By: Jim Johnson
October 24, 2013
DÜSSELDORF, GERMANY — Germany's place atop the plastics machinery industry both is obvious and understood around the world.
So the leadership at Frigel Firenze SpA (Hall 11/A60) the maker of process cooling equipment, knew it was just a matter of time before the company returned to that market.
Frigel is setting up shop with a new sales and service operation in Rheinfelden, Germany, with high hopes of capturing business not only in that country but also in Austria and Switzerland.
It's the second time Frigel has tried to enter the market and follows a three-year run from 2005-2008 when the company could not gain traction. But times are different now, CEO Duccio Dorin said during an interview at K 2013.
"We discovered soon that Germany is a big industry in plastic, but not an easy one," Dorin said. "They are very conservative. They are very, I would say also, I don't know if the term is right in English, suspicious in trying new technology. They want proven technology."
Frigel, which provides cooling systems for plastics machines, has used recent years to prove its products are sound and build brand awareness and relationships with German companies operating in other parts of the world. Those bonds, Dorin said, will now help the company gain a foothold in Germany.
The company believes its reputation has grown in recent years and the opportunity now exists to re-engage in Germany with an effort headed by Markus Fischer, who has 20 years of experience.
"We have sold to many German companies abroad. We have lots of happy German customers using our systems in many countries in the world," Dorin said. "It's not a matter of proving ourselves anymore, so things have changed."
Florence, Italy-based Frigel, however, understands that any real penetration into the German market requires a physical presence in the country.
"German customers, like anybody else as I would say, require somebody to talk to them, possibly in the same language, who can be there when they need it, close to them and be sure they can service their system in case there is any trouble," Dorin said. "Being here, it's committing ourselves to serve them. Not being here, it's always a softer approach and it doesn't work in Germany."
And the reasons for having a facility to service Germany, Austria and Switzerland are obvious, the company said.
"Lots of the key manufacturers of machines, plastics machinery, are based in these countries. And also mold makers. So the many new developments in plastic technology are born here," Dorin said.
Frigel, which also is showcasing a new prototype of its Microgel portable chiller and temperature control unit, does about $50 million in sales per year. About 40 percent of that total comes from Europe with another 20 percent from the United States, Canada and Mexico.
Latin America chips in with 20 percent and Asia brings in the remaining 20 percent, Dorin said. He estimated 85 percent of the company's sales are to the plastics industry.
Manufacturing takes place at two locations in Italy, one in Brazil and one in Thailand. The company also has a sales and service location in Elgin, Ill., that has space to one day add manufacturing.
"It's an economical situation, for the moment, manufacturing in Italy and exporting to the United States," Dorin said. "Obviously, there is a transportation cost. Luckily we do not have duties to pay on the equipment we export to the U.S."
Ultimately, the balance between customer service, transportation costs and lead time needed to fulfill U.S. orders from Italy will determine if the company expands operations in Elgin.