Annual Report 2010 - Knorr-Bremse AG.
Annual Report 2010 - Knorr-Bremse AG.
Annual Report 2010 - Knorr-Bremse AG.
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<strong>Annual</strong> <strong>Report</strong> | <strong>2010</strong><br />
<strong>Knorr</strong>-<strong>Bremse</strong> Group
At a Glance<br />
KNORR-BREMSE GROUP 2006 2007 2008 2009 <strong>2010</strong><br />
Sales EUR mill. 3,121 3,251 3,384 2,761 3,712<br />
Net income EUR mill. 185 198 192 99 239<br />
Employees (as per Dec. 31) 13,035 13,943 14,999 14,432 16,277<br />
Personnel costs EUR mill. 592 622 686 641 721<br />
Balance-sheet total EUR mill. 1,646 1,735 1,788 1,664 2,194<br />
Equity EUR mill. 493 566 639 533 754<br />
Capital expenditure * EUR mill. 107 140 134 101 113<br />
Depreciation * EUR mill. 104 113 115 118 147<br />
Incoming orders EUR mill. 3,541 3,767 3,209 3,185 4,040<br />
Research and development expenditure EUR mill. 141 159 171 153 175<br />
* not including investments in financial assets
Main Majority-owned<br />
Subsidiaries<br />
of <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong><br />
The Americas<br />
<strong>Knorr</strong> Brake Holding Corporation<br />
Watertown, NY (USA)*<br />
Indústria Freios <strong>Knorr</strong> Ltda.<br />
São Paulo (BR)<br />
Anchor Brake Shoe Company LLC (USA)<br />
Bendix Commercial Vehicle<br />
Systems LLC (USA)<br />
Bendix Spicer Foundation<br />
Brake LLC (USA)*<br />
IFE North America LLC (USA)<br />
<strong>Knorr</strong> Brake Corporation (USA)<br />
<strong>Knorr</strong> Brake Ltd. (CDN)<br />
Merak North America LLC (USA)<br />
New York Air Brake Corporation (USA)<br />
* Minority holding in subsidiary by<br />
non-group companies<br />
** 20 % stake held by Robert Bosch<br />
GmbH, Stuttgart (D)<br />
As per December 31, <strong>2010</strong><br />
<strong>Knorr</strong>-<strong>Bremse</strong> Sistemas para<br />
Veículos Comerciais Brasil Ltda. (BR)<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Sistemas para<br />
Veículos Ferroviários Ltda. (BR)<br />
Europe – Middle East – A<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Systeme für<br />
Schienenfahrzeuge GmbH<br />
Munich (D)<br />
Freinrail Systèmes Ferroviaires S.A. (F)<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Rail Systems Italia S.r.I. (I)<br />
IGE-CZ s.r.o. (CZ)<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Ges.m.b.H. (A)<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Nordic Rail Services AB (S)*<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Systemy dla Kolejowych<br />
Srodków Lokomocji PL Sp. z o.o. (PL)<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Rail Systems (UK) Ltd. (UK)<br />
<strong>Knorr</strong>-<strong>Bremse</strong> S.A. (Pty.) Ltd. (RSA)*<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Vasúti Jármű Rendszerek<br />
Hungária Kft. (H)<br />
Merak Sistemas Integrados de<br />
Climatización S.A. (E)<br />
Microelettrica Scientifica S.p.A. (I)<br />
Oerlikon-<strong>Knorr</strong> Eisenbahntechnik <strong>AG</strong> (CH)<br />
Sociedad Española de Frenos, Calefacción y<br />
Señales S.A. (E)*<br />
Dr. techn. Josef Zelisko Ges.m.b.H. (A)
Asia – Australia<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Asia Pacific<br />
(Holding) Ltd. Hong Kong (CHN)<br />
frica<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Systeme für<br />
Nutzfahrzeuge GmbH<br />
Munich (D)**<br />
Bost Ibérica S.L. (E)<br />
Hasse & Wrede GmbH (D)<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Benelux B.V.B.A. (B)<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Fékrendszerek Kft. (H)<br />
<strong>Knorr</strong>-<strong>Bremse</strong> KAMA Systems for<br />
Commercial Vehicles OOO (RUS)*<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Polska SfN Sp. z o.o. (PL)<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Sistemi per Autoveicoli<br />
Commerciali S.p.A. (I)<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Systèmes pour Véhicules<br />
Utilitaires France S.A. (F)<br />
<strong>Knorr</strong>-<strong>Bremse</strong> System för Tunga<br />
Fordon AB (S)<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Systems for<br />
Commercial Vehicles Ltd. (UK)<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Systémy pro užitková vozidla<br />
ČR, s.r.o. (CZ)<br />
Hasse & Wrede CVS Dalian, China Ltd. (CHN)*<br />
IFE-VICTALL Railway Vehicle Door Systems<br />
(Qingdao) Co., Ltd. (CHN)*<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Australia Pty. Ltd. (AUS)<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Brake Equipment (Shanghai) Co.,<br />
Ltd. (CHN)<br />
<strong>Knorr</strong>-<strong>Bremse</strong> CARS LD Vehicle Brake Disc<br />
Manufacturing (Beijing) Co., Ltd. (CHN)*<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Commercial Vehicle Systems<br />
Japan Ltd. (J)**<br />
<strong>Knorr</strong>-<strong>Bremse</strong> India Pvt. Ltd. (IND)<br />
<strong>Knorr</strong>-<strong>Bremse</strong> / Nankou Air Supply Unit (Beijing)<br />
Co., Ltd. (CHN)*<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Rail Systems Japan Ltd. (J)*<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Rail Systems Korea Ltd. (ROK)<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Braking Systems for Commercial<br />
Vehicles (Dalian) Co., Ltd. (CHN)<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Systems for Commercial Vehicles<br />
India Pvt. Ltd. (IND)<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Systems for Rail Vehicles<br />
(Suzhou) Co., Ltd. (CHN)<br />
Sigma Transit Systems Pty. Ltd. (AUS)<br />
SYDAC PTY. LTD. (AUS)<br />
Westinghouse Platform Screen Doors<br />
(Guangzhou) Ltd. (CHN)*
1/Overview<br />
04<br />
06<br />
08<br />
10<br />
12<br />
<strong>2010</strong> at a Glance<br />
The Executive Board of <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong><br />
The Supervisory Board of <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong><br />
<strong>Report</strong> of the Supervisory Board<br />
The State and Development of <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong><br />
and the <strong>Knorr</strong>-<strong>Bremse</strong> Group<br />
2/<strong>Report</strong>s<br />
38<br />
40<br />
42<br />
54<br />
64<br />
70<br />
76<br />
78<br />
82<br />
92<br />
98<br />
104<br />
Rail Vehicle Systems<br />
Markets<br />
Market Successes<br />
Projects<br />
Products<br />
Service<br />
Commercial Vehicle Systems<br />
Markets<br />
Market Successes<br />
Projects<br />
Products<br />
Service<br />
108<br />
110<br />
116<br />
124<br />
128<br />
Group<br />
<strong>Knorr</strong> Excellence<br />
Responsibility<br />
Employees<br />
Trade Fairs<br />
3/Consolidated<br />
Financial Statements<br />
134<br />
155<br />
156<br />
158<br />
159<br />
160<br />
161<br />
Notes to the Consolidated Financial Statements<br />
Consolidated Cash Flow Statement<br />
Segment <strong>Report</strong>ing<br />
Statement of Changes in Group Equity<br />
Independent Auditors’ <strong>Report</strong><br />
Consolidated Balance Sheet<br />
Consolidated Statement of Income<br />
3
<strong>2010</strong> at a Glance<br />
Bendix receives a “Top 5 Aftermarket<br />
Products <strong>2010</strong> Award” for the Tire<br />
Pressure Monitoring System (TPMS)<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Global Care celebrates its<br />
fifth anniversary<br />
<strong>Knorr</strong>-<strong>Bremse</strong> is granted UIC approval<br />
for wheel slide protection systems<br />
January<br />
The 1 millionth Air Processing Unit<br />
is manufactured in Kecskemét<br />
The <strong>2010</strong> Financial Statements<br />
Press Conference takes place at<br />
headquarters in Munich<br />
<strong>Knorr</strong>-<strong>Bremse</strong> is honored as<br />
“Best Investor Suzhou 2009”<br />
March<br />
<strong>Knorr</strong>-<strong>Bremse</strong> is voted “Best Brand<br />
in Commercial Vehicle Sector” for<br />
the fifth time running<br />
<strong>Knorr</strong>-<strong>Bremse</strong> and Berkelium Group set<br />
up the Icer Rail joint venture for production<br />
of organic brake shoes and pads<br />
A new assembly line for torsional<br />
vibration dampers is set up in Russia<br />
Standard & Poor‘s and Moody‘s<br />
raise <strong>Knorr</strong>-<strong>Bremse</strong>’s rating to A-<br />
(Outlook stable) and Baa1 (Outlook<br />
positive) respectively<br />
May<br />
February<br />
The <strong>Knorr</strong>-<strong>Bremse</strong> Aldersbach plant<br />
celebrates its 30th anniversary<br />
Sydac wins the “Top 20 South<br />
Australian Innovation Award”<br />
<strong>Knorr</strong>-<strong>Bremse</strong> India acquires the<br />
remaining shares in the Tata Autocomp.<br />
Systems Ltd. joint venture<br />
April<br />
By supplying the brake<br />
equipment for the Shinkansen E5<br />
<strong>Knorr</strong>-<strong>Bremse</strong> accesses the Japanese<br />
high-speed rail market<br />
<strong>Knorr</strong>-<strong>Bremse</strong> takes part in the<br />
nationwide “Logistics Day” in Germany<br />
<strong>Knorr</strong>-<strong>Bremse</strong> receives Elogistics Award<br />
Dresden University of<br />
Technology receives a brake<br />
test rig from <strong>Knorr</strong>-<strong>Bremse</strong><br />
<strong>Knorr</strong>-<strong>Bremse</strong> presents a brake exhibit<br />
to Deutsches Museum in Munich<br />
June<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Czech Republic opens a<br />
new Commercial Vehicle Systems plant<br />
A delegation from the City of Qingdao<br />
in China visits <strong>Knorr</strong>-<strong>Bremse</strong> in Munich<br />
Short-time working ends at Commercial<br />
Vehicle Systems in Germany
<strong>Knorr</strong>-<strong>Bremse</strong> Rail Vehicle Systems<br />
inaugurates a new plant in Budapest<br />
25th Truck Grand Prix at the<br />
Nürburgring: <strong>Knorr</strong>-<strong>Bremse</strong> goes<br />
racing with Team Hahn<br />
World Cup in South Africa: <strong>Knorr</strong>-<br />
<strong>Bremse</strong> supplies braking systems for<br />
Gautrain Electrostar trains<br />
“Efficient.Technology.Worldwide”:<br />
<strong>Knorr</strong>-<strong>Bremse</strong> showcases products<br />
and services at the key IAA and<br />
InnoTrans fairs<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Aldersbach produces<br />
its 20 millionth disc brake<br />
Merak manufactures HVAC systems<br />
with an eco-friendly refrigerant<br />
<strong>Knorr</strong>-<strong>Bremse</strong> strengthens the HVAC<br />
segment through the strategic<br />
acquisition of Sigma Coachair Group<br />
<strong>Knorr</strong>-<strong>Bremse</strong> sets up assembly of rail<br />
vehicle brake equipment in Russia<br />
<strong>Knorr</strong>-<strong>Bremse</strong> adopts a Group-wide<br />
corporate social responsibility strategy<br />
July September November<br />
August October December<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Commercial Vehicle<br />
Systems signs a joint venture agreement<br />
with CAFF in China<br />
<strong>Knorr</strong>-<strong>Bremse</strong> employees donate<br />
to help flood victims at <strong>Knorr</strong>-<strong>Bremse</strong><br />
in the Czech Republic<br />
A “Girls for Technology” camp is<br />
held at <strong>Knorr</strong>-<strong>Bremse</strong> in Munich<br />
Microelettrica Scientifica acquires a<br />
majority stake in Heine Resistors GmbH<br />
Global Care helps victims of an<br />
environmental disaster in Hungary<br />
<strong>Knorr</strong>-<strong>Bremse</strong> becomes a signatory to<br />
the UN Global Compact<br />
In Daxing, <strong>Knorr</strong>-<strong>Bremse</strong> produces<br />
the 100,000th brake disc for the<br />
Chinese market
6<br />
The Executive Board of <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong><br />
Klaus Deller
EXECUTIVE BOARD<br />
7<br />
Dr. Dieter Wilhelm<br />
Dr. Raimund Klinkner<br />
Chairman<br />
Dr. Lorenz Zwingmann
8<br />
The Supervisory Board of <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong><br />
Klaus<br />
Frank<br />
Werner<br />
Dr. Kurt<br />
Dr. Martin<br />
Manfred<br />
Gegen furtner*<br />
Hellmer*<br />
Ratzis berger*<br />
Kiethe<br />
Kimmich*<br />
Wennemer<br />
Aidenbach<br />
Munich<br />
Aldersbach<br />
Munich<br />
Munich<br />
Bensheim<br />
(since April 1, <strong>2010</strong>)<br />
(since July 1, <strong>2010</strong>)<br />
Toolmaker,<br />
Test engineer,<br />
Chairperson of the<br />
Attorney at law<br />
IG Metall Trade<br />
2nd Deputy<br />
<strong>Knorr</strong>-<strong>Bremse</strong><br />
<strong>Knorr</strong>-<strong>Bremse</strong><br />
Works Council of<br />
Union Secretary,<br />
Chairman,<br />
Systeme für<br />
Systeme für<br />
<strong>Knorr</strong>-<strong>Bremse</strong><br />
Munich Office<br />
Former Chairman of<br />
Nutzfahrzeuge<br />
Schienenfahrzeuge<br />
Systeme für<br />
the Executive Board<br />
GmbH<br />
GmbH<br />
Nutzfahrzeuge GmbH,<br />
of Continental <strong>AG</strong><br />
Aldersbach Plant<br />
Elfriede Hilger*, Munich (until March 31, <strong>2010</strong>)<br />
Chairperson of the General Works Council of <strong>Knorr</strong>-<strong>Bremse</strong> Systeme für Schienenfahrzeuge GmbH, Chairperson of the<br />
Works Council of <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong>, <strong>Knorr</strong>-<strong>Bremse</strong> Systeme für Schienenfahrzeuge GmbH, Munich Plant, and KB Media GmbH<br />
Daniela Fischer*, Bruckmühl (until June 30, <strong>2010</strong>)<br />
Head of the Legal Office of the IG Metall Trade Union, Munich Office
SUPERVISORY BOARD<br />
9<br />
Heinz Hermann<br />
Dr. Eduard<br />
Dr. h. c. Horst<br />
Dr. Hans-Peter<br />
Dr. Wolfram<br />
Heinz<br />
Thiele<br />
Gerum*<br />
Zimmer<br />
Binder<br />
Mörsdorf<br />
Hausner*<br />
Munich<br />
Rosenheim<br />
Lampertheim-<br />
Berg<br />
Essen<br />
Salzweg<br />
Hofheim<br />
Chairman,<br />
1st Deputy Chairman,<br />
Retd. Member<br />
Retd. Member<br />
Retd. Member of the<br />
Assistant Repre-<br />
Entrepreneur<br />
Vice President<br />
of the Board of<br />
of the Board of<br />
Executive Board of<br />
sentative of the IG<br />
Global R & D,<br />
Management of<br />
Management<br />
Thyssen-Krupp <strong>AG</strong><br />
Metall Trade Union,<br />
<strong>Knorr</strong>-<strong>Bremse</strong><br />
Mercedes-Benz <strong>AG</strong><br />
of Deutsche Bank<br />
Passau Office<br />
Systeme für<br />
<strong>AG</strong>, Munich Branch<br />
Nutzfahrzeuge GmbH<br />
*Employee representative
10<br />
<strong>Report</strong> of the Supervisory Board<br />
In the course of fiscal <strong>2010</strong>, the Supervisory Board concerned itself in detail with the state and<br />
development of <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong> and all Group companies.<br />
Along with important individual transactions and human<br />
resources decisions, this also included consideration of<br />
fundamental aspects of strategic direction and corporate<br />
planning. In addition, the Supervisory Board received regular<br />
reports from the Executive Board either in the course of<br />
its meetings or in written or oral form. The Supervisory<br />
Board examined important individual transactions, as well<br />
as deciding on items of business that required its approval<br />
either by law or in line with company statutes. The information<br />
and analyses upon which the decisions of the Supervisory<br />
Board were based were discussed and assessed<br />
in depth together with the Executive Board. In order to<br />
comply with the requirements of the German Accounting<br />
Law Modernization Act in terms of corporate governance,<br />
a second meeting of the Financial Statements Committee<br />
was held in mid year. At its meetings, the Financial Statements<br />
Committee dealt in particular with the supervision<br />
of the accounting process, the efficacy of the internal controlling<br />
system, the risk management system and the internal<br />
audit system, as well as the work of the auditors.<br />
Following the global financial and economic crisis in 2009,<br />
which led to substantial declines in sales and earnings, in<br />
fiscal <strong>2010</strong> the <strong>Knorr</strong>-<strong>Bremse</strong> Group was able to increase<br />
sales to EUR 3.71 billion (2009: EUR 2.76 billion). This figure<br />
includes positive currency translation effects in the amount<br />
of approximately EUR 170 million. The Rail Vehicle Systems<br />
division posted further sales growth on the back of the<br />
marked expansion of its business in the passenger transport<br />
sector, above all in Asia where sales more than doubled.<br />
The Commercial Vehicle Systems division benefitted<br />
from the unexpected pace of recovery in markets across all<br />
regions. Yet despite the rise in activity in the commercial<br />
vehicle sector, in <strong>2010</strong> the markets in Europe and North<br />
America remained well below their pre-crisis level.<br />
To safeguard the future development of the company, in<br />
<strong>2010</strong> <strong>Knorr</strong>-<strong>Bremse</strong> continued to invest in the strategic development<br />
and expansion of its production plants. In the<br />
year under review, both the Rail Vehicle Systems plant in<br />
Budapest, Hungary, and the new Commercial Vehicle Systems<br />
plant in Liberec, Czech Republic, were inaugurated.<br />
As well as bringing an increase in capacities in the Rail Vehicle<br />
Systems sector, these new facilities also allow the<br />
company to implement advanced production and logistics<br />
concepts. Also in the year under review, the Rail Vehicle<br />
Systems plant in Suzhou, China, was expanded.<br />
In addition to organic growth, the year under review saw<br />
corporate strategy continue to focus on targeted acquisitions<br />
and joint ventures with the aim of optimizing the<br />
product portfolio. In the rail vehicle sector the acquisition<br />
of the business of the Sigma Coachair Group in Wetherill<br />
Park, Sydney, Australia, and of Heine Resistors in Dresden,<br />
Germany, reinforced the portfolio in the fields of air conditioning<br />
systems and band resistors respectively. Also,<br />
through the joint venture with the Icer Brakes company,<br />
the product portfolio was further expanded to include organic<br />
brake pads and brake shoes. In the commercial vehicle<br />
sector, the signing of a preliminary contract governing<br />
the establishment of a joint venture with the Chinese<br />
company CAFF for the production of commercial vehicle<br />
brake system and drivetrain components marked an important<br />
strategic step in the world’s largest commercial<br />
vehicle market. The final contract was closed in January<br />
2011.<br />
Against the backdrop of rising sales, the company’s top priority<br />
remained ensuring the highest quality standards. This<br />
was achieved not only through the quality assurance processes<br />
in place across the Group but also by means of targeted<br />
human resource development. By way of examples,<br />
two key modules were added to the Group-wide “<strong>Knorr</strong><br />
Excellence” initiative: the FIT (Finance & IT Excellence) initiative<br />
aims to make <strong>Knorr</strong>-<strong>Bremse</strong> best in class in the long<br />
term in these two areas, while the PEX (People Excellence)<br />
initiative was set up in response to the competition for the<br />
best specialist and management staff in the employment<br />
market.<br />
The <strong>2010</strong> Financial Statements and the Management <strong>Report</strong><br />
on <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong>, the <strong>2010</strong> Consolidated Financial
SUPERVISORY BOARD<br />
11<br />
Statements and the Management <strong>Report</strong> on the <strong>Knorr</strong>-<br />
<strong>Bremse</strong> Group drawn up by the Executive Board, and the<br />
company‘s accounts were examined by the auditors elected<br />
by the <strong>Annual</strong> Shareholders‘ Meeting, KPMG <strong>AG</strong><br />
Wirtschaftsprüfungsgesellschaft, Munich, and endorsed<br />
with their unqualified opinion dated March 2, 2011. The<br />
Supervisory Board also examined the Financial Statements<br />
for fiscal <strong>2010</strong>, the Management <strong>Report</strong>, the proposed allocation<br />
of unappropriated retained earnings, and the<br />
Consolidated Financial Statements and Management <strong>Report</strong><br />
on the <strong>Knorr</strong>-<strong>Bremse</strong> Group. No objections were<br />
raised. At its meeting on March 18, 2011, the Supervisory<br />
Board approved the <strong>2010</strong> Financial Statements, which<br />
thereby became legally binding. The Supervisory Board<br />
concurs with the Executive Board’s proposal for the allocation<br />
of unappropriated retained earnings. The Consolidated<br />
Financial Statements were also approved.<br />
The auditors attended the meeting of the financial statements<br />
committee on February 25, 2011 as well as the financial<br />
statements meeting of the Supervisory Board on<br />
March 18, 2011, reported on their key findings and answered<br />
outstanding questions.<br />
KPMG <strong>AG</strong> Wirtschaftsprüfungsgesellschaft, Munich, also<br />
examined the Executive Board‘s report on relations with affiliated<br />
companies, drawn up in line with Paragraph 312<br />
German Corporation Law (AktG). The auditors endorsed<br />
this report with the following opinion:<br />
“Having audited and assessed this report in accordance<br />
with professional standards, we confirm that: 1. The factual<br />
contents of the report are correct. 2. The consideration furnished<br />
by the Company in the legal transactions set out in<br />
the report was not unreasonably high.“<br />
The Supervisory Board also examined the Executive Board‘s<br />
report on relations with affiliated companies and has no<br />
objections to the concluding statement by the Executive<br />
Board or to the auditors‘ findings.<br />
On March 31, <strong>2010</strong> Ms Elfriede Hilger stepped down from<br />
her position as an employee representative on the Supervisory<br />
Board of <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong>. Frank Hellmer, who was<br />
elected at the Supervisory Board elections in 2008 to replace<br />
Ms Hilger should she leave the Board, joined the<br />
Board on April 1, <strong>2010</strong>. On behalf of <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong> the<br />
Supervisory Board wishes to express its sincere thanks to<br />
Ms Hilger for her long-standing and committed contributions<br />
to its work.<br />
On June 30, <strong>2010</strong>, Ms Daniela Fischer stepped down from<br />
her position on the Supervisory Board of <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong>.<br />
Effective July 1, <strong>2010</strong>, Dr. Martin Kimmich was appointed<br />
by the Munich Registration Court to replace Ms Fischer as<br />
an employee representative on the Supervisory Board. The<br />
Supervisory Board wishes to thank Ms Fischer for her contributions<br />
to its work.<br />
It is with a deep sense of gratitude that we honor the<br />
memory of Dr.-Ing. E. h. Wilfried Lochte, who passed away<br />
on March 7, 2011. Dr. Lochte was a member of the Supervisory<br />
Board of <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong> and of the Supervisory<br />
Board of <strong>Knorr</strong>-<strong>Bremse</strong> Systeme für Nutzfahrzeuge GmbH<br />
from 1993 to 2008. With his extensive experience and pronounced<br />
entrepreneurial thinking, throughout this period<br />
Dr. Lochte stewarded the progress of <strong>Knorr</strong>-<strong>Bremse</strong> with<br />
great commitment and was instrumental in shaping the<br />
company’s development through fundamental decisions<br />
on its strategic direction. He played a decisive part in enabling<br />
<strong>Knorr</strong>-<strong>Bremse</strong> to become established as global market<br />
leader in the rail vehicle systems and commercial vehicle<br />
systems sectors. He maintained close, friendly and<br />
trusting relations with the company’s shareholders. We will<br />
not forget him.<br />
Munich, March 18, 2011<br />
The Supervisory Board<br />
Heinz Hermann Thiele<br />
Chairman
1/<br />
Management <strong>Report</strong><br />
In fiscal <strong>2010</strong> the <strong>Knorr</strong>-<strong>Bremse</strong> Group reported sales of EUR 3.71 billion, up<br />
by 34% or almost EUR 1 billion (2009: EUR 2.76 billion). Sales at the Rail Vehicle<br />
Systems division moved ahead to EUR 2.02 billion (2009: EUR 1.55 billion).<br />
The increase was primarily driven by a steep rise in sales of over 100% in Asia,<br />
where <strong>Knorr</strong>-<strong>Bremse</strong> has been progressively expanding its market presence<br />
since the late 1980s. In <strong>2010</strong> the Commercial Vehicle Systems division of<br />
<strong>Knorr</strong>-<strong>Bremse</strong> benefitted from the increasing pace of recovery of commercial<br />
vehicle markets, posting sales of EUR 1.70 billion (2009: EUR 1.22 billion).<br />
Despite the rise in activity in the commercial vehicle sector, however, in <strong>2010</strong><br />
the markets in Europe and North America remained well below their pre-crisis<br />
level.
14<br />
The State and Development<br />
of <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong> and the<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Group<br />
An overview of the<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Group<br />
General economic<br />
developments<br />
The <strong>Knorr</strong>-<strong>Bremse</strong> Group is the world‘s leading manufacturer<br />
of braking systems for rail and commercial vehicles.<br />
For more than 100 years now the company has pioneered<br />
the development, production, marketing and servicing of<br />
state-of-the-art braking systems. Other lines of business in<br />
the rail vehicle systems sector include automatic, electropneumatic<br />
or electric door systems, air conditioning systems,<br />
control components and windscreen wiper systems,<br />
as well as platform screen doors. In the commercial vehicle<br />
systems sector, the product range includes complete braking<br />
systems with driver assistance systems, as well as torsional<br />
vibration dampers and powertrain-related solutions<br />
such as the Pneumatic Booster System (PBS) and transmission<br />
control systems for enhanced energy efficiency and<br />
fuel economy.<br />
The structure of the <strong>Knorr</strong>-<strong>Bremse</strong> Group is based on the<br />
regions Europe, North America and South America, and<br />
Asia/Australia, and the development of the Group is geared<br />
to meeting the specific requirements of the markets and<br />
customers in these regions.<br />
This regional organizational structure is designed to offer<br />
globally active customers uniform technical platforms<br />
worldwide, while at the same time taking specific local<br />
needs into account. It also ensures that customers who operate<br />
on a regional basis are supplied with globally proven<br />
systems and components.<br />
The negative economic background conditions caused by<br />
the global economic and financial crisis that dominated<br />
2008 and 2009 improved in <strong>2010</strong> and a relatively robust if<br />
regionally different real-market recovery set in.<br />
The emerging economies of Asia continued to drive the<br />
recovery. The relative contributions to growth of the<br />
emerging and industrialized nations showed the same<br />
marked divergent progression as they had during the crisis.<br />
In <strong>2010</strong>, average growth among the emerging nations<br />
was 7.1%, while the industrialized nations posted just 3.0%<br />
growth on average. Global figures are expected to show<br />
overall economic growth of around 5.0% (2009: minus<br />
0.6%).<br />
As the global markets recovered, the economic performance<br />
of the Eurozone also stabilized in <strong>2010</strong>. Following a<br />
4.1% decline in 2009, economic output rose 1.8% in <strong>2010</strong>.<br />
With GDP growth of 3.6% (2008: minus 4.7%) which was<br />
above average for the region, Germany made a substantial<br />
contribution to ensuring greater stability. As an exportoriented<br />
economy, Germany was initially harder hit by the<br />
collapse of global trade, but then benefitted more strongly<br />
from its recovery in <strong>2010</strong> than other Eurozone countries.<br />
With commodity prices firming up, Russia too with its<br />
marked dependency on energy exports saw GDP rise 3.7%<br />
(2009: minus 7.9%).
