Behind every Krauss-Maffei, Van Dorn Demag, Netstal, Demag Ergotech and Billion injection press, and every Berstorff compounding extruder sold at K'98, looms the $1.37 billion Mannesmann Plastics Machinery AG.
The question in Dusseldorf, Germany: Will the 9-month-old holding company be a gentle, unobtrusive giant or a steamroller, blurring the lines between its member firms?
Wolfgang Vogl, chairman of Mannesmann Plastics Machinery, said most of those types of questions have come from competitors and the trade press, not customers, since MPM was established on Jan. 1.
``Many people thought the founding of MPM would be a big bang,'' Vogl said. ``It's not a big bang. Instead, it's hundreds of small decisions.''
Clearly, MPM aims to be a quiet force. The holding company was formed after nearly a decade of consolidation in the plastics equipment sector by Mannesmann AG, the huge German industrial group. In 1993, Mannesmann bought the second-largest U.S. injection press manufacturer, Van Dorn Plastic Machinery Co. But the biggest acquisition, Krauss-Maffei, came more slowly. Mannesmann started buying shares of Krauss-Maffei AG in 1989. After steadily increasing its stake, in 1996, Mannesmann reached 100 percent ownership of Krauss-Maffei — and its two injection press holdings, Netstal-Maschinen AG of Switzerland and Billion SA of France.
All along, executives of the separate machinery firms insisted they would remain fully autonomous. Fierce competition would remain, they said.
Then suddenly, last November, Mannesmann AG announced it would bundle all six companies under a single umbrella called Mannesmann Plastics Machinery. Eyebrows raised at the thought of a single company — the biggest for plastics machinery in the world — with $1.37 billion in sales and 5,400 employees.
To top it off, Vogl, the man tapped to run it, was largely unknown to the global plastics industry.
Vogl, 54, is a veteran executive whose background includes a stint as project manager at Krauss-Maffei AG's mass-transit business, making railroad cars. Later, he ran the Mannesmann Dematic materials-handling group. In between, he spent three years at Berlin blow molding machine maker Bekum Maschinenfabriken GmbH, as managing director and sales manager. Bekum, and a stint in K-M calendering lines early in his career, are his only two plastics jobs.
Vogl outlined MPM's plans in a recent telephone interview from his office in Munich, Germany. He maintains MPM companies can have it both ways, remaining independent, keeping proprietary information private, while working together to reduce costs. The customer will not care as long as each company, be it Van Dorn Demag or Billion, offers sound technology at a fair price, he said.
Vogl has compared MPM to an automaker using many of the same parts, and sharing some tech- nology among different models.
``We will still compete,'' he said. ``The idea is we have six companies with total sales volume of 2.3 billion [deutsche] marks. Eighty percent of the sales volume is injection molding, with the five major players. These companies have separate programs which are in certain machines competitive, especially in the range of 100-400 tons, for example. And this will remain as it is. There will be competition.''
Top executives of all six companies meet every two months in a special committee. Vogl said common parts sourcing and sharing good ideas have been the top agenda items so far.
``The first idea is to bench mark the separate enterprises according to the best possible values, and improve their cost structure to be able to pass on machines to our customers which are at least as good as before, or even better at a lower-cost level,'' he said. ``The second idea is to use the common synergies of such a group, such as buying power, such as development platforms, which any reasonable engineer would use. Design to common use in certain components, hydraulic or electrical components. That would be of advantage to everyone.''
Even before MPM's formal creation, the companies' European operations already were sharing screws. Demag Ergotech GmbH in Schwaig, Germany, supplies small screws, up to 70 millimeters in diameter, plus tie bars and manifolds for other MPM companies in Europe. Krauss-Maffei Kunststofftechnik GmbH in Munich makes larger screws for the other European operations.
Van Dorn Demag Corp. in Strongsville, Ohio, sources most of its screws and barrels from Van Dorn's machining plant in Fountain Inn, S.C.
Sourcing parts collectively is one thing. How does MPM stand on sharing new-product development among its members, which have waged a fierce battle for market share for years?
Vogl downplayed the subject, saying that each company has its own areas of strength. ``So the overlap in certain terms of development is not as vast as you may expect,'' he said. One example could be companies working together to develop hardware for machine controls, he said.
Consolidation is another way to cut costs. MPM already has moved German extruder maker Berstorff Corp.'s U.S. headquarters from Charlotte, N.C., to the Krauss-Maffei Corp. facility in Florence, Ky. Berstorff announced the relocation just three weeks after Mannesmann AG disclosed the formation of MPM.
``There are certain advantages to this. There's no collision in terms of competitors, at all. Berstorff is enlarging their base for compounders, and at the same time K-M is there for the profile extrusion, which is not covered by Berstorff,'' Vogl said. ``But there is a synergy in terms of assembly and servicing, and of course administration staff, to put these at the same location.''
Vogl also drew parallels between Mannesmann Plastics Machinery and the other mega-company, Milacron Inc., which recently announced it was selling its machine tools business to focus on plastics machines and industrial products. Milacron, now with $1 billion in plastics equipment sales, is second, worldwide, only to MPM.
``We view the Milacron group as a real strong and good player in this business. I think the move to sell the machine tools has really given them a clear profile of a plastics machinery company, a very similar idea to our group strategy,'' Vogl said.
He said European economies have rebounded, although ``heavy price pressure'' on equipment remains.
``Europe is doing pretty well at this moment. Of course, everyone is concerned about the Asian and Russia financial crises, which do have an impact,'' he said.