Creating
Impact

One of the fundamental concepts in philosophy is that every effect has a cause. The principle that nothing happens without a reason also holds true for ElringKlinger’s SHAPE30 strategy. The latter represents the company’s response to the challenges of transformation and changing mobility needs. What exactly do the five success factors entail? How are they embedded within the Group? And, which direction does ElringKlinger want to take in pursuing this strategy?

Mr. Jessulat, mobility is all about movement. How do you get around?

Sometimes on foot, sometimes by train, and occasionally by plane. But if you are referring to my car, then fully electric with a vehicle that features our cell contacting system. The drive technology is impressive, and thanks to the state-of-the-art 800V system, charging times are very short.

There is currently fervent debate about postponing the ban on combustion engines. Conventional drive technologies appear to be on the ascendancy again. Is the carbon-neutral drive destined for irrelevance in the near future?

You have to take a more differentiated view of that. Debate is only centered on the pace of transformation. A postponement does not mean a 180-degree turn, but it would give the automotive industry more time. Fundamentally, however, the trend towards electromobility remains intact.

How is ElringKlinger facing up to this transformation?

ElringKlinger was an early mover in gearing itself up for new drive technologies. We have been involved in fuel cell technology for over two decades and have been a series supplier of cell contacting systems for more than ten years. Products from our Lightweighting/Elastomer Technology, Metal Sealing Systems & Drivetrain Components, and Metal Forming & Assembly Technology business units have featured in all-electric vehicles for some time now. This provides us with a broad product portfolio in the field of electromobility. In the event of a slowdown in the pace of transformation, we will continue to leverage our strong market position in the traditional areas of business.

What are your next steps in the field of electromobility? How are you preparing ElringKlinger for the future?

We have laid a solid foundation for the transformation of the Group in recent years. Production relating to two major orders for cell contacting systems is ramping up at our E-Mobility site in Neuffen. We are currently building a Battery Hub for the Americas region in South Carolina. Production of cell contacting systems is also set to commence in Asia in the near future. At the same time, EKPO is taking a global approach with its fuel cell technology. And yet these steps are not enough to ensure that we will still be competitive in 2030.

Does that mean transformation at ElringKlinger will be going even deeper?

Yes, we need to hone the Group’s profile and position it for the future in a targeted manner.

... “targeted” means what exactly?

... that we take an all-embracing approach with regard to the Group’s structure and portfolio and keep our sights firmly set on our goal. It is essential that we increase the Group’s profitability in order to be able to operate flexibly at all times in 2030 too. Until then, the automotive industry will continue on a path of significant transition. This is apparent even today when you look at the new players within the market and the way in which the key automotive regions are developing.

» In applying our SHAPE30 Group strategy, we intend to follow a clearly defined path through the profound transformation of the industry. «
Thomas Jessulat, CEO ElringKlinger

How do you intend to hone the Group’s profile?

Our SHAPE30 Group strategy provides the framework for this. In applying it, we intend to follow a clearly defined path through the profound transformation of the industry. We will be analyzing the markets and using the findings to evaluate the future viability of our product groups. This forms the basis for decision-making with regard to our site strategy.

The divestment of the two plants in Sevelen and Buford serves as an example of such a decision-making process. The same applies to the decision to no longer pursue our system business for electric drive units. The discontinuation of operations at the plants in Thale and Fremont also falls into this category. In addition, we have conducted a strategic realignment of the Metal Forming & Assembly Technology business unit.

With regard to these measures, it should be noted that the emphasis is on profitable product groups and business units. We are withdrawing from loss-making activities, driven by our focus on the goal of improving our financial metrics.

Product Transformation

The transformation is already in full swing. We addressed the mega trends at an early stage. Our solutions are focused on delivering added value for customers. Based on our all-embracing strategic approach, we analyze the markets, review our product groups with regard to their future viability, and draw conclusions relating to our structure and our site strategy.

Does this also mean that you will be taking further steps?