MAN<strong>AG</strong>EMENT REPORT<br />
15<br />
3,121<br />
3,251<br />
3,384<br />
3,712<br />
2,423<br />
2,743<br />
2,761<br />
239<br />
130<br />
154<br />
185<br />
198<br />
192<br />
99<br />
2004 2005 2006 2007 2008 2009 <strong>2010</strong><br />
Sales and net income for the <strong>Knorr</strong>-<strong>Bremse</strong> Group in EUR millions<br />
Sales<br />
Net income<br />
In the USA, by contrast, the markets remained under pressure.<br />
Economic output rose 2.8% (2009: minus 2.6%) on the<br />
back of growing stability in the real estate sector. The Brazilian<br />
economy presented a far more positive picture, with<br />
economic output showing year-on-year growth of 7.5% in<br />
<strong>2010</strong> (2009: minus 0.6%).<br />
Along with Brazil, it was China and India in particular that<br />
drove global economic growth in <strong>2010</strong>. In China GDP was<br />
up 10.3% in <strong>2010</strong> (2009: 9.2%), while India saw GDP rise<br />
9.7% (2009: 5.7%). In Japan too, industrial output again<br />
showed moderate growth, while GDP moved ahead 4.3%<br />
in the year under review (2009: minus 6.3%).<br />
Firmer commodity prices supported global market stabilization<br />
in <strong>2010</strong>. After peaking at USD 140 per barrel in 2008<br />
and falling to below USD 40 in 2009, the price of oil settled<br />
at around USD 90 per barrel at the end of <strong>2010</strong>. Aluminum<br />
prices followed a similar pattern and stabilized at around<br />
USD 2,400/t (top price in 2008 approx. USD 3,300/t, lowest<br />
price in 2009 approx. USD 1,300/t). On the balance sheet<br />
date, the value of the US dollar – which lines up alongside<br />
the euro as one of the Group’s main operating currencies<br />
– had risen 7.2% against the euro compared to December<br />
31, 2009, with one euro worth USD 1.34. As an annual average,<br />
the euro was worth USD 1.32.
16<br />
Development of the <strong>Knorr</strong>-<strong>Bremse</strong><br />
Group in <strong>2010</strong><br />
Consolidated sales for the <strong>Knorr</strong>-<strong>Bremse</strong> Group were up<br />
34% from EUR 2,760.9 million in 2009 to EUR 3,712.2 million<br />
in <strong>2010</strong>. This figure includes positive currency translation<br />
effects in the amount of approximately EUR 170 million. In<br />
an improving but still volatile economic environment, the<br />
company benefited from its strong strategic position with<br />
two divisions, Rail Vehicle Systems and Commercial Vehicle<br />
Systems, in markets that developed differently.<br />
The Rail Vehicle Systems division showed a positive development<br />
in the year under review, stepping up sales to EUR<br />
2,024.4 million (2009: EUR 1,552.6 million). The increase was<br />
primarily driven by a steep rise in sales of over 100% in Asia,<br />
where <strong>Knorr</strong>-<strong>Bremse</strong> has been progressively expanding its<br />
market presence since the late 1980s.<br />
In <strong>2010</strong> the Commercial Vehicle Systems division benefitted<br />
from the increasing pace of recovery of the commercial vehicle<br />
markets, posting sales of EUR 1,700.7 million (2009: EUR<br />
1,221.5 million). One major focus of commercial vehicle activities<br />
in the year under review was on expansion in China.<br />
The business environment by sector<br />
The Group benefitted decisively from the recovery of the<br />
global markets and the resultant increase in the volume of<br />
freight transportation – although with major differences<br />
from one region to the next.<br />
Despite a modest rise in transportation volumes, demand<br />
in the rail freight sector in the North and South America<br />
region and in Europe remained subdued. This was reflected<br />
in <strong>2010</strong> by a further 30% fall in demand for freight cars<br />
in Europe (2009: minus 31%) and by a 32% decline in North<br />
America (2009: minus 63%). In the rail-borne passenger<br />
transportation sector major projects were postponed or<br />
cancelled in Europe and North America. The Asian market,<br />
by contrast, showed positive development in both the<br />
freight and passenger sectors.<br />
Following a 25% slump in worldwide truck output in 2009,<br />
the year under review saw global truck production rise<br />
48%. In Europe, where a record year in 2008 was followed<br />
by the sharpest downturn in any region, truck production<br />
was 55% up in <strong>2010</strong> (2009: minus 63%). The North American<br />
market witnessed its first upswing since 2006, growing<br />
23% in the year under review (2009: minus 37%). In South<br />
America, truck output was 56% up in <strong>2010</strong> (2009: minus<br />
29%). The Asian region showed further growth in <strong>2010</strong><br />
with truck production rising 52% (2009: 1%). Aftermarket<br />
business also benefitted from these positive developments<br />
across all regions and posted further growth in<br />
<strong>2010</strong>.<br />
Acquisitions, additions and joint ventures<br />
In the year under review <strong>Knorr</strong>-<strong>Bremse</strong> continued its strategy<br />
of improving its market position through targeted acquisitions.<br />
In the first quarter of the year under review, <strong>Knorr</strong>-<strong>Bremse</strong><br />
Asia Pacific (Holding) Ltd., Hong Kong, China, and <strong>Knorr</strong>-<br />
<strong>Bremse</strong> <strong>AG</strong>, Munich, Germany, acquired the 26% stake held<br />
by Tata Autocomp. Systems Ltd., Pune, India, in the joint<br />
venture <strong>Knorr</strong>-<strong>Bremse</strong> Systems for Commercial Vehicles India<br />
Private Ltd., Pune, India. <strong>Knorr</strong>-<strong>Bremse</strong> is now the sole<br />
owner of the company. The acquisition of the outstanding<br />
shares took place by mutual agreement between the joint<br />
venture partners.<br />
To further strengthen its position in the rail vehicle brake<br />
pad business, <strong>Knorr</strong>-<strong>Bremse</strong> entered into a joint venture for<br />
the development and production of organic brake pads<br />
and brake shoes. The company is called Icer Rail S.L., and is<br />
based in Pamplona, Spain. The two joint venture partners<br />
are <strong>Knorr</strong>-<strong>Bremse</strong> Group subsidiary Sociedad Española de<br />
Frenos, Getafe, Spain, and Icer Brakes S.A., Pamplona, Spain,<br />
a member of the Spanish Berkelium Group. <strong>Knorr</strong>-<strong>Bremse</strong><br />
originally accessed the brake pad business in 2008 with
MAN<strong>AG</strong>EMENT REPORT<br />
17<br />
the acquisition of Anchor Brake Shoe LLC, West Chicago,<br />
USA.<br />
<strong>Knorr</strong>-<strong>Bremse</strong> subsidiary <strong>Knorr</strong>-<strong>Bremse</strong> Asia Pacific (Holding)<br />
Ltd., Hong Kong, China, acquired the Australian heating,<br />
ventilation and air-conditioning (HVAC) systems specialist<br />
Sigma Transit Systems Pty. Ltd., Wetherill Park,<br />
Australia. While <strong>Knorr</strong>-<strong>Bremse</strong> has to date supplied HVAC<br />
systems primarily in China, Europe and the Americas, this<br />
move will enable the company to access the growth markets<br />
of Southeast Asia, India and Australia in particular. As a<br />
result of the acquisition, the <strong>Knorr</strong>-<strong>Bremse</strong> Group is now<br />
the world‘s leading manufacturer of rail vehicle HVAC systems.<br />
By acquiring a majority stake in Heine Resistors GmbH, a<br />
manufacturer of special-purpose resistors based in Dresden,<br />
Germany, <strong>Knorr</strong>-<strong>Bremse</strong> subsidiary Microelettrica Scientifica<br />
S.p.A., Milan, Italy, reinforced its capabilities in the<br />
field of power systems. With decades of experience, Heine<br />
ranks among the most renowned developers and manufacturers<br />
of resistors for drive technology and rail vehicles.<br />
<strong>Knorr</strong>-<strong>Bremse</strong> subsidiary <strong>Knorr</strong>-<strong>Bremse</strong> Rail Systems (UK)<br />
Ltd., Melksham, UK, acquired the main electronic components<br />
business of Precimax Precision Engineering Ltd., Bristol,<br />
UK.<br />
Overall, these acquisitions had no substantial effect on the<br />
assets, financial status and profitability of the <strong>Knorr</strong>-<strong>Bremse</strong><br />
Group in fiscal <strong>2010</strong>.<br />
Major projects<br />
<strong>Knorr</strong>-<strong>Bremse</strong> made good use of the healthier business environment<br />
in <strong>2010</strong> to pursue its strategy of safeguarding<br />
the company’s long-term health as well as to drive forward<br />
numerous projects. Aligned with <strong>Knorr</strong>-<strong>Bremse</strong>’s regional<br />
approach, this enabled the company to further enhance its<br />
global market position in a series of business areas and<br />
thereby ensure its commercial success.<br />
As part of the ongoing strategic development of the<br />
Group‘s production plants, the new Rail Vehicle Systems<br />
plant in Budapest was opened in July <strong>2010</strong>. As well as<br />
boosting capacity, under the heading of the “5-day factory”<br />
the new plant also implements innovative production and<br />
logistics concepts based on the globally standardized<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Production System (KPS). The new development<br />
and production facility replaces the old factory located<br />
in the immediate vicinity.<br />
At the new factory, <strong>Knorr</strong>-<strong>Bremse</strong> manufactures bogie<br />
equipment components such as brake caliper units and<br />
block brakes. The product portfolio also includes brake<br />
control components, such as brake panels and valves, as<br />
well as a virtually complete range of components for<br />
freight cars and individual air supply elements. Along with<br />
the production facilities, <strong>Knorr</strong>-<strong>Bremse</strong> has also expanded<br />
the research and development function at the new plant.<br />
The primary focus here is on brake actuators, software,<br />
technical calculation and testing.<br />
June <strong>2010</strong> also witnessed the official opening of a new<br />
Commercial Vehicle Systems plant in Liberec (Czech Republic).<br />
As a value stream factory, like the Budapest plant<br />
this new facility too permits the KPS-based implementation<br />
of advanced production and logistics concepts. In Liberec<br />
<strong>Knorr</strong>-<strong>Bremse</strong> manufactures commercial vehicle<br />
braking system components such as brake cylinders and<br />
clutch servo units, foot- and handbrake valves, and air dryer<br />
cartridges. When the transfer of operations had been<br />
completed, the former production facility in Hejnice was<br />
closed down.<br />
In China the Rail Vehicle Systems division geared up to<br />
meet the ever-increasing market requirements and invested<br />
in the progressive expansion of production capacity. At
18<br />
the Daxing site a new production plant for brake discs for<br />
mainline rail vehicles came on stream in April of the year<br />
under review. In Wuxi two new production shops were<br />
added for HVAC systems for high-speed trains and new<br />
production equipment was installed. At Qingdao the production<br />
facilities for door systems were extended in response<br />
to higher demand. And on account of the substantial<br />
growth in China, <strong>2010</strong> saw the renewed expansion of<br />
the Suzhou site, which was only founded in 2005 and first<br />
expanded in 2007. The additions in <strong>2010</strong> brought an extra<br />
5,700 m² of production space, with offices and social areas<br />
covering around 3,300 m².<br />
Both divisions expanded their production capacities in<br />
Russia in the year under review. The Rail Vehicle Systems<br />
division joined forces with OAO Vagonremmash, a subsidiary<br />
of Russian Railways RZD to set up an assembly line for<br />
disc brakes and compressors in Voronezh, which is slated<br />
to start production in 2011. The start of production will<br />
mark a major milestone in the ongoing expansion of the<br />
company’s presence in the highly promising Russian rail<br />
market. In May <strong>2010</strong> the Commercial Vehicle Systems division<br />
inaugurated the first torsional vibration dampers assembly<br />
line at its <strong>Knorr</strong>-<strong>Bremse</strong> KAMA joint venture in Naberezhnye<br />
Chelny. The new line expands the product<br />
portfolio of the joint venture, which was previously focused<br />
on drum brakes.<br />
Quality and processes<br />
<strong>Knorr</strong>-<strong>Bremse</strong> continues to target best-in-class processes<br />
as the foundation on which its competitive capabilities are<br />
based. In <strong>2010</strong>, processes and structures were again reviewed<br />
and enhanced across all key areas.<br />
The <strong>Knorr</strong>Excellence (KE) business model which has now<br />
been rolled out across the Group was again enhanced in<br />
<strong>2010</strong> and two new initiatives were added.<br />
The FIT initiative (Finance & IT Excellence) brought the integration<br />
of processes from the areas of finance and IT into<br />
the KE model. The aim of the initiative is to prepare the organization<br />
to face future challenges by establishing bestin-class<br />
processes in the fields of finance and IT.<br />
The PEX initiative (People Excellence) involved upgrading<br />
existing human resources and executive development<br />
tools and adding new ones. The aim of the initiative is to<br />
promote qualified and talented employees at <strong>Knorr</strong>-<br />
<strong>Bremse</strong> and retain them in the long term. In PEX, <strong>Knorr</strong>-<br />
<strong>Bremse</strong> has created a pioneering basis for the ongoing<br />
enhancement of its own leadership culture.<br />
Q-First stands for the optimization of three aspects: professional<br />
project management, a robust product development<br />
process, and a zero defect strategy in the production<br />
and assembly sectors, in the interest of attaining even<br />
higher quality. Other aspects also pursued successfully in<br />
<strong>2010</strong> included stabilizing supplier structures and improving<br />
the sustainable resolution of complaints.<br />
One focus of the <strong>Knorr</strong>-<strong>Bremse</strong> Production System (KPS) in<br />
<strong>2010</strong> was on the optimization of entire value streams. The<br />
aim of a holistic value stream approach is to be able to respond<br />
faster and more flexibly to customer wishes. In the<br />
year under review the foundations for this approach were<br />
reinforced at methodology level as well as in the course of<br />
actual projects. At the new factories in Budapest and Liberec,<br />
for example, the production processes were interlinked<br />
in such a way that throughput times were substantially<br />
reduced. This approach was not restricted to newly<br />
built facilities, however; workshops were also held to adapt<br />
it to existing plants such as Berlin, Germany, and Melksham,<br />
UK.<br />
In the Rail Vehicle Systems division, one key measure was<br />
to anchor the specific requirements of the International<br />
Railway Industry Standard (IRIS) in the various processes
MAN<strong>AG</strong>EMENT REPORT<br />
19<br />
Assets, financial status and profitability<br />
and ensure compliance across all plants. In <strong>2010</strong> all <strong>Knorr</strong>-<br />
<strong>Bremse</strong> plants worked hard to meet the new and more<br />
rigorous requirements of IRIS Revision 02 and were rewarded<br />
by recertification.<br />
For several years now the Strong Focus program has successfully<br />
brought together all activities designed to boost<br />
productivity, cut costs and promote growth. As part of a<br />
multi-year forward projection, valuable ideas submitted by<br />
the workforce and management are collected, evaluated<br />
and gradually implemented. In <strong>2010</strong> this brought further<br />
substantial cost savings and improvements in productivity<br />
along the value chain, helping safeguard the company‘s<br />
competitiveness.<br />
In <strong>2010</strong> the main factors in the development of the <strong>Knorr</strong>-<br />
<strong>Bremse</strong> Group’s business were growth in the rail vehicle<br />
sector, which varied from one region to the next, and the<br />
incipient recovery of the commercial vehicle markets.<br />
Consolidated sales rose 34.5% in <strong>2010</strong> to EUR 3,712.2 million<br />
(2009: EUR 2,760.9 million). In Europe, consolidated<br />
sales were up 16.0% to EUR 1,886.0 million (2009: EUR<br />
1,626.0 million), which corresponds to 50.8% of the consolidated<br />
total (2009: 58.9%). The Americas contributed<br />
EUR 827.0 million (2009: EUR 620.4 million) or 22.3% (2009:<br />
22.5%) to consolidated sales. In the Asia/Australia region,<br />
sales amounted to EUR 999.2 million (2009: EUR 514.5 million),<br />
which equates to 26.9% (2009: 18.6%) of the consolidated<br />
total.<br />
Incoming orders were valued at EUR 4,040.0 million (2009:<br />
EUR 3,184.5 million), 8.8% above the level of annual sales<br />
and 26.9% up on the previous year, exceeding the EUR 4<br />
billion mark for the first time. Orders on the books at the<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Group rose 17.8% in the year under review<br />
to EUR 3,381.8 million (2009: EUR 2,870.7 million).<br />
Net income for the <strong>Knorr</strong>-<strong>Bremse</strong> Group was up 142.5% in<br />
the year under review to EUR 239.4 million (2009: EUR 98.7<br />
million). Net return on sales reached 6.4% (2009: 3.6%). The<br />
European region contributed EUR 109.8 million to net income,<br />
corresponding to a net return on sales of 5.8%. Net<br />
income from the Americas totaled EUR 47.3 million, with a<br />
net return on sales of 5.7%. The Asia/Australia region posted<br />
net income of EUR 82.3 million, which equates to a net<br />
return on sales of 8.2%.<br />
The consolidated balance sheet total rose 31.8% in <strong>2010</strong> to<br />
EUR 2,194.2 million (2009: EUR 1,664.4 million), largely influenced<br />
by the sales-led increase in accounts receivable<br />
and inventories, and the rise in liquid funds. At year-end<br />
<strong>2010</strong>, total assets represented 59.1% of sales. As a proportion<br />
of the balance sheet total, intangibles, fixed assets,
20<br />
Overall assessment of the economic<br />
position of the Group<br />
and investments were down against the prior-year level to<br />
36.5% (2009: 42.4%). Working capital, defined as the sum of<br />
inventories and accounts receivable, minus accounts payable<br />
trade, rose as a result of the increased volume of orders<br />
to EUR 415.6 million at year-end (2009: EUR 289.2 million)<br />
or 40.3 days’ sales (2009: 37.7 days). The equity ratio<br />
rose by 2.4 percentage points from 32.0% to 34.4%.<br />
Of the Group’s total assets, 45.5% are in the European region,<br />
23.9% in the Americas, and 30.6% in the Asia/Australia<br />
region. The improvement of EUR 215.0 million in net liquidity<br />
to EUR 202.3 million was achieved primarily by an<br />
inflow of funds from cash flows from operating activities in<br />
the amount of EUR 456.4 million. Substantial capital requirements<br />
were generated in <strong>2010</strong> by investments (EUR<br />
113.4 million) and the acquisition of Sigma Transit Systems<br />
Pty. Ltd., Wetherill Park, Sydney, Australia, and Heine Resistors<br />
GmbH, Dresden, Germany. The ratio of net liquidity to<br />
shareholders‘ equity stood at 26.8%. In 2009 the ratio of<br />
net indebtedness to shareholders’ equity (gearing) was minus<br />
2.4%.<br />
<strong>Knorr</strong>-<strong>Bremse</strong>‘s robust strategic positioning, the positive<br />
development of the company‘s business and its excellent<br />
working capital management were confirmed by the external<br />
rating agencies Standard & Poor’s and Moody’s, who<br />
have been rating the <strong>Knorr</strong>-<strong>Bremse</strong> Group since 2000.<br />
Moody‘s awarded <strong>Knorr</strong>-<strong>Bremse</strong> a “Baa1/Outlook positive”<br />
rating, while Standard & Poor‘s rated the company “A-/Outlook<br />
stable”. That makes <strong>Knorr</strong>-<strong>Bremse</strong> the only familyowned<br />
company in the Standard & Poor‘s “Global Automotive<br />
Suppliers Ranking <strong>2010</strong>” with investment grade status<br />
to be awarded an “A” rating.<br />
Within the general economic environment described<br />
above, the <strong>Knorr</strong>-<strong>Bremse</strong> Group has maintained its overall<br />
position with regard to its assets and financial status. The<br />
Group, which was already almost free of debt at the end of<br />
2009, was able to build up substantial net liquidity in <strong>2010</strong>.<br />
The Group’s profitability was ensured by rigorous cost<br />
management and above all by the internal optimization of<br />
processes and structures.<br />
With an equity ratio of 34.4% and net liquidity of EUR 202.3<br />
million, the structure of the Group’s assets is extremely<br />
stable, so that it can continue to readily meet its financial<br />
obligations.<br />
<strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong><br />
As the parent company, <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong> performs the<br />
role of service provider and holding company, as well as a<br />
strategic management function on the operational side.<br />
The marked decline in income from investments in associated<br />
and related companies meant that income before<br />
taxation fell to EUR 119.3 million in the year under review<br />
(2009: EUR 141.7 million). At EUR 81.9 million, net income<br />
for the year was higher than the dividend paid out in <strong>2010</strong><br />
in the amount of EUR 52.0 million, so that the unappropriated<br />
retained earnings of <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong> increased by<br />
EUR 29.9 million to EUR 262.6 million (2009: EUR 232.7 million).<br />
Along with interests in affiliated companies, the balance<br />
sheet of <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong> largely reflects receivables from<br />
and payables to Group companies and these are centrally<br />
administered, partly within the framework of the cashpooling<br />
process managed by <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong>.<br />
All business processes within the parent company <strong>Knorr</strong>-<br />
<strong>Bremse</strong> <strong>AG</strong> are analyzed, documented and optimized with<br />
the aid of <strong>Knorr</strong> Excellence.
