Free to invest in new technology: the use of aluminum and magnesium will steadily increase in...

"CONTINUOUS IMPROVEMENT" is a term much bandied about in automotive circles. However, improvement--continuous or otherwise--requires investment. Klaus Schneider, chief executive officer of KSM Castings in Germany speaks to Automotive Industries about recent changes to the group.

Automotive

Schneider: Let me begin by saying that we are proud of our Thyssen heritage. We do not have any loss of self-esteem as a result of this change of ownership. ThyssenKrupp faced the issue of having to concentrate on its core competency in the future. There is no denying that ThyssenKrupp is primarily a steel enterprise. There were clear indications from the concerning management that there were not adequate investment funds available for employee's ideas or suggestions on how growth and development could be furthered.

AI: Such a change is also associated with a number of open questions. How was the situation at your company?

Schneider: We had a number of misgivings about being sold off. Fortunately for us, the group of interested purchasers was narrowed down and, in the end, our candidate of choice got the best chance and took advantage of it: The Private Equity Investor Company Electra Partners Europe, whose German headquarters are in Frankfurt am Main.

AI: What has changed for you now that an investor group is at the helm?

Schneider: Most significantly, our activities are no longer restricted by investment funding limits. If we are successful in presenting calculable, economically feasible plans then we stand a very good chance of having investments approved for us. Today, we are confident that we will be able to continue to expand KSM Castings.

AI: In other words, with a new investor you will be able to enhance your activities on the market and your competitiveness?

Schneider: Our position is better today than it was before. KSM Castings is now technically part of the largest group of players on the market, like Honsel or Georg Fischer, who are our chief competitors in Europe.

AI: How is competition at the various company locations?

Schneider: We have operations in Hildesheim, Wuppertal, Radevormwald, Bendorf, Wernigerode and the Czech Republic. Our plant in the Czech Republic clearly contributes to the security of our locations in Germany, as we utilize significant synergy effects. There are groups of products that we cannot produce economically in Germany, but in the Czech Republic.

AI: It is often difficult to convince and align different locations to one common company philosophy, but this seems to function at KSM Castings.

Schneider: We work with technological teams from the various locations in our core business sector. The best foundry workers, the best machinists and the best maintenance personnel join to form teams that stand up to face new challenges and tackle new tasks. Without any dictate by business management, these groups meet regularly to discuss new developments and to form a common "think tank" of how certain processes and techniques--or even internal company processes--can be improved at the foundry.

AI; Do you consider competence development to be a continuous process?

Schneider: Most certainly! We will most likely not be able to continue making the same products in five years that we are manufacturing at present. This is because in five years we will have to stand up to meet new challenges and will then have to offer our customers new solutions. To put it more directly: KSM will have to present another class of expertise to customers in the year 2010.

(AI): And how do you intend to do this?

Schneider: For the benefit of our customers, we have intensive and close, simultaneous development with the customer. On the other hand we also have challenges to be met when it comes to technological competency, for example in materials development. We must be able to reshape casting treatment processes. If you look at the topic "CPC technique" it is clear that we are offering our customers castings for chassis with properties similar to those for forged parts which, of course, could be produced more economically.

AI: Where do you see the actual growth potential for KSM Castings?

Schneider: In my opinion the use of aluminum and magnesium will steadily increase in the sector of vehicle construction. Let's take the new VW Passat wheel mounts that we currently produce using the CPC technique. The predecessor was made of a different material. With our CPC process we achieve a 50% weight saving. We use the CPC technique to produce aluminum parts that used to be made of nodular cast iron, for example. On the basis of the experience we have gained to date we can continue to further develop the CPC method. We are also pressing ahead with the development of the alloys used in the CPC method. The benefits that we achieve through improved material properties can be passed on to provide further weight advantages where required. This allows us to enhance our competitiveness further. After all, in the end, expertise is our business, and that's exactly how it should stay!