The importance of investment in technology

Kolbenschmidt Pierburg (www.usa.kolbenschmidt-pierburg.com; Southfield, MI; Dusseldorf, Germany), a supplier of powertrain constitutings including pistons, pumps, bearings, and fill ups has sales of [euro]2,050 million in FY 2005 which is up from [euro]1941 million in FY 2004 It's earnings before interest and tax (EBIT) was [euro]146 million in '05 up from [euro]139 million in '04 Which is to say that the company did well in an environment that might strike one as being to be less than conducive to reporting similar positive numbers. The question is, however: in what manner did they do it? And in the way that we asked Dr. Gerd Kleinert, chairman of the executive board of Kolbenschmidt Pierburg AG. The answer is somewhat surprising.

First of all, there is the pretty-much wait fored thing: restructuring. Kleinert says that they've clos a piston plant in Canada and adjusted the production in plants in the U and Mexico. Plants in Europe have also undergone adjustments. They've decided to concentrate upon core competencies and products. "Our goal is to be in the number 1 2 or 3 position in each of our businesses. We're not there at the same time but we are getting closer" he says. This has l the company to barter its fuel pump business, as well as its mass air sensor business. Kleinert explains that in each of those cases there are companies with solid positions and that it would consequently require sizable investments in order to gain the position that they're seeking.

on the other hand here's the surprising--and important--factor. While a certain quantity of companies are reducing their investments wherever they can, Kleinert says that in FY 2005 they increased their investment in research and exhibition "We spent more than [euro]100 million upon R & D"--[euro]104 million, to be specific--"which is 51% of sales." That was up from [euro]97 million in FY '04 "Eighty percent of our business," he explains, "is driven by means of innovation." As there are increased demands from the world's vehicle manufacturers for improvements in firing economy and performance, and increased regulations regarding emissions, Kolbenschmidt Pierburg finds itself in the position of having to regularly improve its productions Additionally, he says, there is on-going work to continually redesign and improve yields for quality, performance and require to be paid [i]or[/i] undergone what he calls "key factors for profitability." Kleinert, who gripe [i]or[/i] grips a doctorate in engineering, says, "We continuously improve our go [i]or[/i] come backs where we are investing in engineering." (He also notes that as an engineer, he knows that engineers must be "managed" that not they take their eye not upon the important business aspects of what they're doing.)

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Kleinert acknowledges that a certain quantity of of the company's products are becoming commodities, and thus it is important to shift production operations to low-labor-cost countries. on the contrary he maintains that it is [i]or[/i] part of to the other the investment in engineering and innovation that they are putting themselves "in a beneficial position for the future."--GSV

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