Düsseldorf, Germany — A surge in incoming orders is leading Sumitomo Demag to increase capacity for injection molding machine production in Germany.
The company, owned by Sumitomo Heavy Industries in Japan, is set to hit 236 million euros ($282.3 million) in 2016 sales and has a bulging order book worth 260 million euros.
In 2017, sales are forecast to reach 260 million euros and incoming orders 270 million euros ($279 million), said Tetsuya Okamura, CEO of Sumitomo Demag.
Okamura, who is returning to work at parent company SHI in January, said at Sumitomo Demag's K 2016 news conference on Oct. 21 that he was pleased the company is doing so well after eight years under SHI's ownership.
“I'm very happy that Sumitomo Demag has become a very stable company and is on the right track for growth,” he said. His successor as CEO, Gerd Liebig, who is currently chief sales officer, has the right skills to manage the company's further growth, he said.
The fast growth in orders in 2016 has come mainly from customers in the packaging sector, said Liebig. The order backlog is at historically high levels, he said, and the company is currently not competitive in terms of delivery times.
Sumitomo Demag is investing in new machining equipment at its facility in Schwaig, Germany. Andreas Schramm, chief technical officer, said the goal is to increase machine production capacity by 20 percent next year at Schwaig and its other German facility in Wiehe. The company has a third machine production facility in Ningbo, China.
In recent years, Sumitomo Demag has focused on growing its business in the packaging sector. Liebig explained the strategy was to give the company exposure to a sector that is less buffeted by economic recessions. While the company will continue to develop in markets where it has traditionally been strong, such as automotive, its forward plans involve growing promising areas.
In 2017-2020, the company is aiming to grow its sales in transplants, where customers in one region look to grow globally and move production to new facilities in other regions.
“So, the consequence is we need a strong after-sales network,” Liebig said.
The desire is to integrate Sumitomo Demag's existing global sales network with an after-sales network that has previously been developed around agency partners in various countries. The company has been opening its own subsidiaries in many countries, most recently announcing a new subsidiary in Spain, Sumitomo (SHI) Demag Plastics Machinery España S.L., started operations in Valencia on Nov. 1.
The setting-up of subsidiaries is to facilitate an integrated network of service technicians and customer support around the world. It does not mean Sumitomo Demag is getting rid of its agency partners, Liebig said. The company is targeting national markets with annual demand for 300-plus machines to have a Sumitomo Demag subsidiary. Smaller markets will be served by agency partners.
The U.S. and Southeast Asia are the next markets to receive Sumitomo Demag's investment in after-sales. The company has a well established subsidiary in Strongsville, Ohio, which will be strengthened in 2017 with the hiring of more service technicians.