Hidden Champions and Business Heads With Power and Precision » Interview with Dr. Bertram Kandziora, the CEO of the STIHL AG

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With Power and Precision
STIHL, which was founded over 90 years ago in Stuttgart, is the current global market leader in the area of chain saws. Worldwide, the business employs about 15,000 employees and has production sites in Germany, China, Brazil, USA, Switzerland, Austria, and the Philippines. In an interview with the Diplomatic Magazine, Dr. Bertram Kandziora, the CEO of the STIHL AG, speaks about the business’ history, sustainability, and innovation.

Stihl founded the company in 1926 in Stuttgart, where they first manufactured boiler pre-heaters and washing machines. In 2015, STIHL made 3.25 billion euros in profits – what were some milestones along the way to today’s globally operating business?

An important milestone in the STIHL product history was the Contra, which was introduced in 1959. The cordless petrol motor saw significantly revolutionised forestry work and allowed the company to create a double- digit increase in profits. Another important development was the first generational change in the 1970s, in which two of the children of the founder Andreas Stihl, Hans Peter Stihl and Eva Mayr-Stihl, took over the business. They didn’t just establish a worldwide distribution, but they also set up the first international production sites and set the foundation for an international distribution and manufacturing group. In 2002, the Stihl family turned over the operative business management to an outside board and withdrew to the advisory board and the board of directors. In this constellation, we have managed to create over double the amount of revenue for the STIHL Group. For our anniversary year 2016, we were able to once again register record revenue.

Since 1971, STIHL is the highest-sold chain saw brand in the world. How do you explain this continuing success

We have built up an equity ratio of about 70 percent and are independent from capital markets and stock exchanges. This way, we don’t have to keep paying attention to shortterm profits, and can instead establish our long-term business strategy. We also never rest on the laurels of our previous success. We continue to evolve and are always committed to giving our customers new and better products with top quality.

The majority of your revenue is achieved overseas. What are some of the most important markets?

The most important individual market and a strong engine of growth is the US market. Within Europe, Germany and France are the heavyweights.

STIHL employs about 15,000 employees worldwide and has production sites in in Germany, China, Brazil, the USA, Switzerland, Austria, and the Philippines. Why have the company headquarters still remained in Baden- Wuerttemberg?

For over 70 years, our headquarters have been in Waiblingen, close to Stuttgart. That’s where we develop our products and manufacture devices for professional users. In order to do this, we need well-trained specialists and excellent engineers with know-how, and we have those in Germany. As a family business, we take great pride in our roots and stand by them. They give us the strength to grow. You can also see that in the fact that we’ve extended our employment and our location safeguarding contracts for the employees of our main location to 2020, and that we’ll be investing about 300 million euro in our headquarters between 2015 and 2019.

Since 1999, STIHL submits over 100 patent applications a year. Where does this innovative power come from?

At STIHL we have over 500 developers, including well-trained engineers and skilled workers who we partially also train ourselves, who work in our development centre on new products and ideas on a daily basis. We also have a very high depth of production of over 50 percent. We are the only chain saw manufacturers worldwide who also produce and develop, in addition to motor units, guide rails and a variety of saw chains. So we profit from our specific know-how and from decades of experience.

Wood is a valuable resource on our planet. What is STIHL doing in order to protect these resources and the forests?

As a manufacturer of engine-operated devices, STIHL is committed to sustainability and environmental protection. We distribute our products through the specialist traders who advise our customers and show them how to properly use the devices. Our products are used in sustainable forest management and for forest conservation, and they contribute to the maintenance, cultivation, and care for nature. We are particularly attentive to being environmentally friendly. For example, we’ve created a saw chain oil for our chain saws that biodegrades quickly in the forest. We are also involved in many environmental projects. For example, we were finalists in the German CSR Prize in 2016 as recognition for our efforts to protect the forest through our cooperation with the non-profit Association Bergwaldprojekt e. V.

Today’s product palette ranges from chain saws and motor scythes to high pressure cleaners, dry and wet vacuums, blowers, and hedge and stone trimmers. What new devices will customers be able to look forward to in the future?

We will naturally continue to expand our portfolio and bring innovations for professional and private users to the market. We’re paying particular attention to our battery range, with which we’re trying to gain new customer groups in the future. There will soon be a new product line with an integrated battery which will be directed at customers who are looking for an affordable battery-powered device with top STIHL quality in the entry-level segment. We will also expand our distribution channels in 2017 and start with our so-called “electric and battery partners.“ The majority of users of battery-powered equipment live in cities. This is why these specialised distributors are usually based in urban areas and exclusively sell battery-powered and electronic products. This additional market path is therefore very advantageous for our existing customers and potential customers looking for battery-powered devices.

With the acquisition the garden equipment brand VIKING in 1992, the company created a second source of income. How did this development occur?

VIKING is an experienced specialist in the gardening field and produces high quality gardening equipment. This product portfolio was a perfect addition to our chain saws and motor devices, which are primarily used in agriculture and forestry. Uniting with VIKING was therefore a logical, strategic step. As from 2019, we will market the entire product line of VIKING under the STIHL brand name.

With STIHL Timbersports, you host competitions for different forestry disciplines, the last one being the world championship in Stuttgart. Can you tell us more about these competitions?

Competitive tree-felling is a sport full of tradition, and has its roots in the traditional work of lumberjacks. This is also evident in the disciplines that have evolved from the classic work steps found in forestry: Trees are felled, split, and tree stumps are sawn apart – and at a very fast speed. The STIHL TIMBERSPORTS ® series represents the top tier of this sport, since it gathers the best athletes worldwide. I am regularly present at competitions, and it’s very impressive to see what the athletes do. STIHL TIMBERSPORTS® is a true extreme sport, in which precision, skill, and balance is just as important as strength. STIHL and competitive tree-felling – these two things work perfectly together. Therefore STIHL is also the name-giving organiser of the STIHL TIMBERSPORTS® series. Because STIHL TIMBERSPORTS® is not a niche sport anymore, the competition enjoys draws large crowds of spectators. The last world championship in the Porsche stadium in Stuttgart was completely sold out with 11,000 visitors.

What plans does your business have for the future?

STIHL is well-prepared for the future. We are an economically healthy business, we have a high amount of equity capital, and we grow on our own accord. For many years now, we have been seeing steady growth, and we wish to stay on this course. A large field of growth will be the battery-powered series. Here we will win more market shares and appeal to a new customer base. We also want to expand our development, manufacturing, and distribution. In the next five years, we want to increase our revenue by at least a billion euros.

Interview Raimon Klein

Pictures: 1, 2, 3, 4, 5, 6 = STIHL