These are Germany’s 100 fastest growing medium-sized companies

Cologne Carbon concrete, a mixture of wood and clay or would you prefer gypsum fiber? Which innovative wall enables the best indoor climate in the house? With this in mind, students at the Leipzig University of Technology, Economics and Culture (HTWK) are currently examining Kleusberg’s construction materials.

The medium-sized company is a partner in the HTWK’s “Sustainable Building” project. The aim is to introduce new, environmentally friendly materials when building houses. It is also about environmental protection: The new walls by Kleusberg should also help to improve the overall climate balance of buildings.

The recycling of components from Kleusberg is also innovative. Most of the modules from the knowledge company can be dismantled, and their material can be reused. And Kleusberg even saves resources when building a house.

According to the company, schools or office buildings, for example, can be completely built within a few days – which greatly reduces the use of machines. Customers appreciate the innovative strength of the medium-sized company. In the six German Kleusberg plants alone, more than 4500 square meters of building space are produced every week.

Kleusberg recently achieved sales of around 250 million euros – an annual increase of 14.1 percent since 2016. The average EBIT margin over the past five years is 15.5 percent. As a newcomer, Kleusberg made it to 17th place in this year’s “Top 100” ranking of medium-sized companies with the highest growth and profitability.

This ranking list is determined annually by the strategy consultancy Munich Strategy in cooperation with the Handelsblatt. More than 4,000 medium-sized companies in Germany from a wide variety of industries were examined.

The top 100 companies have increased their sales by an average of eleven percent over the past five years – and their EBIT margin is 14.7 percent on average.

How family businesses generally manage to assert themselves economically – that is what Markus Thomzik, research professor at the Institute for Applied Innovation Research at the Ruhr University in Bochum, examines. “Medium-sized companies owe their growth primarily to their innovative strength,” he says.

A look at the statistics shows: Germany ranks second behind the USA when it comes to filing patents with the European Patent Office. “We don’t lack ideas in Germany,” says Thomzik. He sees a need to catch up elsewhere: “Many companies in Germany lack the willingness to take risks to convert their ideas into marketable products. Successful medium-sized companies are looking for this risk. “

Laboratory instead of drawing board

Converting good ideas into economic success – this is what the winner of the “Top 100” ranking succeeds in: Peter Huber Kältemaschinenbau. For the manufacturer of temperature control devices for research and industry, there has been an average sales growth of 21.5 percent and an average EBIT margin of 23.5 percent over the past five years. Peter Huber Kältemaschinenbau made the leap from fifth place to the very front.

The latest innovation from the Offenburg medium-sized company is a temperature control system for use in the automotive industry. The device ensures, for example, that battery tests can also be carried out at working temperatures below minus 40 degrees Celsius. An improvement in pumping technology ensures that the indispensable viscous refrigerant remains functional.

For CEO Daniel Huber, innovations are “essential to remain the market leader”. The company has an innovation strategy that can be viewed by every employee. The main aim here is to create suitable conditions for innovations. The three-page paper demands the greatest possible freedom for the 25 employees in the research and development department. No one should be so busy in everyday business that creativity is restricted.

“We spend significantly more on research and development than other industry participants,” says Huber. He attaches great importance to the speed with which ideas are implemented. “With us, the prototype of a device is often in the laboratory even before it is finished on the drawing board.” Being close to the customer helps us to find out which products the market needs. Huber points to more than 1000 customer visits per year.

A high financial commitment to research – since last year this has been rewarded by the federal government through a new funding instrument. On January 1, 2020, the law on tax incentives for research and development came into force. Since then, companies that are taxable in Germany have had a legal right to support in the form of the so-called research allowance.

“The tax subsidy is intended to stimulate research activities, particularly in small and medium-sized companies,” is how the Federal Ministry of Finance outlines the goal. The new instrument met with great interest. The authorities have already approved 2,373 applications – 83 percent of the applicants were given a chance.

Crisis encourages rethinking

Expert Thomzik nevertheless considers the effect of state innovation funding to be limited – and warns of convenience: “Innovations are made in people’s minds,” he says. “Nothing is more dangerous than resting on yesterday’s successes.”

Thomzik cites the automotive industry as an example, which has delayed the move to electromobility for too long and is now partly overtaken by foreign competition. Thomzik believes that creating a new culture of innovation in the country is a generational task. It is important to combine the prevailing way of thinking of zero tolerance for errors with a stronger recognition of the willingness to take risks. “In companies, the usual zero error tolerance in the routine has to finance the innovator’s error culture,” says Thomzik.

More willingness to take risks – that could also be a consequence of the corona pandemic in companies. This was suggested by a survey of 100 medium-sized companies conducted by the Baden-Baden Peter Hertweck Forum in September this year.

The result: managers make more courageous decisions at the end of the crisis. 56 percent of those questioned saw an acceleration in changes in their own company. A good third (36 percent) say that decisions are made more quickly at management level. The changed framework conditions due to the pandemic have meant that many companies will implement their plans for the 2020s faster than planned, according to the analysis.

Christian Frank also expects decisiveness from his employees. “Everyone can and should be courageous with us,” says the CEO of Sikora. The medium-sized company develops and produces measurement and control technology as well as sorting systems for industry in Bremen.

“We live on 50 years of innovation”, Frank refers to the company’s history. But you don’t want to rest on your successes. Setbacks in research and development are factored in: “Not everything can work right away. We consciously take this risk. Because if we don’t have a technological lead over the competition, we can only differentiate ourselves through price. That would be difficult as a medium-sized company. “

With an average sales growth of 12.8 percent and an average EBIT margin of 23.5 percent in recent years, Sikora made up eight places in the Munich Strategy ranking and is currently in tenth place. The share of foreign business in sales is 60 percent for the top 100 companies. At Sikora it is even 96 percent – with a focus on Asia.

State funding for innovation promotes product development at Sikora. An employee is solely concerned with which subsidies are eligible for the company and which prerequisites – such as partnerships with universities – must be created in order to receive them. According to CEO Frank, ten percent of sales flow into research and development. Every fifth Sikora employee works in this department.

The latest innovation is a chip for a device that uses radar waves to measure the thickness of pipe walls. The semiconductor was developed together with partners from industry and universities and ensures greater precision in production. Radar waves measure the diameter of a pipe and the wall thickness. A computer evaluates the data. For example, if the wall is too thick, it is corrected automatically. This is doubly efficient: Incorrect productions are avoided and material is saved.

More: Managing Director of Munich Strategy: “The export world champion model needs an update”