Dr. Stefan Wolf ” Our globalization cannot simply be reversed”
Following customers into international markets.
Dr. Stefan Wolf is Chairman of the Management Board of ElringKlinger AG,an internationally active automotive supplier with around 9500employees and 44 locations worldwide, and honorary president of the employers’ association Gesamtmetall.
The digital networking of global locationsmeans a further boost for the ongoing internationalization of ElringKlinger AG.
The economic situation of the nation seems difficult. What is the mood at ElringKlinger?
The mood is cautiously positive. Of course, we also suffer from all the things. For us, it’s mainly the raw material prices. Steel and aluminum are the main materials we work with. Prices have risen significantly here. Of course, we also have problems in the supply chain. But I always try to maintain a positive mood among the workforce. We have also had difficult times in the past. Not as difficult as the ones we’re going through now – but times have always gotten better again. That will be the case this time as well.
Do these challenges affect the transformation process and your future plans?
Actually not really. We have more than 20 years of experience in fuel cell technology, and more than 10 years ago we established a business unit for battery technology and electromobility, which are our technologies of the future. We also remain very strong in combustion engines. I believe, by the way, that we will have these for a very long time to come. But if unit numbers decline here, we will place substitute products. We already have orders and good development projects in these areas. One thing is clear: we must now, of course, earn money that we can continue to invest in the technologies of tomorrow in order to bring the transformation well over the line. That is of course difficult at the moment, due to the cost increases and with the immense additional burdens we have. I am also firmly convinced that we will slide into a recession next year – regardless of whether it is 0.4 percent or becomes 1 percent or 1.4 percent. We have to look at getting out of the trough very quickly to generate positive returns that we can use to shape the transformation.
“We have also had difficult times in the past. They have then always gotten better again. That will also be the case this time.”
Does the view of global markets also drive you forward on the subject of hydrogen?
We definitely are thinking globally, no question. I believe that this technology will have a future and we see even here in Germany changes in attitudes. Things are moving. In the coalition parties, i.e. in the traffic lights, I see that the hydrogen issue is becoming very relevant there. New transportation concepts will not work without fuel cells. Flying, large cruise ships, and, in my view, trucks, will not work without fuel cells. You will certainly never see a small car with a fuel cell, but I believe that the fuel cell will also be used in SUVs and luxury vehicles. We are not limited to road vehicles; trains are also conceivable. We also already have relevant projects, such as with Airbus since 2020, where we are developing a fuel cell stack for a passenger aircraft. There are many interesting applications, in this respect, the fuel cell is very relevant in the sum.
On the subject of dependencies on China: Is “decoupling” a solution?
I think “decoupling” is totally unrealistic. Turning away from China would be a big mistake. For the vehicle industry, China is the largest single market. It is the largest sales market and we also have an incredible number of supplier relationships both with parts that come from China or parts that we supply to China. So no, decoupling is a completely unrealistic view. That would lead to a global economic crisis the likes of which we have not seen before. The country is an exporting nation and simply too intertwined globally. That said, we may need to look again at supply chains and consider geopolitical developments when investing for the future. We sometimes didn’t do that in the past, and that was a mistake. After all, there are very many suppliers who are in Ukraine, but hardly anyone expected Russia to attack this country so brutally. We make sure that we are balanced in the supplier sector, i.e. that we have German suppliers as well as European ones. But to turn a company like ElringKlinger back globally, I think that is completely illusory.
Global value chains are often very complex, can’t they be simplified?
We have been pursuing this for years. We produce in our Chinese plants and subsidiaries for customers in China. These are partly international, of course, but also local vehicle manufacturers in China. We produce a lot in Mexico for the U.S., in the U.S. for U.S. vehicle manufacturers, and in Brazil for vehicle manufacturers in Brazil. So we have been pursuing this for a very long time, that we have to localize production in order to then also be able to supply locally in the country. This localization is a process that we are pushing hard. It wouldn’t make sense, for example, to close down production in the USA and produce the parts in Germany and then bring them to the USA with high transport costs. It is simply too expensive to ship vehicle parts that are bulky halfway around the world. That’s why we have followed our customers globally so that we can also deliver locally. To turn that back would also from the cost side make no sense at all..
“Decoupling from China is completely unrealistic. That would lead to a world economic crisis as we have not yet seen. “
You are active in 44 countries, are there any new, alternative markets for you at all?
Of course, alternative markets are already developing, quite strongly especially in the Asian region: Indonesia, Thailand, and the Philippines – these are all markets that are developing. Then in South America, in the automotive sector Argentina – but of course we have neighboring locations where we can then deliver relatively easily to these countries. For us, globalization is complete. There’s just one thing I’m happy about: We planned a site in Russia in 2009. We pulled the ripcord there on the home stretch and decided against it. It would have been a bottomless pit for us, and it was exactly the right decision not to go into the country and the market, which is important today for the spare parts business and also for the vehicle trade, but is relatively insignificant as a location for vehicle production. Otherwise, however, we have a global set-up, that we are actually in all countries where our customers produce vehicles.
What does “completed globalization” mean internally for ElringKlinger, for the cooperation of the teams in the countries?
For us, the topic of digitalization is important. We are already relatively strong digital, but have now already created a separate area, which will in the future only take care of this issue. Because here, of course, things will become even more global. Machines and systems will communicate with each other, from Mexico to China to Germany. Tools will be networked with each other: A Mexican tool will communicate with a tool in our plant in Runkel near Limburg. That in itself will be a new push in globalization. We will also make our teams much more global. Two years of Corona have shown us that we can do a lot more virtually and digitally. This will lead to us becoming even more international in terms of personnel. People no longer have to move to another country every three or five years, but they will communicate with each other digitally more and more easily. Many of our customers’ projects today are also global in nature and have to be handled globally. A development engineer in California would like to have a contact person, and with a nine-hour time difference, we have to find a way to let people communicate with each other. For me, digitization also means globalization, especially in terms of personnel. Of course, we have to train people for this. Digital transformation means change for people. We have to take them with us. To this end, we have developed appropriate training programs and also created support programs – for young people whom we want to develop. Of course, these programs at ElringKlinger are set up totally globally.▪
“Digitization brings a new push of globalization.”