MAN<strong>AG</strong>EMENT REPORT<br />
21<br />
Appropriation of retained earnings<br />
<strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong> posted unappropriated retained earnings<br />
of EUR 262.6 million in <strong>2010</strong> (2009: EUR 232.7 million).<br />
The <strong>Annual</strong> Shareholders Meeting will be asked to approve<br />
the proposal that an amount of EUR 156.0 million from the<br />
unappropriated retained earnings of <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong> be<br />
used to pay a dividend of EUR 60.00 per dividend-bearing<br />
share with a par value of EUR 26.00, with the balance to be<br />
carried forward to new account.<br />
Relations with affiliated companies<br />
KB Holding GmbH, Grünwald, Germany, directly holds<br />
more than half the share capital of <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong>. Pursuant<br />
to § 312 German Corporation Law (AktG), a report on<br />
relations with affiliated companies has been drawn up<br />
which includes the following statement: “In the legal transactions<br />
listed in the <strong>Report</strong> on Relations with Affiliated<br />
Companies, in accordance with the circumstances known<br />
to us at the time at which the said transactions took place,<br />
our company received appropriate counter-performance<br />
in each case.” The report was audited by the Auditors and<br />
received their unqualified opinion.<br />
Assets<br />
Liabilities<br />
Balance sheet total<br />
in EUR millions<br />
1,664.4<br />
2,194.2<br />
1,664.4<br />
2,194.2<br />
Balance sheet total<br />
in EUR millions<br />
FIxed assets/intangibles<br />
40%<br />
34%<br />
32%<br />
34%<br />
Shareholders’ equity<br />
Investments<br />
2%<br />
3%<br />
10%<br />
9%<br />
Pension accurals<br />
Current assets/RAP<br />
49%<br />
49%<br />
48%<br />
52%<br />
Short-term debt<br />
Liquid assets<br />
9%<br />
14%<br />
10%<br />
5%<br />
Borrowings<br />
2009 <strong>2010</strong> 2009 <strong>2010</strong><br />
Structure of assets, liabilities and finances of the <strong>Knorr</strong>-<strong>Bremse</strong> Group
22<br />
Regional developments by division<br />
In the year under review, the Rail Vehicle Systems division<br />
contributed EUR 2,024.4 million (2009: EUR 1,552.6 million)<br />
to consolidated Group sales and the Commercial Vehicle<br />
Systems division EUR 1,700.7 million (2009: EUR 1,221.5<br />
million). The growing buoyancy of the commercial vehicle<br />
markets led to convergence of the contribution to sales of<br />
the two divisions in <strong>2010</strong>. The Commercial Vehicle Systems<br />
division accounted for 46% (2009: 44%) and the Rail Vehicle<br />
Systems division for 54% (2009: 56%) of consolidated<br />
sales.<br />
The development of the two divisions is set out below for<br />
the individual regions that make up the Group.<br />
Europe<br />
Rail Vehicle Systems<br />
The decline in rail freight transportation that set in towards<br />
the end of 2008 under the influence of the financial and<br />
economic crisis continued in the year under review, with a<br />
sustained impact on the market situation for the Rail Vehicle<br />
Systems division in both the original equipment and<br />
aftermarket sectors. Compared to the previous year, far<br />
fewer freight cars and locomotives were purchased in<br />
<strong>2010</strong>. Production of freight cars was down by around 30%<br />
year-on-year, with locomotive output falling approximately<br />
20%. In addition, in the European passenger transportation<br />
sector several projects were postponed or cancelled<br />
in <strong>2010</strong>. In the UK in particular, three major projects were<br />
shelved on account of local financial difficulties.<br />
Despite the prevailing challenging market situation in Europe,<br />
<strong>Knorr</strong>-<strong>Bremse</strong> was able to win some important orders.<br />
In particular, the company‘s position in the European<br />
mass transit sector was strengthened by incoming orders<br />
from the metro and streetcar segments. One example here<br />
was the order <strong>Knorr</strong>-<strong>Bremse</strong> obtained from Alstom to supply<br />
the braking systems for 450 cars (including options) for<br />
one line of the Amsterdam metro. In the streetcar segment,<br />
the company won an order from vehicle builder<br />
Stadler to supply door and braking systems for its Variobahn<br />
streetcars, which are destined for service in various<br />
European cities.<br />
In the multiple unit and high-speed rail markets too, <strong>Knorr</strong>-<br />
<strong>Bremse</strong> was able to conclude significant sales agreements.<br />
For example, <strong>Knorr</strong>-<strong>Bremse</strong> was named sole supplier of<br />
braking systems for the new generation of double-decker<br />
multiple units built by Stadler in Germany. The company<br />
also won the order to supply the braking and door systems<br />
for 1,160 cars of the TWINDEXX high-speed platform from<br />
Bombardier. <strong>Knorr</strong>-<strong>Bremse</strong> also signed a service agreement<br />
with Bombardier for the TRAXX fleet, one of the leading<br />
European locomotive platforms. Siemens is building<br />
270 new multiple units for the 2014 Winter Olympics in Sochi,<br />
Russia, and here too <strong>Knorr</strong>-<strong>Bremse</strong> will be supplying<br />
the braking system. In the HVAC segment, <strong>Knorr</strong>-<strong>Bremse</strong><br />
was the successful bidder for the two major French projects<br />
Régiolis (with Alstom) and Régio2N (with Bombardier)<br />
and will initially be supplying systems for around 1,300<br />
cars. The company has also secured a strong position regarding<br />
possible future options in both projects.<br />
Commercial Vehicle Systems<br />
After truck output in Western Europe had fallen to around<br />
200,000 units in 2009, the market began to recover in <strong>2010</strong><br />
and by year-end production had reached 320,000 trucks.<br />
However, while this equated to a 60% increase year-onyear,<br />
the market still trailed far behind its pre-crisis level. All<br />
of <strong>Knorr</strong>-<strong>Bremse</strong>‘s customers in the original equipment<br />
sector benefited equally from this upturn, which therefore<br />
had a positive impact on the full range of products manufactured<br />
and marketed by the European production network<br />
of <strong>Knorr</strong>-<strong>Bremse</strong> Systeme für Nutzfahrzeuge GmbH.<br />
The output of trailers in Western Europe also recovered in
MAN<strong>AG</strong>EMENT REPORT<br />
23<br />
<strong>2010</strong> after falling 65% in 2009, the steepest decline of any<br />
segment in the region. Following on from 70,000 units<br />
built in 2009, trailer output increased by over 50% and exceeded<br />
the forecast level of 105,000 units. The level of aftermarket<br />
sales rose by 21% against the prior year to reach<br />
an all-time high in <strong>2010</strong> after adjustment for foreign exchange<br />
effects. Production of trucks in Central and Eastern<br />
Europe also increased, rising 37% from around 55,000 units<br />
in 2009 to 75,000 units in <strong>2010</strong>, as the pace of recovery<br />
failed to match that of Western European truck output.<br />
The key sales driver in Europe in <strong>2010</strong> was once again the<br />
disc brake, which also celebrated a milestone in the year<br />
under review. In the fall of <strong>2010</strong>, the 20 millionth disc brake<br />
came off the line at the company‘s largest disc brake production<br />
facility in Aldersbach, Germany. In the Western European<br />
OEM market, <strong>Knorr</strong>-<strong>Bremse</strong> was able to maintain its<br />
leading role as supplier of disc brakes for tractor units.<br />
Another production milestone came up in <strong>2010</strong> at the<br />
company‘s Kecskemét plant in Hungary, where the 1 millionth<br />
Air Processing Unit (APU) was manufactured in the<br />
spring of <strong>2010</strong>. Since 1997, the APU, which was originally<br />
developed by <strong>Knorr</strong>-<strong>Bremse</strong> in the 1990s, has seen successful<br />
service with Daimler, Iveco and DAF, among others.<br />
<strong>2010</strong> also brought the next stage in the expansion of the<br />
exceptionally successful <strong>Knorr</strong>-<strong>Bremse</strong> KAMA joint venture<br />
initiated in 2007 between <strong>Knorr</strong>-<strong>Bremse</strong> and the largest<br />
Russian commercial vehicle builder KAMAZ. May <strong>2010</strong> saw<br />
the inauguration of the first assembly line for torsional vibration<br />
dampers at the production plant in Naberezhnye<br />
Chelny. The new line expands the product portfolio of the<br />
joint venture, which was previously focused on the production<br />
of drum brakes.<br />
North America<br />
Rail Vehicle Systems<br />
The freight car market in North America experienced a further<br />
decline in <strong>2010</strong>. New freight car construction decreased<br />
from around 22,000 units in 2009 to approximately<br />
15,000 units in the year under review, the lowest level since<br />
1987. On top of this, North American customers took delivery<br />
of just 350 locomotives in <strong>2010</strong>, a downturn of around<br />
30% and the lowest level since 1992. For equipment manufacturers<br />
in the freight car and freight locomotive sectors,<br />
however, second-half order intake showed signs of improvement<br />
and orders on the books at year-end indicated<br />
better prospects ahead. Even so, and despite a decline of<br />
almost 10% in the North American freight car fleet due to<br />
scrapping, some 20% of the fleet remained idle, even at<br />
year-end. The aftermarket too was severely impacted.<br />
In the freight sector, <strong>Knorr</strong>-<strong>Bremse</strong> was able to mitigate the<br />
effects of the continued strong market downturn in <strong>2010</strong><br />
by improvements in market share and freight car content.<br />
The key factors here were the company‘s strong position in<br />
the original equipment and aftermarket sectors, increased<br />
exports, especially via the growing number of inter-company<br />
shipments to China, and gains due to increased investments<br />
by railroads in new technology products, such<br />
as the electronic braking system EP-60 and the Locomotive<br />
Engineer Assist Display and Event Recorder, LEADER.<br />
In North America too, several major projects in the passenger<br />
transportation sector were cancelled or postponed.<br />
But even against this difficult backdrop <strong>Knorr</strong>-<strong>Bremse</strong> succeeded<br />
in winning the contract from the Washington Metropolitan<br />
Area Transit Authority (WMATA) to equip 364 vehicles<br />
with brakes and HVAC systems by 2015.<br />
<strong>2010</strong> brought growing demand for the type VV-120T oilfree<br />
Air Supply Unit in the North American market. WMATA,
24<br />
for example, procured another 180 units for retrofitting to<br />
their existing vehicle fleet, while New York Transit Authority<br />
ordered 332 oil-free units for their fleet of vehicles.<br />
The push to expand high-speed rail services in North<br />
America continued in <strong>2010</strong>. <strong>Knorr</strong>-<strong>Bremse</strong> expects this to<br />
have a positive impact on the company’s long-term prospects.<br />
Commercial Vehicle Systems<br />
For the first time since 2006, the decline in truck output in<br />
North America was reversed in <strong>2010</strong>. However, production<br />
remained extremely low, 56% down on the record level of<br />
2006. Compared to the prior year, output was up 23% at<br />
approximately 218,000 units. This positive trend was<br />
echoed in the aftermarket sector, where growth was<br />
around 20% in the year under review.<br />
In <strong>2010</strong>, <strong>Knorr</strong>-<strong>Bremse</strong> was again able to win important<br />
orders in North America. As a result, Bendix Spicer Foundation<br />
Brake LLC expanded its position in the North American<br />
drum brake market. The company’s drum brakes<br />
were adopted as standard for the on-highway and vocational<br />
commercial vehicles built by Mack Trucks. Bendix<br />
has also experienced continued strong acceptance of its<br />
air disc brake technology at OE and fleet customers, not<br />
least in anticipation of the new Stopping Distance Regulation<br />
in North America, where phase one launches in August<br />
2011.<br />
In addition, Bendix reinforced its collaboration with other<br />
OEMs. As announced at the Mid-America Truck Show in<br />
<strong>2010</strong>, the PACCAR company‘s Peterbilt Motors brand became<br />
the first North American heavy truck manufacturer<br />
to make air disc brakes standard equipment on its flagship<br />
Model 587. Bendix safety technology products were also<br />
featured during PACCAR‘s eight-month Peterbilt and Kenworth<br />
tours and during the <strong>2010</strong> Volvo North American<br />
Driving Success tour. In particular, Bendix was able to<br />
showcase the superior performance of the Bendix AD-<br />
B22X air disc brakes, Bendix ESP, and the Bendix Wingman<br />
ACB – Active Cruise with Braking collision mitigation technology.<br />
Bendix also reached two major production milestones in<br />
<strong>2010</strong>: The company built its 750,000th BA-921 air compressor,<br />
first introduced in 2002, and Bendix shipped its<br />
100,000th ESP full stability system, first launched in late<br />
2004.<br />
South America<br />
Rail Vehicle Systems<br />
Production of freight cars in South America showed a<br />
marked recovery in <strong>2010</strong> compared to the previous year,<br />
climbing over 100% to 2,800 units. Procurement of freight<br />
cars, however, remains at a relatively low level (2008: 5,000<br />
freight cars procured).<br />
The expansion of mass transit networks in major cities such<br />
as São Paulo, Buenos Aires, and Rio de Janeiro, by contrast,<br />
led to a positive development in the rail-borne passenger<br />
transportation sector in the year under review. In all, <strong>Knorr</strong>-<br />
<strong>Bremse</strong> is to equip 450 cars with braking, HVAC, and door<br />
systems by 2012.<br />
Commercial Vehicle Systems<br />
Following a 28% decline in output in 2009, truck production<br />
rose 56% in <strong>2010</strong> to 184,000 units. This was even higher<br />
than the record level of 163,000 vehicles built in 2008.<br />
The main driver of this development was the Brazilian market.<br />
As a result of the marked economic recovery across all<br />
sectors – and in the construction, infrastructure, and commodities<br />
industries in particular – combined with easier
MAN<strong>AG</strong>EMENT REPORT<br />
25<br />
access to vehicle financing, transportation volumes soared<br />
in the year under review.<br />
In the context of the introduction of mandatory ABS antilock<br />
brake systems for commercial vehicles in Brazil, <strong>Knorr</strong>-<br />
<strong>Bremse</strong> was able to conclude an agreement with Ford<br />
Caminhões governing the supply of ABS technology: From<br />
2013, <strong>Knorr</strong>-<strong>Bremse</strong> will be meeting 100% of the ABS needs<br />
of Brazil‘s third-largest commercial vehicle builder. This order<br />
also involves meeting the entire EBS requirements of<br />
Ford Otosan in Turkey.<br />
Asia/Australia<br />
Rail Vehicle Systems<br />
The rail vehicle market in Asia/Australia continued its positive<br />
development in <strong>2010</strong>. The main growth driver was<br />
China, where state stimulus packages and extensive infrastructure<br />
projects resulted in high demand for rail vehicles.<br />
<strong>Knorr</strong>-<strong>Bremse</strong>‘s strategy in China, based on its own production<br />
plants and close collaboration with its Chinese partners,<br />
was rewarded by further high-speed train orders from<br />
the region. <strong>Knorr</strong>-<strong>Bremse</strong> is supplying the braking and<br />
door systems for over 1,000 cars for the CRH1-380 highspeed<br />
train. The company also received a follow-on order<br />
for the braking systems for 320 cars from the CRH1-250C<br />
series. In addition, <strong>Knorr</strong>-<strong>Bremse</strong> won the order to supply<br />
the bogie equipment for 1,920 cars of the CRH2-380 highspeed<br />
train. China now has the largest and fastest highspeed<br />
fleet in the world, operating on a network of some<br />
7,000 kilometers of high-speed track. <strong>Knorr</strong>-<strong>Bremse</strong> is the<br />
only supplier of brake equipment for high-speed trains to<br />
cover all existing vehicle platforms in China.<br />
Along with the high-speed sector, orders were also obtained<br />
in the mass transit and locomotive markets. In <strong>2010</strong><br />
<strong>Knorr</strong>-<strong>Bremse</strong> was commissioned to supply the braking<br />
systems for around 1,400 new locomotives, thereby further<br />
expanding its market position. In the context of the ongoing<br />
extension and construction of the metro systems in<br />
Guangzhou, Shanghai, and Beijing for example, the company<br />
won orders to supply braking systems for almost 700<br />
cars. In addition, <strong>Knorr</strong>-<strong>Bremse</strong> was commissioned to supply<br />
some 1,500 platform screen doors for metro projects in<br />
Shenzhen and Dalian.<br />
The other Asian markets also developed positively: In India<br />
<strong>Knorr</strong>-<strong>Bremse</strong> posted further growth in the classical market<br />
for freight and passenger transportation vehicles and<br />
won a ground-breaking order from Indian Railways to<br />
equip over 11,000 freight cars with modern bogie-mounted<br />
brake systems.<br />
In 2009 and <strong>2010</strong>, <strong>Knorr</strong>-<strong>Bremse</strong> also secured a large proportion<br />
of the mass transit projects in India, supplying the<br />
braking, door and HVAC systems for over 600 cars. In the<br />
heavy-haul locomotive sector too, <strong>Knorr</strong>-<strong>Bremse</strong> was able<br />
to build on its existing market position and win some key<br />
orders. In Japan the company continued its successful association<br />
with the Shinkansen E5. Back in 2009, <strong>Knorr</strong>-<br />
<strong>Bremse</strong> had already been selected to supply bogie equipment<br />
for all of the power cars for the new generation of<br />
Shinkansen trains. Shipments began in <strong>2010</strong> and will continue<br />
until 2012.<br />
Commercial Vehicle Systems<br />
The Asia/Australia region reported a further increase in<br />
truck production in <strong>2010</strong>. This was due to the contribution<br />
of China, the world‘s largest commercial vehicle market in<br />
unit output terms. In China, truck production was up 47%<br />
at 1,328,000 units in <strong>2010</strong>. Once again this development<br />
was supported by the state stimulus programs introduced<br />
in 2009, which led to a veritable boom in commercial vehicle<br />
production in the first half of the year under review. In<br />
the second half year, state intervention in the capital mar-
26<br />
ket also throttled back domestic truck production, so that<br />
output volumes returned to normal.<br />
Chinese manufacturers hold a dominant 98% share of the<br />
domestic commercial vehicle market, which explains why<br />
foreign manufacturers and suppliers are increasingly entering<br />
into joint ventures in order to secure a share of the<br />
growing market. By signing a joint venture agreement with<br />
the Chinese company Chongqing CAFF Automotive Braking<br />
& Steering Systems Co. Ltd. governing the production<br />
of commercial vehicle brake system and drive train components,<br />
<strong>Knorr</strong>-<strong>Bremse</strong> too has succeeded in taking an important<br />
strategic step forward in the Chinese market. The<br />
joint venture opened for business at the beginning of<br />
2011. <strong>Knorr</strong>-<strong>Bremse</strong>‘s local presence in China through its<br />
companies in Dalian and Shanghai already dates back several<br />
years. The positive market development in <strong>2010</strong><br />
brought <strong>Knorr</strong>-<strong>Bremse</strong> major orders in the compressor, torsional<br />
vibration damper, disc brake and electronic brake<br />
control system segments. For example, <strong>Knorr</strong>-<strong>Bremse</strong> won<br />
the order to supply CNHTC with compressors for its D20/26<br />
product line. In addition, <strong>Knorr</strong>-<strong>Bremse</strong> will be supplying<br />
disc brakes to the Chinese OEM Yutong. To meet rising demand<br />
for disc brakes in the Chinese market, <strong>Knorr</strong>-<strong>Bremse</strong><br />
also prepared the ground for setting up a disc brake assembly<br />
line at its Dalian plant.<br />
The commercial vehicle markets in India and Japan also<br />
experienced an upswing in <strong>2010</strong>. Truck production in India<br />
increased 83% to 280,000 vehicles built. Japan, which was<br />
hard hit by the global economic crisis in 2009, recovered to<br />
step up its truck production by 55% to 155,000 units. In<br />
<strong>2010</strong>, <strong>Knorr</strong>-<strong>Bremse</strong> Japan was able to obtain a major order<br />
from vehicle builder Isuzu. For the first time, <strong>Knorr</strong>-<strong>Bremse</strong><br />
will be supplying drum brakes for a Japanese light truck. In<br />
the past, these models have featured hydraulic brakes. The<br />
scope of supply will comprise the complete wheelend<br />
module, plus the electronics and specific valves. The Americas 22.3%<br />
Asia/Australia 26.9%<br />
Europe 50.8%<br />
Consolidated sales by region
MAN<strong>AG</strong>EMENT REPORT<br />
27<br />
Capital expenditure and depreciation<br />
In <strong>2010</strong>, the <strong>Knorr</strong>-<strong>Bremse</strong> Group invested EUR 113.4 million<br />
in fixed and intangible assets, which was 13% more<br />
than in the previous year (2009: EUR 100.6 million). This upward<br />
trend was due to the marked improvement in the<br />
business environment in the year under review.<br />
At EUR 74.8 million, 66.0% of the company‘s capital expenditure<br />
was invested in Europe. EUR 21.3 million (18.8%) was<br />
invested in the Americas and EUR 17.3 million (15.2%) in<br />
Asia/Australia.<br />
Allocation of capital expenditure was such that the Rail Vehicle<br />
Systems division benefited in the amount of EUR 61.2<br />
million (2009: EUR 66.6 million) and the Commercial Vehicle<br />
Systems division in the amount of EUR 50.4 million<br />
(2009: EUR 33.4 million).<br />
Depreciation on intangible and fixed assets increased<br />
across the Group, rising from EUR 117.7 million in 2009 to<br />
EUR 146.9 million in the year under review. With EUR 72.4<br />
million, Europe accounted for the majority of depreciation,<br />
followed by Asia/Australia with EUR 41.4 million and the<br />
Americas with EUR 33.1 million. A breakdown of depreciation<br />
by division shows that the larger proportion of EUR<br />
82.9 million (2009: EUR 51.3 million) was accounted for by<br />
Rail Vehicle Systems, while depreciation at the Commercial<br />
Vehicle Systems division amounted to EUR 61.0 million<br />
(2009: EUR 63.4 million).<br />
In <strong>2010</strong>, investment activity focused primarily on the expansion<br />
of production capacities in Asia and on replacement<br />
investments, as well as on the construction of the<br />
new production plant in Budapest (Hungary).<br />
107<br />
2006 104<br />
140<br />
2007 113<br />
134<br />
2008 115<br />
101<br />
2009 118<br />
113<br />
<strong>2010</strong> 147<br />
Capital expenditure<br />
Depreciation<br />
Consolidated capital expenditure and depreciation in EUR millions
28<br />
Research and development<br />
As a technology group, <strong>Knorr</strong>-<strong>Bremse</strong> continued to drive<br />
forward its research and development efforts in the year<br />
under review in close collaboration with its customers. Total<br />
expenditure on research and development and project<br />
planning amounted to EUR 175.3 million in <strong>2010</strong>, which<br />
equates to 4.7% of consolidated sales.<br />
As the global technology leader in the fields of braking systems<br />
for rail and commercial vehicles, <strong>Knorr</strong>-<strong>Bremse</strong> develops<br />
innovative products distinguished by their safety, high<br />
quality, reliability and customer benefits. This also applies<br />
to the other fields covered by the product portfolios of the<br />
Rail Vehicle Systems division (automatic door systems, airconditioning<br />
and driver assistance systems, control components<br />
and platform screen doors) and the Commercial<br />
Vehicle Systems division (driver assistance systems, torsional<br />
vibration dampers and powertrain-related components<br />
such as PBS and transmission control systems).<br />
<strong>Knorr</strong>-<strong>Bremse</strong>‘s success in the market with these products<br />
is founded on its comprehensive command of electronics,<br />
pneumatics, and mechanical engineering. These capabilities<br />
enable the company to adopt an integrated approach<br />
and provide its customers with complete systems. In the<br />
European commercial vehicle industry in particular, the<br />
long-standing trend towards the introduction of innovative<br />
system solutions and modular solutions involving the<br />
increasing use of mechatronic systems is continuing,<br />
which means that <strong>Knorr</strong>-<strong>Bremse</strong> has a competitive edge in<br />
the marketplace.<br />
In <strong>2010</strong>, development activities in the rail vehicle sector<br />
focused among other things on systems and products that<br />
meet the demanding requirements of the Chinese mass<br />
transit and high-speed train markets. In the commercial<br />
vehicle sector, development activities included a focus on<br />
innovative systems that enhance road safety. In both sectors<br />
a great deal of time and effort was dedicated to the<br />
advancement of systems that boost energy efficiency.<br />
Moreover, both divisions pressed ahead with the development<br />
of innovative products for the BRIC countries. The Rail<br />
Vehicle Systems division reached an important milestone in<br />
its efforts to access the Russian rail vehicle market with the<br />
development of a control valve that is compliant with the<br />
Russian GOST standards. For the Commercial Vehicle Division<br />
too, the development of solutions tailored to the requirements<br />
of the BRIC markets also took center stage.<br />
In line with <strong>Knorr</strong>-<strong>Bremse</strong>‘s regional strategy, in <strong>2010</strong> the<br />
proportion of the Group‘s development capacity located<br />
in emerging markets such as India and China was again<br />
increased. At year-end <strong>2010</strong>, the <strong>Knorr</strong>-<strong>Bremse</strong> Group employed<br />
a worldwide total of 1,999 people in the field of research,<br />
development and project planning (2009: 1,885).<br />
In <strong>2010</strong> the Group continued to pursue its ambition of realizing<br />
innovative solutions that meet local market and customer<br />
requirements, and of continuously improving these<br />
solutions in the interests of its customers, as evidenced by<br />
an impressive number of innovations and awards.<br />
2006 141<br />
2007 159<br />
2008 171<br />
2009 153<br />
<strong>2010</strong> 175<br />
Consolidated research and development expenditure in EUR millions
MAN<strong>AG</strong>EMENT REPORT<br />
29<br />
Human Resources<br />
At year-end <strong>2010</strong>, the <strong>Knorr</strong>-<strong>Bremse</strong> Group employed a total<br />
of 16,277 persons or 12.8% more than at the end of 2009.<br />
In the European region, there were 9,243 employees on the<br />
payroll at year-end <strong>2010</strong> (2009: 8,555). At 56.8%, the proportion<br />
of employees in Europe declined from 59.3% in 2009.<br />
The workforce in Germany totaled 3,235 employees, which is<br />
164 more than in 2009 (3,071) and equates to 19.9% of the<br />
total Group payroll. The number of employees in the Americas<br />
also rose in <strong>2010</strong>, reaching 3,556 at year-end compared to<br />
3,217 in 2009. The proportion of the total Group workforce in<br />
the Americas showed a slight downturn to 21.8% (2009:<br />
22.3%). In Asia/Australia the size of the workforce again increased<br />
from 2,660 in 2009 to 3,478 on the back of regional<br />
growth. The significance of the region is also reflected in a<br />
further rise in the proportion of the payroll now employed in<br />
Asia/Australia, which rose from 18.4% in the previous year to<br />
21.4% in <strong>2010</strong>.<br />
The number of employees in both divisions increased, although<br />
without keeping pace with the rise in sales. In the Rail<br />
Vehicle Systems division, the number of employees at yearend<br />
<strong>2010</strong> was again up at 9,523 (2009: 8,256). In the Commercial<br />
Vehicle Systems division, following a crisis-led decline<br />
in the prior year, the headcount rose to 6,590 employees<br />
(2009: 6,014).<br />
In view of demographic trends and in line with the company‘s<br />
international growth strategy, <strong>Knorr</strong>-<strong>Bremse</strong> attaches<br />
great importance to sustained human resource development.<br />
The importance of HR development is underlined by<br />
the People Excellence (PEX) initiative which bundles all of the<br />
necessary measures. The targeted advancement of high potentials<br />
and the creation of the appropriate development<br />
and career opportunities provide a source of employee motivation<br />
and support long-term loyalty. Through cooperation<br />
with key universities and participation at recruiting and university<br />
job fairs, <strong>Knorr</strong>-<strong>Bremse</strong> is regularly perceived as an innovative<br />
employer by young talents. And in line with the increasingly<br />
international nature of its HR efforts, the company<br />
continues to support periods of employment at foreign locations<br />
within the Group.<br />
We would like to thank all of the company‘s employees for<br />
their commitment and hard work in <strong>2010</strong>. Our thanks also go<br />
to the employee representatives for their constructive collaboration.<br />
2006 13,035<br />
The Americas 21.8%<br />
Asia/Australia 21.4%<br />
Europe 56.8%<br />
2007 13,943<br />
2008 14,999<br />
2009 14,432<br />
<strong>2010</strong> 16,277<br />
Group workforce acc. to regions on Dec. 31, <strong>2010</strong><br />
Group workforce on Dec. 31, <strong>2010</strong>
30<br />
Social responsibility and sustainability<br />
Particularly in times of globalization and climate change,<br />
being successful invariably also means conducting all aspects<br />
of one‘s business, from planning to execution, with<br />
foresight. Doing so in awareness of a responsibility for the<br />
impact of one‘s actions on people, the environment, and<br />
society, and working relentlessly to optimize that impact,<br />
has become a maxim of modern corporate management.<br />
In <strong>2010</strong>, several projects were initiated to further enhance<br />
<strong>Knorr</strong>-<strong>Bremse</strong>‘s sustainability performance. For example,<br />
<strong>Knorr</strong>-<strong>Bremse</strong> became a signatory to the United Nations<br />
Global Compact initiative, thereby not only making a commitment<br />
to observe the Global Compact‘s ten globally acknowledged<br />
principles in the fields of human rights, labor,<br />
environment, and anti-corruption, but also undertaking to<br />
implement and promote them in its everyday work.<br />
efforts in the wake of natural disasters, such as the earthquake<br />
in Haiti, floods in Pakistan and the Czech Republic,<br />
and the toxic sludge disaster in Hungary.<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Global Care was founded in response to the<br />
tsunami disaster of December 26, 2004 to provide unbureaucratic,<br />
effective and lasting help to the victims. Since<br />
then, 69 aid projects have been realized in a total of 31<br />
countries on four continents. The projects are supervised<br />
on a voluntary basis and with great dedication by <strong>Knorr</strong>-<br />
<strong>Bremse</strong> employees. By year-end <strong>2010</strong>, with donations totaling<br />
EUR 5.3 million, Global Care had reached out to help<br />
some 200,000 people.<br />
The spotlight in <strong>2010</strong> was on the adoption of the <strong>Knorr</strong>-<br />
<strong>Bremse</strong> Corporate Social Responsibility (CSR) Strategy,<br />
which anchors corporate responsibility and sustainability<br />
in the corporate strategy, the management system, and<br />
the company‘s business processes. Together with the<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Corporate Values and the UITP Charta for<br />
Sustainable Development, the ten principles of the Global<br />
Compact form the basis for all activities and commitments<br />
in this area. Through its new CSR strategy, <strong>Knorr</strong>-<strong>Bremse</strong> is<br />
also responding to the needs of its customers, who are increasingly<br />
demanding documentary proof of compliance<br />
with and management of ecological and social standards.<br />
As in previous years, in <strong>2010</strong> <strong>Knorr</strong>-<strong>Bremse</strong> supported the<br />
charitable organization <strong>Knorr</strong>-<strong>Bremse</strong> Global Care, which<br />
was founded in 2005, providing funding for its activities in<br />
the amount of EUR 1,000,000 in the year under review. The<br />
main focus of the organization‘s activities in <strong>2010</strong> was on<br />
the pursuit of long-term projects, such as the construction<br />
of a permanent hospital ward in Burma‘s Irrawaddy Delta<br />
which was devastated by Cyclone Nardis in 2008. In <strong>2010</strong>,<br />
the organization also supported several emergency relief
MAN<strong>AG</strong>EMENT REPORT<br />
31<br />
Follow-up report<br />
Subsequent to the conclusion of fiscal <strong>2010</strong>, effective January<br />
1, 2011, <strong>Knorr</strong>-<strong>Bremse</strong> Nordic Rail Services AB, Lund,<br />
Sweden, acquired the Swedish specialist in the door systems<br />
aftermarket business Kalmar Tågkompetens AB, Kalmar,<br />
Sweden, strengthening its portfolio in the Northern<br />
European market.<br />
Moreover, on January 1, 2011, the <strong>Knorr</strong>-<strong>Bremse</strong> IT-Services<br />
GmbH organization, based in Munich, Germany, became<br />
operational. <strong>Knorr</strong>-<strong>Bremse</strong> IT-Services GmbH bundles the<br />
IT activities of <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong>, Munich, Germany, <strong>Knorr</strong>-<br />
<strong>Bremse</strong> Systeme für Nutzfahrzeuge GmbH, Munich, Germany,<br />
and <strong>Knorr</strong>-<strong>Bremse</strong> Systeme für Schienenfahrzeuge<br />
GmbH, Munich, Germany, under one roof.<br />
Effective January 19, 2011, <strong>Knorr</strong>-<strong>Bremse</strong> Asia Pacific (Holding)<br />
Ltd., Hong Kong, China, and the Chinese manufacturer<br />
Chongqing CAFF Automotive Braking & Steering Systems<br />
Co. Ltd., Chongqing, China, founded the joint venture<br />
company <strong>Knorr</strong>-<strong>Bremse</strong> CAFF Systems for Commercial Vehicles<br />
Chongqing Ltd., Chongqing, China. <strong>Knorr</strong>-<strong>Bremse</strong><br />
holds a 66% stake in the joint venture with the remaining<br />
34% being held by its Chinese partner. The joint venture<br />
company manufactures brake components in the air supply<br />
and brake control segments, as well as components for<br />
transmission and clutch control systems.
32<br />
<strong>Report</strong> on risks and opportunities<br />
The <strong>Knorr</strong>-<strong>Bremse</strong> Group operates an established, multistage,<br />
worldwide planning, reporting, and controlling system.<br />
Standard reporting periods and report contents have<br />
been defined across the Group, and these formal reports<br />
are supplemented in greater depth by presentations on<br />
routine and special subjects at monthly review meetings.<br />
In addition, the <strong>Knorr</strong>-<strong>Bremse</strong> Group has put in place a<br />
standardized risk management system at top management<br />
level. This is based on a semi-annual risk report that is<br />
discussed at regular Executive Board meetings and used as<br />
a basis for introducing appropriate measures. This ensures<br />
that the operational risk management system is duly complemented<br />
at strategic level. In its entirety, this control system<br />
has proved an effective, reliable network for the early<br />
identification and remediation of potentially undesirable<br />
developments.<br />
Risk assessment and management also forms an important<br />
part of the process of describing, documenting, and<br />
continuously improving business processes across the<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Group (<strong>Knorr</strong> Excellence model).<br />
Business risks<br />
The <strong>Knorr</strong>-<strong>Bremse</strong> Group is active in business segments<br />
that for years have been characterized by a dynamic process<br />
of consolidation on the customer side. This has resulted<br />
in powerful demand-side leverage, with corresponding<br />
pressure on prices. <strong>Knorr</strong>-<strong>Bremse</strong> responds to these factors<br />
with innovative products and systems, positioning itself as<br />
a partner for long-term relationships that target cost-effective<br />
solutions for the customer. The earlier <strong>Knorr</strong>-<strong>Bremse</strong> is<br />
involved in the customer‘s project as a whole, the better<br />
the chance of attaining that target.<br />
Regional commercial vehicle and rail vehicle markets are<br />
subject to irregular cycles. Market volatility and fluctuating<br />
growth can affect individual suppliers, market segments or<br />
entire regions. As a globally active corporate group, <strong>Knorr</strong>-<br />
<strong>Bremse</strong> is particularly exposed to the risks implicit in the<br />
changing state of the global economy. The development<br />
of the economies of individual countries and of the worldwide<br />
flow of trade is carefully monitored in order to minimize<br />
risks affecting the company‘s sales. At the same time,<br />
the international presence of <strong>Knorr</strong>-<strong>Bremse</strong> renders the<br />
Group largely immune to risks that are restricted to an individual<br />
region.<br />
In the course of its dynamic growth in recent years, <strong>Knorr</strong>-<br />
<strong>Bremse</strong> has integrated a number of companies or shareholdings<br />
into the Group. In the past, the financial and cultural<br />
risks typically associated with such integration<br />
processes were minimized by means of systematic analysis<br />
and assessment of the target companies. When it comes to<br />
overcoming cultural barriers, <strong>Knorr</strong>-<strong>Bremse</strong> can look back<br />
on 20 years of experience with integration processes related<br />
to the acquisition of numerous companies as well as<br />
to joint ventures in which the company holds a majority<br />
stake and is responsible for operational management. This<br />
experience will pay dividends in any future mergers and<br />
acquisitions and has been mapped in the form of structured<br />
processes.<br />
<strong>Knorr</strong>-<strong>Bremse</strong> and its systems are regularly at the leading<br />
edge of technological development. This also engenders<br />
risks which, because of the safety-critical nature of the application<br />
concerned, require particularly careful monitoring.<br />
To this end, <strong>Knorr</strong>-<strong>Bremse</strong> routinely employs comprehensive<br />
quality planning, quality assurance, and testing<br />
procedures. To ensure continuous improvement of its<br />
quality procedures, <strong>Knorr</strong>-<strong>Bremse</strong> takes its lead from international<br />
standards. The individual plants regularly undergo<br />
internal and external audits in this context. Above and beyond<br />
this, despite having already attained a very high level<br />
of quality, both divisions work intensively to continuously<br />
improve the quality and reliability of their products with<br />
the aid of the <strong>Knorr</strong> Excellence quality program “Quality<br />
First”.
