Strategy
The Demag Cranes Group’s strategy is geared to sustained profitable growth. Using set earnings targets, we continuously review external growth opportunities as well as potential for organic growth. This applies particularly for emerging markets.
With our Group-wide restructuring programme, we have created a basis for sustained growth. The measures introduced have been successfully implemented and many are already having an effect on earnings. We have reduced key cost items and thereby permanently boosted the competitiveness of the Demag Cranes Group.
As part of Group integration, key management functions were pooled within Demag Cranes AG. In addition to optimising costs, this simplified the Group’s decision-making and operational processes, making them more flexible and faster. Examples include management functions from Finances and Accounting, Human Resources, IT, Communication & Marketing and Corporate Strategy. Another important step in Group integration was the creation of the Executive Committee, which comprises the Management Board and executive vice presidents in charge of global research & development and engineering, production, product and contract management, services, sales and human resources. The committee pools strengths and allows the Group to exploit more quickly any market opportunities that arise. Responsibilities are clearly defined and teamwork is fostered by the very close cooperation among key personnel from different areas of competency.
As the chart below shows, our customers are at the heart of our activities. We serve them by optimising the interplay between the operating interfaces from three sides: firstly in the sales process through the Sales team, then through our Product and Contract Management team, in order to optimise handling of the order and, of course, through our Services team, who provide a range of services throughout the entire life cycle of the product. These three areas are direct interfaces with the customer and are constantly interacting with upstream and downstream functional areas, such as research, development, design and production.
Business Model: Customer Centricity
A further key feature of our strategy comprises stepping up sales activities in emerging markets, primarily in Asia. India and China in particular proved highly resilient throughout the economic and financial crisis. We are therefore investing in these target markets on a continuous basis; during the financial year, for example, we opened a new plant in Chakan, India. Since we are further enhancing our focus on customer needs around the world, we believe emerging markets especially offer great scope for extending the mid-segment product range. Local development teams in decentralised competence centres can offer products and applications that are precisely matched to market needs. In India, for example, we unveiled our first locally produced Process Crane in the past financial year: the crane is the result of an extremely productive and innovative collaboration between Indian and German engineers, who focused specifically on the requirements profile and procurement options of the Indian market. We already have a good standing in emerging markets through our regional subsidiaries in Brazil, Russia, India and China, as well as in the United Arab Emirates. This has been underscored in the last few years not least by the substantial rise in the share of Demag Cranes Group business transacted in emerging markets. In mature markets in particular, our strategy also focuses on expanding systems integration, i.e. generating added value for our customers by providing logistics services above and beyond the scope of the products we supply.
The Demag Cranes Group also continues to sustain its future focus in Port Technology with innovative products. One example of the continuous progress in automation technology is the Lift AGV (Automated Guided Vehicle), an automated container transporter with lifting equipment. In addition, the battery-powered AGV is one of our groundbreaking innovations with a focus on environmental sustainability. With the aim of continuously promoting innovation, Gottwald Port Technology GmbH (Gottwald), a subsidiary of Demag Cranes AG, along with REFU Elektronik GmbH and the Institute of Automotive Engineering (ika) of RWTH Aachen University, are participating in a consortium to research alternative drive systems for the heavy-load segment. As at 1 July 2010, the consortium has received confirmation of funding from the German Federal Ministry of Education and Research (BMBF) for a joint project to improve energy efficiency in heavy-load vehicles. The overall objective of the project is to research a system solution for energy-efficient drive trains in heavy-load industrial vehicles. In addition, Gottwald together with HHLA Container-Terminal Altenwerder GmbH (CTA), the Institute of Automotive Engineering (ika) of RWTH Aachen University and Institut für Energie- und Umweltforschung Heidelberg GmbH (ifeu), is involved in a consortium researching a battery-powered drive train for container transport vehicles.
Growth in service business is mainly driven by increasing coverage of our installed base, which is the largest in the world with more than 660,000 electric cranes and hoists worldwide. Based on our customer relationships, we aim to enable our customers to focus on their own core business and gain optimum benefits from their crane systems in all processes. We achieve this by taking on more functional responsibility and offering a wide range of services. In addition to greater coverage of our own installed base, this includes providing services cranes and hoists by third-party suppliers and augmenting our service portfolio to include services for crane-related products, such as load handling attachments. Emerging markets also offer enormous potential for service business.
Overall, the Demag Cranes Group aims to increase the proportion of total revenue generated in emerging markets to 40 percent in the medium term.
