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November 04, 2015 01:00 AM

Haitian's Franz a one-man symbol of globalization

Steve Toloken
Assistant Managing Editor
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    Michael A. Marcotte
    Helmar Franz at NPE 2015 in Orlando, Fla.

    For me, few people personify the globalization of the plastics industry more than Helmar Franz, who recently retired as chief strategy officer of the giant Chinese injection press maker Haitian International Holdings.

    Franz, who is 65, moved to Ningbo, China in 2005 to work for Haitian. Before that, he had a long career in Germany's plastics machinery industry, where he was chairman of equipment maker Demag Ergotech and head of the German plastics and rubber machinery association VDMA.

    Part of my reason for singling out Helmar's retirement is personal, I admit. Our times in China overlapped. I arrived in early 2006 and left in mid-2014, and I enjoyed seeing him a few times a year at industry events and in Ningbo.

    I remember visiting him and touring Haitian factories, going through an area of Ningbo that 20 years earlier would have been closed to foreigners like us, because it was too close to an important Chinese naval base. Now it's full of plastics machinery companies.

    The world changes.

    In the time Franz was in the executive offices at Haitian, Haitian changed as well. It went from about $400 million in annual sales to more than $1 billion, and became one of the world's biggest in its sector.

    Haitian didn't get big by buying other companies. The growth came organically, a lot of it powered by China and Asia.

    I was always interested in Haitian's decision to hire Franz, and his decision to work there, because I knew some of the big differences between management styles in Western companies and Chinese firms. Some people really struggled crossing that gap.

    If Franz did, he never told me.

    But he did talk to PN back in 2011 about how Haitian tried to be different from many companies in China by listening much more closely to customers to anticipate their needs.

    The goal was to bring more innovation to what he called the “unspectacular 80 percent” of the world's industry. He meant the mass market of plastic companies in emerging markets that probably aren't paying a lot of attention to the latest manufacturing buzzwords like Industry 4.0.

    But they do want innovation. Haitian, as Franz described it, felt the strategy was not to bring stripped down, simplified, cheaper version of European or Japanese technology. It was about bringing some new innovation. For Haitian, it was its energy-saving hydraulic machine, the Mars series, which became the main engine of its growth.

    Low-tech is not the same as bad-tech.

    Of course not all of Haitian's initiatives have worked out. Its all-electric, uniquely designed Mercury series never really met expectations.

    But there have been more successes than setbacks the last decade at the company. And much of the rest of the global machinery industry has since come to China with more factories.

    I think you can see the 2014 decision by Austria's Engel Holding GmbH, another of the global giants in machinery, to open its new Wintec subsidiary in China as recognizing that Haitian had a point. Wintec is making standardized machines for the global commodity processing market. In other words, the unspectacular 80 percent.

    To me, that's a fascinating starting point for a case study in a business journal, looking at innovation in extremely price conscious emerging markets.

    But plastics machinery is probably not nearly sexy enough to get the attention of business school professors, with the biggest companies having sales of “only” $1 billion. On a global scale, it's a small industry.

    Franz will remain on Haitian's board and act as a strategic consultant to the company. One area I know he's played a key role has been in dealing with international media and the financial analysts who follow Haitian in Hong Kong's stock market.

    He began his career on the other side of the Cold War from most of us, before the Soviet Union fell, getting his university education in plastics in Moscow and working in the industry in the former East Germany. He also lived and worked in Iraq and Egypt.

    I asked him once if he thought that made it easier for him to make the move to China, and I remember he demurred. I got the impression he didn't really think so.

    He recently talked to us, though, about how his travels have convinced him that entrepreneurship can take hold in many different economic systems, under the right conditions.

    He offered Haitian as an example, as a company that its founder Zhang Jingzhang began in the 1960s during China's Cultural Revolution, a very tumultuous time for business.

    For a lot of us, globalization means we get to stay in hotels in interesting places.

    But for Franz, who started his plastics career behind the Iron Curtain, moved to industry leadership roles in a unified Germany and then later transitioned to senior executive jobs during China's boom years of one-party capitalism, I think it means a little more.

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