MAN<strong>AG</strong>EMENT REPORT<br />
33<br />
Operational risks<br />
Risks due to production downtimes are covered by commercially<br />
appropriate insurance contracts. Flexible working<br />
time models enable unexpected short-term shifts in<br />
capacity requirements to be accommodated efficiently.<br />
<strong>Knorr</strong>-<strong>Bremse</strong> maintains a close working relationship with<br />
many suppliers and service providers. In order to avoid delivery<br />
delays or quality defects, which in turn could lead to<br />
lost production time and have a negative impact on earnings,<br />
<strong>Knorr</strong>-<strong>Bremse</strong> attaches great importance to careful<br />
supplier selection procedures. Suppliers are also continuously<br />
subjected to technical and commercial audits.<br />
Exchange rate risk is not of crucial importance for the<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Group because geographic diversification<br />
over recent years has enabled the Group to establish a<br />
high proportion of local manufacturing and local suppliers<br />
within the respective currency zones. In order to limit the<br />
residual exchange rate risk related to transactions across<br />
different currency zones, <strong>Knorr</strong>-<strong>Bremse</strong> is increasingly<br />
identifying opportunities to exploit compensatory supply<br />
volumes within the Group. In selected cases, currency risks<br />
are also hedged by means of derivatives. Such measures,<br />
however, serve exclusively to hedge underlying transactions<br />
within the scope of normal business operations.<br />
The basis for managing foreign exchange risks is provided<br />
by the <strong>Knorr</strong>-<strong>Bremse</strong> Guidelines on Managing Currency Exposure,<br />
which set out the procedures to be followed and<br />
the necessary scope of hedging transactions in binding<br />
form for all Group companies. The monitoring of compliance<br />
with these Guidelines is part of the relevant <strong>Knorr</strong><br />
Excellence process. The risk of fluctuations in commodity<br />
prices that are of relevance to <strong>Knorr</strong>-<strong>Bremse</strong> is also hedged<br />
by means of derivatives, in so far as such fluctuations could<br />
have a substantial impact on the Group‘s profitability. This<br />
is the case with steel and aluminum.<br />
order to avoid malfunctions, <strong>Knorr</strong>-<strong>Bremse</strong> attaches great<br />
importance to harmonization of the hardware and software<br />
architecture, the integrity and security of existing<br />
data, appropriate back-up solutions, and careful management<br />
of access control. Compliance with the IT Security<br />
Guidelines is comprehensively monitored with the aid of<br />
internal and external audits at all major sites around the<br />
world. The Corporate Data Center in Munich, Germany,<br />
meets the very highest requirements (industry standard) in<br />
terms of efficiency, reliability, and security. Based on this<br />
platform, the necessary global transparency and the integration<br />
of all corporate sites – and of recent additions in<br />
particular – are being further enhanced.<br />
In response to increasingly stringent environmental requirements,<br />
<strong>Knorr</strong>-<strong>Bremse</strong> has aligned its activities with<br />
the international standard ISO 14001. The majority of the<br />
company’s sites have already been certified or recertified<br />
accordingly.<br />
In Asia, as well as in the other regions, imitation and counterfeit<br />
products remain a serious threat to business in the<br />
commercial vehicle and rail vehicle sectors. The most effective<br />
countermeasure to this threat is <strong>Knorr</strong>-<strong>Bremse</strong>’s<br />
technical expertise, which on account of the safety-critical<br />
applications of its products is both recognized and appreciated<br />
by customers around the world.<br />
Careful analysis of the Group-wide risk profile has revealed<br />
that no identifiable risks exist that would threaten the survival<br />
of the company or have a substantial impact on its<br />
assets, financial status or profitability. Nor are any such risks<br />
currently expected to arise in the future.<br />
Business processes within the <strong>Knorr</strong>-<strong>Bremse</strong> Group are<br />
supported by powerful and state-of-the-art IT systems. In
34<br />
Outlook<br />
In 2011 the <strong>Knorr</strong>-<strong>Bremse</strong> Group expects to see the positive<br />
development of its business continue, albeit in an environment<br />
that remains highly volatile. Following the<br />
worldwide market recovery that set in during <strong>2010</strong>, we are<br />
currently expecting that trend to persist, although the<br />
pace of recovery will vary considerably from one region to<br />
the next. In Europe a divided picture will likely emerge. On<br />
the one hand the export-oriented countries – and Germany<br />
in particular – will show strong growth driven by the<br />
recovery of global trade. On the other hand the countries<br />
of Southern Europe and Ireland will remain burdened by<br />
high levels of national debt. In the USA, the world‘s largest<br />
economy, levels of consumer spending which are being<br />
depressed by prevailing high levels of unemployment are<br />
still considered extremely critical.<br />
The emerging Asian markets will probably continue to<br />
make a significant contribution to economic growth in<br />
2011.<br />
In the European rail vehicle market there are currently no<br />
signs of any decisive growth drivers for 2011. The locomotive<br />
sector is expected to make a modest recovery while<br />
the freight car market remains stagnant. A stable market<br />
environment is anticipated for the passenger sector. The<br />
postponement or cancellation of major procurement projects<br />
in <strong>2010</strong> was a key factor in the continued depressed<br />
state of the market. In Russia, large-scale projects associated<br />
with the 2014 Winter Olympics in Sochi and the 2018<br />
World Cup are revitalizing the market.<br />
In the European commercial vehicle sector the recovery<br />
that has set in is expected to continue in 2011. The volume<br />
of trucks built in 2011 will probably be up on the prior-year<br />
level. However, the record level of 2008 will not be repeated<br />
in the medium term.<br />
In fiscal 2011, the main challenge for the Commercial Vehicle<br />
Systems division in Europe will be posed by the increasing<br />
globalization of its business. Further expansion<br />
into markets of the future, such as Russia and China, and<br />
the shipments this calls for from Europe, along with the<br />
introduction of products that meet specific local requirements,<br />
and selective penetration of new fields of activity<br />
should drive the growth of the company‘s business in the<br />
medium term. In all growth projects, the focus is on increasing<br />
customer benefits and extending our technology<br />
leadership, with the quality and reliability of all products<br />
being assigned top priority.<br />
In the North American rail vehicle sector, <strong>Knorr</strong>-<strong>Bremse</strong> anticipates<br />
that 2011 will bring a moderate market recovery<br />
for equipment manufacturers for freight cars and locomotives<br />
compared to <strong>2010</strong>. In both of these segments, however,<br />
growth will be at relatively low levels. To offset the<br />
weak state of the domestic market, North American locomotive<br />
manufacturers are stepping up their export activities,<br />
bringing new challenges for market players. In the<br />
passenger transportation sector in North America the anticipated<br />
investments failed to materialize in <strong>2010</strong>, leading<br />
to a marked deterioration in the mood of the market, so<br />
that the outlook for 2011 is for zero growth.<br />
The commercial vehicle market in the North American region<br />
is expected to continue its modest recovery in 2011.<br />
The sharp drop in unit sales anticipated for <strong>2010</strong> on account<br />
of the new emissions regulations will probably not<br />
happen in 2011 either. Owing to increasing market shares<br />
in the OEM sector, aftermarket business is set to grow in<br />
2011 as well as in subsequent years.<br />
In the South American region the rail freight sector is expected<br />
to show a recovery, driven by the ongoing rise in<br />
demand for raw materials. In particular, the infrastructure<br />
projects associated with the 2014 World Cup in Brazil and<br />
the 2016 Olympics in Rio de Janeiro are exerting a positive<br />
influence on the market. The <strong>Knorr</strong>-<strong>Bremse</strong> Rail Vehicle Systems<br />
division will also be involved in the expansion of the
MAN<strong>AG</strong>EMENT REPORT<br />
35<br />
mass transit networks in São Paulo, Buenos Aires, and Rio<br />
de Janeiro.<br />
In the South American commercial vehicle sector, the market<br />
environment is expected to remain stable compared to<br />
<strong>2010</strong>. The construction activities triggered by major events<br />
will have a supporting impact on the commercial vehicle<br />
market, which will likely be influenced by advance purchases,<br />
given that the introduction of EURO 5 emissions<br />
standards is planned in 2012.<br />
In Asia/Australia <strong>Knorr</strong>-<strong>Bremse</strong> expects to see the expansion<br />
of the transportation infrastructure continue over the<br />
next few years. It is anticipated that growing environmental<br />
awareness, higher energy costs, and increasing levels of<br />
gridlock on the roads will have a positive impact on the<br />
development of rail transportation. The focus here will be<br />
on the passenger sector, although the rail freight market<br />
will also benefit from this development.<br />
In 2011 <strong>Knorr</strong>-<strong>Bremse</strong> will continue to expand its activities<br />
in the rail vehicle sector in the Asia/Australia region. The<br />
high pace of growth in the region’s rail fleets will also create<br />
potential new aftermarket business. At the Rail Vehicle<br />
Systems division’s plants in China, measures will be taken<br />
to increase capacities in order to meet existing orders and<br />
future customer demand.<br />
In the commercial vehicle sector the region is expected to<br />
see a steady level of truck production for 2011 as a whole.<br />
In the medium term, however, <strong>Knorr</strong>-<strong>Bremse</strong> is anticipating<br />
renewed growth since China is driving forward its vehicle<br />
exports, particularly to Africa and South America. The<br />
commercial vehicle markets in India and Japan look set to<br />
show a positive development.<br />
Based on the regional backdrops set out above, <strong>Knorr</strong>-<br />
<strong>Bremse</strong> expects to see the business develop positively in<br />
2011. Progress will, however, be influenced by the risks described<br />
above for the further growth of the global economy.<br />
Presuming that the economy continues to pick up<br />
speed, earnings are expected to remain stable. Based on<br />
the assumptions made for the Group, the assets, financial<br />
status, and profitability of <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong> too can be expected<br />
to remain stable, depending on income from the<br />
company‘s investments.<br />
In 2011 <strong>Knorr</strong>-<strong>Bremse</strong> will continue to pursue a policy<br />
geared to safeguarding the company‘s long-term health<br />
and in particular will be driving forward the steps already<br />
introduced to expand its capacities in regions where demand<br />
is growing. These include, for example, an intensive<br />
marketing effort in Asia and the introduction of innovative<br />
products, as well as the selective expansion of the company‘s<br />
fields of activity.<br />
Extending this outlook to 2012 is difficult on account of<br />
market volatility and the risks described above. <strong>Knorr</strong>-<br />
<strong>Bremse</strong> currently expects to see global economic growth<br />
accompanied by an increase in transportation volumes.<br />
Further factors with a positive influence on the development<br />
of business for <strong>Knorr</strong>-<strong>Bremse</strong> will include the megatrends<br />
of ongoing urbanization and the increasing importance<br />
of energy-efficiency and safety. Consequently,<br />
against the backdrop of the economic context described<br />
above, a stable earnings position can be anticipated for<br />
2012 as well.
2/<br />
<strong>Report</strong><br />
Against a background of general economic recovery in <strong>2010</strong>, <strong>Knorr</strong>-<strong>Bremse</strong><br />
benefited from its strong strategic position with two divisions: Rail Vehicle<br />
Systems and Commercial Vehicle Systems. In the rail division one of the main<br />
drivers of growth was a dramatic increase of more than 100% in Asian sales,<br />
while the truck division benefited from rapidly accelerating recovery in commercial<br />
vehicle markets. <strong>2010</strong> saw the company once again invest considerable<br />
effort in driving innovation, accessing new markets and improving internal<br />
processes. The response of the prestigious rating agencies Moody‘s and<br />
Standard & Poor‘s was to upgrade their ratings of the company once again.
Rail Vehicle Systems<br />
Over the year <strong>Knorr</strong>-<strong>Bremse</strong> Rail Vehicle Systems benefited in particular from a<br />
high volume of orders from Asia. The main growth driver was China, where<br />
state-sponsored programs and large-scale infrastructure projects resulted in<br />
buoyant demand for mass transit and mainline vehicles, but the division was<br />
also successful in other parts of the region. In a bid to improve its global<br />
market position it once again invested extensively in products and production<br />
facilities, while at the same time strengthening its position through carefully<br />
targeted acquisitions.
40 RepoR t | RAIL Ve HICLe SYSteMS
RepoR t<br />
41<br />
Markets<br />
Despite persistent weakness in the European market, <strong>Knorr</strong>-<strong>Bremse</strong> won important orders for<br />
metros, streetcars, multiple units and high-speed trains. In North America, there was increased<br />
demand for environmentally-friendly air supply units and South America experienced a significant<br />
recovery in freight car production. In Asia there were positive developments virtually<br />
across the board in the rail vehicle market.<br />
Europe<br />
The downturn in European freight traffic continued in <strong>2010</strong>, with freight car production declining by<br />
some 30% and locomotive production down about 20% on the previous year. In the passenger segment<br />
several projects were not implemented as planned. Even so, <strong>Knorr</strong>-<strong>Bremse</strong> was able to win a number of<br />
important orders. A downturn in the freight sector was compensated by important contracts in the<br />
metro, streetcar and multiple unit/high-speed segments.<br />
North America<br />
The North American freight market continued to decline in <strong>2010</strong>, with production of new freight cars<br />
down from 22,000 units in 2009 to 15,000 in <strong>2010</strong> – the lowest level since 1987. Nevertheless, by the<br />
end of <strong>2010</strong> the volume of orders received by <strong>Knorr</strong>-<strong>Bremse</strong> had started to grow, indicating possible<br />
signs of market recovery. In the passenger sector <strong>Knorr</strong>-<strong>Bremse</strong> won a number of major orders in the<br />
metro segment.<br />
South America<br />
There was a distinct recovery in South American freight car production in <strong>2010</strong>, even though it did not<br />
return to pre-crisis levels. The main growth drivers in the passenger sector came from major cities like<br />
São Paulo, Buenos Aires and Rio de Janeiro, where local transport networks were extended. Preparations<br />
for the Soccer World Cup in Brazil in 2014 and the Summer Olympics in Rio de Janeiro in 2016 are<br />
expected to provide a further boost.<br />
Asia/Australia<br />
There was further positive development in the rail vehicle markets in Asia and Australia in <strong>2010</strong>. The<br />
main source of growth was China, where there was continued strong demand for rail vehicles. The<br />
company’s strategy of operating its own production facilities and co-operating closely with Chinese<br />
partners reaped rewards in the form of major orders from the high-speed sector in the region. <strong>2010</strong><br />
was also a successful year for <strong>Knorr</strong>-<strong>Bremse</strong> in other Asian countries such as India and Japan.
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Market Successes<br />
<strong>Knorr</strong>-<strong>Bremse</strong> is recognized worldwide as a reliable and innovative manufacturer and business<br />
partner. This was once again demonstrated during <strong>2010</strong> by the conclusion of major project<br />
agreements in all regions. In China, <strong>Knorr</strong>-<strong>Bremse</strong> is to supply braking and door systems for a<br />
large number of new high-speed trains; from both North and South America the company<br />
received major orders for the metro segment; and in India it is involved in refitting more than<br />
11,000 freight cars with modern bogie equipment. But these were not the only successes<br />
recorded by the company.<br />
Worldwide sales figures for the Rail Vehicle<br />
Systems division in eUR millions<br />
2008 1,431<br />
2009 1,553<br />
<strong>2010</strong> 2,024<br />
Europe<br />
Linear eddy current brakes and door systems for Velaro D<br />
<strong>Knorr</strong>-<strong>Bremse</strong> is to equip 15 new Deutsche Bahn high-speed multiple units based on the Siemens<br />
Velaro platform with the latest generation of eddy current brakes. <strong>Knorr</strong>-<strong>Bremse</strong> subsidiary IFE is also<br />
supplying the door systems. Specially designed for international operations within Europe, the trains<br />
will link France and Germany at speeds up to 320 km/h.<br />
Eddy current brakes are completely wear-free and operate without contact between the wheel and<br />
the rail. They can be applied progressively and act virtually without delay. In the case of the new Velaro<br />
D, the requirements for the braking system were set even higher than usual, mainly because the traction<br />
technology is based on bipolar transistors. The higher voltages involved meant the coils of the<br />
eddy current brake had to be provided with improved insulation. <strong>Knorr</strong>-<strong>Bremse</strong> developed coils capable<br />
of withstanding up to 10 kilovolts, and its engineers also enhanced the brake’s characteristics in<br />
terms of signal transfer technology.<br />
<strong>Knorr</strong>-<strong>Bremse</strong> delivered four eddy current brakes to Siemens for testing at the end of 2009 and by<br />
January <strong>2010</strong> sample testing had been completed and series production could begin. By mid 2011,<br />
output is scheduled to reach eight brake sets per month.
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Pan-European maintenance agreement with Bombardier<br />
The first ever pan-European maintenance agreement between <strong>Knorr</strong>-<strong>Bremse</strong> and Bombardier was<br />
signed during the InnoTrans trade fair in Berlin. <strong>Knorr</strong>-<strong>Bremse</strong> is to overhaul the braking systems of all<br />
European TRAXX (Transnational Railway Applications with eXtreme FleXibility) locomotives for which<br />
Bombardier has full servicing agreements with the owners.<br />
The new agreement is not just confined to maintaining the systems supplied by <strong>Knorr</strong>-<strong>Bremse</strong>. Parallel<br />
to the regular overhaul work, specialists from both companies will also be attending workshops to<br />
discuss further improvement of the servicing, particularly in terms of cost and availability. As a systems<br />
specialist, for example, <strong>Knorr</strong>-<strong>Bremse</strong> can dismantle components in its own service centers to examine<br />
their actual condition and develop specific maintenance measures. It is an approach that supports<br />
Bombardier’s “total cost of ownership” (TCO) approach aimed at making its vehicles and systems more<br />
attractive to potential customers. In return, <strong>Knorr</strong>-<strong>Bremse</strong> will receive feedback on the performance of<br />
its systems under real operating conditions.<br />
Another element of the agreement involves <strong>Knorr</strong>-<strong>Bremse</strong> advising Bombardier on setting up a warehouse<br />
with a range of replacement components. The company’s years of practical experience in the<br />
field will help Bombardier meet customers’ high expectations in terms of availability.<br />
Major Swiss order<br />
Another success story for <strong>Knorr</strong>-<strong>Bremse</strong> came when the company signed a contract to supply braking<br />
systems for 59 TWINDEXX double-decker mainline passenger trains ordered by Swiss Railways (SBB)<br />
from vehicle builder Bombardier. In addition to onboard components – including the EP compact<br />
brake control system – the package includes complete bogie equipment and air supply modules with<br />
oil-free compressors. <strong>Knorr</strong>-<strong>Bremse</strong> subsidiary IFE will also be supplying the train doors. The 59 double-decker<br />
trains will require more than 1,600 passenger doorsets, 40 loading doors and 40 catering<br />
doors in all. Each of the passenger and catering doors will also be supplied with an intelligent sliding<br />
step with automatic platform detection.<br />
The order covers nine 4-section and fifty 8-section trains. An option for more than 100 further trains<br />
has also been formally agreed between Bombardier and SBB. Delivery of the first components is<br />
scheduled for the end of 2011, with the 59 completed vehicles due for delivery to SBB between 2013<br />
and 2019. The first trains will go into regular service from December 2013 onwards.<br />
The TWINDEXX double-decker multiple units operated by Swiss Express are some of the most modern<br />
rail vehicles currently available. They include a large on-board restaurant and a spacious family car, as<br />
well as a business compartment offering space for businessmen to hold meetings or work undisturbed.<br />
The trains have a top speed of 200 km/h (optionally 230 km/h) and will initially operate on the<br />
St. Gallen – Zurich – Bern – Geneva and Romanshorn – Zurich – Bern – Brig lines as well as on the Inter-<br />
Regio service between Zurich and Lucerne.
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Braking systems for Amsterdam Metro<br />
Years of close cooperation between <strong>Knorr</strong>-<strong>Bremse</strong> and French vehicle builders Alstom paid off once<br />
again in <strong>2010</strong> when <strong>Knorr</strong>-<strong>Bremse</strong> received an order for braking equipment for rail vehicles destined for<br />
operation on Amsterdam Metro. The order is part of a framework agreement with Alstom dating back<br />
to 2008 that covers the development and supply of braking systems for the “Metropolis” metro platform.<br />
The contract involves supplying a total of 138 car-sets with complete braking systems based on the EP<br />
Compact Lite brake control system, with additional components for the parking brake and pneumatic<br />
suspension. It also includes oil-free compressors, axle brake discs and brake calipers.<br />
As only 5.5 kilometers of the 40 km metro network actually runs underground, the operator is also<br />
equipping the trains with sanding systems – again supplied by <strong>Knorr</strong>-<strong>Bremse</strong>. Delivery of the braking<br />
systems for Amsterdam Metro is scheduled for the period 2011-2013.<br />
Supplying Alstom’s CITADIS Evo platform<br />
During the year under review, <strong>Knorr</strong>-<strong>Bremse</strong> received an order to equip the CITADIS Evo platform for<br />
vehicle builder Alstom. 27 of the low-floor streetcars manufactured by Alstom are to be fitted with a<br />
hydraulic braking system using electro-magnetic track brakes. Because of restricted installation space<br />
on the bogies, the braking systems are designed to be as compact as possible. Higher maximum operating<br />
pressures of up to 100 bar compared with 10 bar for pneumatic systems make it possible to<br />
use smaller brake calipers. The order for the vehicles – which are destined for operation in Rouen,<br />
France – also includes door systems from <strong>Knorr</strong>-<strong>Bremse</strong> subsidiary IFE.<br />
<strong>Knorr</strong>-<strong>Bremse</strong> also signed a declaration of intent with Alstom to supply hydraulic braking systems for<br />
future orders of the CITADIS Evo platform. The framework agreement covers a period of seven years<br />
and involves the company equipping up to 100 vehicles per year.<br />
<strong>Knorr</strong>-<strong>Bremse</strong> already has a longstanding connection with the CITADIS platform – some 800 vehicles<br />
have already been fitted with the company’s systems. The most recent order came in 2009 in the form<br />
of braking systems for 75 vehicles in the French cities of Montpellier, Dijon and Brest.<br />
Moscow Metro opts for <strong>Knorr</strong>-<strong>Bremse</strong> systems<br />
Handling over nine million passengers a day, Moscow Metro is one of the world‘s busiest networks.<br />
The metro operates a fleet of more than 4,500 vehicles, which is modernized every year by the acquisition<br />
of new car-sets. In May <strong>2010</strong>, Moscow Metro brought into service the initial prototypes of the<br />
latest generation of vehicles. These are fitted with multiple systems manufactured by <strong>Knorr</strong>-<strong>Bremse</strong>.<br />
Along with the oil-free compressor and block brake units, these vehicles are equipped with braking<br />
resistors from Microelettrica and door systems manufactured by <strong>Knorr</strong>-<strong>Bremse</strong> subsidiary IFE. Vehicle<br />
builder Metrovagonmash (MVM) and Moscow Metro opted for IFE doors because with extremely short<br />
intervals of less than 50 seconds between trains, it is vital that the door systems can be relied on to<br />
work perfectly.
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The first production order covers 53 cars due for delivery during the course of 2011. A total of nearly<br />
800 doors is required, and production began at the IFE facility in the Czech Republic in November<br />
<strong>2010</strong>. Within the same time frame <strong>Knorr</strong>-<strong>Bremse</strong> will be supplying all the oil-free compressors, block<br />
brake units and braking resistors.<br />
These recent orders from Metrovagonmash have enabled <strong>Knorr</strong>-<strong>Bremse</strong> to further expand its penetration<br />
of the Russian metro market: Both the new cars and their predecessors, which will continue to be<br />
built in parallel in 2011, are now equipped throughout with <strong>Knorr</strong>-<strong>Bremse</strong> compressors and Microelettrica<br />
brake resistors.<br />
Braking systems for Russian State Railways<br />
Russia is currently modernizing its regional train fleet in advance of the Sochi Winter Olympics – which<br />
is one reason why the country’s state railway system (RZD) is calling the new regional trains ordered<br />
from Siemens the “Desiro RUS Sochi 2014”. <strong>Knorr</strong>-<strong>Bremse</strong> is to supply complete braking systems and<br />
bogie equipment for a total of 54 multiple units.<br />
The 5-car trains will be equipped with the EP Compact brake control system. The fact that <strong>Knorr</strong>-<br />
<strong>Bremse</strong> is also supplying the oil-free compressor marks a further milestone in the company’s activities<br />
in Russia. The Russian Desiro multiple units will be braked by a combination of wheel and axle brakes.<br />
Both types have been combined because passenger densities of up to seven people per square meter<br />
make high demands of the brakes.<br />
The braking systems are designed to operate in temperatures ranging between +50 and -50 degrees<br />
Celsius. All three of <strong>Knorr</strong>-<strong>Bremse</strong>’s Russian sites – St Petersburg, Moscow and Voronezh – were involved<br />
in their development.
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Framework agreement with AAE<br />
<strong>Knorr</strong>-<strong>Bremse</strong> has signed an agreement for the overhaul of brake components with AAE (Ahaus Alstätter<br />
Eisenbahn <strong>AG</strong>), the leading European leasing company for standard freight cars. The contract covers<br />
a period of three years and includes all <strong>Knorr</strong>-<strong>Bremse</strong> control valves, load-proportional valves and load<br />
brake valves installed in freight cars covered by the company’s European overhaul program. The program<br />
starts in 2011 and a total of some 6,000 valves will be overhauled over the period covered by the<br />
contract.<br />
The logistics will be handled by the <strong>Knorr</strong>-<strong>Bremse</strong> Service Center in Berlin, but the actual overhaul will<br />
take place at the company’s specialized Service Center in Budapest. The time frame for carrying out the<br />
overhaul and returning components to AAE is a mere five days. By setting up a pool of overhauled<br />
components and maintaining them on the basis of forecast deadlines it is possible, in cooperation with<br />
the customer, to guarantee minimum throughput times. At any one time the service center has valves<br />
undergoing overhaul and also a stock of finished valves. As freight cars come in, they can immediately<br />
undergo servicing and the valves can be installed as rapidly as possible, enabling <strong>Knorr</strong>-<strong>Bremse</strong> to keep<br />
out-of-service times to a minimum.<br />
This quick turnaround was one reason why the contract was awarded to <strong>Knorr</strong>-<strong>Bremse</strong>. Another was<br />
the company’s ability to offer a single central location for all the customer’s overhaul requirements. And<br />
of course a further deciding factor was <strong>Knorr</strong>-<strong>Bremse</strong>’s excellent reputation amongst operators for service<br />
reliability.<br />
Service contract with Danish Railways extended<br />
Danish Railways (DSB) is continuing to rely on the competence of <strong>Knorr</strong>-<strong>Bremse</strong> when it comes to<br />
servicing its fleet: <strong>Knorr</strong>-<strong>Bremse</strong> will also be handling the second overhaul cycle for the hydraulic<br />
brakes of DSB’s commuter rail fleet. For <strong>Knorr</strong>-<strong>Bremse</strong> this renewed vote of confidence is a great success<br />
and underlines the company’s strong competitive position in such major projects. A key factor in<br />
obtaining the order was doubtless <strong>Knorr</strong>-<strong>Bremse</strong>’s extremely reliable performance in the first overhaul<br />
cycle of these commuter trains.<br />
The follow-up order covers the entire commuter rail fleet operated by DSB, which comprises 120<br />
eight-car sets and 35 four-car sets. The second overhaul cycle will run from 2012 to 2018. At the same<br />
time, DSB secured an option to extend the contract beyond this period.<br />
North America<br />
Locomotive exports to China, South Africa and South America<br />
Due in part to the ongoing weakness of the domestic freight market, locomotive exports have become<br />
an important factor for North American rail equipment suppliers. Recent procurements, originating primarily<br />
in China, Africa and Australia, have also benefited <strong>Knorr</strong>-<strong>Bremse</strong>’s US subsidiary New York Air Brake<br />
(NYAB).
