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CEO Explains Why He Sold A German Soul To the Chinese
Wolf Richter www.testosteronepit.com www.amazon.com/author/wolfrichter
Putzmeister was a paragon of the German Mittelstand—family-owned companies with innovative technologies and high-quality manufacturing that become worldwide players in niche markets that they dominate. They’re at the core of the German export economy. But in early 2012, like so many other Mittelstand companies, it was acquired by a Chinese giant. And now, a year later, Putzmeister CEO Norbert Scheuch reveals just how impossible integration is, and how pessimistic he has become not only about Europe, but the rest of the world, particularly China.
The company was founded by Karl Schlecht in 1958. First product: an automated mortar machine, ideal for the post-World War II construction boom. Soon Putzmeister expanded into concrete pumps—truck-mounted equipment with articulated masts that can pump liquid concrete. Over time, it developed larger pumps with unique technologies and record setting performances. In the 1970s, it expanded into the rest of Europe; in the 1980s, into the US; in the 1990s, into Japan, China, Russia.... It had become a worldwide player. In 2012, it had about 3,000 employees, but only 1,100 in Germany.
Yet the company had been losing ground to a scrappy Chinese upstart, Sany, that grew in leaps and bounds during the construction boom in China to end up with 70,000 employees worldwide. Then Putzmeister slammed into the financial crisis: sales plummeted from €1 billion in 2008 to €440 million in 2009.
“I rarely experienced a business screeching to a halt in quite the same way,” said CEO Norbert Scheuch. Survival had become an issue. While sales picked up in 2010, it had trouble competing with Sany. So Scheuch quietly began shopping for a buyer, and found... Sany, which forked over €525 million. And Karl Schlecht, at 79, had found his exit.
When the deal was announced—shock! 700 employees gathered in front of the factory to protest the sale... to the Chinese, of all people. But Schlecht saw it differently. “We must come down from our arrogance,” he said. Meanwhile back at the Putzmeister plant in Shanghai, when employees found out that the company had been sold to the Chinese, they organized a general strike and shut the place down for 10 days.
CEO Scheuch, the only German board member of a Chinese company, admitted in an interview with Manager Magazin that the concrete pumps were “completely overlapping products.” So they separated them regionally, except in China, where they had a “two-brand policy.” They were vague hopes for synergies in product development and components. But there was “minimal” personnel exchange. “We tolerate only a very limited number of Chinese engineers, because we only have 180 engineers ourselves,” he said. And none of the German engineers were sent to China.
Sany had bought Putzmeister for three reasons: internationalization, brand reputation, and technology transfer, he said. The latter was about quality. The goal was to raise the quality of Sany components to Putzmeister standards so that Putzmeister could use them, while benefiting from lower manufacturing costs in China. To make that happen, Putzmeister was recruiting experts in Germany. “We know where we can find good people,” he said. And as Germans, they had easier access. They’d be sent to China “to advance processes and technologies there.”
What did Putzmeister learn from the Chinese? Scheuch dodged the question. “I don’t think such a discussion about similarities and learning from each other is appropriate.” Why? Because “there are huge differences in management, problem solving, and social structures” that could not be transferred. “We will never be able to turn a German company into a Chinese company, and vice versa. Nobody wants that anyway.” And integration would not be possible, he said. The differences were too large. So they’d limited themselves to a “strategic cooperation,” he said—and at the factory, nothing has changed.
But the industry was in trouble, even in China. In 2011, about 10,000 concrete pumps were sold worldwide, he said, of which 8,000 went to China—80%! In 2012, the rest of the world was recovering a little, and about 3,000 pumps were sold. But sales in China fell from 8,000 to 5,000—a 37% plunge.
To explain why the business was better in developing countries, he listed three parameters: growth of the population, growth of per-capita GDP, and growth of government indebtedness. If all three are lined up just right, the country becomes “an excellent breeding ground for our products.”
Europe had none of the parameters, and he saw “no good prospects.” The Americas were progressing, he said, but he didn’t “dare” give a forecast for the US. India was in a recession; though the population was growing, the other two parameters were not. And China had just gone through a 37% plunge.
So he did not have a scintilla of optimism for 2013. Growth? “I cannot say if it’s going to be 0% or 3%,” he said. The company would reduce temporary work and fixed-term employment in Germany this year, he said. “Globalization is carrying us away from Germany and Europe to other regions.”
