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Michael Schwarzkopf – Plansee's Leader

At a MPIF Fall Management Conference in Puerto Rico, (from left to right) Richard Scheithauer, OSRAM Sylvania Products Inc., Pankaj Khare, Kennametal Inc. Michael Schwarzkopf and Egon Okorn, Schwarzkopf Technologies Corp.

Last Fall Michael Schwarzkopf was invited to give the first keynote address at a MPIF management meeting in Puerto Rico. His grandfather and founder of the company, Paul Schwarzkopf was a brilliant technologist and an entrepreneur – a rare combination. Before Michael took the helm of the company, the company had a reputation as a great technically oriented refractory metals company with their emphasis on research and technology. Since he became chairman he has guided his company to improve its global position while maximizing its technology, manufacturing, marketing and business strengths. Through strategic mergers, acquisitions, joint ventures and strategic capital and R&D expenditures, Plansee has strengthened its’ manufacturing and marketing position in a tough economic environment. By so doing, Michael Schwarzkopf has positioned the company to be very successful as the global economic conditions strengthen.

Peter Johnson, MPIF, James Trombino, MPIF and Michael Schwarzkopf

The magnificent mountains surrounding Reutte, Austria where PLANSEE is located

Michael received his degree in 1984 in mechanical engineering and materials science from ETH Zurich, Switzerland. From 1985 to 1987 he attended Max-Planck-Institute for Material Science, Germany and did a Thesis on cemented carbides. He received his PhD. from Montanuniversität (mining university) Leoben, Austria. His education gave him an excellent academic and technical background that would enable him to make wise technical and business decisions effecting Plansee’s direction and growth. From 1988 he was involved in product development and then served as manager for business development at Sinterstahl. He received excellent experience and strengthened his business skills when Plansee acquired Sintermex, S. C.V. in Mexico and where he and his family lived while he was its Managing Director for two years. He then became a Member of the Executive Board, responsible for Operations and in 1996 became Chairman of the Executive Board of the PLANSEE-Group.

Two main production plants are located in Reutte, Austria – Plansee AG for refractory metals products and Ceratizit Austria GmbH for cemented carbide products, employing about 2.000 people in total. In Reutte the Plansee Seminar is held every 4 years. The next Plansee Seminar will be in May of 2005. It is the best technical meeting on refractory metals and hard materials.

A photo taken of engineers, scientists and businessmen talking in front of the meeting place at the last Plansee Seminar in 2001. I would strongly recommend taking your family with you to this great meeting and wonderful location in Reutte, Austria.

Today the Plansee group of companies consists of three divisions, the largest one being CERATIZIT focusing on cemented carbides and tools for metal cutting and for industrial wear applications.

CERATIZIT total sales are approx. 400 M€ with 3.500 employees worldwide. The important markets served are e.g. general engineering industry or the wood and stone industry; Plansee owns 50% of the CERATIZIT group.

The second largest division is High Performance Materials with the material groups refractory metals, composite materials, Cr-alloys and intermetallics with sales of approx. 300 M€, serving with 2.000 employees worldwide e.g. the lighting, electronic/semiconductor, medical, power engineering and coating industry.

The third largest division is Sinterstahl, with sales of more than 100 M€ and 800 employees, focused on classical PM steel products for the automotive and automotive supplier industry as well as TiAl components for e.g. Formula 1.

Michael said that there are three important competences that link these businesses together. “They are materials, technologies and markets. First of all is the knowledge about high performance materials, second the necessary technologies to transform the materials into customer specific products – using of course powder metallurgy but more and more additional technologies have been added to satisfy our customers needs and last but not least is the understanding of the applications at our customers and through close cooperation get to know their future needs.”

Plansee`s biggest markets are automotive, electronics/semiconductor, engineering industry, wood and stone industry, lighting, medical systems and power engineering and they account for 80 % of total worldwide sales.

Michael said “we serve our customers by a worldwide network of 50 production – and sales companies. Over the last ten years Plansee doubled its worldwide presence in terms of locations. Today we have 10 legal entities and even more locations in Asia (5 Japan, 2 India, 1 mainland China, 1 Taiwan, 1 in Hong Kong). In Europe we are present in all-important countries as Austria, Germany, Luxembourg, France, Italy, UK, Spain and even in Bulgaria. Within the last 12 months Plansee increased its US presence from 1 to 5 companies. Our total sales today in the US are approx. 100 M$. Plansee has production facilities in all 3 divisions in the US.

The goal is clearly defined: to achieve a leading market position through profitable growth in defined business areas. Three remarks: leading market position means #1, #2 or #3; profitable growth means sales and profit growth, and the third remark is on defined business segments.

Our business segment strategy is a focused worldwide strategy in defined business areas, where we believe we can achieve profitable growth. This means we are not going global with all 50 segments! Our strategy is supported by continuous investments in machinery, processes or technologies as well as investments in our employees.

