Festo growth strategy confirmed by record sales

Global market for automation technology booming

Festo offers one-stop-shopping from Factory to Process Automation (PresseBox) ( Esslingen, )
The Festo Group posted its highest-ever sales figures in fiscal year 2011. Following on from a strong 2010, the company raised global sales by a further 18% to € 2.1 billion in 2011 (prior year: € 1.8 billion), thereby strengthening and expanding its financial independence as a family company. There was strong demand from customers in Germany (plus 19%) and Europe (plus 20%), as well as Asia (plus 15%) and the Americas (plus 14%). As manufacturing companies pulled out of the crisis, they sought to enhance the efficiency of their plant and machinery with the aid of new automation solutions supplied by Festo. Growth was also driven by customers in the BRIC nations, whose investments in competitive automation solutions was aimed at raising productivity and meeting international quality standards. Demand for Festo's energy-efficient solutions for green manufacturing and eco-friendly water/waste water solutions for towns and cities has never been stronger. Festo's strategic alignment with the Asian and American growth markets, the expansion of its Process Automation activities in the field of Metropolitan Solutions as well as its Electric Drives and Customer Solutions divisions, and the alignment of its global supply chain to ensure optimal market supplies in the world's growth regions are already paying off. The company's Didactic division also made encouraging progress (8% sales growth). Industrial training concepts supplied by Festo serve to alleviate the skilled labour shortage and are in strong demand from clients in fast-growing markets. Global headcount rose to 15,500 in 2011 (prior year: 14,600), of which 7,100 people (prior year: 6,800) were employed in Germany and 8,400 (prior year: 7,800) abroad. In 2011/2012, the company invested 125 million euros in the expansion of its global development, manufacturing and logistics network - approximately half of which involved facilities in Germany. The R+D ratio in Germany amounted to approximately 9%. Under the motto "1 Partner -10x Success", Festo will be presenting around 80 new products for safe, smart and energy-efficient production at the Hanover Fair 2012 (Main Stand D07, Hall 15), as well as eco-friendly solutions for towns and cities (Metropolitan Solutions section, Stand 23, Hall 26). The new products range from mechatronic motion solutions to bionics and future concepts for the working environment of the future. Following two record years, the Management Board expects a further increase in sales of 6- 7% in fiscal year 2012.

"Our order books are full. We already reached a very high sales level over the past few years and will continue to grow in 2012. Aggregate growth since 2009 has now reached sixty percent. An absolute record. The Euro crisis has actually increased the pressure on machine and equipment manufacturers to invest more in competitive automation solutions. This explains the strong demand in Europe and especially Germany. At the same time, we also see a rising need for automation technology in the BRIC states, and above all China. There is a clear trend here towards automated manufacturing processes, which will add further momentum to the growth in automation sales," stated Dr. Eberhard Veit, Chairman of the Management Board of Festo AG.

And he added: "The challenge is particularly great for the emerging markets. There is a lack of skilled labour and the level of training among staff varies widely. As the global market leader in industrial education and training, we are not only investing heavily in developing automation products but also in sustainable education systems - an approach which differentiates us from the competition and makes us unique. In addition, we are developing products which are intuitive to operate and which can be used easily by people all over the world in their respective work environment," stressed Dr. Veit.

Production in the region for the region: expansion of regional market supplies in growth markets, focusing on Asia and especially China

Festo is pursuing a twin-pillar strategy with a global product program "In Asia for Asia" and a rising proportion of value added in Europe. "We have been driving the expansion of our facilities in the world's growth markets, without which we would no longer be able to serve the global market. These foreign investments always have a positive impact on our facilities in Germany. In Europe, we can utilize our highly automated production and high economies of scale to produce individual modules which are subsequently adapted in the respective markets," explained Dr. Veit.

In 2011/2012, expansion activities will focus on Asia, and in particular China. "Our customers in Asia expect the same service and excellent deliveries as we are known for in Europe," stressed Dr. Veit and added: "In China, we are expanding our sales, production and logistics capacities. With 42 service centres in all regions of the country, a major factory in Jinan for regional market supplies and a sales company in Shanghai, we already serve some 13,000 international and Chinese clients."

Expansion of German facilities: high-tech in research, development and production

As part of its sustainable location strategy, the company's headquarters and various fields of technological expertise at its base in Esslingen, Germany, are to be developed into a high-tech research and development site over the coming years, while the central functions for the Festo Group as a whole are to be expanded.

"Our corporate strategy includes a massive expansion of future-oriented fields, such as systems and customised solutions designed by Festo, as well as electric drives and process automation. We want our high-tech site in Esslingen to provide the central functions which will support our targeted global growth. New work environments will be created in the future planned spaces, especially for our growing and complex project business. The new facilities will also enable additional laboratory space and more room for us to intensify our cooperation with universities and higher education institutes in the field of high-tech clusters and joint research projects," stated Dr. Veit.

The German Global Production Centres (GPC) will be expanded in the coming years to become highly automated, cutting-edge technology factories. At the GPC Rohrbach, the main plant for cylinder production, a new extension will enable the production of pneumatic drives for the company's growing Electric Drives business, as well as for its Process Automation segment. Manufacturing, assembly and logistics at the company's main base in Esslingen will be relocated to the nearby site in Scharnhausen. A new building complex will be created here with a new Technology Centre, new high-bay warehouse and highly innovative manufacturing spaces. "These investments will lay the foundation for cooperative technology and product development, state-of-the-art manufacturing and optimized processes. In turn, this will raise our efficiency and shorten our time-to-market," stressed Dr. Veit.

Outlook: huge demand for automation technology for efficient and resource-conserving processes in manufacturing companies and for mega-cities

"New technologies have to solve urgent problems. I only have to mention the key words "energy efficiency", "regenerative energy sources", "electro-mobility", "global food supply", "water shortage" and "efficient and resource-conserving processes". As a company, we are called upon to provide solutions. As a partner of the manufacturing industry, as well as towns and cities, we can make a major contribution by enabling sustainable processes. And the manufacturing of products must become increasingly flexible. We need the breathing adaptive factory in order to react faster and more flexibly to the extreme changes on the international markets of the future. And we must not forget the people involved. In other words, we will only be successful if we can perfectly coordinate technology, knowledge management, training and services," stated Dr. Veit and gave an outlook on the company's future growth:

"We expect global growth of 6 to 7%. We aim to achieve growth across all our international sites, and especially in Germany. In the coming years, Germany in particular will form the backbone for Europe's engineering industry. In addition, we intend to grow in the booming Asian markets. We regard ourselves as a provider of solutions in the entire field of Factory and Process Automation. We see opportunities, for example, in the field of metropolitan solutions with a main focus on water/waste water, as well as all sectors involved with global nutrition, e.g. food and beverages, but also biotech/pharma and of course automotive to mention just a few."
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