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Strong demand from China in particular has driven up exports by North American locomotive builders. In<br />
the year under review this was reflected in orders of CCB II microprocessor-controlled braking systems for<br />
the Chinese market. By the year’s end, some 1,800 CCB II systems had been supplied.<br />
<strong>Knorr</strong>-<strong>Bremse</strong> is also involved in a major order that the US conglomerate General Electric (GE) received in<br />
South Africa: South African rail operator Transnet Freight Rail ordered 100 new diesel locomotives from GE,<br />
and by the end of <strong>2010</strong>, NYAB had supplied 18 CCB II brake control systems to GE for this project, with the<br />
remaining 82 to follow in 2011. In addition, NYAB also supplied a further 20 CCB II systems to Union Carriage<br />
& Wagon (UCW) destined for South African operator Transnet, the parent company of Transnet<br />
Freight Rail. Again, most of the systems are to be delivered in further batches during the course of the current<br />
year. NYAB is also involved in GE orders from Brazil, for which <strong>Knorr</strong>-<strong>Bremse</strong> also supplied over<br />
100 CCB II systems.<br />
For the Canadian locomotive builder Electro Motive Diesel (EMD), NYAB supplied not only CCB II systems<br />
but also the EP 60 electro-pneumatic braking system for some of the locomotives ordered. The same applied<br />
to 25 locomotives ordered from EMD by Saudi rail operator SRO (Saudi Railway Organisation).<br />
EP-60 for Australian freight trains<br />
In addition to supplying EP-60 for the locomotives being built by EMD, <strong>Knorr</strong>-<strong>Bremse</strong> also received<br />
orders from Australia for the electro-pneumatic braking system. By the end of <strong>2010</strong>, the company’s<br />
subsidiary NYAB had equipped more than 1,000 Australian freight cars with EP-60 systems, and a total<br />
of four different operators were operating the system on a trial basis.<br />
The EP-60 braking system considerably improves the braking of long, heavy freight trains because the<br />
braking signal is transmitted electrically rather than pneumatically from the locomotive to the freight<br />
cars, only being converted into a pneumatic signal when it reaches the bogie. This avoids a situation<br />
where the front cars are braked first but the delay in signal transmission means the rear cars continue<br />
to shunt them.<br />
Largest order ever for <strong>Knorr</strong> Brake Corporation<br />
For the new trains operated by Washington Metropolitan Area Transit Authority (WMATA) in Washington<br />
DC, <strong>Knorr</strong>-<strong>Bremse</strong> is supplying the brakes (including oil-free compressors) and the HVAC systems. The<br />
braking systems are being developed in Westminster, while <strong>Knorr</strong>-<strong>Bremse</strong>’s Spanish subsidiary Merak is<br />
responsible for the design and development of the HVAC. The North American division of <strong>Knorr</strong> Brake<br />
Corporation, Merak NA, will produce the HVAC units. The contract concluded with the Japanese manufacturer<br />
of the vehicles, Kawasaki, is the largest North American project in the history of <strong>Knorr</strong> Brake<br />
Corporation.<br />
The order covers the equipment for 364 cars with an option for 384 more. The first car-sets are scheduled<br />
for delivery as early as 2012, with series production slated for the period from 2013 to 2015. The new<br />
trains will boost transportation capacity for what, in terms of passenger numbers, is the second largest<br />
metro in the United States. By 2030, WMATA anticipates carrying an average of one million passengers a<br />
day. Metro Washington DC has also ordered a further 180 oil-free compressors for retrofitting in existing<br />
car-sets.
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49<br />
The recent order is the latest development in a partnership between <strong>Knorr</strong>-<strong>Bremse</strong> and Kawasaki on the<br />
North American continent that stretches back many years: <strong>Knorr</strong> Brake Corporation is currently supply<br />
braking systems to Kawasaki for the M-8 Project for Connecticut DOT. In the 1990s, the company also<br />
supplied the braking system for coaches for the Long Island RR. <strong>Knorr</strong>-<strong>Bremse</strong> is also a long-time supplier<br />
to Washington Metro, having supplied the previous two series of trains built by CAF and Alstom.<br />
<strong>Knorr</strong>-<strong>Bremse</strong> is also involved in the expansion and modernization of the metro network in Chicago,<br />
where it is to supply braking systems for 160 metro cars being built by Nippon Sharyo.<br />
South America<br />
Braking and HVAC systems for Rio de Janeiro and São Paulo metros<br />
Major orders from Rio de Janeiro and São Paulo metros further strengthened <strong>Knorr</strong>-<strong>Bremse</strong>’s lead in<br />
the South American mass transit market during the year under review.<br />
The company will be supplying modern braking systems for 119 cars ordered from Chinese manufacturer<br />
China Railway Construction (CRC) by Rio de Janeiro Metro as part of its fleet expansion. The order<br />
for HVAC systems was secured by Sigma Coachair Group, which was taken over by <strong>Knorr</strong>-<strong>Bremse</strong> Asia<br />
Pacific in September <strong>2010</strong>.<br />
<strong>Knorr</strong>-<strong>Bremse</strong> also successfully tendered to supply the newly built Line 8 operated by Companhia<br />
Paulista de Trens Metropolitanos (CPTM) in São Paulo. The company is to provide braking systems for<br />
all 288 new cars ordered from Spanish vehicle builder CAF, and Merak will also supply the HVAC systems.<br />
The business partnership between <strong>Knorr</strong>-<strong>Bremse</strong> and São Paulo Metro goes back many years.<br />
Some 60 per cent of trains operating on the existing six lines have <strong>Knorr</strong>-<strong>Bremse</strong> braking systems on<br />
board.<br />
Contract to supply Buenos Aires Metro<br />
<strong>Knorr</strong>-<strong>Bremse</strong> also chalked up a success in Argentina during <strong>2010</strong>, when it became involved in a major<br />
order placed with Chinese manufacturer China Railway Construction (CRC) by Buenos Aires Metro as<br />
part of the mega-city’s modernization of its metro network. <strong>Knorr</strong>-<strong>Bremse</strong> Rail Vehicle Systems is to<br />
supply the braking systems.<br />
The first step in a project covering a total of 45 vehicles involves replacing the oldest ones on Line A,<br />
which dates back to 1913. These are the oldest metro vehicles still in operation anywhere in the world.<br />
The contract was signed in August <strong>2010</strong>, and shipment of the systems starts in May 2011. In addition<br />
to the current order for 45 new vehicles China Railway Construction has also signed an option for a<br />
further 234.
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Asia<br />
Further orders from China in the high-speed train segment<br />
<strong>Knorr</strong>-<strong>Bremse</strong> has received further major orders from China: The company’s Chinese subsidiaries and<br />
partner companies are supplying the braking and door systems for more than 1,000 cars for the CRH1-<br />
380 high-speed train, the “Zefiro China”, built by the Bombardier Sifang Transportation joint venture.<br />
They have also been commissioned to supply the braking systems for 320 cars from the CRH1-250C<br />
series.<br />
In addition, <strong>Knorr</strong>-<strong>Bremse</strong> won the order to equip the CRH2-380 high-speed train manufactured by<br />
CSR Sifang Locomotives & Rolling Stock Co. Ltd. In this project, <strong>Knorr</strong>-<strong>Bremse</strong> and its Chinese partners<br />
are responsible for supplying the bogie equipment for almost 2,000 cars.<br />
Besides these orders, <strong>Knorr</strong>-<strong>Bremse</strong> will also be supplying the braking systems for 480 cars for the new<br />
CRH3 and CRH5 series trains. In addition, the company is supplying door and HVAC systems for several<br />
hundred cars and equipping many of them with electronic components made by Microelettrica.<br />
The year <strong>2010</strong> brought a very special highlight for <strong>Knorr</strong>-<strong>Bremse</strong> in China: The company’s products<br />
were installed in the CRH380A train that set a new speed record of 486 km/h. The new CRH380 highspeed<br />
trains are equipped with high-performance disc brakes, door systems and HVAC systems from<br />
<strong>Knorr</strong>-<strong>Bremse</strong>. In 2011 these trains are scheduled to go into service on the Beijing to Shanghai route.<br />
Expo Shanghai<br />
Following the success of <strong>Knorr</strong>-<strong>Bremse</strong>’s supporting role during the Beijing<br />
Olympics in 2008, organizers of the EXPO in Shanghai also opted to put their<br />
local rail services in the company’s hands. A record tally of 70 million visitors<br />
meant that ten times as many people as two years ago had to be transported<br />
daily to the World Exhibition site between May 1 and October 31, <strong>2010</strong>.<br />
Most of the visitors were carried by local rail services. Massive expansion means Shanghai now has the<br />
world’s largest metro system – bigger even than London Underground.<br />
<strong>Knorr</strong>-<strong>Bremse</strong> is one of the leading component suppliers to Shanghai Metro – accounting for 80 per<br />
cent of the braking systems delivered by April <strong>2010</strong>. In particular its reputation for reliable and innova-
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Orders for heavy locomotives<br />
<strong>Knorr</strong>-<strong>Bremse</strong> also received important orders in the Chinese heavy-duty freight locomotive segment.<br />
The company was commissioned by CNR Dalian Locomotive and Rolling Stock Company and CNR<br />
Beijing 7th Railway Transportation Equipment Co. Ltd. to develop and manufacture braking systems<br />
for a total of 450 7200kW locomotives. And CSR Zhuzhou ordered braking systems for more than 700<br />
further locomotives in the same category. The order also included 150 braking systems for 9600kW<br />
locmomotives. In addition, <strong>Knorr</strong>-<strong>Bremse</strong> received an order from the CSR Qishuyan Locomotive Company<br />
Ltd. for braking systems for 300 diesel-electric lcomotives.<br />
<strong>Knorr</strong>-<strong>Bremse</strong> accesses Japanese high-speed market<br />
<strong>Knorr</strong>-<strong>Bremse</strong> has succeeded in accessing the Japanese high-speed train market. In <strong>2010</strong> Japanese<br />
railway company JR East commissioned the company to supply braking components for the traction<br />
bogies of 23 units of the new E5 Shinkansen generation. The high-performance brakes had to be capable<br />
of bringing the Japanese high-speed train safely to a halt from speeds of up to 360 km/h, and<br />
for this purpose <strong>Knorr</strong>-<strong>Bremse</strong> developed an ultra-compact lightweight type of brake caliper based on<br />
a tried-and-tested modular design. The brake discs and flexible ISOBAR sintered brake pads were also<br />
specially developed for the extreme demands of possible emergency braking in the event of an earthquake.<br />
tive products has enabled the company to establish a strong footing in this vast metropolis with its 20<br />
million-plus inhabitants. The EP2002 intelligent brake control system, for example, is a huge success<br />
in Shanghai. And as one of the most important sub-suppliers for Shanghai Metro, <strong>Knorr</strong>-<strong>Bremse</strong> also<br />
offers rapid, professional aftermarket support: Field service engineers, operations technicians and<br />
other specialists ensure the smooth running of systems round the clock. Rapid delivery of original<br />
spare parts is also guaranteed: In Suzhou, Shanghai and Wuxi the necessary components are manufactured<br />
either in-house or by joint ventures. And the company’s own logistics department ensures<br />
fast, efficient transportation and delivery.
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With the new E5 generation of the Shinkansen, JR East will be extending the “Tohoku“ line between<br />
Tokyo and Hachinohe to Aomori, on the west coast of the main island of Honshu. If it is to compete<br />
with air travel, the high-speed train has to complete the trip within three hours – which means increasing<br />
its top speed from 275 km/h to 320 km/h. This calls for a braking system with substantially higher<br />
performance.<br />
In addition to supplying the E5 generation, <strong>Knorr</strong>-<strong>Bremse</strong> also received an order to supply most of the<br />
bogie equipment for the pre-series prototype of the next generation – the E6. Delivery took place<br />
within a few months of receipt of the order, and initial testing started in June <strong>2010</strong>.<br />
<strong>Knorr</strong>-<strong>Bremse</strong> upgrades Indian freight car brakes<br />
The Indian national rail operator, Indian Railways, has chosen <strong>Knorr</strong>-<strong>Bremse</strong> to supply the new brakes<br />
for a staged upgrade of its freight car fleet. In place of conventional braking technology, the cars will<br />
be equipped with modern bogie brakes from <strong>Knorr</strong>-<strong>Bremse</strong> that are not only lighter and more efficient<br />
but also more reliable, as well as having just one brake cylinder per bogie.<br />
Indian Railways management began showing an interest in collaboration with <strong>Knorr</strong>-<strong>Bremse</strong> back in<br />
2009, and in <strong>2010</strong> placed an initial order for the supply of bogie-mounted brake systems for approximately<br />
11,000 freight cars by September 2011. <strong>Knorr</strong>-<strong>Bremse</strong> India wasted no time and began deliveries<br />
in October <strong>2010</strong>.<br />
Along with modern bogie brakes, the <strong>Knorr</strong>-<strong>Bremse</strong> plant in India also manufactures conventional<br />
brakes; however, demand is progressively shifting toward the more technically advanced bogie brakes.<br />
Prizes and awards<br />
Elogistics Award<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Systeme für Schienenfahrzeuge has won an Elogistics Award from AKJ Automotive – a<br />
working group that brings together experts and top managers from the German automotive industry<br />
and offers a platform for exchanging experience amongst OE manufacturers, suppliers and service<br />
providers in the automotive value chain. The Elogistics Award is made in recognition of best-practice<br />
solutions in the fields of IT and logistics developed by companies in the automotive industry and related<br />
sectors.<br />
<strong>Knorr</strong>-<strong>Bremse</strong> received the award for a pioneering solution to the problem of “uniform disposition responsibilities<br />
in a complex plant structure” based on a sophisticated combination of logistics and information<br />
technology. The company succeeded in designing an integrated disposition system with<br />
only one person responsible for each category of goods, enabling customer requirements to be dealt<br />
with much more rapidly and efficiently, even on a cross-plant basis.
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Sydac wins Australian award<br />
<strong>Knorr</strong>-<strong>Bremse</strong> subsidiary Sydac, an industry-leader in the development of simulation technology and<br />
engineering software, won first prize in the Top 20 South Australian Innovation Awards. The new<br />
awards system profiles the 20 most influential business-to-business innovations of the 21st century.<br />
The judges felt that Sydac’s highly innovative technology and development of a successful business<br />
model demonstrated twin competitive advantages that have gained the company a significant market<br />
share at home and abroad.
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Projects<br />
<strong>2010</strong> saw <strong>Knorr</strong>-<strong>Bremse</strong> further improve its capabilities, extending its product portfolio and thus<br />
strengthening its market lead in many areas with a combination of newly established sites, joint<br />
ventures and acquisitions. In China, for example, many of its production sites were expanded,<br />
and in Munich the first and only testing center outside Russia for GOST-standard brake equipment<br />
used in Russia and the Commonwealth of Independent States went into operation.<br />
Brake equipment assembly in Russia<br />
In September, <strong>Knorr</strong>-<strong>Bremse</strong> completed preparations for the assembly of disc brakes and compressors<br />
in the Russian city of Voronezh. Production at the new facility promises to strengthen the company’s<br />
presence in the country and enable even more Russian trains to be directly supplied with products<br />
tailored to local market requirements. <strong>Knorr</strong>-<strong>Bremse</strong>’s collaboration with OAO Vagonremmash, a subsidiary<br />
of Russian railway company RZD, is an important partnership that could bring further orders from<br />
the Russian rail market.<br />
The disc brakes manufactured in Voronezh will be initially installed in mainline passenger cars built by<br />
OAO TVZ – but can also be used in other vehicle types. The oil-free compressors assembled at the same<br />
plant are suitable for electric multiple units or locomotives.<br />
<strong>Knorr</strong>-<strong>Bremse</strong>’s aim is to be able to deliver customized equipment from Voronezh for all Russian vehicle<br />
types. To guarantee high quality standards the assembly line has been designed along the lines of the<br />
<strong>Knorr</strong> Production System (KPS), with globally tested quality standards applied.<br />
With its new production facility for disc brakes and compressors <strong>Knorr</strong>-<strong>Bremse</strong> is building on a long<br />
tradition of business activity in Russia. Back in the 1960s, the former <strong>Knorr</strong>-<strong>Bremse</strong> parent plant in East<br />
Berlin supplied braking equipment for Soviet passenger trains, and today, <strong>Knorr</strong>-<strong>Bremse</strong> equipment is<br />
used in mainline trains, locomotives and multiple units. Prestigious Russian high-speed trains like the<br />
Siemens Sapsan or the Alstom Allegro also use <strong>Knorr</strong>-<strong>Bremse</strong> braking equipment and on-board systems.
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Certification of GOST-standard testing facility<br />
<strong>Knorr</strong>-<strong>Bremse</strong> is the first – and currently the only – company outside Russia to have achieved certification<br />
of a testing facility for braking equipment built to the GOST standard, which applies in Russia and<br />
the Commonwealth of Independent States. The company is now in a position to test and certify a<br />
wide range of components for the Russian market both at its Munich headquarters and also in Berlin.<br />
The facility can be used during product development and also for certification purposes. Avoiding the<br />
need to ship components to Russia for testing and certification means the company can considerably<br />
increase its process flexibility and shorten its delivery times.<br />
Depending on the project concerned, the company is able to test rail vehicle braking equipment such<br />
as brake discs and brake blocks as well as complete bogie equipment. Other testable components<br />
include compressors with their motors and air reservoirs, and also control valves.<br />
New building in India<br />
In the fall of <strong>2010</strong> <strong>Knorr</strong>-<strong>Bremse</strong> India completed its plans for the construction of a new rail vehicle<br />
systems plant. On a site close to the existing facility, a modern building offering about 18,000 m 2 of<br />
production and office space will house some 400 employees who will manufacture rail vehicle brake<br />
control systems, bogie equipment, compressors and air dryers. The new building had become necessary<br />
because of recent exponential growth in the Indian market – with predictions of a further<br />
medium-term increase in demand as India continues to expand its infrastructure.<br />
In line with <strong>Knorr</strong>-<strong>Bremse</strong> India’s international strategy, the new plant will work with certified suppliers<br />
to produce components for the Indian market. The company will be applying the global <strong>Knorr</strong>-<strong>Bremse</strong><br />
Production System (KPS), which ensures that processes are standardized along the entire value chain<br />
– from raw material processing and surface treatment right down to assembly and final quality testing.<br />
<strong>Knorr</strong>-<strong>Bremse</strong>’s new building will also set a new environmental benchmark by adhering to the “Green<br />
Building Standard”. This involves, for example, significantly reducing CO 2<br />
emissions through efficient<br />
air conditioning and high-specification building insulation.<br />
Expansion in China<br />
<strong>Knorr</strong>-<strong>Bremse</strong> China is preparing for the future and responding to steady growth in demand. The company’s<br />
Chinese sites are expanding their production facilities, installing new plant and streamlining<br />
their processes – reflecting the company’s huge success in this growth market.<br />
Suzhou site grows<br />
In <strong>2010</strong> the first major expansion of <strong>Knorr</strong>-<strong>Bremse</strong>’s “Suzhou II” plant, which had been a new-build in 2007,<br />
was completed. Within five months an additional 5,700 m 2 of production facilities and approximately<br />
3,300 m 2 of office space and functional/social areas were created, bringing the total to 22,500 m 2 .
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More room for machining operations was created, enabling the plant to operate with a high degree of<br />
vertical integration and further localize production. Assembly lines were redesigned to cope with high<br />
levels of demand for brake control systems, especially in the mainline segment. Throughput was further<br />
optimized in terms of timing and routing, with alignment of assembly, inspection and packing processes.<br />
And the service area was expanded to 1,400 m 2 in response to growing aftermarket demand. A<br />
new laboratory measuring 350 m 2 was also created to house the so-called System Engineering and<br />
Commissioning Center China.<br />
Environmental aspects were also taken into account in the expansion program, with a rainwater tank<br />
installed for irrigation of the surrounding gardens and solar panels mounted on the roof for hot water<br />
supply. A modern canteen, new locker rooms and showers were also built to take care of the 1,000-strong<br />
workforce.<br />
Rapid growth in Wuxi<br />
The Merak-Jinxin joint venture in Wuxi, which produces air conditioning systems, was also further expanded<br />
in <strong>2010</strong>. Since it was first set up in June 2008, the company has grown its workforce from 10<br />
to 300. During the year under review, high order volumes from the region drove up production to<br />
more than 2,000 on-board HVAC units. To meet such demand, the workshops were expanded, increasing<br />
potential annual output to 2,400 units.
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“5-day factory”<br />
opened in Budapest<br />
It is one of the most advanced plants in the <strong>Knorr</strong>-<strong>Bremse</strong> Group: following a<br />
construction phase lasting only a year or so, the new development and production<br />
plant for rail vehicle systems was officially inaugurated in Budapest in<br />
July <strong>2010</strong>. For <strong>Knorr</strong>-<strong>Bremse</strong> the plant represents a massive increase in capacity<br />
and sets new standards of production and logistics.<br />
At the new factory, <strong>Knorr</strong>-<strong>Bremse</strong> manufactures bogie equipment components<br />
such as brake caliper units and block brakes. The product portfolio also includes<br />
brake control components, such as brake panels and valves, as well as a virtually<br />
complete range of components for freight cars and individual air supply elements.<br />
The move to new premises had become necessary because the old factory,<br />
located just a few hundred meters away, had reached the limits of its capacity.<br />
Along with the production facilities, <strong>Knorr</strong>-<strong>Bremse</strong> has also expanded the<br />
research and development function at the new plant. The primary focus here is<br />
on brake actuators, software, technical calculation and testing.
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A unique concept in the rail vehicle industry<br />
One innovative aspect of the new plant, in which the company has invested some EUR 45 million, is<br />
the underlying concept of the “5-day factory”, based on the globally standardized <strong>Knorr</strong>-<strong>Bremse</strong> Production<br />
System. The concept involves a wide range of pioneering measures aimed at significantly reducing<br />
throughput times along the entire value chain. In the past a major component like the block<br />
brake would take from 20 to 30 days to complete from provision of the raw materials to final shipment,<br />
but standardization of all production processes at the new factory now means the same process<br />
should take just five days – an improvement by a factor of four.<br />
Ingenious supply chain models<br />
Underlying these improvements is the use of intelligent supply chain models, integrated manufacturing<br />
cells, an in-house surface treatment center, and one-piece-flow assembly lines aligned with customer<br />
cycles. This in turn is facilitated by an ingenious system that ensures optimal integration of<br />
procurement, production, and delivery systems.<br />
<strong>Knorr</strong>-<strong>Bremse</strong> has developed a system that precisely assigns all products to a supply model. This is<br />
based on more than just the customary analyses: The “5-day factory” also weights the competence of<br />
each supplier, for example, as well as other aspects with a bearing on logistics, such as volumes.<br />
Focus on customer benefits<br />
By moving to the new plant, <strong>Knorr</strong>-<strong>Bremse</strong> is enhancing customer benefits in several respects – first<br />
and foremost through greater flexibility and optimized schedule effectiveness. The closed value-loop<br />
within the company has also been improved and more efficient transportation and handling processes<br />
have further improved product quality.<br />
On a site situated close to the old facility, more than 1,000 employees now work in a modern building<br />
offering over 30,000 m² of production and office space. A combination of selected building materials<br />
and innovative control technology ensures optimum energy use and has significantly reduced the<br />
new plant’s energy requirements and operating costs.<br />
Opening ceremony<br />
High-ranking visitors attended the inauguration of the new <strong>Knorr</strong>-<strong>Bremse</strong> Rail Vehicle Systems plant in<br />
Budapest in early July: Both the Hungarian Minister of National Development, Dr. Tamás Fellegi, and<br />
the Chairman of the Supervisory Board and owner of <strong>Knorr</strong>-<strong>Bremse</strong>, Heinz Hermann Thiele, were present<br />
at the ceremony.
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In June <strong>2010</strong> two workshops were set up for production of HVAC systems for high-speed trains. A<br />
month later, three assembly lines went into service, producing, amongst other things, air heaters, exhaust<br />
systems and mixing boxes.<br />
Output doubled in Qingdao<br />
Massive growth in demand for high-speed train door systems mean that IFE-VICTALL in Qingdao had<br />
to double its average monthly output with effect from early January <strong>2010</strong>. Expansion of the company’s<br />
production capacity was also used as an opportunity to redesign processes in line with the principles<br />
of the globally standardized <strong>Knorr</strong> Production System (KPS) and introduce the basic concept of a<br />
“5-day factory”, in which the throughput time for a product is reduced to a maximum of five days.<br />
First Gautrain line opened<br />
The Gautrain’s first track section was opened in the South African capital<br />
Johannesburg just in time for the start of the <strong>2010</strong> Soccer World Cup.<br />
<strong>Knorr</strong>-<strong>Bremse</strong>’s contribution to the 24 modern Electrostar trains built by the Bombela Consortium cannot<br />
be missed: the company has supplied the entire electro-pneumatic braking system including oilfree<br />
compressor and sanding system. And <strong>Knorr</strong>-<strong>Bremse</strong> subsidiary IFE supplied each Gautrain with 16<br />
access systems and four cab doors.<br />
The new 80-kilometer express link is a showcase project when it comes to expansion of South Africa’s<br />
public transportation network. Running at speeds of up to 160 kilometers per hour, the Gautrain is one
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New plant in Daxing<br />
In Daxing, <strong>Knorr</strong>-<strong>Bremse</strong> and its Chinese partner CARS (China Academy of Railway Sciences) produces<br />
brake discs for Chinese-built locomotives and multiple units. In April <strong>2010</strong>, after a mere four months’ construction<br />
time, a new plant for the manufacture of brake discs went on stream. And by December of the<br />
same year, it was able to celebrate a further success: within less than four years it had produced its<br />
200,000th brake disc.<br />
A combination of state-of-the-art machines, streamlined production flow using six lines, and application<br />
of <strong>Knorr</strong>-<strong>Bremse</strong>’s standardized global production strategy makes for highly efficient production of up to<br />
9,000 discs per month. This means Daxing has the highest output of rail vehicle brake discs of any plant in<br />
the world.<br />
of the fastest trains on the Electrostar platform. During its first four months in operation the train’s<br />
popularity as an alternative to often-congested roads was demonstrated when more than a million<br />
passengers opted to use the new link.<br />
Passengers can make the trip on this first section from Johannesburg International Airport to Sandton,<br />
in the northern part of the city, in just 14 minutes. The second section linking Johannesburg with<br />
Pretoria is scheduled to open in 2011 and will take a mere 42 minutes longer.
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Clear objective:<br />
market leadership<br />
A combination of acquisitions and new partnerships has enabled <strong>Knorr</strong>-<br />
<strong>Bremse</strong> to further strengthen its position in rail markets around the world.<br />
During <strong>2010</strong> a joint venture – Icer Rail – was set up to develop organic UIC<br />
brake pads and UIC brake blocks. Acquisition of Sigma Coachair Group (SCG)<br />
raised the <strong>Knorr</strong>-<strong>Bremse</strong> Group to the status of the world’s leading manufacturer<br />
of rail vehicle HVAC systems. And the takeover of Heine Resistors GmbH<br />
strengthened the company’s market position in the field of resistors for rail<br />
applications.<br />
Addition in brake pad segment<br />
In May, <strong>Knorr</strong>-<strong>Bremse</strong>’s subsidiary Sociedad Española de Frenos formed a joint<br />
venture with Icer Brakes, part of the Berkelium Group, with the specific aim of<br />
developing and manufacturing brake pads and blocks. It was a logical next step<br />
for <strong>Knorr</strong>-<strong>Bremse</strong>’s strategy in the rail vehicle brake pad segment. Back in 2008 it<br />
had acquired Anchor Brake Shoe Company, the leading North American manufacturer<br />
of brake shoes for locomotives and freight cars. In this case the focus<br />
was on the American market, whereas the new Icer Rail joint venture expanded<br />
<strong>Knorr</strong>-<strong>Bremse</strong>’s portfolio of brake blocks to include organic brake pads and brake<br />
blocks designed to European UIC standards.