Strategies realized either by the support of our regional sales companies, by a local production site, through acquisition, cooperation or rather seldom by a merger.”

So far this strategy has been very successful. “Over the last five fiscal years, market sales – representing our worldwide market presence - grew profitable on an average rate of 16% annually, from 395 M€ in the year 1998/99 to 720 M€ in 2002/03 and we expect further growth this fiscal year too. In the last fiscal year 2002/03 75 % of our sales derived from Europe, 12% from Americas and 13% from Asia.”

Some examples of their internationalization strategies are:

The production Greenfield in Asturias in 1996, a focus factory as a typical center of excellence for synchronizer hubs for manual transmissions. Today they employ 100 people. Their plan is to double production over the next years. Start of production is April 2004.

After the acquisition of Polmetasa, a PM company in Mondragon, Basque country – also in the north of Spain, in 1991 they focused on the production of shock absorber parts. Today Polmetasa is their Center of Excellence within the Sinterstahl group for shock absorber parts, employing more than 200 people. With the expansion to the US they mirrored existing production lines / technologies to guarantee a quick and professional start-up at the new site near State College, Pennsylvania. SOP at SSC was in September 2003 Initially they will focus on shock absorber parts, with the aim of bringing in more local production of focus products.

Michael said, “Our second new activity in the US was the acquisition of Polese Company in San Diego, Ca early this year. Polese is a leading company in the field of heat spreaders and packages, one of the business segments, for which we see attractive growth opportunities in future.

    Our reasons for the acquisition were:
  • Achieving the critical mass in an important business segment
  • Excellent market position in the US
  • Good timing, as the semiconductor market was in turbulences
  • Frank Polese, the President and CEO of Polese, is heading this world wide active business segment for Plansee from San Diego.”

He also stated that another business segment, which developed quite substantially over the last few years, has been the field of sputtering targets for different coating applications as e.g. LCD screens, hard coating, LAC etc. To support their customers in Japan and SEA they set up – together with a Japanese partner – a small bonding shop near Tokyo airport to guarantee quick supply for finished and bonded targets.

“In this case internationalization means higher value added products, differentiation and improving customer service”.

Michael spoke about Plansee’s most important merger. “If you can’t beat them, join them. The biggest impact on Plansee and hopefully a little bit for the cemented carbide world has been the merger of Plansee Tizit and Cerametal end of 2002. It was a 50/50 merger of equals of two privately held enterprises, both having a similar cultural background. Plansee has a long experience with 50/50 joint ventures. For more than 40 years our Sinterstahl business was shared on equal basis with our German partner Thyssen Krupp Automotive.”

Michael also said, “Beside our focused internationalization strategy the process of continuous improvements plays a key role in supporting our core products, technologies and processes as well as the development of new products, new technologies and processes. Over the last five years Plansee has spent between 60 and almost 90 M€ per year or in average 13% of sales in capital expenditure as well as product and technology innovation.”

They have also made large capital investments in their new production plant for Mo and W round products, a clear capacity and productivity investment to stay competitive in the field of RM products. The second significant investment was realized in the carbide powder plant, changing from acetone to water spraying, besides important ecological and safety aspects a capacity and productivity (process stabilization) increase was achieved.

Securing our future through new products is definitely another aspect of our strategy, e.g. a new multi functional tool for turning, milling and grooving for complex part structures, this innovation was presented at the EMO fair in Milan end of October 2003.

Michael said, “The third part of our strategy Plansee always has put a focus on is its workforce. We believe that the investment in human resources is a key factor for our success. We believe that if we want to stay in future an attractive, modern employer for our people we need e.g. high ethical standards and accepted corporate values, further lead an open communication process on our strategy and goals, allow entrepreneurial freedom, offer clear career paths for our young talents / performers by providing international personnel development programs and last but not least assure a market driven remuneration. Aspects we at Plansee take very seriously and consequently we try to improve in our process of becoming a more and more international employer.”

“One of the biggest challenges we face today is the acceleration of globalisation, which means that if we want to play the global game we have to manage more and more internationalization projects at the same time. The last fiscal year was probably an exceptionally one for Plansee, but in total we initiated or realized 8 different projects at the same time.”

So far Plansee has been very successful with the implementation of its strategy. He said, “The world is changing so rapidly we constantly have to adapt to new global challenges but also global risks.”

Plansee has also contributed to the new 25 Euro coin. In the framework of the 150-year anniversary of the Austrian “Semmeringbahn” railway, the Austrian Mint issued a collector’s coin with a nominal value amounting to 25 Euro. This new bimetal coin consists of a silver outer ring and a green niobium “core“ which was manufactured by the PLANSEE AG companies in Reutte and Liezen (Austria). Anodic oxidation provides the gray shimmering niobium with a thin oxide layer even before it is bonded with the silver ring. Through light refraction interference colors result, which give the metal its green color. After joining the two metals, coining is realized at the Austrian mint. The coin is a legal means of payment in the Republic of Austria.

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