Against the backdrop of industry transformation, it is imperative that we are able to adapt whenever necessary. Facing this process of profound change, we need to stay determined in the pursuit of our chosen path. We are committed to analyzing and reviewing the situation on an ongoing basis and will take further measures if necessary. Always with a focus on sustainability and profitability.

What do you envisage for ElringKlinger in 2030?

In 2030, ElringKlinger will be a focused technology group with key products for mobility, built on our expertise and tailored to the needs of our customers. In 2030, we will generate more than 50% of our revenue with products beyond the combustion engine, having ramped up our major series production projects. Our strong market position relating to traditional products will form the backbone of this transformation. Our financial metrics will have improved compared to today’s figures, and the Group will be able to react flexibly to requirements. ElringKlinger will be more sustainable and more digital when it comes to its positioning. And our corporate culture provides the foundation needed so that everyone can enjoy working for ElringKlinger and perform at the highest level within the Group.

Sustainability

Sustainability is part of ElringKlinger’s DNA. The company’s products help to reduce carbon emissions. The social dimension can be traced back to company founder Paul Lechler, who donated part of his profits for charitable purposes as early as the 19th century. We also consider transparent corporate governance to be a fundamental principle. ElringKlinger is committed to safeguarding its competitiveness through sustainable positioning and action.

What do you mean by sustainable positioning?

Well, in recent years we have brought together the Group’s various sustainable activities under one roof and developed a sustainability strategy. Guided by our purpose statement, we intend to safeguard our competitiveness through sustainable positioning. This starts with the products: not only should they contribute to sustainable mobility, but they should also be manufactured as sustainably as possible. In this context, both raw materials and suppliers play an important role, also when it comes to determining as reliably as possible and improving our product carbon footprint, i.e., ultimately the CO₂ emissions of our products. We need that for ourselves. But we also need it for our customers so that they can drive forward their decarbonization efforts.

Alongside environmental indicators, social aspects such as respect for human rights, fair wages, and the absence of child labor are also important aspects within the value chain. These are points that would appear to be self-evident to us in Europe, but this is not always the case.

That’s true. Sustainability covers not only environmental issues but also the aspects of social responsibility and transparent corporate governance.

Exactly. ElringKlinger plays a particularly active role when it comes to social issues. In Mexico, for example, we have a team of volunteers and regular fundraising campaigns for socially disadvantaged people. In China, India, and South Korea, employees are committed to helping those suffering from hearing loss. At the Group headquarters in Dettingen, employees took part in the “Sternenwunsch” campaign to fulfill the Christmas wishes of children from families with limited financial resources. These initiatives are all very different in nature and reflect the philosophy of our company founder Paul Lechler. He had made an agreement with his father in the 19th century to donate part of his profits to charity. This agreement lives on to this very day through the Lechler Stiftung, a charitable trust that uses part of ElringKlinger’s profits for social causes. As you can see, sustainability is an integral part of ElringKlinger’s DNA.

ElringKlinger tritt mit dem Anlauf von Großserienaufträgen in einen strategischen Wachstumszyklus
ein und strebt an, im Jahr 2030 mehr als 50% des Umsatzes mit Produkten jenseits des Verbrennungsmotors zu erzielen.

That is quite impressive. In addition to sustainability as a success factor, you also mentioned the success factor of digital transformation. What is the approach here?

Digital transformation is a key factor in making us fit for the future and at the same time fulfilling our vision of being the preferred partner to our customers. After all, our customers want to be able to trace their products so that they have a full understanding of their value chain at all times. This “traceability” requirement calls for comprehensive digitalization in production; the “digital twin” of our products is just as much a goal as the “digital factory” itself. But the digital world is not just of relevance in production. It is also imperative that we set up our processes as a whole in such a way that they are effective and time-efficient. In doing so, we can create additional scope for other tasks, such as the pursuit of innovative product ideas.

Performance &
Process Excellence

ElringKlinger structures its processes in such a way as to ensure they are stable, reliable, and transparent. This involves thinking in end-to-end processes – holistically and across departmental boundaries. A system of key metrics was established to assess the processes in respect of progress, maturity, and success. Optimized processes allow us to achieve the best possible performance and offer our customers significant added value through enhanced productivity.