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Joint development activities<br />
The joint venture enables <strong>Knorr</strong>-<strong>Bremse</strong> for the first time to take an integrated approach to developing<br />
braking systems with organic UIC brake pads and UIC brake blocks. Engineers in both companies are<br />
now working on achieving optimum interplay of friction materials and braking systems to ensure<br />
minimum wear and maximum operating life for the individual components.<br />
The two partners are a perfect match: Icer Brakes is a recognized expert in the development and<br />
manufacture of friction materials – an area where <strong>Knorr</strong>-<strong>Bremse</strong> has not been particularly active up till<br />
now – while <strong>Knorr</strong>-<strong>Bremse</strong> offers something a highly specialized manufacturer like Icer Brakes does<br />
not have: a century of experience in rail vehicle applications and braking systems combined with a<br />
global sales and marketing network.<br />
Strategic acquisition in HVAC segment<br />
There were similar motives in the case of <strong>Knorr</strong>-<strong>Bremse</strong>’s acquisition of the well-established Australian<br />
HVAC specialist, Sigma Coachair Group (SCG). The takeover has considerably expanded <strong>Knorr</strong>-<strong>Bremse</strong>’s<br />
market position. Via its subsidiary, Merak, the company already has a well-established reputation mainly<br />
in China, Europe and America, but SCG gives it easier access to growth markets in Southeast Asia,<br />
India and Australia.<br />
The merger will generate many synergies for both companies, particularly in development, production<br />
and procurement. More than 30 years of experience in the field have enabled Sigma Coachair<br />
Group to achieve top quality standards combined with high levels of efficiency. The company has also<br />
been involved in a large number of projects worldwide. For example, trains built by Kawasaki Heavy<br />
Industries for Taipei Metro are being equipped with Sigma HVAC systems. And via Hyundai Rotem the<br />
public transport operator in Boston has ordered Sigma Coachair systems for new metro trains. Many<br />
of the management positions at Sigma Coachair have been deliberately preserved so that the company’s<br />
years of expertise will continue be available in the future.<br />
Further foothold in special resistors<br />
<strong>Knorr</strong>-<strong>Bremse</strong>’s purchase of a majority share in German company Heine Resistors GmbH also fits into<br />
the Group’s strategy of making targeted acquisitions to expand its market position in a range of further<br />
business areas.<br />
Heine Resistors GmbH was taken over by Microelettrica Scientifica S.p.A., a member of the <strong>Knorr</strong>-<br />
<strong>Bremse</strong> Group based in Rozzano, Italy. This <strong>Knorr</strong>-<strong>Bremse</strong> subsidiary has been designing, developing<br />
and producing switches, protection relays and resistors for rail vehicles and industrial applications for<br />
more than 50 years.<br />
The acquisition of Heine is particularly promising for Microelettrica in the field of brake resistors, as the<br />
two firms will be able to benefit from industrial synergies. They also complement each other perfectly<br />
in worldwide markets, with Microelettrica particularly well represented in Sweden, Italy and Japan,<br />
while Heine has a particularly strong customer base in Germany and Eastern Europe.
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Products<br />
For more than 100 years <strong>Knorr</strong>-<strong>Bremse</strong> has been pioneering the development, production,<br />
marketing and servicing of modern braking systems for the rail vehicle industry. In fiscal <strong>2010</strong><br />
<strong>Knorr</strong>-<strong>Bremse</strong> also launched a number of innovative products in other areas such as access and<br />
HVAC systems – all aimed at making rail transportation safer, more economical and more<br />
environmentally friendly.<br />
New HVAC system from Merak<br />
<strong>Knorr</strong>-<strong>Bremse</strong> subsidiary Merak has developed a new air-conditioning system that operates with the<br />
new, ultra-eco-friendly refrigerant HFO1234yf. The use of this refrigerant for air-conditioning in rail<br />
vehicles represents a major advance in the field, as its Global Warming Potential (GWP) of 4 in 100 years<br />
is much lower than that of the currently used refrigerant R134a (GWP 1,300). By using HFO1234yf the<br />
rail vehicle HVAC system also complies with the strict criteria of an EU Directive that regulates emissions<br />
from mobile air-conditioning systems and requires the use of a refrigerant with a GWP lower<br />
than 150.<br />
Merak has a long tradition of developing eco-friendly systems. Back in the early 1980s, for example, the<br />
company developed the first high-performance rail vehicle HVAC system based on the use of a heat<br />
pump. Thanks to its continuous development there are now over 1,000 Merak HVAC systems in operation<br />
that use this technology.<br />
Simulators further developed<br />
Sydac develops state-of-the-art train driving simulators for customers in Australia, North America and<br />
Europe. High-definition graphics enable all possible weather conditions, various seasons and times of<br />
day to be simulated, along with detailed depictions of the surroundings and persons such as passengers<br />
or trackside workers which create a virtual environment for train driving. Crucially they enable<br />
drivers to practice coping with all kinds of situations caused by technical failure or human action without<br />
damage to persons or materials.<br />
In the summer of <strong>2010</strong> Sydac delivered simulators to Australian operator Downer EDI Rail for use in its<br />
new Waratah trains in Sydney. The order comprised four simulators in all – two for training multiple
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unit drivers and two for other personnel. One of each of these two types was mounted on a truck, to<br />
enable them to be used flexibly and independently of location.<br />
For the Norwegian Rail Academy Sydac also developed state-of-the-art simulators that realistically<br />
simulate the FlytoGet line in the Norwegian capital of Oslo. The Norwegian Rail Academy ordered six<br />
full cab simulators and three additional ones for operations control.<br />
<strong>2010</strong> also saw Sydac further expand its cooperation with TDS (Train Dynamic Systems), a company<br />
owned by <strong>Knorr</strong>-<strong>Bremse</strong> subsidiary New York Air Brake (NYAB). The main focus was on merging simulation<br />
of heavy-duty freight trains from North America with Sydac’s simulator technology for passenger<br />
operations.<br />
Further development of EP2002 brake control system<br />
<strong>Knorr</strong>-<strong>Bremse</strong> has launched the EP2002 Cube brake control system for metros and multiple units. Based<br />
on the proven EP2002 brake control system, the Cube features an additional integrated control module.<br />
The mechatronic system, which combines mechanical and electronic elements in a single, ultra-compact<br />
unit, now not only offers the service and emergency brake functions of EP2002 but also additional<br />
pneumatic functions for controlling the parking brake and air suspension. As a result there is no longer<br />
any need for an additional, separate control panel.<br />
In the past, auxiliary functions such as air treatment or parking brake control have been installed in<br />
brake control modules in sub-frames or on equipment panels. This is where the EP2002 Cube makes a<br />
real difference. The Cube is basically a three-dimensional aluminum block with no active functional elements<br />
of its own that fills the roles of the conventional EP2002 assembly subframe, the connector block<br />
and the piping, effectively making it a three-dimensional multifunctional component. All of the components<br />
required for the above functions are attached to the Cube. The multiple air lines encased<br />
within the aluminum block mean that except for the compressed air feed pipe and the lines to the<br />
mechanical brake components, air spring components, and reservoirs, all of the piping in the vehicle<br />
can be dispensed with. Even then, the installation envelope of the Cube is no larger than the crosssection<br />
of an average air reservoir. This simplifies integration of the brake control system, enabling it to<br />
be installed beneath the car within a length of just 400 millimeters.<br />
Advantages like these have greatly accelerated the market penetration of the new EP2002 Cube. By the<br />
end of the year under review some 700 units had already been installed in metro projects in China.<br />
New E3D door system<br />
During the year under review, <strong>Knorr</strong>-<strong>Bremse</strong>’s subsidiary IFE developed a new door system for trains<br />
travelling at speeds up to 300 km/h. E3D is an electrically operated single-leaf door system that combines<br />
the familiar E3 and DET door systems. It is supplied almost completely pre-assembled and features<br />
a compact installation envelope and easy maintenance.
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A clear opening width of up to 1,400 mm and an excellent pressure seal up to 6,000 pascals offers passengers<br />
high levels of comfort. The seal prevents unpleasant pressure fluctuations inside the train<br />
caused by aerodynamic effects at high speeds.<br />
E3D also has a highly sensitive obstacle detection system. If it is triggered while the door is closing, it<br />
stops within a fraction of a second until it receives a further close command.<br />
Intelligent sliding step<br />
Another new development from <strong>Knorr</strong>-<strong>Bremse</strong> showcased at InnoTrans <strong>2010</strong>, was an intelligent sliding<br />
step developed for double-decker trains. This is equipped with an ultrasound sensor that measures<br />
the distance from the platform and calculates how far it needs to extend, stopping the step automatically<br />
between 3 and 4 centimeters from the platform edge. By reducing the gap and height<br />
difference between step and platform it offers greater safety especially for elderly people. The system<br />
is also equipped with a contact strip to prevent passengers becoming caught in the step.<br />
Series assembly of door systems<br />
Door manufacturer IFE has further expanded its door assembly services. In addition to first assembly, it<br />
now also offers specific assembly aids and diagnostic instruments – or alternatively it can even carry out<br />
full series assembly for the customer. In <strong>2010</strong>, as part of the negotiations on equipping the FLEXITY 2<br />
platform, IFE concluded an initial agreement on door system assembly with Bombardier.<br />
Vehicle manufacturers are increasingly relying on specialized systems suppliers to take over the task of<br />
door assembly. Using expert technicians from the original equipment manufacturer is the only way to<br />
ensure correct installation. When IFE assembles the door systems itself the company is able to offer a<br />
guarantee that includes pre-defined standards of reliability. Such high standards can usually only be<br />
achieved through skilled assembly by an expert.
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SCHIenenFAHRZeUGe<br />
Valves for the world<br />
There are few rail vehicles for which <strong>Knorr</strong>-<strong>Bremse</strong> cannot supply a control<br />
valve that complies with the required standard. The company’s valves are used<br />
in their millions worldwide – but they are by no means interchangeable. In the<br />
past, various regions have set differing standards, none of which are compatible<br />
with one another. When selling to particular markets it is therefore essential<br />
to adapt products to the specific regional requirements. Control valves<br />
have to be capable of functioning reliably in desert sand but also at minus 60<br />
degrees Celsius in the Russian winter.
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From Europe to the world<br />
In the core European market, decades of experience, state-of-the-art technology and long service intervals<br />
have contributed to the success of the <strong>Knorr</strong> KE valve, which complies with the European UIC<br />
standard. The valve is globally regarded as a synonym for extreme reliability, having proved itself millions<br />
of times. The secret to its success is its continuous development: Improvements and innovations<br />
are tested on <strong>Knorr</strong>-<strong>Bremse</strong>’s UIC test bench in Munich, where engineers can simulate braking of trains<br />
up to 1,500 in length and record the performance data of every individual control valve.<br />
Acquisition of the US company New York Air Brake (NYAB) and the launch of the <strong>Knorr</strong>-<strong>Bremse</strong> DB60<br />
control valve specially designed for the American AAR standard, marked the continuation of <strong>Knorr</strong>-<br />
<strong>Bremse</strong>’s worldwide expansion – and also gave the company access to the South African market,<br />
which uses the same standard. <strong>Knorr</strong>-<strong>Bremse</strong> valves are also installed in trains in Australia, where the<br />
AAR system is used for transportation of heavy iron ore and otherwise the Australian Railways ARA<br />
standard applies.<br />
<strong>Knorr</strong>-<strong>Bremse</strong> was also able to draw on its experience with adapting to the AAR standard when it entered<br />
the Russian market. In close collaboration with the Russian state railways the company developed<br />
valves for trains operating on 1,520 mm gauge tracks. They are designed to be easily installed on<br />
Russian trains and to be compatible with competing valves – but also to offer demonstrable advantages<br />
for operators.<br />
Close collaboration with local experts<br />
For a major project such as development of control valves for the GOST standard it was crucial for<br />
<strong>Knorr</strong>-<strong>Bremse</strong> to have the support of experienced Russian rail experts who were familiar with local<br />
conditions and knew what was important for the Russian market. But despite being able to call on<br />
their experience the project was a major challenge. Whereas in Europe and America the valves are<br />
designed to function at temperatures down to minus 40 degrees Celsius, in Russia the temperature<br />
limit was minus 60 degrees Celsius.<br />
Successful certification<br />
This certification project involved detailed testing of systems, components and materials on special<br />
test benches in Munich over a period of several months. Compatibility tests were backed up by field<br />
and operational testing.<br />
At the end of the year under review an important milestone was reached when the new valves were<br />
certified for the Russian market. Once in-service testing begins in 2011 the company will be well on its<br />
way to becoming a certified supplier of GOST standard control valves for use in Russia and the Commonwealth<br />
of Independent States.
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Service<br />
Every vehicle builder and train operator has a unique customer profile – and therefore also has<br />
unique needs when it comes to aftermarket service for brakes and on-board systems. <strong>Knorr</strong>-<br />
<strong>Bremse</strong> Rail Services brings together the company’s full range of aftermarket activities for rail<br />
vehicles into a single, flexible program designed to offer efficiency, ease of use, delivery effectiveness<br />
and high availability of spare parts. In <strong>2010</strong> the company’s aftermarket logistics concepts<br />
were further developed in the form of “Original Spare Parts Kits” and the “FastMover Spare<br />
Parts Concept”, and the e-business system for spare parts ordering was also further expanded.<br />
The aim of all these measures was to maximize efficiency of spare parts management for the<br />
customer.<br />
Original spare parts kits<br />
The success of <strong>Knorr</strong>-<strong>Bremse</strong>’s original spare parts kits continued in <strong>2010</strong>, with kits being supplied to<br />
more than 50 customers. Each consists of a complete set of the spare parts required for maintaining and<br />
overhauling a specific <strong>Knorr</strong>-<strong>Bremse</strong> system.<br />
The kits are a crucial factor in increasing efficiency. They simplify disposition, ordering and delivery<br />
monitoring, as well as receipt of goods and invoicing. They also help improve warehousing, commissioning<br />
and inventory processes.<br />
The kits mean <strong>Knorr</strong>-<strong>Bremse</strong> can automatically supply service staff with the correct original parts required<br />
for their work, enabling them to concentrate on the job at hand. The composition of the kits<br />
enables the repair shop to operate more economically at each stage of the process. Standardization<br />
ensures a consistent quality of overhaul work, repair shops benefit from reduced day-to-day pressure<br />
and vehicle operators welcome the improvement in terms of quality, safety and cost.<br />
FastMover spare parts concept<br />
It is difficult to plan for the precise moment when a product component will require replacement on<br />
account of wear and tear. This makes efficient spare parts management all the more important to<br />
ensure the overhauled components are in the right place at the right time. It was with this in mind that<br />
<strong>Knorr</strong>-<strong>Bremse</strong> developed a program entitled “FastMover Spare Parts Concept”.<br />
Under the program <strong>Knorr</strong>-<strong>Bremse</strong> undertakes contractually to hold in inventory a certain range of socalled<br />
“fast movers” – components with a fast turnover that cover the majority of spare part requirements.<br />
This reduces capital tie-up for the customer, minimizes delivery times and increases parts availability.
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Electronic data interchange<br />
With its expansion of electronic data interchange (EDI), <strong>Knorr</strong>-<strong>Bremse</strong> has taken another step towards<br />
improved efficiency and leaner processes. EDI considerably simplifies spare parts ordering.<br />
A successful pilot project demonstrated that an EDI system using a standardized SAP interface enables<br />
spare parts to be ordered up both quickly and efficiently.<br />
When a customer enters an order on his PC it is initially stored in his internal IT system. A click of the<br />
mouse then forwards it to <strong>Knorr</strong>-<strong>Bremse</strong>, where it goes directly to the delivery system, which converts<br />
the customer’s reference number into the <strong>Knorr</strong>-<strong>Bremse</strong> order and dispatch system. This then automatically<br />
generates data on availability, price, delivery and payment conditions. The customer receives<br />
automatic confirmation of every order he submits, together with information on when the part is due<br />
to be shipped from <strong>Knorr</strong>-<strong>Bremse</strong>.
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74 HIGHLIGHt<br />
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SCHIenenFAHRZeUGe<br />
Booming<br />
aftermarket in Asia<br />
As expected, the large-volume orders received from Asia in recent years are<br />
now beginning to trigger demand for servicing and spare parts in this growth<br />
region. In <strong>2010</strong> <strong>Knorr</strong>-<strong>Bremse</strong> therefore continued to expand its aftermarket<br />
capacity in China.<br />
Rapid growth of the Chinese rail market started at least 10 years ago and continues<br />
apace. With the support of the Chinese government, high-speed rail lines<br />
have been planned and constructed, and many major cities have invested in<br />
modern metro networks or expanded existing ones. At the same time the state<br />
railway operator decided to invest in modern locomotives manufactured in the<br />
West, and by the end of <strong>2010</strong> almost 3,500 locomotives equipped with <strong>Knorr</strong>-<br />
<strong>Bremse</strong> systems were in operation, with a further 1,000 or more due for delivery<br />
in 2011.<br />
It is no coincidence that <strong>Knorr</strong>-<strong>Bremse</strong> was involved in many of these initial investments<br />
and is now also benefiting from increased demand for aftermarket<br />
services. The company has maintained contacts with China since the 1970s and<br />
its first major project came in 1990, when it was contracted to equip 96 cars with<br />
braking systems for Shanghai Metro. From that moment onwards, <strong>Knorr</strong>-<strong>Bremse</strong><br />
managed to steadily expand its business activities in China, culminating in last<br />
year, when the company received the largest order in its 100-year history – a<br />
contract worth some EUR 500 million to supply braking, door and HVAC systems<br />
for the Chinese CRH3 high-speed train.
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Changing aftermarket activities<br />
In the past, <strong>Knorr</strong>-<strong>Bremse</strong>’s aftermarket activities in China consisted largely of supplying spare parts,<br />
but components supplied several years ago for the braking systems of high-speed trains, metros and<br />
locomotives are now due for their first major technical overhaul.<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Rail Vehicle Systems has been quick to react to this development and has rapidly built<br />
up the required additional aftermarket capacity. This involved in particular establishing a service center<br />
in Suzhou in Jiangsu Province and expanding the field service teams who work directly with customers<br />
at local level.<br />
New service center<br />
The main backbone of <strong>Knorr</strong>-<strong>Bremse</strong>‘s aftermarket service in China is its Suzhou service center, and the<br />
workforce here was considerably expanded during the year under review, enabling the company to<br />
react more swiftly to demand in the Chinese aftermarket and further improve the safety and reliability<br />
of trains operating in China.<br />
The servicing skills of all local staff were also developed in close collaboration with established service<br />
centers and <strong>Knorr</strong>-<strong>Bremse</strong> production units worldwide.<br />
The equipment used in China meets the same standards as in Europe, as do the tools used, the key<br />
performance indicators and the tried-and-tested methods of the <strong>Knorr</strong>-<strong>Bremse</strong> Production System<br />
(KPS). This means <strong>Knorr</strong>-<strong>Bremse</strong> can guarantee uniform quality standards around the globe. Delivery<br />
performance at the service center in Suzhou is already running at well over 95%.<br />
Expansion of field service team<br />
<strong>Knorr</strong>-<strong>Bremse</strong> reacted to the new requirements of the market in two ways. First of all it expanded its<br />
field service teams – virtually doubling them in size during <strong>2010</strong>. And secondly it encouraged other<br />
service units to pass on their expertise – particularly technical skills – to the Chinese field service teams<br />
so as to make local support for customers even more effective. At the same time the company adapted<br />
structures and processes to the requirements of the Chinese market.<br />
Expansion of aftermarket service in Asia continues<br />
In the future, too, <strong>Knorr</strong>-<strong>Bremse</strong> will be able to draw on its experience of developing from a simple<br />
spare parts supplier to providing aftermarket services for entire systems. China is currently about a<br />
decade ahead of many Asian threshold countries in terms of developing its rail market. So the expertise<br />
gathered by <strong>Knorr</strong>-<strong>Bremse</strong> in the Chinese aftermarket should stand the company in good stead<br />
when it comes to future developments in other rapidly growing Asian markets.
Commercial Vehicle Systems<br />
Following a dramatic slump the previous year, <strong>Knorr</strong>-<strong>Bremse</strong> Commercial<br />
Vehicle Systems posted significantly higher sales in all markets in <strong>2010</strong>. Truck<br />
production in China rose by 47%, and in North America the ongoing decline<br />
since 2006 was halted. In addition, the proportion of trucks produced in Western<br />
Europe grew by 60% to 320,000 units. After increasing capacity in line with<br />
this trend, the Commercial Vehicle Systems division was able to benefit disproportionately<br />
from this new growth.
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Markets<br />
There was a distinct upturn in the European commercial vehicle market, even though it failed<br />
to return to pre-crisis levels. Production figures rose significantly in virtually all segments.<br />
<strong>Knorr</strong>-<strong>Bremse</strong> successfully tendered for a wide range of projects, winning new orders in North<br />
and South America and also in many Asian countries.<br />
Europe<br />
Recovery in the truck market picked up speed during the course of the year under review. In Western<br />
Europe, truck production was up 60% at 320,000 units, and trailer production also recovered, expanding<br />
by more than 50% to exceed the forecast output of 105,000 units. Developments in Central and<br />
Eastern Europe were also positive, with truck output rising by 37% to 75,000 units. However despite<br />
these increases, sales remained well below pre-crisis levels.<br />
North America<br />
<strong>2010</strong> saw the decline in North American truck production halted for the first time since 2006. Output<br />
was 23% up on the previous year at some 218,000 vehicles, though this was still 56% below the record<br />
level achieved in 2006. Aftermarket developments were also positive. Against a background of these<br />
positive trends, <strong>Knorr</strong>-<strong>Bremse</strong> North America won a number of important orders.<br />
South America<br />
In a context of economic recovery in all segments – particularly the construction, infrastructure and raw<br />
materials industries – combined with measures to facilitate vehicle financing, transport volumes in<br />
South America increased significantly during the year under review. As a result, South American commercial<br />
vehicle production rose 56% in <strong>2010</strong> to 184,000 units, surpassing the record level achieved in<br />
2008.<br />
Asia/Australia<br />
<strong>2010</strong> saw truck production in Asia/Australia continue to expand, driven mainly by output in China,<br />
which was 47% up at 1,328,000 vehicles. The commercial vehicle markets in India and Japan also recorded<br />
growth. <strong>Knorr</strong>-<strong>Bremse</strong> benefited from this positive trend, winning important orders for compressors,<br />
torsional vibration dampers, disc brakes and electronic brake control systems.
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Joint venture<br />
with CAFF in China<br />
As part of a significant expansion of its activities in China in the year under<br />
review, <strong>Knorr</strong>-<strong>Bremse</strong> Commercial Vehicle Systems signed a joint venture<br />
agreement for the manufacture of brake valves, transmission valves and air<br />
dryers in August. The setting up of the new company marks a milestone in<br />
<strong>Knorr</strong>-<strong>Bremse</strong>‘s China strategy and is a good example of the benefits of longterm<br />
engagement in a local market.<br />
The agreement was signed between <strong>Knorr</strong>-<strong>Bremse</strong> Asia Pacific (Holding) Ltd.<br />
and the Chinese manufacturer Chongqing CAFF Automotive Braking & Steering<br />
Systems Co. Ltd. <strong>Knorr</strong>-<strong>Bremse</strong> holds a 66% stake in <strong>Knorr</strong>-<strong>Bremse</strong> CAFF Systems<br />
for Commercial Vehicles Chongqing Ltd., as the new joint venture is called, with<br />
the remaining 34% being held by its Chinese partner.
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Partner with an excellent reputation<br />
Chongqing CAFF Automotive Braking & Steering Systems Co. Ltd. is a company with an excellent<br />
reputation, especially within China. Founded in 1952, the company was one of the first manufacturers<br />
of automotive components in China and has had a lasting influence on the development of the Chinese<br />
automobile and commercial vehicle industries over recent decades. CAFF currently employs<br />
around 1,600 people.<br />
Declared goal: market leadership<br />
The declared medium-term goal is to become one of the leading commercial vehicle industry suppliers<br />
in the People’s Republic of China, and the German-Chinese partnership is an important step in that<br />
direction. Collaboration with CAFF enables the Commercial Vehicle Systems division to produce a<br />
wide-ranging product portfolio with a high element of value-added directly in the Chinese market. At<br />
the same time, the new joint venture will strengthen the company‘s local presence yet further.<br />
In addition to the choice of partner, the location was also of great importance for <strong>Knorr</strong>-<strong>Bremse</strong>. Situated<br />
at the heart of China, the municipality of Chongqing is home to some 32 million people and is a<br />
key driver of industrial development in virtually the whole of Western China. Chongqing is also a major<br />
cultural and industrial center and an important transportation hub in this region to the east of Sichuan<br />
province. Many western companies have set up operations here and some countries maintain general<br />
consulates in the city.<br />
Strategic vision pays dividends once again<br />
The formation of the joint venture <strong>Knorr</strong>-<strong>Bremse</strong> CAFF Systems for Commercial Vehicles Chongqing<br />
Ltd. is yet another example of the success of the Group’s long-term strategy in China.<br />
Parallel to the expansion of the Rail Vehicle Systems division, <strong>Knorr</strong>-<strong>Bremse</strong> Commercial Vehicle Systems<br />
had entered into negotiations on potential partnerships with Chinese companies at a very early<br />
stage, and the foundation of this joint venture demonstrates the value of this approach.
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Market Successes<br />
Against a background of general market recovery, <strong>Knorr</strong>-<strong>Bremse</strong> achieved notable successes in<br />
<strong>2010</strong>: from Volvo the company received an order to supply compressors for its new mediumduty<br />
engine platform; in Brazil it became the market leader for electronic braking systems; and<br />
in Germany it was voted “Best Brand” in the “Brakes” category of the commercial vehicle sector<br />
for the fifth year in succession.<br />
Worldwide sales figures for the Commercial<br />
Vehicle Systems division in eUR millions<br />
2008 1,975<br />
2009 1,221<br />
<strong>2010</strong> 1,701<br />
Europe<br />
Electronic brake control system 5.1 at Daimler<br />
This was not the first time that <strong>Knorr</strong>-<strong>Bremse</strong> had received an order to supply electronic brake control<br />
systems (EBS) to Daimler <strong>AG</strong>. But this latest contract nevertheless represented an important milestone,<br />
as the company will now also be supplying the world’s leading commercial vehicle manufacturer with<br />
an EBS system for heavy-duty trucks. The system will be used on the twin-axle semitrailer tractors belonging<br />
to the new SFTP vehicle platform, which means <strong>Knorr</strong>-<strong>Bremse</strong> will be supplying about half of<br />
the EBS systems for the platform. Last year the final preparations were made at the Aldersbach site for<br />
series production of components in 2011.<br />
The preparations for production kick-off had been preceded by almost four years’ intensive joint development<br />
work on the system’s software and hardware, including many testing phases both at <strong>Knorr</strong>-<br />
<strong>Bremse</strong> and at Daimler. During the year under review the machine tools for production were manufactured<br />
and assembly lines modified so that series production could start on schedule in 2011.<br />
The EBS5.1 brake control system was specifically designed for the requirements of the new vehicle<br />
platform and its new electronic architecture and represents a variant of the EBS5. As a platform development,<br />
EBS5 succeeds in integrating into a single brake control system a wide range of functions that<br />
are now taken for granted in commercial vehicles. In addition to driver assistance systems like the ESP<br />
electronic stability program or the ABS anti-lock system, these also include coupling force control,<br />
wear control and retarder blending.
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ABS for agricultural vehicles<br />
This is an example of a new area of application for a well-established product: <strong>2010</strong> saw <strong>Knorr</strong>-<strong>Bremse</strong><br />
continue its development of an electro-pneumatic anti-lock braking system for agricultural vehicles<br />
and virtually complete the preparations for series production. During the first half of 2011, full production<br />
of the new ABS system will start for the Fendt 900 vehicles series.<br />
There were two basic reasons why <strong>Knorr</strong>-<strong>Bremse</strong> became involved in this new market segment. Firstly,<br />
market analyses had indicated that as agricultural tractors become ever larger, demand is growing for<br />
safety-critical products. In developing the system <strong>Knorr</strong>-<strong>Bremse</strong> was able to draw on its core competences<br />
and decades of experience with vehicle safety systems. For this new category of vehicle the<br />
company used tried-and-tested electro-pneumatic components from the related truck sector.<br />
The second reason was increasing convergence of the parameters for agricultural tractors and trucks.<br />
Tractors are becoming faster and capable of pulling heavier loads. And their engines are increasingly<br />
not just used to power the vehicle but also for other functions, for example driving snow blowers. As<br />
the fields of use expand, so, too, do the technical requirements. If, for example, agricultural vehicles are<br />
used for clearing snow, then safety aspects become increasingly important.<br />
Compressors for Volvo Powertrain<br />
<strong>Knorr</strong>-<strong>Bremse</strong> has won an order from Volvo Powertrain to supply compressors for the company’s new<br />
medium-duty engine platform. This means that <strong>Knorr</strong>-<strong>Bremse</strong>’s share of the compressor market for Volvo<br />
Powertrain will rise significantly from 2013 onwards. At the end of 2009 <strong>Knorr</strong>-<strong>Bremse</strong> had already secured<br />
a contract to supply compressors for the company’s heavy-duty engine platform.<br />
The total volume will be more than 72,000 units per year, making <strong>Knorr</strong>-<strong>Bremse</strong> one of Volvo Powertrain’s<br />
five most important suppliers. Production facilities in Lisieux (France), Dalian (China) and Pune (India) will<br />
be involved in supplying the compressors.
