Krauss Maffei GmbH, Berstorff GmbH and Netstal-Maschinen AG - sister companies owned by Chicago investment firm Madison Capital Partners - will be able to build machinery in a plant in China that currently makes KM-brand extruders, a top executive said at K 2007.
Dietmar Straub, chief executive officer and chairman of the machinery group, said Madison Capital wants to set up the China operation as a ``multidivisional'' operation that can build KM and Netstal injection presses and KraussMaffei Berstorff-brand extruders.
Not part of the plan is Demag Plastics Group, which recently closed the old Van Dorn assembly plant in Strongsville, Ohio. Straub and executives of Schwaig, Germany-based DPG made it clear at K 2007 that Madison Capital wants to sell Demag, which has its own separate injection press factory in China.
Details have not been worked out yet, but Straub said the 100,000-square-foot plant in Jiaxing, China, near Shanghai, is big enough to handle some assembly of all three units.
``We have taken the decision to utilize that plant jointly. It's not decided what we do there, but it is decided that we utilize our production base in China for all divisions.'' But he said exact plans are not final. ``We have not decided what to make there,'' he said.
Straub, interviewed Oct. 30, spelled out the strategy of Madison Capital for the first time since Madison bought the group of plastics machinery manufacturers in mid-2006 from Kohlberg Kravis Roberts & Co.
Madison Capital and its president and chief executive officer, Larry Gies, have been tight-lipped about the direction of the Munich, Germany-based group, Mannesmann Plastics Machinery GmbH. The only signal came in March, when Madison announced a reorganization to create a ``newly integrated, flat organization structure.'' At the same time, the investment firm named Straub as the top executive effective April 1. The German executive replaces Madison's Richard Osborne, who ran the business shortly after the ownership change.
Straub, 53, who has an MBA, is a veteran of Mannesmann Group. Straub has worked in various executive positions since 1986 at the German industrial conglomerate that used to own the MPM plastics machinery businesses. Germany's Siemens AG bought MPM in 2000, then sold it to KKR in 2002. After four years of ownership, KKR sold to Madison Capital.
Straub said some management officials have ownership stakes in the machinery group.
Past owners have followed what they dubbed a ``multibrand'' strategy, keeping the units as separate competitors, even when there was some overlap. Straub said that approach works in a fast-growing industry.
``There have been times in our industry, with different circumstances, where a multibrand strategy was the right thing to do, when your industry growing rapidly,'' he said. ``Now conditions have changed. It's heavily competitive today. You have new entrants from Asia. And so ... we don't see that as a valid, positive strategy anymore.''
There is no overlap in injection presses from Netstal, a NÃ¤fels, Switzerland, maker of specialized machines for high-speed packaging, PET preforms and medical products, and Krauss Maffei, a broader-line business that at K promoted its ability to join, in a single machine, in-line compounding with thermoplastic injection molding and reaction injection molding of polyurethane.
Also, the Berstorff compounding extruder business has been brought under Krauss Maffei, which makes another type of extruder, for pipe and profiles. The merged brand is called KraussMaffei Berstorff.
But Straub said there is overlap between Demag Plastics Group and Krauss Maffei in applications and customers.
Klaus Erkes, president and CEO of Demag Plastics Group, also confirmed at a K news conference that DPG is for sale.
So now MPM has fewer brands, subtracting DPG and Billion SA, a small maker of injection presses in Oyonnax, France, that KKR sold a few months before it sold MPM to Madison Capital.
Straub said he believes the term multidivisional aptly describes the planned common Chinese plant operation.
``That's part of the strategy now, to bring the company closer together and to be this one company with different technologies. There are obvious things that we do together better than separate, and this is one of the things,'' Straub said.