Providing machining systems for the automotive industry, the German company Grob operates globally with revenue in excess of $700 million. Grob do Brasil is the group’s second largest, and fastest growing division, and sales in the Brazilian market have reached an all-time high for 2012. Vice President of Sales and Projects, Christian Müller, explains to Reuben Ford how surviving the ups and downs of the industry requires intelligent solutions.
Riding the automotive industry rollercoaster has not been for the faint-hearted as the recent rises and falls of the world economy sent suppliers spinning round curves and turned sales upside down. No stranger to the nature of the market, Grob, one of the world’s leading producers of tooling machines, nonetheless found itself at the mercy of anxious consumers and trembling vehicle manufacturers.
Founded in Germany in 1933, the company has been present in Brazil for 55 years where its 28,000-square meter facility in industrial capital São Paulo, which employs 590, is testament to the group’s success. Manufacturing production systems, assembly lines and automation for gear boxes and vehicle engines, the plant has doubled growth projections in the last five months. “Around 80 percent of automobile producers purchase their machinery from us,” says Grob do Brasil’s Vice President of Sales and Projects, Christian Müller. With such an impressive market share, it is no surprise that Grob is the largest tooling solutions supplier in Latin America and clearly the market leader.
MOLDING TO THE MARKET
Grob do Brasil was inaugurated by the group in 1956 to satisfy the demand for machine and tooling created by the automobile boom. The history of the company in Brazil reflects the development of the head office in Germany; both began as small workshops and experienced solid growth, successfully jumping industry hurdles to achieve outstanding results. In the case of Grob do Brasil, the country’s track record of an erratic economy was excellent training for more recent obstacles. The economic history of the country obliged Grob do Brasil to develop creativity and competence to expand the national market. Today, the company designs and produces hundreds of different machines for the diverse sectors of the industry.
With the arrival of global sourcing, and demand for integrated suppliers, Grob do Brasil has become a global player, participating in large projects with the head offices in Germany and the US branch in Bluffton, Ohio. Supplying important clients such as Ford, Volkswagen, General Motors, FIAT and Peugeot, the company also acts directly on the foreign market.
“Our experience in Brazil has helped us accompany our clients through the economic crisis. The car industry is historically complicated and flexibility – adapting to the restraints of the market – is vital. When our customers suffer a depression, we do too, but our mission is to continue offering what they need and bounce back after downturns,” Müller explains.
When the industry swung into crisis in 2008, sales were totaling $106 million per annum and Grob do Brasil employed 700 staff. In 2009, in the midst of the difficulties, revenue fell to $90 million and dropped a further $12 million in 2010. “Our sales are always made one year in advance as automobile manufacturers prepare their production systems for the coming year: 2011 saw us well on the road to recovery with figures reaching $100 million and we already have record sales for 2012 of $120 million with a reduced staff of 590,” continues Müller.
The recovery shows the strength of the Brazilian company and in particular, the Brazilian market. Previously, 40 percent of production from Grob do Brasil was destined for overseas, while the remaining 60 percent of machines were purchased within the domestic market. For 2012 however, 100 percent of the tooling systems were sold in Brazil – a record for the company and a strong indication of the heavy investment in Brazilian manufacturing on the part of automobile producers. With specialists estimating that investment will double by the year 2020, Grob is growing to meet market potential.
The excellent performance of the domestic market is the perfect way to avoid the uncertainty of international sales and a fluctuating exchange rate. The increase in value of the Brazilian Real has pushed up the price of machines produced in the country, making them expensive for international clients.
The company has also minimized instability by establishing an internal program called Grob Production Systems. The project increases efficiency and productivity of internal processes, including specialized training of personnel that has had impressive results. “Our efforts have resulted in a 20 to 25 percent increase in productivity, which has supported the diversification of our markets, initiated as a means to reduce the risks involved in our industry,” Müller explains.
Watching the market for suitable opportunities has become second nature to Grob. The company not only provides machinery for the car industry but also for trucks and heavy goods vehicles, tractors and agricultural equipment. Grob also supplies machinery to Embraer: the Brazilian aerospace conglomerate that produces commercial, military, and executive aircraft and provides aeronautical services is the fourth-largest commercial aircraft company in the world. “We recognize the importance of partnerships, but also of the stand alone market, of realizing our strengths and offering the best to our clients,” continues Müller. Diversification is undertaken with care, observing the market and offering specific solutions to certain clients and regions.
“Unlike competitors we provide individual, intelligent solutions and not catalogue models. Our machines can be assembled to perform the exact service and process that the client requires,” Müller says. The company’s leading machining center is the G-Module; a modular structured machining center, available in three different sizes in single or twin-spindle machine versions, designed for deployment in series production in the automobile industry. Although the G-Module has become Grob’s flagship product, the company also makes transfer systems, special machines, assembly systems and hybrid solutions all of which have specific applications in the assembly and production of vehicles.
The machines use a combination of integral modular transfer systems with transfer lines that can be set flexibly at any height and can be expanded as required. Hybrid solutions allow fast changeover and optimum adaptability to changing production needs. “Our modern planning methods (Simultaneous Engineering) and planning tools (computer-assisted simulation) offer a high level of manufacturing effectiveness through equipment customization to meet individual machining requirements – everything can be achieved,” says Müller. In fact the cost-saving adaptability of the machines even often allows the changeover to another model.
“Each piece of machinery supplied is unique and cannot be copied, because we see our products as solutions to our clients’ problems and not just machines,” Müller clarifies. Everything from the degree of automation to the color of the machine can be decided together with the client and is a strong differential for Grob.
It is not only the products that have proven to be a success. Grob’s integrated business model means that the company can supply global clients from any of its three production plants in Germany, Brazil and the US. While Grob Germany is the group’s largest facility, grossing four times the annual revenue of Grob do Brasil and employing 2,300 staff, it is supported by its Brazilian division. Grob do Brasil supplies India, China and Europe, whose demand exceeded the European plant’s capacity.
The global model that has adapted so adequately to the needs of its clients has also taken national challenges in its stride. As well as the problems of a soaring exchange rate, the highly technical nature of manufacture at Grob demands a skilled work force, which was difficult to find in Brazil. Moreover the salaries required by such professionals exceed domestic norms and increase the importance of good decision making. “Inflation last year hit 4.5 percent, meaning that payroll costs increased by 9 percent for us – this is a situation that other countries have not had to face,” Müller explains.
Achieving success and overcoming difficulties in the face of what is known as the ‘Custo Brasil’ (Cost of Brazil), shows the excellent strategy and management of Grob do Brasil. Taxes that are 40 percent higher than in many countries have not deterred the company, which even runs to the aid of its other divisions. With a bright future ahead, Grob do Brasil has proven time and time again that its products, as well as its planning, are a matter of market intelligence.