanded and at a rapid rate. Already in 2004, Trützschler had more than doubled the size of the factory from 6,400 to what is now 13,000 square meters. According to our original business plan, we should still be able to cope with just the 6,400 square meters. Even after the expansion, the location was still used for the fitting of subassemblies from Germany. At the end of 2007, this once again changed very quickly. In the following months up to the beginning of 2008, the share of the supplies from Germany dropped almost to zero. Nevertheless, the turnover of Trützschler in China remained stable the factory in Shanghai filled the gaps. One reason for the rapid switchover was that the Chinese authorities suddenly cancelled customs and tax exemptions that were relevant to Trützschler s imports from Germany. Thus, and practically over night, the imported machines were 27 percent more expensive. That s how it is in China, says Harald Schoepp calmly. Regulations and laws can change very quickly. Otherwise the state administration does not cause the company any real problems. Things operate just as smoothly here as they do in Germany, says Harald Schoepp. Unexpected challenges On the other hand, Trützschler in Shanghai and elsewhere in China is confronted with other, partially unexpected challenges. For example that the potential customers consider the performance claims for the German machines to be implausible because they are so high. At the beginning there was a certain amount of mistrust, recalls Harald Schoepp. They simply did not believe it to be possible that we can achieve such high production rates with our machines. A textile manufacturer from Fuzhou for example with a staff of around 20,000, the company is the largest employer in the eastern Chinese miracle metropolis considered the performance of the systems to be technically simply not feasible. And hence he was guaranteed an hourly output of 88 kilograms of polyester compared with a best case of 50 kilograms that the company was used to with its previous ma- 10 BystronicWorld 2/2009

Bystronic trains the Trützschler employees on location and in Chinese. chines. They told us that it was just not possible, explains Harald Schoepp. Hence Trützschler offered to supply the company with additional machines cost free if the guaranteed output was not reached. It was achieved as predicted, additional machines were not required. In order to maintain Trützschler s good reputation it is essential that the manufacture of the main subassemblies is not outsourced to another company. The production precision of the subassemblies is of paramount importance, explains Harald Schoepp. You simply cannot imagine the degree of accuracy that is demanded by the machines. Thus Trützschler in Shanghai makes very restricted use of outsourcing. With key components we don t rely on others. We prefer to make them ourselves. Also the sheet metal processing remains under Trützschler s control, since the machines use a large number of sheet metal parts. This means that the frame walls, covers, and a large number of functional parts are manufactured from sheet metal. This is critical, explains Harald Schoepp. We simply cannot outsource this. Highest demands on suppliers In order to be able to produce the sheet metal parts for the systems reliably and with the appropriate quality, while maintaining high productivity, If we have a problem that our own people are unable to solve, I expect a technician to be here at the latest by the next day. Harald Schoepp Trützschler places the same demands on its machine suppliers as its customers place on Trützschler s textile machines. Thus the company in Shanghai puts its trust in Bystronic equipment for sheet metal processing. We initially made contact with Bystronic at a trade fair in Beijing, recalls Harald Schoepp. There we saw: these are topclass machines. Above all the precision, the speed, and the flexibility of the laser cutting systems were decisive for this assessment, just as much as their high productivity and the reliability, which at the beginning Trützschler simply had to accept but which has been completely confirmed in the BystronicWorld 2/2009 11