For corporations that know how to leverage global tax systems, France offers a free ride. But as the government tries in a vain and desperate effort to make ends meet, it’s not only going after multinationals and their tax optimization schemes but also smaller companies that are gasping for air. Revenues from aggressive collections—“not far from blackmail,” an insider said—have jumped. A rare, and telling, area of growth in a morose economy. Read.... Finally A Glorious Growth Industry In France: Hounding Companies For Back Taxes and Penalties
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Isn't there an opportunity in here some where ? Exit Karl Schlecht, exit the chinese . . . next . . .
Putzmeister? yer gotta be a jokin...no wonder they have problem with a name like that!
It doesn't sound like Putzmeister is a going concern. It's outlived its usefulness.
This might mean concrete will be handled in the future the 'old fashioned' way.
As for Sany ... Chinese ... no doubt worthless junk that falls apart in a month ... made as cheaply as possible out of the cheapest materials ... like everything else made in the country ... it doesn't sound like China is a going concern.
It's outlived its usefulness.
the important message here is the admission that the company could not integrate with the chinese because of cultural differences as different societies manifested in business practices. it would be interesting to flesh those difficulties out in more detail.
the west is dead(except, maybe canada and australia),. it has been built out. china, india, asia ex japan, south america,and africa is where the future lies.
please-they have tried to be top dog before and it has always ended in failure-this time will be no different. whitey always wins.
the crackers have been around a very short time in the history of civilization despite a moment of localized success in rome taming the barbarians. even the south americans were more sophisticated then the cave dwelling europeans before they realized the knowledge known in asia already was useful.
asia will assume the throne of the world their population dictates is rightfully theirs.....thanks to the new globalization as opposed to the old globalization(the renaissance and colonialism)
given that you are a cretin when it cones to history, it's no surprise you make such pitiful predictions...
i almost pissed myself laughing when i read that
"asia will assume the throne of the world their population dictates is rightfully theirs....."
The spectacle of 14,000 dead pigs floating down a river in China doesn't portend well for a future world where China holds the throne.
White civilization has been the apex of human civilization.
Pretty sure those barbarians were Slavs and Germanics. Turns out the Mongols were actually multiethnic from the Volga, Ukraine, Turkey region. Not from 'Mongolia' at all. Hence why they couldn't find Karakorum or Genghis Khan's tomb there.
i figured i would run into someone who knew something. the khan brothers were real people with an effective recruiting program. my favorite quote attributed to one of them(probably not true) is, " you must have been very bad for your god to send someone like me".
anyway, the euro centric educated have a difficult time understanding the rest of world was much more sophisticated long before the "west". they have an even more difficult time reckoning their replacement as a simple arithmetic equation.
asians were so backwards before euros dragged them into modernity that they couldn't see the usefulness of things like microscopes.
breeding mindlessly is not sophisticated.
"700 employees gathered in front of the factory to protest the sale... to the Chinese, of all people. But Schlecht saw it differently. “We must come down from our arrogance,”"
AND
"Sany, which forked over €525 million. And Karl Schlecht, at 79, had found his exit."
Later, bitchez.
funny....the german employees could have saved 40% of their salaries for 20 years and bought the company themselves. they would then benefit (or not) from their own work......but they didnt nd now they think they 'own' part of the company. the old man sold the company which he owned and spent his money building.
They did invest 40% of their salaries, unfortunately the folks that they gave the 40% to invest in bought Cyprus bonds
it's too bad they lost their jobs-give them a little bit of a fucking break. I'm sure alot of them worked hard and took pride in their work-at least they produced a well made product and were not just fucking leeches like the vast majority that inhabit the US any more.
the germans were probably union and worked 30 hr weeks with benefits out the ass. they could have saved their money and taken the same risks as the founder BUT THEY DIDNT. they had zero risk. they were paid to work. they didnt 'deserve' anything more.
"were probably"-what a stupid blanket statement. and who said anything about "deserving" anything. the germans and europeans make better stuff-the chinese just copy it or rip it off and then do a piss-poor job at reproducing it (like the 3 Gorges dam when it was so totally fucked up they had to bring in round-eye engineers to finish it)-but since the ChiComs pay their slaves a $ a day they are "innovative businessmen" and "entrepeneurs"? fucking spare me the randian bullshit-the chinese will get fucked by the west like every time they try to be a world wide powerhouse
otto you ignorant slut...i dont give arats ass about the chinese. the german workers got exactly what they put into the company and that was nothing. they did a days work for a days pay and didnt own anything. the chinese have one thing over your germans, they are more successful as they bought the german out instead of the other way round.
i would say the chinese won and the germans get to go to belsen for a vacation...i hear that belsen is a gas.
