mind The Minden-based medium-sized company Wago makes 1.2 billion euros in sales a year. The specialist for connection and electrical engineering has become the world market leader with a rather inconspicuous product: the spring clamp.
These components connect electrical lines, the “Wago terminal” has become synonymous with the entire product class. Wago’s product range is much broader today. And with Heiner Lang, an engineer who understands the portfolio has been running the company for a good year and a half. This is also the first time since the company was founded in 1951 that a non-family manager has been at the helm of the spring clamp specialist. Lang came to Wago from Bosch-Rexrodt in the middle of the lockdown. His goal: to make the medium-sized company fit for the future. He has just returned from a trip to India, where the company intends to significantly expand production.
In the future, the manager wants to expand the company both in America and in Asia and continue to grow in both India and China. In China even with products specially manufactured for the local market there. In the meantime, discontinuing the business in Russia was “a simple, quick and unanimous decision from an entrepreneurial point of view”.
Read the full interview here:
Mr. Lang, many companies are questioning their business in China – including Wago?
No. However, we can clearly see that growth in China is no longer as great as it was in previous years. And we also see that more and more is being produced in China for China.
What does that mean?
Local producers are now at a technical level that they can more easily replace foreign suppliers.
So China no longer needs European technology?
At least the foreign production facilities of European manufacturers are under strong competitive pressure from local Chinese manufacturers.
Wago too?
Yes, we too.
The boss of the spring clamp manufacturer Wago wants to put the topic of sustainability on the daily agenda from Friday afternoon.
How many employees does Wago have in China?
Our on-site team consists of around 1300 employees.
It’s not just about growth and competition, but also about how your company deals with the Chinese government.
That’s right. In our risk management, geopolitical scenarios play a greater role than before.
Do you want to withdraw production in China?
No, we want to create a balance in our production facilities. We are currently investing more in India and want to achieve production volumes there that are similar to those in China. We are therefore diversifying by preferentially expanding our activities in India.
So does this make China less important?
Yes. Not because we produce less there, but more in India.
How many employees do you already have in India?
Almost 400 colleagues work for us there.
Geopolitics is becoming increasingly important. What do you do differently in China?
We will make China more independent. Not because we fear geopolitical turmoil, but because the market in China demands different products.
Heiner Lang: “In China, they don’t want over-engineered products, they want locally designed products”
Do they want less high-tech from Germany there?
You could say that. They don’t want over-engineered products, they want locally designed products that are simple and cheap. For this you need a unit that adapts to the specific Chinese needs. We’re working on that.
Don’t you do that in other countries?
China is a separate market and there is special competition. The best way to deal with this is directly from the market.
Does Wago want to decouple the China business?
That has not yet been decided, but we are not looking at the political developments here, but at the specific competition there.
But a self-sufficient unit is being created there, so the complete decoupling of the China business is not far off?
We currently have no such plans. We see independence as an opportunity and not as a threat because the Chinese market is big enough for an individual solution.
Would you agree that India will be more important than China in say 2030?
We haven’t drawn that conclusion yet. But the importance of India as a market and production location is increasing.
“Closing business in Russia was a simple, quick and unanimous business decision”
How much revenue do you generate in China?
We generate more than 100 million euros in sales there and want to consciously increase sales in China. This is different from the case of Russia, where we are convinced that we no longer want to be active here. Going out of business in Russia was a simple, quick and unanimous business decision.
Because the shop was so small there?
We generated around 30 million euros in sales there every year.
But you still have the branch there?
We have stopped all activities in Russia, we have reduced the team to a minimum, i.e. laid off a large part of the workforce.
But you still received a smaller part of the employees there?
From 50 to under ten. We still have a camp there that’s frozen.
When are you going to make a final decision on this?
Human suffering makes me sad. The current situation is unbearable, due to the long-standing customer relationships and the skeleton team, we will continue this for a reasonable period of time, we will decide this year.
Germany’s hidden champions grew up with engineering knowledge. You too are an engineer. Do you feel well prepared for so many geopolitical challenges?
Yes and no. For companies that thrive on products that engineers create, having engineers at the top is a huge advantage. The understanding is just greater. I also expect myself to be able to explain our products well. Engineers are generally curious, they want to understand everything, which helps in every job and also in political contexts that are associated with uncertainties.
Does that help run a business?
I am convinced of that. In any case, you need an open mind, an intrinsic interest in entrepreneurship. If you have that, then you can see the challenges early on.
Have you already made any organizational changes since you took office in the middle of the 2021 pandemic?
Those were special circumstances when I came to the top at Wago in the middle of the lockdown. We have strategically evolved and divided the world into three regions, each with regional responsibilities for America, Europe and Asia. In other words, the continents on which we are active with a total of over 30 of our own companies. We want to promote this regionality. As an engineer, I would say that you are stable on three pillars. (laughs)
Read more business talks here:
So is there a new level?
Yes, the heads of these three regional units report directly to the Chief Sales Officer. This structure is our first step in a significantly stronger internationalization.
Do you need to internationalize further?
Clearly. So far we have generated 70 percent of our sales in Europe and we also have a large focus on Germany.
And what is your medium-term goal?
We want to earn 25 percent in America, 25 percent in Asia and 50 percent in Europe. We have to go there.
What was your specific task when you came to the company in 2021?
The task is to lead the company into the future. The cornerstones for this are profitable growth, entrepreneurship and long-term independence as a family business. The topic of sustainability is also very important to my shareholders and to me personally. I am now implementing this agenda strategically with my team.
What do you value most in a family business?
The entrepreneurial freedom that my advisory board gives me, because they mostly let me do it.
Sustainability is important to you. In your last sustainability report for 2021, however, you set few specific goals…
We have to get better at that, for sure. And I am personally involved here. Concrete steps have already been taken.
Do you now know the CO2 footprint for Wago?
In a pilot project in Switzerland, we specifically calculated the footprint for 2021, it is 13,000 tons of CO2 per year. This corresponds to the emissions of 1200 households.
“The trick is to grow while reducing the carbon footprint”
Have you already been able to save CO2?
Yes, the trick is to grow while reducing the carbon footprint. In Switzerland, we were able to save 43 percent CO2 by changing the electricity mix, while sales increased by 20 percent.
And overall?
We had a higher carbon footprint than 2021, with a higher turnover, and the ratio has gotten better. For example, today we have options for operating the machines in a more resource-efficient manner and with less energy consumption, we have lowered the temperatures in the buildings and much more. One thing is clear: We are only at the beginning of this journey and still have more to do.
What is your biggest challenge when it comes to sustainability?
To focus on the topic throughout the team. Sustainability is often still a topic for Friday afternoons. I want to make it clear that this is important and urgent for all of us – and yes, maybe even more important than the last half percent optimization of product costs.
The East Westphalian family company Wago operates a large training workshop to counteract the shortage of skilled workers.
(Photo: Christian Schwier)
So you have to convince the engineers first and foremost?
No, we have to anchor the topic throughout the organization. We would like to implement this transformation in simple, digestible steps for Wago.
How often do you think about sustainability, except on Friday afternoons?
For every business decision.
You had to get to know many employees digitally, did that work out?
Creative approaches were required during the corona lockdown. I came in lockdown. Back then, we held a virtual meeting with a country every day. A maximum of 15 people could take part – across all hierarchies and without an agenda.
Does that bring anything?
Yeah we just talked and we still do that today, it broke the ice and everyone knows they can reach me.
Thank you very much Mr. Lang for the interview.
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