meantime. The second major criterion was a wellfunctioning customer service. At the beginning a competitor s product was used in the factory in Shanghai. But the service was not satisfactory, says Harald Schoepp. Bystronic, on the other hand, had long since achieved a high standard in terms of service in China. Even the best machine has an outage at some time, says Harald Schoepp. Whereby the key factor is that this outage is as seldom and as short as possible. And hence customer service plays a decisive role. If at some stage we have a problem that our own people are unable to solve, then I expect a technician to be here at the latest by the next day, says Harald Schoepp. And this works with Bystronic. But this is not all that he expects from a good customer service. A further criterion is the training of the employees. These have to be trained using the Chinese language, and as far as possible by Chinese technicians. This is important, according to Harald Schoepp. This also means: if at some time they have a problem, for example with the laser, they only need to pick up the telephone and request first-level assistance from Bystronic. This also functions immediately. A third challenge is the supply of spare parts. That s always a problem with imported machines, explains Harald Schoepp. But here too, Bystronic was able to help us in almost every case up until now. I believe that to date we only had one case where a spare part had to be imported. It is not by chance that Harald Schoepp places great value on a professional customer service. For his company, too, service belongs to the core activities, and by his own statement, this is first class for customers in China and bordering countries. In Shanghai the company has a stock of spare parts with a value of approximately 40 million Yuan (around 4.5 million euros). Of the total of 220 employees in Shanghai, 20 are involved in customer service and they ensure that the machines installed in China and surrounding countries, also those imported from Germany, perform as reliably as they should. Thus the location in Shanghai is very important, says Harald Schoepp. And not just for the manufacture. A challenge that confronts Trützschler in this respect is the recruiting of suitably qualified employees. Ironically, this difficulty results from the strength of the location. Naturally, the good infrastructure entices a large number of companies to Shanghai, says Harald Schoepp. We were amongst the first in this industrial zone. If you have a look around the area, you will see that there is almost no free space anymore. The result of this is that the demand for good employees exceeds the supply. For qualified skilled professionals in middle management, the salaries are rapidly developing towards the level in Germany, says Harald Schoepp. Today, Europe is no longer a leading location for textile production. The largest markets for machines such as those from Trützschler are hence Trützschler and Bystronic Bild etw. aufhellen Trützschler and Bystronic make a good pair. Trützschler expects top class from its suppliers and Bystronic knows what is important for demanding customers. The basis is naturally that the machines meet the highest demands for quality and productivity, says Bob Wang, Managing Director of Bystronic Co., Ltd (Shanghai). But that alone does not suffice. A smoothly functioning customer service is equally important, says Bob Wang. After all, service is a part of the productivity. Bystronic and Trützschler also understand each other so well because both companies are in a similar situation in China. Both are top sellers in the upper segment. On the mass market on the other hand, the domestic Chinese suppliers dominate. A customer such as Trützschler after all a world market leader in its segment sets an example for other companies in China and shows them that superior results can be achieved with first-class machines such as those from Bystronic. In the years up to and including 2007, Bystronic achieved growth rates in the high two-figure range in China. The worldwide economic turndown, however, made 2008 a difficult year. Bystronic owns two companies in China: Bystronic (Tianjin) Machinery Co. Ltd, where pressbrakes of the AFM family and laser cutting systems for the local market are manufactured, and Bystronic Co., Ltd (Shanghai), where service and sales are concentrated at locations in Shanghai, Beijing, Tianjin, Guangzhou, and Shenzhen. Harald Schoepp, Managing Director of Trützschler Textile Machinery Shanghai, and Bob Wang, Managing Director of Bystronic Co., Ltd (Shanghai). 12 BystronicWorld 2/2009

the emerging countries such as India and China, followed by the adjoining countries. Business in Germany itself will take a more settled course and will tend to focus on the engineering- and knowhow-intensive areas such as research and development. With a view to the employment market at the home base, this is not necessarily a pleasant development in Harald Schoepp s opinion. But one has to face the facts. China will definitely become the core of our business. Justus Krüger lives in Hong Kong and Beijing. He works as China correspondent for the Berliner Zeitung newspaper. Shanghai Shanghai is a resplendent metropolis. More than 18 million people live within its administrative area making this city on the Huangpu River near the estuary of the Yangtze River the largest in the country. It can also claim to be the country s most open city besides Hong Kong. At the same time it is the most important industrial town in the Middle Kingdom. Its success is reflected in the city itself, whether by the spectacular skyline of the Pudong business district, by the old and once again noble French Quarter Xujiahui, the sublime river walk along the banks of the Huangpu, or by the Transrapid Maglev railway, which transports travelers from the airport to the city at 300 kilometers per hour. Shanghai is one of China s most important high-tech centers and not just on the surface. Companies such as SAP and Google maintain research centers in the city, at the same time the machine industry plays a nationwide prominent role, and the harbor participates year for year in a neck-and-neck race with Hong Kong and Singapore for the largest volume of containers handled worldwide. Shanghai on the Huangpu River is China s most important industrial town and, besides Hong Kong, probably also the most open city in the Middle Kingdom. BystronicWorld 2/2009 13