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North America<br />
Bendix becomes main supplier for to Mack Trucks<br />
The joint venture Bendix Spicer Foundation Brake LLC between <strong>Knorr</strong>-<strong>Bremse</strong>’s US subsidiary Bendix<br />
Commercial Vehicle Systems LLC and Dana Commercial Vehicle Products LLC, USA, has reinforced its<br />
North American market leadership position. In April, the foundation drum brakes manufactured by<br />
Bendix Spicer Foundation Brake LLC became standard at Mack Trucks for the company’s commercial<br />
vehicles, which are mainly long-haul models.<br />
For the joint venture, becoming the main supplier for Mack Trucks confirmed its strategic direction.<br />
Ever since the company was founded in 2004, Bendix Spicer Foundation Brake LLC has remained focused<br />
on the development and production of highly robust and durable foundation drum and disc<br />
brakes and slack adjusters.<br />
Active Cruise with Braking System (ACB) for Peterbilt Motors Company<br />
The Bendix Wingman ACB (Active Cruise with Braking) – an automatic emergency braking system – is<br />
being offered by another major North American vehicle builder, Peterbilt Motors Company, further<br />
underpinning the key position of <strong>Knorr</strong>-<strong>Bremse</strong> subsidiary Bendix as a manufacturer of safety technologies<br />
for commercial vehicles in the U.S. market. The ACB system is built upon the Bendix Electronic<br />
Stability Program and helps drivers avoid collisions and mitigate the risk of rollover and loss-ofcontrol<br />
situations.<br />
Using a radar sensor, ACB constantly measures the distance to the forward vehicle and, based on the<br />
acquired data, automatically governs the speed of the truck. The radar sensor, which is mounted to the<br />
front of the vehicle, can detect up to 32 moving and stationary objects within a radius of approximately<br />
150 meters. If the following distance closes too fast, the system provides audible and visual<br />
alerts to the driver. If the distance continues to close, ACB proactively intervenes in the engine and<br />
brake control systems to mitigate the risk. In inclement weather or in heavy traffic, the driver can deactivate<br />
the automatic intervention in the engine and brake control units.<br />
Of course, ACB cannot replace a good driver. But the system can bring a significant improvement in<br />
highway safety in everyday truck traffic and help reduce the risk of collisions and the related costs. In<br />
addition, by assisting the driver to maintain a set following distance to the forward vehicle and preventing<br />
abrupt acceleration, the ACB system can help save fuel.
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20 millionth<br />
disc brake delivered<br />
The success story continues apace: parallel to the <strong>2010</strong> IAA in Hanover, the<br />
<strong>Knorr</strong>-<strong>Bremse</strong> site in Aldersbach, Germany produced its 20 millionth disc brake.<br />
The success of the pneumatically operated disc brake started in 1992, when<br />
<strong>Knorr</strong>-<strong>Bremse</strong> produced a small series for a bus application. Then, in 1996, the<br />
leading truck manufacturers introduced the brakes as standard, and in the third<br />
year of production an important milestone was reached when the millionth unit<br />
came off the production line. By January 2006, <strong>Knorr</strong>-<strong>Bremse</strong> had produced its 10<br />
millionth brake.<br />
As the number of different applications grew, production steadily increased by<br />
more than 200,000 to 2.8 million a year in 2007 and 2008. Then, only a few years<br />
later in <strong>2010</strong>, the company celebrated brake number 20,000,000.
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Consistent performance the secret of success<br />
There are many reasons for the success of the pneumatic disc brake, including its light, compact design,<br />
even brake pad wear, greater ease of servicing and related cost savings. But the main reason remains<br />
the enhanced safety levels it offers. Introduction of the disc brake significantly reduced braking distances<br />
compared with traditional drum brakes. The brake’s consistently strong performance under all<br />
operating conditions and its rapid response and controlled application ensures safe braking especially<br />
at high speeds. And the development engineers are currently focusing on reducing the braking distance<br />
even further.<br />
Continuous improvement the key to market success<br />
The enduring success of the disc brake is due in no small part to the product’s continuous development<br />
and improvement. Modifications introduced in recent years have included the monoblock caliper and<br />
the splined disc – which offers improved heat-resistance. Parallel to these developments the brake has<br />
also been adapted for specific applications, for example on trailers. Some 50 engineers are currently<br />
working on continuous improvement of this innovative product.<br />
By constantly enhancing the product’s advantages for customers, <strong>Knorr</strong>-<strong>Bremse</strong> has managed to further<br />
consolidate its position as the leading supplier of disc brakes and complete braking systems for the<br />
commercial vehicle industry. Its many applications now set the industry standard for trucks weighing<br />
between 6 and 44 tons. The company is also particularly focused on developing products that are tailored<br />
to the various regional markets. Thus, for example, the disc brake is currently being adapted for<br />
use in North America, Brazil and – most recently – China. The R&D expenditure involved represents an<br />
important investment in the global success of the disc brake.<br />
Uniform quality standards world-wide<br />
<strong>Knorr</strong>-<strong>Bremse</strong> relies on state-of-the-art technology and a comprehensive quality management system<br />
in the production of these brakes, with EUR 80 million invested in the machining and assembly equipment<br />
at the Aldersbach factory alone. A similar volume of investment is also devoted to suppliers. And<br />
the <strong>Knorr</strong>-<strong>Bremse</strong> Production System (KPS) ensures that all the disc brakes are produced to the same<br />
high standard the world over. Across-the-board quality management ensures top quality at every stage<br />
of the value chain. In recent years the Disc Brake Center of Competence in Aldersbach has helped establish<br />
further centers of competence in Brazil, the USA and China.
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South America<br />
Anti-lock system for Ford<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Brazil and <strong>Knorr</strong>-<strong>Bremse</strong> Turkey have jointly won important orders from Ford. In June,<br />
Ford Caminhões decided to put its faith in <strong>Knorr</strong>-<strong>Bremse</strong> ABS technology: with effect from 2013, <strong>Knorr</strong>-<br />
<strong>Bremse</strong> Brazil will be supplying the complete ABS requirements of South America’s third biggest truck<br />
manufacturer. <strong>Knorr</strong>-<strong>Bremse</strong>’s Brazilian subsidiary is also set to benefit from new legislation requiring<br />
trucks to be equipped with ABS systems in Brazil from 2013 onwards.<br />
In addition to this order from South America, <strong>Knorr</strong>-<strong>Bremse</strong> will also be supplying the entire EBS requirements<br />
of Ford Otosan in Turkey. The contract was secured as a result of close cooperation between<br />
the teams in Brazil, <strong>Knorr</strong>-<strong>Bremse</strong>’s Turkish organization and the Electronics Center of Competence<br />
responsible for developing ABS systems in Schwieberdingen.<br />
Series production<br />
of compressor with clutch<br />
Series production of the compressor with clutch started in September of the year under review. The<br />
compressors will be initially installed in the TGX Efficient Line, a new vehicle series from truck manufacturer<br />
MAN, but during 2011 will be extended to the entire range of heavy vehicles. The compressor with<br />
clutch is an innovative development that connects and disconnects compressor and engine according<br />
to air requirements, thereby saving significant quantities of fuel.<br />
The compressor disengages from the engine in situations where this makes sense in terms of energy<br />
management – for example where more power is needed for the vehicle itself during drive-off, accel-
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Asia<br />
Successes in China<br />
<strong>Knorr</strong>-<strong>Bremse</strong> has been represented in China by its companies in Dalian and Shanghai for several<br />
years. In order to expand its activities in China, a start was made in <strong>2010</strong> with the development of an<br />
assembly line for disc brakes in Dalian, which should be completed in 2011. In August a contract was<br />
signed with commercial vehicle supplier CAFF to form a joint venture that will take up operations in<br />
2011 (see pages 80/81).<br />
During <strong>2010</strong> <strong>Knorr</strong>-<strong>Bremse</strong> received growing numbers of orders for compressors from China National<br />
Heavy Duty Truck Group (CNHTC) and the engine manufacturer Weichai. FOTON, one of the leading<br />
Chinese truck manufacturers also decided to bring in <strong>Knorr</strong>-<strong>Bremse</strong> to provide equipment for a number<br />
of important products. The new orders have considerably strengthened the position of <strong>Knorr</strong>-<br />
<strong>Bremse</strong> in the Chinese truck market. The company is also to supply the majority of the torsional vibration<br />
dampers for CNHTC trucks as well as WP7 and WP12 engines from Weichai.<br />
eration or overtaking. This means the engine does not need to generate extra power to drive the compressor,<br />
and fuel is saved. But even during normal driving the compressor can be disengaged when the<br />
braking system already has sufficient air – so the engine does not have to drive the compressor in neutral.
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Partnership with Volvo in Asia further expanded<br />
Winning the order to develop and supply central braking system components for the Asian market has<br />
enabled <strong>Knorr</strong>-<strong>Bremse</strong> to further expand its strategic global partnership with Volvo. From 2013 onwards<br />
<strong>Knorr</strong>-<strong>Bremse</strong> will be supplying braking systems from its Chinese and Indian plants for medium and<br />
heavy-duty trucks to be manufactured locally by Volvo.<br />
At the end of <strong>2010</strong> <strong>Knorr</strong>-<strong>Bremse</strong> received an order for complete ABS and air treatment systems for the<br />
trucks. The company also won the tender to supply the engine compressors, which will be manufactured<br />
in India.<br />
By producing for the local mass-premium segment Volvo aims to significantly expand its share of the<br />
Asian market – one reason why <strong>Knorr</strong>-<strong>Bremse</strong> attaches such significance to the latest orders and the<br />
expansion of its strategic product lines at Volvo.<br />
Prizes and awards<br />
“Best Brand” for fifth year running<br />
For the fifth year running, <strong>Knorr</strong>-<strong>Bremse</strong> was named “Best Brand in the Commercial Vehicle Industry” in<br />
the “Brakes” category. The award recognizes the reliability, quality and safety of <strong>Knorr</strong>-<strong>Bremse</strong> products<br />
and is regarded by customers as a reliable indicator of quality. Readers of the trade journals lastauto<br />
omnibus, trans aktuell and FERNFAHRER were invited by DEKRA, the vehicle inspection experts, and<br />
publishers ETM to vote for the best brands in the commercial vehicle segment.<br />
Participants were not just voting on brand recognition but also on the perceived value of the products<br />
concerned and the degree of confidence they inspired. The fact that <strong>Knorr</strong>-<strong>Bremse</strong> won the award for<br />
the fifth time running despite difficult market conditions is an incentive for the company to remain a<br />
preferred supplier for its customers, offering them high quality, innovative and competitive products.<br />
<strong>Knorr</strong>-<strong>Bremse</strong> wins die casting competition<br />
In the <strong>2010</strong> International Aluminum Pressure Die Casting Competition, <strong>Knorr</strong>-<strong>Bremse</strong>, together with<br />
Swiss supplier DGS Druckguss Systeme <strong>AG</strong>, won first prize in the category “Multifunctional near-net<br />
shape castings” for its casing for the Electronic Air Control 2 (EAC2) for braking systems.<br />
The term “near-net shape” is used by experts to describe products that have virtually achieved their<br />
final shape following casting and only require minimal finishing. The process jointly developed by<br />
<strong>Knorr</strong>-<strong>Bremse</strong> and DGS brings enormous advantages: During finishing of a component weighing 4.6<br />
kilograms following conventional pressure die casting, anything up to a kilogram of waste can be<br />
generated, whereas the figure for the new process is a mere 300 grams.
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PACCAR quality award<br />
The fact that Bendix Spicer Foundation Brake LLC (BSFB) won a “50 PPM” quality prize from American<br />
manufacturer Paccar is an indication of the company’s success in working towards the “zero defects”<br />
goal laid down by <strong>Knorr</strong>-<strong>Bremse</strong>. PPM stands for “parts per million“ and is a common metric used in<br />
manufacturing to refer to the number of defects – or defective units – per million parts examined.<br />
BSFB received the prize in recognition of the fact that fewer than 50 in a million parts delivered were<br />
faulty or defective. This makes Bendix one of a small circle of preferred PACCAR suppliers.<br />
SmarTire among TOP 5 aftermarket products<br />
US industry publication Heavy Duty Aftermarket Journal has named the SmarTire TPMS tire pressure<br />
monitoring system as one of the top 5 aftermarket products of <strong>2010</strong>. The criteria for selection are innovation,<br />
customer usefulness and customer retention.<br />
The system, which can be retrofitted to almost any commercial vehicle, monitors the pressure and<br />
temperature of each tire to provide tire status information in real time. If the tire pressure falls below<br />
a set level, the system warns the driver of the potential danger, enabling him to check and if necessary<br />
adjust tire pressure at any time. Continuous monitoring can also have a positive impact on running<br />
costs, as tire pressure influences both tire wear and fuel consumption.<br />
Three supplier awards from Caterpillar<br />
During the year under review Bendix received three awards for quality excellence from commercial<br />
vehicle manufacturer Caterpillar. In the categories OEM air treatment products, remanufactured air<br />
compressors and service parts the company received silver level designation – a status only granted<br />
by Caterpillar to a select group of suppliers.<br />
Bendix regards this achievement as validation of its system of continuous quality improvement. At<br />
the same time it boosts the company’s commitment to supporting Caterpillar with top quality products.
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Projects<br />
During <strong>2010</strong> <strong>Knorr</strong>-<strong>Bremse</strong> further strengthened its market position in the commercial vehicle<br />
sector with a wide range of different projects. In Russia, for example, a new torsional vibration<br />
damper assembly line was opened, and in Kecskemét, Hungary, the one millionth air treatment<br />
unit was produced. In response to growing demand in the Chinese market, <strong>Knorr</strong>-<strong>Bremse</strong> also<br />
paved the way for transferring an entire disc brake assembly line from its German site in Aldersbach<br />
to Dalian, China.<br />
New damper assembly line opens in Russia<br />
In May <strong>2010</strong> a new assembly line for dampers started up at <strong>Knorr</strong>-<strong>Bremse</strong> KAMA in Naberezhnye<br />
Chelny in the Russian Republic of Tatarstan. This joint venture between <strong>Knorr</strong>-<strong>Bremse</strong> and Russia’s biggest<br />
truck manufacturer, KAMAZ, produces torsional vibration dampers for the Russian market. Currently<br />
some 250 truck dampers leave the assembly line during every shift. Locating production in Naberezhnye<br />
Chelny has considerably increased supply chain flexibility, as products previously shipped<br />
from Europe to Russia can now be produced locally.<br />
This establishment of local production facilities in Russia is part and parcel of <strong>Knorr</strong>-<strong>Bremse</strong>’s global strategy<br />
of ensuring that products are manufactured directly in the market in which they are to be sold as far<br />
as possible. The strategy has proved highly successful: since it was first set up the new Russian joint venture<br />
has grown steadily and expanded production despite the difficult economic circumstances.<br />
Milestone in Kecskemét<br />
A milestone was passed in the production of air treatment equipment at <strong>Knorr</strong>-<strong>Bremse</strong> in March <strong>2010</strong>,<br />
when the company’s plant in Kecskemét, Hungary turned out its one millionth APU (Air Processing<br />
Unit). The APU in question is a pneumatically controlled unit for air treatment in commercial vehicles<br />
that combines several different functions in a single item of equipment. Among other things, it comprises<br />
an air dryer with pressure regulator, as well as a four-circuit safety valve with one or more integrated<br />
pressure limiters. Production of the one-millionth APU is a further step forward in the long<br />
success story of <strong>Knorr</strong>-<strong>Bremse</strong>: The first such units to feature in a standard production model appeared<br />
in the Mercedes Actros truck over ten years ago. Since 1997 Iveco and DAF have also been using air<br />
processing units from <strong>Knorr</strong>-<strong>Bremse</strong> to replace their previous stand-alone air dryers and multi-circuit<br />
safety valves.
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Up till 2005 the APUs were manufactured at the <strong>Knorr</strong>-<strong>Bremse</strong> plant in Aldersbach, Lower Bavaria<br />
(Germany). Then production was transferred to Kecskemét in Hungary, where today <strong>Knorr</strong>-<strong>Bremse</strong><br />
employs some 650 people making not only air treatment systems but also pneumatic and electronic<br />
brake control systems for the European commercial vehicle industry. Kecskemét is also where APU<br />
sales activities for Central and Eastern Europe are based.<br />
Cooperation with Robert Bosch<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Systeme für Nutzfahrzeuge and Robert Bosch GmbH are to jointly develop a radar sensor<br />
for commercial vehicle safety systems, including the AEBS automatic emergency braking system.<br />
By forming a joint venture, both companies will be able to benefit from the expertise of their respective<br />
partner. <strong>Knorr</strong>-<strong>Bremse</strong> will contribute its considerable experience with safety systems in the<br />
commercial vehicle market, and Bosch will offer its expertise in developing and manufacturing radar<br />
sensors.<br />
The result of this successful collaboration will be an intelligent radar sensor that meets all requirements<br />
in terms of design and function and combines the specific expertise of both companies.<br />
Strategic relocation<br />
Bendix Spicer Foundation Brake LLC, a joint venture between <strong>Knorr</strong>-<strong>Bremse</strong> subsidiary Bendix Commercial<br />
Vehicle Systems LCC and Dana Commercial Vehicle Products LLC, reorganized its production<br />
of spring brake actuators and brake chambers at the end of <strong>2010</strong>. This included transferring production<br />
operations from Di-Pro Inc. in Fresno, California to the new Bendix facility in Acuña, Mexico.<br />
The move, which was completed in December <strong>2010</strong>, is consistent with Bendix’s overall strategic plan<br />
to optimize its North American manufacturing locations by leveraging corporate shared services,<br />
alongside its goal of maintaining lean and cost-effective manufacturing processes to remain competitive<br />
in the marketplace.<br />
Development of a disc brake production line in Dalian<br />
During the year under review, <strong>Knorr</strong>-<strong>Bremse</strong> drove forward the development of local supply structures<br />
and production capacity at its Chinese plant in Dalian in response to growing demand for a commercial<br />
vehicle disc brake designed for the Chinese market. The process of transferring an entire assembly<br />
line from Aldersbach to Dalian will be completed during 2011, and deliveries of locally produced disc<br />
brakes are scheduled to start in 2012. Parallel to the relocation process, the task of designing a marketspecific<br />
disc brake will be completed and the green light given to Chinese suppliers for series production<br />
to start.<br />
The new production line will enable <strong>Knorr</strong>-<strong>Bremse</strong> to manufacture some 300,000 disc brakes per year<br />
– all to the company’s usual high quality standards. As in the case of previous relocation projects in<br />
North and South America, the project was able to draw on the experience of experts at the Aldersbach<br />
plant and the Disc Brake Center of Competence who supported the operations in Dalian, working<br />
with local colleagues and providing them with training.
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By the end of the year under review <strong>Knorr</strong>-<strong>Bremse</strong> was already working with all the major Chinese<br />
truck manufacturers on application projects involving the localized disc brake.<br />
<strong>Knorr</strong>-<strong>Bremse</strong> CVS India joint venture acquired<br />
As of February of the year under review, the joint venture <strong>Knorr</strong>-<strong>Bremse</strong> Systems for Commercial Vehicles<br />
India Private Ltd., originally formed between <strong>Knorr</strong>-<strong>Bremse</strong> Far East Limited and Tata Autocomp.<br />
Systems, became a wholly-owned subsidiary of the <strong>Knorr</strong>-<strong>Bremse</strong> Group. The company is thus responding<br />
to the pace of growth in the Indian market and clearing the way for further expansion.<br />
In keeping with the excellent past and prospective collaboration between the two companies, the<br />
acquisition took place by mutual agreement. For <strong>Knorr</strong>-<strong>Bremse</strong>, the move opens up additional opportunities<br />
to serve the Indian market as an autonomous systems supplier and to participate in market<br />
growth as a supplier to all Indian truck manufacturers. At the same time, it enables <strong>Knorr</strong>-<strong>Bremse</strong> to<br />
play a more prominent part in shaping technological market trends. Initial orders have already been<br />
won and provide a promising start for the execution of <strong>Knorr</strong>-<strong>Bremse</strong>’s expansion plans.<br />
In addition, in terms of both technology and economy the products developed and manufactured in<br />
India frequently meet the requirements of customers in other emerging markets. As a result, <strong>Knorr</strong>-<br />
<strong>Bremse</strong> India will be able to build a network of efficient local suppliers.
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Value-stream factory<br />
opens in Czech Republic<br />
Development of a new facility in the town of Liberec, Czech Republic, involved<br />
more than just transferring production activities. In early June <strong>2010</strong>, <strong>Knorr</strong>-<br />
<strong>Bremse</strong> Commercial Vehicle Systems introduced an entirely new approach to<br />
production and logistics based on its globally standardized production system<br />
KPS and taking the form of a “value-stream factory”. The result was a significant<br />
increase in efficiency and flexibility in both areas.<br />
The new production and sales center in the northern Bohemian town of Liberec<br />
replaced the existing facility in Hejnice, some 30 kilometers away. On a site measuring<br />
almost 8,000 m² <strong>Knorr</strong>-<strong>Bremse</strong> Commercial Vehicle Systems now produces<br />
components for truck braking systems such as brake cylinders, clutch servos,<br />
foot and hand brake valves and filter cartridges.
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Focus on value creation<br />
All processes at the new factory are focused on value creation, with a particular emphasis on flexibility<br />
and economy. The proverbial key to success is synchronization of processes, with individual production<br />
processes no longer regarded separately but rather as part of a single process. Thus the focus is<br />
no longer on optimizing and maximizing capacity utilization of individual workplaces but on the process<br />
as a whole, optimizing resource utilization and eliminating deviations.<br />
The basic elements of a value-stream factory were incorporated into the planning process from the<br />
very outset. Logistics are situated immediately next to production processes, with standardized, modularized<br />
product islands and workstations. Tugger trains ensure a coordinated and efficient supply of<br />
materials to assembly operations, reducing inventory and improving component availability. In addition<br />
to standardization, another focus was on further developing shopfloor management. The company<br />
value chain was concentrated on the production process itself, with all supporting processes<br />
aimed at making production as cost-effective, flexible and error-free as possible.<br />
The right time, the right workplace<br />
Modular factory design provides the basis for an ideal materials flow. The layout of the plant and its<br />
individual buildings is based on current value streams, but is designed to be flexible enough for the<br />
materials flow to be maintained even when a change in product and production structures is introduced.<br />
The new layout with its optimized processes guarantees the right quantity of the required<br />
material being sent at the right time to the right place.<br />
The many advantages of Liberec<br />
The decision to move to Liberec came as part of <strong>Knorr</strong>-<strong>Bremse</strong>’s strategic development of its production<br />
network. In addition to having good transport links, the region of Northern Bohemia also offers<br />
large numbers of highly skilled workers. And the town of Liberec, which has engineering and mechatronics<br />
faculties at its university, is home to many engineers. Proximity to <strong>Knorr</strong>-<strong>Bremse</strong>’s former plant<br />
at Hejnice also facilitated the transfer of expertise to the new site.<br />
Long tradition of links with Czech Republic<br />
This latest move to a new site is one further step in <strong>Knorr</strong>-<strong>Bremse</strong>‘s long history of activities in the<br />
Czech Republic. In 1992, shortly after the fall of the Iron Curtain, the <strong>Knorr</strong>-<strong>Bremse</strong> plant in Aldersbach<br />
started to co-operate with the Czech company AUTOBRZDY a.s. A year later the German-Czech joint<br />
venture <strong>Knorr</strong>-Autobrzdy s.r.o. was set up, and in 1998 was fully taken over by <strong>Knorr</strong>-<strong>Bremse</strong> and incorporated<br />
into the <strong>Knorr</strong>-<strong>Bremse</strong> Group.
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Products<br />
Reliable, safe, high performing, efficient and tailored to the requirements of international<br />
customers – these were the characteristics of the commercial vehicle products either newly<br />
developed or further improved during <strong>2010</strong>. They included the AEBS automatic emergency<br />
braking system, the compressor with clutch and the latest version of the TEBS trailer electronic<br />
braking system.<br />
Screw compressor for hybrid buses<br />
In response to growing demand for commercial vehicles that use hybrid drive technology, <strong>Knorr</strong>-<br />
<strong>Bremse</strong> began series production of screw compressors for hybrid buses in spring <strong>2010</strong>. The new design<br />
of compressor is to be installed in the 5,000 Volvo buses ordered as part of London’s fleet renewal<br />
program, some of which is due to be completed in time for the 2012 Olympic Games. In addition to<br />
supplying Volvo, <strong>Knorr</strong>-<strong>Bremse</strong> has also launched similar projects with other commercial vehicle manufacturers.<br />
Screw compressors are capable of producing large volumes of compressed air, using two synchronous<br />
counter-rotating screws with a large inlet valve and smaller outlet valve. Unlike conventional compressors,<br />
they are not powered by the vehicle engine but by their own electric motor. They are low-vibration<br />
and quiet in operation.<br />
<strong>Knorr</strong>-<strong>Bremse</strong> is convinced of the potential offered by screw compressors and has also started designing<br />
a compressor application for hybrid trucks. Unlike buses, trucks are not constantly stopping and<br />
starting and therefore require less air to operate their brakes, so the engineers are focusing on designing<br />
a unit that produces smaller volumes of compressed air.
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New lightweight disc brakes<br />
<strong>Knorr</strong>-<strong>Bremse</strong> continues to develop its portfolio of pneumatic disc brake products with a view to covering<br />
as wide a range of vehicle applications as possible while at the same time catering for regional<br />
differences. The company’s latest disc brake is much lighter, and can reduce the overall weight of a<br />
truckset by up to 100 kilos, saving fuel and cutting emissions without compromising safety. In the<br />
trailer segment the successor to the SK disc brake – the ST – was also presented in <strong>2010</strong>. Specially<br />
designed for trailer applications, this brake is extremely light but offers the same braking performance<br />
as before.<br />
Trailer-EBS further developed<br />
The TEBS trailer electronic braking system specially developed by <strong>Knorr</strong>-<strong>Bremse</strong> for trailers ensures<br />
even braking on all wheels of a truck-trailer combination. TEBS receives the driver’s braking signal and<br />
adjusts it to the weight distribution of the trailers, thereby reducing brake wear and cutting vehicle<br />
maintenance costs.<br />
During the year under review <strong>Knorr</strong>-<strong>Bremse</strong> added a number of additional functions to the second<br />
generation of TEBS, including ABS configuration for vehicles with more than three axles. This means<br />
that trailer EBS is now available for all vehicle types. Applications for pony trailers were also added.<br />
If combined with the Trailer Roadtrain Module (TRM), electronic transmission of the braking signal to<br />
the trailers also makes it possible to bring extra-long vehicles safely and rapidly to a halt.<br />
AEBS automatic emergency braking system<br />
During the year under review <strong>Knorr</strong>-<strong>Bremse</strong> continued to develop the AEBS automatic emergency<br />
braking system for commercial vehicles. At the <strong>2010</strong> IAA Commercial Vehicles it gave an impressive<br />
demonstration of the system during a special session on hazardous goods transportation organized<br />
by the German Association of the Automotive Industry VDA. AEBS involves a radar sensor mounted on<br />
the truck monitoring the distance to the vehicle in front. If this starts to close too quickly, the system<br />
intervenes in the braking system, helping avoid a collision. Combined with an optional video camera,<br />
AEBS can even trigger full emergency braking if it identifies a completely stationary object (for example<br />
the end of a tailback) in front of the vehicle.<br />
In each of these two versions, AEBS initially alerts the driver to the imminent danger with acoustic and<br />
optical signals or a brief application of the brakes. If the driver fails to react within a predefined period<br />
of time, the system triggers partial braking, thereby allowing for a longer driver reaction time. Only<br />
when the system spots an imminent danger of collision is emergency braking triggered. In this way<br />
the system avoids an accident as far as physically possible or at least mitigates its consequences. This<br />
latter effect can be increased by the system continuing to brake even during a collision, thereby enabling<br />
the brakes to absorb some of the energy.<br />
Even when AEBS applies the brakes without the driver’s involvement, he still retains full control over<br />
the vehicle (in line with the Vienna Agreement) and can interrupt AEBS braking at any time by accelerating,<br />
steering etc.
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Tire Pressure Monitoring System now also available in Europe<br />
During the year under review <strong>Knorr</strong>-<strong>Bremse</strong> launched the Tire Pressure Monitoring System (TPMS) in<br />
the European market. This wireless sensing system for state-of-the-art tire monitoring in commercial<br />
vehicles had already been available on the North American auto market since 2009.<br />
TPMS is the only tire monitoring system in the world that keeps a constant eye on both tire pressures<br />
and temperatures in semi-trailer tractors, trailers, trucks and buses. If the tire pressure falls below a set<br />
level, the system warns the driver of the potential danger. TPMS is not just suitable for new-build trucks<br />
– it can also be retrofitted to virtually any commercial vehicle.<br />
As well as being a safety feature, TPMS can also play a key role in cutting fleet operation costs. By enabling<br />
the driver to check and if necessary adjust tire pressure at any time, both tire wear and fuel<br />
consumption can be significantly reduced. A further positive effect is that fact that maintaining the<br />
right tire pressure also enhances the performance of the braking system.<br />
Production of brake pad retaining system with ProTecS launched<br />
During the year under review <strong>Knorr</strong>-<strong>Bremse</strong> launched production of the new brake pad retaining<br />
system with ProTecS. This replaces the system used hitherto on air disc brakes SN6, SK7 and SN7 and<br />
can be used on all applications. What is new is the use of a welding point to connect the spring and<br />
brake pad.<br />
This increases the pressing force across the entire working area and significantly increases service life,<br />
particularly in rough driving conditions. The pad retaining system also acts like a sliding shoe, providing<br />
good protection against abrasion on the spring and retaining clip caused by dirt. The system also<br />
has a further advantage – it enables the pad to be slid back more easily out of contact with the disc.<br />
A further feature that comes with the introduction of ProTecS is the cast back plate. This weighs less<br />
than the previous steel plate, generating less momentum, thus preventing radial acceleration of the<br />
pad and reducing deformation in contact with the brake carrier.<br />
The new pad retaining system with ProTecS also offers considerable safety advantages in terms of<br />
servicing. With ProTecS the risky practice of re-using springs is not possible. And the new pad sets are<br />
also more environmentally friendly – the friction materials meet the requirements of Eco-Class 1 and<br />
3 respectively. The cadmium and lead compound content of the pads has been considerably reduced.
