Dr. Frank Schmuck of Pfisterer Sefag, an internationally leading manufacturer of network components in the field of low and medium voltage, about the import of the dialogue in times of economic crisis and the joint responsibility for the industrial location Europe.
Dr. Schmuck: If one believes the business forecasts, Europe and the USA have left the severest economic crisis for many decades behind them. Obviously, your industry could watch the events from a safe distance. Which causes do you consider to be responsible for the crisis and which conclusions do you draw for the future?
Dr. Schmuck: Unfortunately we were also affected by the economic crisis. Flourishing regions such as the Middle East suddenly acted very cautiously, or projects were postponed or newly put out to tender. Nevertheless, we had not to face any serious problems on site, because a sound product diversification took place within the context of a long-term strategic orientation, and because we have in addition to the very cyclical project business another important corporate pillar, the so-called OEM business (delivery of non-commodities). In 2009, for example, we were awarded the contract to supply the insulators for the new basic tunnel of the St. Gotthard (Translator's comment: "second road tunnel through this mountain pass in Switzerland). An important project for the European railway network and with total tunnel lengths of 152 km surely one of the most demanding ones.
Even in the year of the crisis Pfisterer Sefag continued the planned extension of the production location Malters, close to the city of Lucerne in Switzerland, in the context of the aforementioned strategic orientation. It was very helpful for us that the company Pfisterer as familiy-owned enterprise seeks not to raise outside funds, but to finance investments on their own. This principle holds good in these times, especially when examples in the media show that banks have become very reserved with the granting of credits for small and medium-sizes businesses (e.g. in Germany), even if the enterprise was "sound".
Let me add this point about the media: critical evaluation and reliable representation of facts are at any time required. However, one could partly get the impression that there was a "competition" in coverage, i. e. who is the one to present the most negative example? With all economic reasons of the crisis and the required measures to rectify it taken into account -the crisis was strongly continued in people's minds, or do you remember that a Chancellor ever had to assure the citizens of their savings being secure?
Many persons concerned and observers criticized the focusing on mass, output and increase in productivity. Where do you see the failures of the past and which consequences do you expect for the European industries?
 Dr. Schmuck: A clear recipe for every line of business does not exist. Let us take the automotive industry. Here, the Japanese showed us in the eighties how to realize through mass production a level of prices to which the premium suppliers in Europe were not able to find a response for a long time. The Asian car manufacturers only offered cars at that time which were both low-priced and equipped with innovative elements, such as air conditioning, electric window lift or hi-fi system. Today's situation: the consumer can choose, also among the European premium suppliers. Standardization concepts are fine, if the products become less expensive thereby (e. g. platform philosophy of the automotive industry).
It is decisive that an increase in productivity is not to the detriment of quality - an "as good as necessary" is in case of long-lived products (nowadays we are talking about 50 years for insulators) an approach that may lead to a sub-dimensioning, because all contributory factors are not foreseeable and the "necessary" can hardly be defined with sufficiently technical security. Thus we are back to the industry of insulator production: due to the long history of insulators, the interchangeability had to be guaranteed in case of a change of technology, so that a high standardization level is given within the scope of international standards. In the global project business and its complex processes, such as design release, bank guarantees, etc., delivery times of as much as 3, 4 or 6 months are customary. In the OEM-business the trend is going to be an "in-time", i.e. delivery dates between 4 and 8 weeks. In the light of this product mix, a combination of sufficient production capacity with corresponding stock-keeping of the standard components or a production process with buffer is required.
Over the past few months DESMA has promoted more partnership and a joint chances management in its dialogue campaign 'Bold&Modest'. Instead of going on holiday or making dumping prices, networked solutions were suggested and production diversification was discussed with customers. Which impression did these messages leave on you? The impression of strength or rather of weakness?
Dr. Schmuck: Strength, definitely. In a phase where moaning and bad forecasts (q. v. covering) were"hip", a medium-sized company suddenly comes along with a totally different tenor: "Yes, there is something going on, which is also a problem for us -but we confront it and we will persist". That was like the famous "solid rock". This positive message had a very constructive effect on my team and colleagues. The ‚Smiley' set an optical point of good feeling.
Some voices are talking about a change in such a way that the crisis would entail market-cleanings and centralizations what on the other hand may lead to the dissolution of supply chains and to a loss of know-how. Do you see a joint responsibility for the industrial location Europe, between demanders and suppliers?
Dr. Schmuck: Nobody can evade the globalization, even if the rules are interpreted very differently. Example: the conduct of the emerging economies during the last climate summit. Another example is the handling with know-how: certain markets become only accessible, when, apart from the actual product, the know-how to produce locally is sold as well. With this knowledge grown over decades in Europe on account of much engineering commitment, and when this advantage is given up in favor of low wages and to the detriment of the environment, as it is often reported, this shows facets of a pseudo competition and is not fair toward the industrial location Europe. These examples do not claim completeness, but elucidate that we have a joint responsibility for the industrial location, for our acquired knowledge and the environment.
The European companies, not only the small and medium-sized ones but also the global players, have a big advantage in their common language and culture identity. This is often underrated, since it is an intangible quantity. Another benefit, as it seems to us, is the procurement of complex subassemblies within a relatively short distance to the supplier resp. to his know-how providers, because this enables short response times. The value of a production machine or a subassembly does not only consist of the supply price, but also of the working life and the time within which spares and service team are placed at disposal, if required. From the perspective of a total cost statement, a machine being by 50 % less expensive is very attractive, however, when it fails and can be commissioned again after 2 weeks only, the saving is quickly compensated, the negative effect on customers in case of delays in deliveries not considered.
Is there something you are missing in the moving closer together of the participants within a supply chain? More fellowship? More being down-to-earth? More ideas? More service? More know-how transfer?
 Dr. Schmuck: These are of course rather emotional factors. First of all, it is about rendering a real performance as per specifications, order, etc. At the same time, it is also about mutual esteem, exchange, communication. This can of course happen while having a meal together.
Well, a human being, as everybody knows, is not only made up of explicit factors, such as utility, efficiency and rationality, but also more essentially of implicit factors, such as empathy ,intuition and imagination. How do these factors reappear in your work?
Dr. Schmuck: Mutual confidence is an important factor in our concrete cooperation. At our location we developed an in-house innovative manufacturing method and our suppliers could of course disclose this knowledge to our competitors - violations of secrecy agreements are often hard to prove in lawsuits. Here, mutual trust, developed over many years, plays a vital role which has a good basis along with above culture identity.
What must happen for the crisis to become a positive learning success for all parties concerned?
Dr. Schmuck: The experiences made are surely very complex and have to be appraised differently from industry to industry as far as the need for action is concerned. If looking at the USA where the economic crisis started due to a system collapse in credit granting, the simple rule, not to live beyond one's means, is still correct. To what extent there will be better rules and controls in the international banking system (e.g. objectiveness of rating agencies, competences of the supervisory bodies (the BaFin* in Germany, etc.)), I feel quite sceptical about it. Concerning Pfisterer Sefag, our ambitious goal was, as described above, to realize investments through owner's equity, an important implemented vision that has proved successful especially in these challenging times.
*BaFIn: Federal Institute for Financial Services Supervision
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