That sounds like a far-reaching transformation. How do digitalization and processes interact?

Processes are central issues. We have experienced strong growth over the past twenty years, with revenue more than tripling since 2005. At the same time, we have become more global in the way we position ourselves, with a broader product portfolio. In addition, we have seen considerable advances in technology over the last two decades. It’s easy to forget, but smartphones, for example, didn’t really catch on until 2007. The world has evolved rapidly since then. Just think about all the things we do with our smartphones today.

If you take these three factors together – growth, breadth of portfolio, and technical capabilities – it becomes obvious that the Group has to work differently today than it did in the past. It simply wouldn’t be successful otherwise. We will have to take this approach further so that the way we work in 2030 is still in line with the state of the art. For our benefit and, above all, for the benefit of our customers.

Digital Transformation

Digitalization allows us to establish effective processes, which also includes the aspect of time and resource efficiency. ElringKlinger is building a system landscape via digital platforms in order to manage processes even more effectively on the basis of real-time and user-oriented information and to react even faster to market changes. The associated efficiency gains create additional scope for team members to engage in other value-creating activities.

And what will that look like?

In very abstract terms, we have to describe in processes what we do and where the responsibility lies from a functional perspective. Processes must never be person-dependent. We have to ensure that these processes are stable, robust, and reliable. We have defined metrics to determine how stable they are and manage them accordingly. We have already come a long way in that respect. All of this is part of our “Process Excellence @ ElringKlinger” initiative, or PEEK for short. In this context, we have also established four end-to-end processes that we must always master across all units in order to ensure success in development and production. All of this feeds into our EKOS operating system, which is undergoing continuous refinement. One of the core elements of EKOS is our focus on stakeholder satisfaction – customer satisfaction but also staff and shareholder satisfaction. This gets to the heart of SHAPE30: being a preferred partner, embracing a progressive corporate culture and enhancing profitability in order to be able to act flexibly at all times.

Corporate Culture

A progressive corporate culture that is receptive to change and at the same time target- and values-driven forms the basis for the further transformation of ElringKlinger. This is based on a value system of Trust & Reliability, Passion & Team Spirit, Integrity, Sustainability, Innovation, and a Focus on the essentials. Among the cornerstones of success are entrepreneurial thinking, individual commitment, and a constructive feedback and failure culture.

What do you mean by a progressive corporate culture?

First and foremost, you need orientation. Everyone in the Group has to understand our purpose; it’s about “the reason why”: why does the company exist? Then, it is important that the Group has answers to the “what” and “how”: What vision do I want to achieve and how? Closely linked to this is a framework of values that the Group has to embrace with every fiber of its being. We have worked hard on this issue.

Can you give us a few details?

Our corporate purpose “Pioneering Innovative Technologies for a Sustainable Future” captures exactly what I described with regard to our focus on technology and sustainability. Our vision “The Preferred Partner in Driving Innovative Technologies” expresses our aspirations in the area of customer centricity, but not only that. We want to be the “preferred partner” from both an internal and an external perspective. This also means being an attractive and good employer – where people enjoy engaging with each other. All of this is implemented with the help of our success factors, the idea being to shape and mold the Group according to the standards set out therein. Progressive corporate culture refers to the working environment, leadership, daily motivation, team cohesion, honest communication, an appreciative failure culture, transparent decision-making, and a wide range of personal development opportunities.

ElringKlinger’s roadmap is in place then. A final question: What do you expect from 2025?

2025 will not be an easy year. The fundamentals are extremely challenging – both economically and politically, in all regions of the world. At the same time, our industry is in transition, which means that we have to adapt to a wide range of changes. Against this backdrop, we will take a determined approach to further implementing our SHAPE30 Group strategy in 2025.

» We need to hone the Group’s profile and position it for the future in a targeted manner. «
Thomas Jessulat, CEO ElringKlinger