Fan manufacturer EBM Papst prefers to cool the cloud

Mr. Geißdörfer, you have been in office for a year now. In May you said you wanted a new strategy for EBM Papst. How far are you?
We are presenting them internally to our 15,000 employees.

And how does she look?
We see huge potential over the next ten years in the megatrends of renewable energies, data centers and air conditioning technology. The world is getting warmer. Therefore, as a fan manufacturer, we focus on ventilation and heating technology.

Are you a beneficiary of the climate catastrophe?
If you like, yes. But we make a significant contribution to energy efficiency with our products. This is how we do something about global warming.

>> Read also: “Late, but not too late” – Entrepreneurs are pushing for the rapid implementation of the energy defense shield

Focus also means leaving something out. What will EBM Papst no longer do in the future?
We will no longer supply the car industry.

Why? Is Germany’s most important industry no longer lucrative for you? After all, you worked for the second largest German automotive supplier, ZF, for a long time.
The business is no longer profitable for us and will therefore no longer be part of our core business in the future.

Only old orders from some industries

Is the price pressure really too high?
I would say that the desired quality is only a limited challenge for us technologically and is not attractive for us as a supplier at the prices demanded.

Who else is on your cross-off list?
We will also cancel the household appliance industry, i.e. white goods such as refrigerators or dishwashers. That’s low-tech for us.

How much sales will you voluntarily forego in the future?
That’s around ten percent that we’re phasing out. We process the old orders, but no new orders are accepted.

In view of the upcoming recession, isn’t that a bit too bold?
We will easily compensate for this with growth in other fields.

For example?
The promotion of heat pumps has triggered a boom. Demand has tripled, and in some cases quadrupled, within a short space of time. And we have to think about how we can catch up and build up capacities accordingly.

And what exactly do you supply to the heat pump?
The fan. Not only does it have to consume little power, it also has to be particularly quiet. As a neighbor, you don’t want to hear anything from the device.

Is flow physics still not exhausted?
No, there’s still something going on. We need quiet and energy-saving fans. Our aim is to be at the forefront, and that’s what we are. It hurts us when we can’t build enough fans for the market and then less efficient fans from other manufacturers are installed.

Market is growing by up to seven percent annually

What growth areas are there?
We also have a drive technology division for conveyor belts or autonomous shuttles in factories with a turnover of around 150 million euros. Here we will enter into cooperations or even more. Something is going to happen in the next twelve months.

Do you have a concrete growth target for the entire company?
We want to grow faster than the market.

Almost every entrepreneur says that.
Our market is growing between six and seven percent a year.

And where are you now?
We’re still remodeling, but in three years we’ll definitely be growing faster than the market.

We will significantly expand our locations in the USA and Asia.

Then in five years your turnover will exceed the three billion euro mark?
At least I don’t want to rule that out, but it depends on the global economy.

Was that the whole strategy now?
No, an important point is that we still produce too much in Germany and Europe. We have to position ourselves more globally and produce “local for local” because of the ability to deliver and for security reasons. We will significantly expand our locations in the USA and Asia.

Is that a concession to the high costs in this country or the current geopolitical situation?
It is irresponsible to maintain the previous supply chains, in which Mulfingen stands still when there is a lockdown in China.

What are the sales distribution goals?
We are currently still generating around 70 percent of our sales in Europe. The aim is an equal distribution in the triad.

It’s no longer a question of whether, but how many plants will come to the USA

But with your wide range of products, can’t you make everything from a fan for a laptop to a fan for a heat pump in one factory?
No, you have to have a sophisticated system. With small fans, transport is not the problem. Transport is an important factor for fans with a diameter of 1.5 metres. We have to produce as close to the end customer as possible.

You mentioned the megatrend towards large data centers. How well are you represented at companies like Google, Alibaba or Amazon?
We don’t name individual customers, but we cool the cloud. And it is growing rapidly with increasing networking. Data centers require endless ventilation and cooling, and we are the most energy efficient in the business, which is important today but will be even more critical for customers in the future.

The demand is still far higher than what we can supply.

Can you name numbers?
In November we will open our next plant in the USA. The demand is so great that we are not considering whether to build a new plant in the USA, but only where and whether we need more. We can really grow there. These are great topics. The megatrends drive us.

And how is business going at the moment?
The demand is still far higher than what we can supply. Our order book is extremely full.
How are you preparing for the recession?
As a precaution, we issued a green promissory note loan for a mid-double-digit million euro amount, firstly because of sustainability, but above all to be flexible. You have to make yourself weatherproof beforehand, in a storm it would be too late.

Do you actually need the money?
Of course we have other means at our disposal. But we have to make sure that we don’t lose energy-intensive suppliers such as metal and plastic foundries. These mostly smaller companies have a harder time getting money. We pay the invoices directly upon delivery. For example, we still have a hedge for energy prices until the end of the year. A lot of smaller companies don’t have that. They depend on the daily energy price. If the energy share of the total costs is 20 percent for such companies and the price has increased fivefold, then it eats up every margin and almost kills the company.

Sustainability plans pulled out of the drawer “quickly”.

Do you also pay in advance?
We only pay in advance in highly explosive hardship cases in order to protect our value chain.

How energy-intensive is your production?
We’re under one percent of the cost. Our topic is different. Building the most efficient fans has always been a driving force at EBM Papst. Now add the carbon footprint of the entire device. We want to build fans from sustainable raw materials.

When it comes to power electronics, we are just as big a buyer as major automotive suppliers.

Wasn’t that already the case at EBM Papst?
Yes, ten years ago with incorporated wood fibers. The plans just disappeared in the drawer. Now we’ve quickly pulled them out of the drawer again, because now the time is ripe for the topic. The products will of course look different, but we also want to implement the basic idea of ​​sustainability. In terms of recycling, it would be ideal if we produced the plastic from CO2.

What role does electronics play?
The topic of intelligence, control, power electronics plays a major role in efficiency. When it comes to power electronics, we are just as big a buyer as major automotive suppliers. We have to assert ourselves against this competition in procurement in order to get our volume from the chip manufacturers. We also have to reposition ourselves in the value chain.

>> Read also: Cars, Thermomix and fans – the chip shortage never ends

How tight is the chip supply at the moment?
It has gotten a little better because the high demand from consumer electronics has eased off a bit. But when it comes to silicon carbide for more powerful power semiconductors, the bottleneck is still big. The market for silicon carbide is very tight because the capacities are only just emerging. The promotion of heat pumps has triggered a boom. Demand has tripled, and in some cases quadrupled, within a short space of time. And we have to think about how to catch up. But we too must first build up the appropriate capacities.

They were one of the first companies to pay their employees 500 euros to mitigate the effects of inflation. Other companies are tackling the issue, why not you?
Because people are in need now. We hope that this payment will remain tax-free and that the money will reach the people in full. The companies are also challenged. Everyone cares about their energy efficiency. You don’t have to teach companies to save energy when it comes to price trends. But as a family business, we are also obliged to support our employees in such a crisis, provided we can afford it as a commercial enterprise.

How do you rate the government’s measures?
The government generally takes too long to make decisions. And what’s more, this is often not coordinated between the three partners. This is increasingly irritating people and companies.

Not only did EBM Papst act quickly on the subject of special payments, you were also one of the first to pull the plug on business with Russia after the outbreak of the war of aggression against Ukraine. how come
We are a family business. The way to the three owner families is short, the coordination is quick.

More: New boss of the fan manufacturer EBM Papst attacks German chip companies