Mannesmann Plastics Machinery GmbH reported marginally higher sales of 1.26 billion euros ($1.6 billion) for fiscal 2005 - as top executive Pepyn Dinandt singled out Demag Plastics Group as an underperforming unit of the world's largest plastics equipment maker.
Dinandt, chief executive officer of MPM, announced the results at a news conference at the Fakuma trade show, held Oct. 18-22 in Friedrichshafen. Calling Demag Plastics Group's performance ``unsatisfactory,'' he announced that DPG will lay off 100 people from its two German injection press factories, in Schwaig and Wiehe. After the layoffs, DPG will employ about 850 at those sites.
The new job cuts come on top of 130 layoffs back in May at the German plants and DPG's U.S. factory, in Strongsville, Ohio.
Meanwhile, MPM continues a major expansion to double production at joint venture assembly operations in China and India.
Dinandt said MPM did make a profit in fiscal 2005, ended Sept. 30. But weaker-than-forecast results from DPG hurt MPM's overall profitability, he noted.
According to Dinandt, all the other brands - Krauss-Maffei, Netstal, Berstorff and Billion - turned in results that were within, or slightly above, the forecast.
For Munich-based MPM, the 1.26 billion euros in 2005 sales represented an increase of less than 1 percent over 2004 sales. Orders were down slightly for 2005, at 1.25 billion euros ($1.59 billion), from the high order volume of 1.27 million euros in 2004.
Dinandt said MPM was hurt by high prices for oil and steel, plus the weak U.S. dollar - factors that will continue into 2006. He would not give specific numbers for profit and earnings before interest, taxes, depreciation and amortization. But he said EBITDA for MPM remained stable. Cash flow fell marginally short of the 2004 level.
Groupwide, Dinandt said:
* Sales of injection molding equipment declined in 2005 to 885 million euros ($1.13 billion), down from 2004 sales of 934.6 million euros. Demand for presses to mold CDs and DVDs fell sharply.
* Extruder sales reached about 230 million euros ($293 million), up from 195.8 million euros the year before. Dinandt said it marked the first time extrusion machinery sales topped 200 million euros.
* Sales of polyurethane processing machinery jumped 32 percent, to more than 95 million euros ($120 million).
At Fakuma, Dinandt also announced that all MPM member companies will establish assembly-line production for some equipment lines. Machines will move between workers, based on principles from the automotive industry, he said.
Assembly lines already have started at DPG's small-press plant in Wiehe, where the machines move on rails, and at the Krauss-Maffei factory in Munich, for building small machines.
Other brands and locations will start their own assembly-line production over the next year.
DPG staff changes
DPG has the most global manufacturing capacity of any MPM unit. But Dinandt said DPG is not delivering financial results that are good enough.
``Demag, on the one side, has a very good range of products. ... From a product point of view I think they can recover in the market,'' he said. ``And they are a very global company. They are present all around the world. I think the issue was cost and productivity-focused management.''
MPM has shaken up DPG management. Fakuma marked the trade show debut of Klaus Erkes, new executive managing director. He fills the top spot left empty since April, when Helmar Franz left after a disagreement over the company's direction. Bill Carteaux, the co-executive managing director who worked with Franz, left earlier to become president of the Society of the Plastics Industry Inc. in Washington.
Erkes led DPG's news conference, though he does not start work officially until Nov. 1.
Erkes pledged to improve financial results: ``We have to speed up, and to speed down simultaneously. We have to speed up what we offer, and we have to reduce speed in costs. So the layoffs are not a reduction of capacity. It's like a marathon runner who reduces weight in order to do better.'' He added that the cuts will include both blue- and white-collar employees.
He said DPG held its own in fiscal 2005, keeping order intake at about the same level as 2004, even as global demand was down.
Erkes, 47, is a newcomer to plastics. He has a degree in mechanical engineering and economics and a doctorate from RWTH Aachen University. He has worked at two publicly held German industrial companies: IWKA AG, a Karlsruhe-based conglomerate that counts Kuka robots among its holdings; and as chairman of the board of Schumag AG, an Aachen company that makes machines for producing copper tubing, grinding and polishing machinery and wire-manufacturing equipment. The company also makes automotive parts.
Another new executive, Chief Financial Officer Uwe Rohfleisch, replaces Gerhard Becker, who departed at the same time as Franz. Herbert Hgemann became the new chief operating officer earlier this year.
DPG also created a new position, manager of production and logistics for its German plants. The company named to that post Joachim Metzmacher, who had worked at sister company Krauss-Maffei since 1985.
In other people news, Gerd Liebig, DPG's chief strategic and marketing officer, will leave to take a marketing position with injection press maker Engel Holding GmbH of Schwertberg, Austria. Liebig was not at Fakuma, but he announced after the show that he would leave the company at the end of October. Liebig is slated to start Jan. 1 at Engel.
In another personnel move, DPG this summer named Michael Leipold as manager of automation. His first project starred at Fakuma - a robot called D-Robot 105, tied into a small DPG Systec hydraulic press. Leipold said the company developed the Systec press and the robot together, to create a complete system.
Initially, the servo-driven beam robot will be tied into Systec presses with clamping forces of 55-220 tons, linked directly through the NC5 machine controller. The hand-held teaching pendant can dock onto a larger screen that mirrors the screen on the NC5 - so the robot can be programmed off-line.
Leipold said DPG engineers are working on software that allows the robot to check how it is running with the injection cycle, so the robot can propose ways to optimize production.
The initial robot, D-Robot 105, can lift about 11 pounds. A future size will lift as much as 330 pounds.
India, China growth
DPG continues its global expansion. A few weeks before Fakuma, Dinandt and other company officials visited India to christen DPG's second plant in Chennai, under a joint venture with Indian partner Larsen & Toubro Ltd. The new plant doubles production for L&T Demag Plastics Machinery Pvt. Ltd. to 600 injection presses a year - and Dinandt can foresee another expansion up to 1,000 presses annually.
``Customers [at the India opening] said, `Listen, it's nice that you're making 600, but we need potentially more.' And then ... the figure of 1,000 units came out,'' Dinandt said.
L&T Demag sells Santosh-brand machines in clamping forces of 44-1,100 tons. In mid-2005, the venture built its 1,000th injection press.
Last year, DPG also doubled production in China, also to 600 presses a year. The operation, called Demag Haitian Plastics Machinery Ltd., is a joint venture with Ningbo Haitian Group Co. Ltd., a major Chinese injection press supplier.
Dinandt said the China market for injection presses declined in fiscal 2005, while India's grew.