Neidinger: The production process is already back to normal. In two years we will have no space anymore and then we have to think about what we are doing here [in Kunshan]. We have to concentrate on Shenyang. As long as we can bring the products to the market and we have innovative products for China and the China OEMs, I'm sure we'll have success here.
In the auto industry, at first you get a development and this takes 2-3 years before a new car comes out. After development you make prototype tools, prototype parts, and then you have the first step to assemble and test the car. Maybe you make some changes, and then you will stay with this part and produce those parts over 5-6 years. So there is constant volume with the orders.
Q: What are some of the challenges specific to China and how you are tackling them?
Neidinger: First of all setting up our plants here, and second especially finding the right people on site — from our training, what we are doing, how we select the people. This is quite different from in Europe. We have to collect the people from universities. We have high requirements for technical people. If we source from the market it is not enough.
Since 2008, we set up a program with local universities to cooperate with them and do some training with them. While the students are in university, we send our experts and give technical training, such as our process tooling and maintenance and equipment. After this training and graduation, normally they have one year's practice and then will come to our company for practice. During this one year we give more training to the students, not only theory but also practical training. In this way we build up strong technical teams at our plants. We are looking for engineers that we can send from China to the U.S. and Europe. We are discussing roughly 40 engineers per year.
If you have this training and you find the people who are interested in what we are doing during this training, then you have 50 percent already done. This is now the fourth year we have done the training. Each year we have at least 20 trainees and last year we had 30. Now we have 20 and we hired a teacher to train them in the company. This was a huge investment and then to get the right people in the right places here. If I see from some of the people that we hired how we grow up in the company that's really good. I am really satisfied with the steps that they are taking here.
Q: How does rising cost of labor force affect you?
Neidinger: The only change is you have a salary increase in China of 8-10 percent yearly. Due to that we have to change production, in that way you install higher automatization with nearly all the products we're getting. We hire fewer workers for this plant but more engineers. To install such kind of equipment you need engineers to develop this kind of equipment.
There is a change from workers to engineers due to the high performance equipment that we need here now. Because OEMs believe we'll get better production possibilities if we reduce prices. At the beginning we had a very low salary, but after 10 years you find salary is increasing. We started with the automatization process three to four years ago at all our companies here. The additional advantage is the quality is much better.
Q: Is competition a challenge here?
Neidinger: Competition is a big challenge. You have more competitors or such sort of competitors that can do this equipment, but at the end we found there are not so many competitors who can develop and produce the equipment that we do here in China. I see our Chinese competitors are learning, but at the moment we are still a few steps ahead.
Of course it is difficult. At the moment what I see is the products are only for local market and there are only one or two OEMs who export. But I think in the future there will be an export from China, because from the quality side you can compare the products they produce here with what is in the Europe and U.S. market. For new developments, in the short term, maybe four to five years there will be some Chinese OEMs that start exporting.
Q: What trends are you seeing in car manufacturing in China?
Neidinger: I see especially for weight reduction there is no other choice but to implement more plastic in cars, and due to that we have to develop specific materials, we have to develop these kind of parts that reduce weight and save petrol in cars. You have to implement something to reduce your weight so you can fulfill your requirement. The government is giving clear direction. But here in China there is more power behind it. If the government is going in this direction they will force all OEMs to do something. That is quite different from Europe where they have a time frame to complete it in. Here the time frame is very short.
This is growing now in China — mainly parts where we save petrol for environmental costs. They have to fulfill now the requirements for how much petrol the car can use in China. To fulfill this we have to work very hard with OEMs to meet these requirements. I see it quite clearly from the government. The direction is given and the OEM has to follow the direction.
Regarding electrical vehicles, the problem with electrical vehicles is the technique is not in this development phase where you can run these cars say 1,000 km. So at the moment there is a distance of what you can cover with this car of about 300-400 km maximum. But then you have to charge the battery again so it takes a long time. The technique is very new and the only way that I see this going slowly is hybrid cars. This is going to be a trend for the next 10 years. We have a huge pre-development center. We are following these trends and we are looking at which products we can produce in plastic to go in this direction.
Q: Are there affects from the economic slowdown here?
Neidinger: No definitely not. The country is so huge and there is enough potential in the market for the future. It still is the biggest auto market, even as it is slowing down a little bit.
They built more than 22 million cars in 2014 here, a quarter of the world market [close to 90 million cars].
Q: Tell me what is happening for Röchling in the rest of Asia.
Neidinger: We have a corporation in Japan and in Korea. To work with a Japanese OEM you have to be located on site. That means development must also be on site. In Korea it is a special situation, as the OEMs are mainly Korean companies and it is not allowed for foreigners to jump in with their products.
In India the market is not so flexible as here in China. We have some plants there with other divisions. I say India will take another 10-15 years to grow a little bit. But if you see the market here in China you cannot compare to other places in Asia. The cars for Vietnam are produced in Thailand and some parts are delivered from China.
Q: Since you have worked both in and outside of China, can you make a comparison?
Neidinger: I am personally here in China for 30 years, but I do not speak Chinese.
People here always make a huge step. We build similar plants in different countries in the world and if I look to our people here in China, we are always one step in front. For example the engineering center that we installed here. In just a short time we started to develop our own products here. If I look to other regions it looks quite different. We are really satisfied with our people here, [in terms of] how they work, how they learn, how they put into practice what they have learned. Of course we do a lot of training here, but there is a huge step forward every year here. We only have one foreigner here, all the rest are Chinese. I see that's one reason why we have success here.