Viewed in the context of the life cycle of a business this is to be expected. It now happens on a worldwide basis when it used to be limited to local or regional businesses. It is a painful process. People will loss jobs. Technology will move to where it is needed and used. I suspect that china over-bought based on recent sales. Reverse engineering would have moved the technology eventually. Anyone remember Japan and what they did in the 60's. History doesn't repeat but its sure does rhyme.
Simply put, a great article.
yes-too bad you'll only see it on ZH
too bad -Putzmeister concrete pumps are great pumps and they last forever-there are still 30 year old pumps around that run like they're new- and that is saying something with the wear and tear they get. they should make garbage like the Chinese,have it break and then sell some more garbage. or planned obsolescence like GM does now- or was that in the 50s? race ya to the bottom bitchez
Well run businesses do not just screech to a halt. Apparently the only arrogance that matters was Norbert's. May his employees - former employees - pay him in kind.
yes but it was HIS business-free to sell to whoever he wanted to. and it sounds like he fucked the chinese pretty good in the deal
He fucked the Chinese? He screwed the pooch. Surely you don't think that the numerous and massive failures of management are normal or acceptable, or that banksters and traitors should walk.
A weekend of hard bargaining -none of which will take place in the "Euromerikan Zone"* - and then we will see the new deal unfold. Greece(and the rest of ClubMed) is watching very closely the vice being closed upon their Cypriot kin...when beggars are no longer choosers, they become the prey of schmoozers...and the sionists have been schmoozing Greece very hard; as a bargaining chip with Turkey, as an asset as another client state like Georgia, Bulgaria, and Azerbaijan, and as a reminder to those stlll angling for cheap Iranian oil via the Suez...that the Med is a sionist sea.
Carrot and stick...but the Greeks remained unconvinced...so it's time to throw the Greek Cypriots to the lions, et encourager les autres. Germany's top-level mossad assets have been set loose to bark and bite, while the WH messenger boy has been sent home with a message to the US military...if you don't fight our wars for us, we will start one for you to fight...in your own country!
The bargaining? That's between Moscow, Ankara, Tel Aviv and Teheran...Turkey, while still going through the motions of listening to offers of accession to Europe, and more inducements from ZATO to play the enforcers in Syria, has looked hard at where exports have the most chance of increasing, and taken the measure of the players at the table. Turkey, Russia and Iran will hold the keys to Europe's energy imports...while allowing israel to continue to run the Arabs and north Africans. Southern Europe(and France) will be turned over to the sionists, the rest given a choice of following Germany East or sticking with a Merikan empire collapsing under the weight of domestic division and foreign entanglements.
Tel Aviv is content to see the Turks turn East, their role is complete. The Russians will have turned the tide of war away from their doorstep without having to spend a nickel...and the Iranians will be free to rebuilt their economy and have won their man Assad a reprieve. The Isrealis will tax farm their rump Eurozone and continue to build up their budding commercial prospects in the Far East, their investments in stolen Merikan technology and weaponry paying huge dividends.
Too late the Merikans will realize they've been bamboozled again...their country turned into a hellhole of factional warfare and pillage...just like the 1860s...it just took events in one small country to crystallize the grand vision of DEUTSCHE VERTEIDIGUNGS DIENST and the Sionist continuum which James Jesus Angleton realized on his deathbed he had betrayed his country to. Many Merikan Hebraics will come to feel the same pangs of remorse...far too late.
*was going to post this on another thread, but Wolfie has provided the perfect venue...once he stopped beating up on the southern neighbours, and returned to this kind of reporting, he became again another stellar reason that ZH is the only place to get the real spiel!
Putzmeister pumps? This is a gag, right?
Maybe they should switch to making penis pumps? China's a natural market with all their unmarried men.
Something tells me you have never been on a construction site.
These inside glimpses are very revealing, and useful. Thanks!
In other news.....man suspected of having bomb-making materials blows himself up....unconfirmed reports that he was a Cypriot with a broken GPS trying to make a withdrawl at Bank of Cyprus....
http://beforeitsnews.com/crime-all-stars/2013/03/suicide-bomber-blows-himself-up-in-pennsylvania-2446262.html
Very good perspective. What an advantage to be able to follow the business press in several languages!
Manager Mag: "How did the strike end?"
Scheuch: "We solved it the Chinese Way. We paid a compensation, and
we called the ring leaders on the carpet and scolded them by calling them outlaws and insisting that they stop the strike."
wow