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Meeting the needs of<br />
the BRIC states<br />
As the world’s largest commercial vehicle markets, Brazil, Russia, India and<br />
China – the BRIC states – have high requirements for commercial vehicle<br />
components. For many years, <strong>Knorr</strong>-<strong>Bremse</strong> has pursued a consistent regionalization<br />
strategy aimed at covering the specific needs of the markets in these<br />
countries. And its efforts have paid off in the form of steady growth in demand<br />
for <strong>Knorr</strong>-<strong>Bremse</strong> components.<br />
All over the world <strong>Knorr</strong>-<strong>Bremse</strong> offers innovative, region-specific solutions<br />
aimed at improving vehicle safety and energy efficiency and tailored to the<br />
needs of individual markets. In developing its products it always takes into account<br />
customer requirements in the various countries, with their differing infrastructures,<br />
transport systems and climatic conditions. Localized products also<br />
must comply with national legislation and, in some cases, have to be locally produced,<br />
either for cost reasons, or to meet customs regulations or quite simply<br />
because of the distances involved.<br />
In <strong>2010</strong> the focus was on products especially tailored to the needs of the BRIC<br />
states.
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20-inch disc brake for China<br />
Unlike in Europe and North America, commercial vehicles in China use tires with inner tubes. This creates<br />
a wheel contour that provides less space for disc brakes. To cope with this reduced installation<br />
envelope <strong>Knorr</strong>-<strong>Bremse</strong> has developed a special design of brake with an internal mechanism based on<br />
the well-known disc brake concept that has sold in its millions in the company’s core markets.<br />
In <strong>2010</strong> the process of localizing production of the 20-inch disc brake began, including the development<br />
of a local supply infrastructure. At the same time the process began of transferring an entire disc<br />
brake assembly line from the German site in Aldersbach to Dalian, China.<br />
ABS for BRIC<br />
With more than 20 years’ experience of designing electronic brake control systems, <strong>Knorr</strong>-<strong>Bremse</strong> is<br />
the world’s leading manufacturer of ABS systems. This means <strong>Knorr</strong>-<strong>Bremse</strong> Commercial Vehicle Systems<br />
is well placed for accessing BRIC markets.<br />
With its ABS system specially designed for the BRIC states, <strong>Knorr</strong>-<strong>Bremse</strong> offers a scaleable, cost-effective<br />
solution that meets the needs of these countries. The system covers a wide range of functions: It<br />
has to meet certain minimum requirements but also has to be modular in design and capable of being<br />
customized to regional customers’ requirements. The ABS is therefore available with integrated ESP<br />
function on the one hand, and on the other hand can also reproduce electronic brake control functions.<br />
PBS – Pneumatic Booster System<br />
The concept underlying this development is both simple and ingenious: the Pneumatic Booster System<br />
(PBS) utilizes the compressed air that has already been generated for the braking system, injecting<br />
measured amounts briefly into the inlet manifold of the engine to boost its short-term performance.<br />
Within half a second the engine has enough oxygen to eliminate so-called “turbo lag” during acceleration.<br />
This brief but significant improvement in performance enables the driver to change up faster and<br />
maintain lower average engine revs without affecting performance.<br />
This short-term boost in engine performance is not only useful during drive-off and overtaking. The<br />
acceleration of a vehicle equipped with the Pneumatic Booster System is comparable to one with a<br />
20% to 30% higher cubic capacity – which means PBS is of considerable benefit to BRIC states, where<br />
vehicles are traditionally fitted with smaller engines.
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Service<br />
<strong>Knorr</strong>-<strong>Bremse</strong>’s “Active Service” concept set new standards of support for dealerships, repair<br />
shops and fleet operators, offering tailor-made, cost-effective solutions and a strong regional<br />
presence, with the company available 24/7 by telephone, on the Internet or via local contacts.<br />
<strong>2010</strong> saw it further improve its already excellent levels of aftermarket service.<br />
Active Service<br />
<strong>Knorr</strong>-<strong>Bremse</strong> has brought together its entire range of services for dealerships, repair shops, fleet managers<br />
and drivers under the title of “Active Service” with the aim of helping them achieve maximum<br />
efficiency and economy in all aspects of their operational and business processes. Active service offers<br />
a concept tailored to each particular application and adjusted to the increasing complexity of commercial<br />
vehicle systems. From initial product development to installation and subsequent servicing,<br />
everything is focused on offering the customer the best possible service. The service portfolio is based<br />
on the criteria of safety, quality and economy throughout the entire lifecycle of a product.<br />
A combination of OE-quality products and enhancement of practical skills through technical training<br />
and hotline support enables turnaround times in repair shops to be shortened. Rapid online access to<br />
servicing manuals, service news and other technical documentation is included. Standardization of<br />
products reduces inventory costs and capital tie-up and also – despite the increasing variety of products<br />
involved – ensures product availability for servicing. Internet-based services such as the electronic<br />
product catalogue enable products and relevant information to be rapidly found.<br />
The entire product catalogue including technical details and drawings can be viewed at any time on<br />
the <strong>Knorr</strong>-<strong>Bremse</strong> website. And to ensure ease of use, the functions related to product search, web<br />
shop, legacy parts and warranties are linked with SAP. In Europe, warranty inquiries are also linked directly<br />
to <strong>Knorr</strong>-<strong>Bremse</strong>’s QSYS quality system.
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NEO system diagnostics<br />
With its new NEO System Diagnostics tool, <strong>Knorr</strong>-<strong>Bremse</strong> has created an electronic diagnostic platform<br />
that provides rapid, professional support for repair shop personnel working on electronic vehicle systems.<br />
Depending on the particular configuration involved, it either communicates via the vehicle’s<br />
diagnostic interface or directly with the electronic control unit (ECU). Not only can it read off the error<br />
code – in the case of complex faults it can also run a system analysis to localize and deal with the<br />
problem. NEO has a modular design and is compatible right across the range, from the starter version<br />
through to the top model.<br />
Regular software updates enable repair shops to guarantee state-of-the-art servicing. In <strong>2010</strong>, for example,<br />
when the full service product portfolio for the latest generation of the EBS5.X electronic braking<br />
system and corresponding vehicle applications was made available on the aftermarket, the updated<br />
diagnostic software was also included. In addition to the basic functions such as error display<br />
and localization, the data transfer function also enables a repair shop to replace the entire ECU<br />
smoothly and efficiently if necessary. NEO System Diagnostics and the accompanying software can<br />
also be used for sensor calibration. The NEO software also offers a full range of functions for the latest<br />
EBS5 electronic braking system family for special OE applications.<br />
Technical training<br />
Building on past experience with its technical training program, <strong>Knorr</strong>-<strong>Bremse</strong> has created a new training<br />
portal that will be available online for customers from 2011. The portal facilitates communication<br />
between the <strong>Knorr</strong>-<strong>Bremse</strong> training team and participants, for example by offering regularly updated<br />
information on training provisions and availability of places as well as supervising waiting lists.<br />
In addition, with the launch of its collaboration with Robert Bosch, a further milestone has been<br />
reached in the field of technical training of commercial vehicle repair shops. The two companies now<br />
offer joint training sessions on commercial vehicle braking systems as part of the Active Service concept.<br />
The main beneficiaries are repair shops and dealerships, who can now update their skills and<br />
knowledge from a single source.<br />
“TruckWorks”<br />
“TruckWorks” is a new service concept developed by Mercedes-Benz that relies crucially on the support<br />
of partners such as <strong>Knorr</strong>-<strong>Bremse</strong>. It involves Mercedes-Benz offering OEM-quality services from a<br />
single source not just for vans and trucks but also for trailers, semitrailers and attachments. To create<br />
this one-stop shop concept, 19 co-operation partners – one of which was <strong>Knorr</strong>-<strong>Bremse</strong> – were recruited<br />
from the vehicle manufacturing and supply sectors. The company’s full range of aftermarket<br />
capabilities is called for to support the program – including component searches, training, hotline and<br />
OEM systems diagnostics.<br />
Quality management program for aftermarket customers<br />
The quality management program for aftermarket customers (QMPAD) is being subjected to a thorough<br />
revision and expansion for the first time since its launch in 2004. The system, which was rolled
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out progressively in the aftermarket following the introduction of the Group Exemption Regulation<br />
(GER) in 2002, is being adapted to take into account changing market conditions and new legislation.<br />
At the same time the regional application of the program is being expanded, with a version not based<br />
on the GER being introduced for future cooperation with export customers serving markets outside<br />
Europe.<br />
Aftermarket event at 21st Automechanika in Frankfurt<br />
Some 155,000 visitors from a record 180 different countries attended one of the world’s biggest international<br />
trade fairs for the automotive industry – the 21st automechanika in Frankfurt. Much interest<br />
was shown in a customer event on the subject of the aftermarket organized by <strong>Knorr</strong>-<strong>Bremse</strong> outside<br />
the trade fair grounds: At the Marriott Hotel Josef Frank, Aftermarket Director of CLEPA, the European<br />
Association of Automotive Suppliers (Comité de liaison européen des fabricants d‘équipements et de<br />
pièces automobiles), talked about the Euro V and VI technical standards and the new Motor Vehicle<br />
Block Exemption Regulation MVBER. Afterwards, participants also had an opportunity to discuss current<br />
issues.
<strong>Knorr</strong>-<strong>Bremse</strong> Group<br />
In addition to the targeted fostering of product innovations, the key success<br />
factors for <strong>Knorr</strong>-<strong>Bremse</strong> in the future will include process optimization,<br />
employee development, corporate responsibility, environmental protection<br />
and social engagement, aspects which remained among the top priorities for<br />
this family-owned company in <strong>2010</strong>.
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<strong>Knorr</strong> Excellence<br />
Under the heading of <strong>Knorr</strong> Excellence (KE), <strong>Knorr</strong>-<strong>Bremse</strong> has introduced a standardized model<br />
for all its management systems and has merged all process optimization initiatives across the<br />
entire Group. The aim of KE is to achieve excellence in all corporate processes and to ensure<br />
higher levels of customer satisfaction by continuously improving the Group‘s performance.<br />
In <strong>2010</strong>, <strong>Knorr</strong>-<strong>Bremse</strong> consistently pursued this program and further improved standardized<br />
processes throughout the Group by launching new initiatives, notably in the fields of finance,<br />
IT and human resources on the one hand and by pursuing existing initiatives on the other<br />
hand.<br />
Finance & IT Excellence<br />
Within its FIT initiative, <strong>Knorr</strong>-<strong>Bremse</strong> made further efforts to establish best in class processes across<br />
the board in the finance and IT sectors in <strong>2010</strong>.<br />
In the IT sector, FIT includes two projects: “IT 2.5“ and “ONE IT“. The objective of IT 2.5 is to boost productivity,<br />
thus improving IT cost structures. In the course of the project, the individual IT cost items<br />
were reviewed and specific improvement potentials identified and then tapped by specific action.<br />
ONE IT is a global organizational project that seeks to realize further synergies through global harmonization<br />
in the IT sector. In <strong>2010</strong>, the main focus was on integrating the previously separate IT systems<br />
of the Rail Vehicle Systems and Commercial Vehicle Systems divisions of <strong>Knorr</strong>-<strong>Bremse</strong> and of the parent<br />
company, <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong>, under the heading of Global Shared Services.<br />
In the finance sector, the FIT projects “Intercompany Netting“ and “Fast Close“ were launched. The Intercompany<br />
Netting project seeks to simplify and expedite intercompany payment transactions and<br />
related liaison processes, thus reducing transaction costs in the long term. The objective of Fast Close<br />
is to increase the flexibility of timing for the annual financial statements process, at the same time as<br />
ensuring and improving analysis quality. Thanks to the process improvements already implemented,<br />
<strong>Knorr</strong>-<strong>Bremse</strong> was able to save ten working days during the preparation of annual financial statements<br />
for <strong>2010</strong>.<br />
In the finance sector, the Supplier Early Payment Program SEPP launched a few years ago was rolled<br />
out worldwide in <strong>2010</strong>. SEPP has proven to be an effective means of safeguarding liquidity and reducing<br />
the cost of capital for selected suppliers. SEPP therefore provides sustained reinforcement for the<br />
financial stability of key external partners of the <strong>Knorr</strong>-<strong>Bremse</strong> Group.
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PEX<br />
People Excellence<br />
Within the PEX – People Excellence – initiative, existing human resources and executive development<br />
projects were continued and new projects were launched in <strong>2010</strong>. The objective of the initiative is to<br />
implement basic elements of human resources development around the world and to take the Group<br />
management culture forwards. The elements of the initiative, including the staff dialogue, executive<br />
development and the identification and development of high-potentials aim to create further performance<br />
incentives and to highlight the long-term prospects for employees. With PEX, <strong>Knorr</strong>-<strong>Bremse</strong><br />
has established a future-oriented basis for the ongoing development of its management culture (see<br />
also the “Employees“ section on pages 125 to 127).<br />
Quality First<br />
Within the Q-First quality campaign, a large number of specific measures were defined to ensure that<br />
each and every component developed and supplied by <strong>Knorr</strong>-<strong>Bremse</strong> is of the highest possible quality.<br />
Quality First comprises a raft of measures covering areas such as management, human resources,<br />
development, production, supplier development, complaints management and customer relations.<br />
As a manufacturer of safety-critical products, <strong>Knorr</strong>-<strong>Bremse</strong> considers these measures indispensable.<br />
One fundamental principle of the <strong>Knorr</strong>-<strong>Bremse</strong> quality management policy is prevention rather than<br />
cure. Potential errors must be detected in good time before they lead to defects in product components<br />
in service. In <strong>2010</strong>, <strong>Knorr</strong>-<strong>Bremse</strong> therefore once again dedicated its efforts to ensuring that<br />
safety-relevant requirements were taken into consideration from the beginning of the development<br />
process. In addition, the company again conducted a large number of Product Safety Audits (PSA).<br />
These especially strict audits that are specific to <strong>Knorr</strong>-<strong>Bremse</strong> ensure that internal and external suppliers<br />
comply with the Group‘s very high quality standards.<br />
Supply Chain Excellence<br />
The Supply Chain Excellence (SCE) project has now been successfully launched at all <strong>Knorr</strong>-<strong>Bremse</strong><br />
sites. The main focus of the project in <strong>2010</strong> was to ensure that internal and external production capacities<br />
were adapted to the increasingly rapid recovery in global demand. The introduction of best in<br />
class logistics processes at the Budapest (Rail Vehicle Systems) and Liberec (Commercial Vehicle Systems)<br />
plants under the headings of “5-day factory“ and “value-stream factory“ were other key aspects<br />
of the SCE initiative. Global inventory management was continued and schedule effectiveness was<br />
significantly improved in many areas.<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Production System<br />
In <strong>2010</strong>, the <strong>Knorr</strong>-<strong>Bremse</strong> Production System (KPS) concentrated on value stream optimization and<br />
employee training. For example, joint training events for the Rail and Commercial Vehicle Systems divisions<br />
were held during the year. These events focused on KPS expert training and on shop floor management<br />
training for executives. In practically oriented training sessions, the participants were familiarized<br />
with or learned more about KPS methods by working in teams to optimize real production lines<br />
and processes. The new KPS process audit in the Rail Vehicle Systems division, which has now been<br />
introduced at nine <strong>Knorr</strong>-<strong>Bremse</strong> production facilities, is a tool for systematically determining the KPS
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maturity level of production lines at the same time as identifying scope for improvement and indicating<br />
how it can be achieved. In the Rail Vehicle Systems division, within the framework of KPS, value<br />
stream methodology was systematically implemented at Kecskemét, for example, on production lines<br />
operated at high capacities, with a view to identifying potential for further improvements. In addition,<br />
a stronger focus on shop floor management was adopted and training for new employees, experts<br />
and executives was driven forward.<br />
PROGRESS<br />
In <strong>2010</strong>, the optimization and harmonization of business processes on the basis of improvements resulting<br />
from <strong>Knorr</strong> Excellence initiatives was continued under the PROGRESS program. SAP was introduced<br />
at nine locations in <strong>2010</strong> and is now used at more than 70 <strong>Knorr</strong>-<strong>Bremse</strong> facilities. The simultaneous<br />
optimization and harmonization of business processes together with the introduction of SAP<br />
for all the companies of the <strong>Knorr</strong>-<strong>Bremse</strong> Group has proved itself in practice and will be continued in<br />
2011.<br />
Efficient Cut of CO 2<br />
To combine environmental and economic aspects, <strong>Knorr</strong>-<strong>Bremse</strong> defined Group-wide climate protection<br />
targets and launched the ECCO 2<br />
(Efficient Cut of CO 2<br />
) environmental initiative for worldwide implementation<br />
in 2009. By 2020, the energy efficiency of the Group is to be improved by 20% and CO 2<br />
emissions thereby cut by 20% (see also “Responsibility“, p. 118). In <strong>2010</strong>, measures to reduce CO 2<br />
emissions<br />
were taken at a variety of locations as part of ECCO 2<br />
. At the new plants in Budapest and Liberec<br />
in particular, special attention was paid to resource conservation during the construction of the buildings.<br />
Prizes and awards<br />
MIS Asia IT Excellence Award <strong>2010</strong><br />
The MIS Asia IT Excellence Award is one of the most coveted awards for outstanding IT performance in<br />
Asia. Asian IT organizations and CIOs in particular are honored for their outstanding management<br />
contribution to the use of IT for enhancing corporate value and achieving business targets. In <strong>2010</strong>,<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Asia-Pacific won the award for the second year in succession. <strong>Knorr</strong>-<strong>Bremse</strong> received the<br />
accolade in the Best Security Strategy category for its Securegate Asia Pacific program.<br />
MNC Corporate Treasury Team of the Year Award<br />
Not least because of the strict selection criteria that apply, Asset Magazine‘s Triple A Awards are some<br />
of the most prestigious annual honors presented by the Asian finance industry. The awards honor<br />
companies and individuals that have made a significant contribution to the development of the finance<br />
industry in Asia. In <strong>2010</strong>, <strong>Knorr</strong>-<strong>Bremse</strong> Asia-Pacific received the MNC Corporate Treasury Team<br />
of the Year Award for its successful financial management.
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Further improvement<br />
in external ratings<br />
<strong>Knorr</strong>-<strong>Bremse</strong>’s rapid and rigorous reaction to the onset of the economic crisis<br />
in the fall of 2008 paid renewed dividends in terms of the Group’s external<br />
creditworthiness rating in <strong>2010</strong>: Two prominent rating agencies not only<br />
reaffirmed the Group’s investment grade status, they also upped their ratings<br />
again.<br />
In the opinion of the rating agencies Moody’s and Standard & Poor’s, <strong>Knorr</strong>-<br />
<strong>Bremse</strong> has steered a safe course through the crisis. Moody’s initially retained its<br />
2009 rating of Baa1, but raised the outlook from “stable” to “positive”. Standard &<br />
Poor’s awarded <strong>Knorr</strong> <strong>Bremse</strong> a rating upgrade from “BBB+/Outlook positive” to<br />
“A-/Outlook stable”. Standard & Poor’s had already seen the potential for an upgrade<br />
a year earlier, despite a very difficult market environment. With its 2009 financial<br />
indicators, on which the <strong>2010</strong> rating was based, <strong>Knorr</strong>-<strong>Bremse</strong> was able<br />
to demonstrate that it had been able to realize that potential.
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Two pillars provide mutual support<br />
A key role here is played by the fact that the Group’s two separate business areas, rail vehicles and<br />
commercial vehicles, are subject to different economic cycles that can take very different courses – in<br />
terms of time and from one region to the next. Thus in times of crisis the two pillars provide mutual<br />
support and mitigate the overall impact of the cyclical global market. The fact that the company’s<br />
product portfolio has been expanded beyond the core field of braking also helps to safeguard its longterm<br />
future. Its innovative products in the areas of engine management, HVAC, power electronics or<br />
automatic door systems stand for reliable leading-edge technology at its finest.<br />
International strategy a stability factor<br />
In <strong>2010</strong> <strong>Knorr</strong>-<strong>Bremse</strong> maintained its global strategic focus with a broad-based position in numerous<br />
markets. <strong>Knorr</strong>-<strong>Bremse</strong> invested not only in product development but also in strategically important<br />
production facilities such as the new Rail Vehicle Systems plant in Budapest, Hungary, or the new<br />
Commercial Vehicle Systems plant in Liberec, Czech Republic. The agencies rated this diversification in<br />
terms of both regions and product groups as an additional stability factor in mitigating the effects of<br />
cyclical crises.<br />
Dependable planning<br />
<strong>Knorr</strong>-<strong>Bremse</strong>’s documented continuity in meeting or exceeding agreed targets over a long period of<br />
time was considered by the rating agencies proof of a solid and consistent management performance.<br />
A moderate financial policy is key to this management approach. The Group’s balance sheet structure<br />
and cash flow generation are geared to stability and sustainability and supported by an appropriate<br />
volume of short and medium-term committed lines of credit that are by no means taken up in full.<br />
Should the need arise, however, these credit facilities could bridge the gap between cash flow generation<br />
and cash requirements, ensuring the flexibility that the company needs if it is to generate a<br />
rapid response.<br />
Appropriate level of debt<br />
The rating agencies both affirm that <strong>Knorr</strong>-<strong>Bremse</strong>’s credit facilities are strictly aligned with the company‘s<br />
core business and in keeping with its economic capabilities. No speculation takes place.<br />
Through their ratings, Moody’s und Standard & Poor’s confirm that in times of crisis and of larger external<br />
acquisitions, the Group is always capable of generating sufficient cash flow to ensure that its level<br />
of net debt remains appropriate or, as was the case in <strong>2010</strong>, can be transformed into net liquidity.
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Responsibility<br />
Sustainability and responsibility are increasingly important elements of modern corporate<br />
governance. <strong>Knorr</strong>-<strong>Bremse</strong> is therefore expanding its activities in the area and integrating them<br />
into its overall corporate strategy.<br />
A family business like <strong>Knorr</strong>-<strong>Bremse</strong> sets great store by sustainability and responsibility. As part of its<br />
long-term business planning process the company has drawn together its business, environmental<br />
and social activities and formulated a corporate social responsibility strategy. And by signing up to the<br />
United Nations Global Compact, <strong>Knorr</strong>-<strong>Bremse</strong> has publicly signaled its commitment to the ten globally<br />
recognized basic principles that are also part of its own corporate culture.<br />
Corporate social responsibility strategy<br />
The corporate social responsibility strategy that <strong>Knorr</strong>-<strong>Bremse</strong> has developed in collaboration with<br />
several of its divisions forms an integral part of the Group’s overall corporate strategy. It systematizes<br />
the company’s responsibilities for the environment, the workforce and society in general and determines<br />
the main focus of its future activities in the area. The overarching objective is to use its global<br />
and local activities in the field of corporate responsibility to develop the business and strengthen<br />
corporate culture, protect against risks, contribute towards sustainable development and create a<br />
positive public image for the Group.<br />
<strong>Knorr</strong>-<strong>Bremse</strong> will focus its activities on six areas in future. Measures in the field of “Products and Partners”,<br />
for example, are designed to support customers in saving energy and conserving sources and<br />
help business partners to achieve higher environmental and social standards.
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CSR program<br />
Each year a CSR program based on this strategy lays down specific objectives and measures for the<br />
various different areas of corporate social responsibility. Following the launch of the energy efficiency<br />
campaign ECCO 2<br />
(Efficient Cut of CO 2<br />
), the company is also further developing and implementing its<br />
climate strategy and auditing its suppliers’ environmental and social standards. The CSR program for<br />
2011 includes a process of dialogue and benchmarking with key customers, greater focus on marketing<br />
energy-efficient products and a pilot project for auditing CO 2<br />
emissions at company plants.<br />
Protecting the climate with ECCO 2<br />
With its ECCO 2<br />
environmental and climate campaign <strong>Knorr</strong>-<strong>Bremse</strong> has set itself the goal of improving<br />
energy efficiency by 20% and achieving a similar percentage reduction in carbon dioxide emissions by<br />
the year 2020. The campaign forms part of the <strong>Knorr</strong> Excellence Model for improving business processes.<br />
During the year under review, the main focus of ECCO 2<br />
was on optimizing compressed air and<br />
lighting systems, with further measures related to space heating and heat recycling. These enabled<br />
energy efficiency to be improved by 10% during <strong>2010</strong> and CO 2<br />
emissions to be reduced by 10% compared<br />
to the previous year. The – mainly technical – measures involved have resulted in savings of EUR<br />
1.2 million per year.<br />
Synergies were also achieved as part of the Supply Chain Excellence Initiative (SCE), which looks at<br />
supply structures and inter-site logistics within the <strong>Knorr</strong>-<strong>Bremse</strong> Group. Reorganizing the system and<br />
UN Global<br />
Compact<br />
<strong>Knorr</strong>-<strong>Bremse</strong> has become a signatory to the United Nations Global Compact initiative which, with its<br />
ten principles, sets international standards for companies and organizations in the fields of human<br />
rights, labor, environment and anti-corruption. <strong>Knorr</strong>-<strong>Bremse</strong> will be engaging in an international exchange<br />
of experience and contributing to a dialogue on corporate responsibility within the worldwide<br />
network of more than 8,000 Global Compact corporate members, including 140 companies and<br />
organizations in Germany.<br />
Five years on from the founding of the charitable organization <strong>Knorr</strong>-<strong>Bremse</strong> Global Care e. V., <strong>Knorr</strong>-<br />
<strong>Bremse</strong> has marked a further major milestone in meeting its corporate responsibilities by signing up<br />
to the Compact.
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establishing a central hub will in future halve transportation distances and cut 165 tons of annual CO 2<br />
emissions. A program of CO 2<br />
audits of company sites has also been launched with the aim of creating<br />
greater transparency about energy consumption and CO 2<br />
emissions and identifying scope for reductions.<br />
Following a pilot program to calculate the CO 2<br />
footprint of the Munich and Berlin sites, the program<br />
is now to be rolled out at other locations around the world.<br />
Energy-efficient products<br />
<strong>Knorr</strong>-<strong>Bremse</strong> pays great attention to the potential environmental impact of the innovative technologies<br />
it develops. It was, for example, the first company in the rail vehicle sector to market a compressor<br />
that operates without oil lubrication. A more recent example is the newly developed HVAC system<br />
from <strong>Knorr</strong>-<strong>Bremse</strong>’s subsidiary Merak, which uses a new ultra-eco-friendly refrigerant – HFO1234yf –<br />
which has a very low global warming potential rating. In the commercial vehicle sector, climate<br />
change and pressure to reduce costs have also boosted demand for energy-efficient technologies in<br />
recent years – which is why <strong>Knorr</strong>-<strong>Bremse</strong> has long since made the development of fuel-saving technologies<br />
a priority and has showcased various solutions at trade fairs over the years. These have included<br />
the LEADER driver information system, which enables the fuel consumption of rail vehicles to<br />
be reduced by up to 15% and – in the truck sector – the Pneumatic Booster System (PBS), which<br />
eliminates turbo-lag and saves 2-3% fuel. At the same time, PBS increases engine power, enabling a<br />
smaller, lighter engine with lower fuel consumption to be used. The year also saw the launch of a further<br />
development of the Electronic Air Control System (EAC2), which differs from conventional com-<br />
Customers are also increasingly making demands on <strong>Knorr</strong>-<strong>Bremse</strong> in this respect, with some even<br />
explicitly quoting the ten principles of the UN Global Compact when placing orders. During the year<br />
under review, <strong>Knorr</strong>-<strong>Bremse</strong> started to develop its own standard code of behavior for suppliers, using<br />
the UN Global Compact as an important, globally recognized frame of reference.
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mercial vehicle air systems by switching the air supply compressor on and off according to the driving<br />
situation, saving up to 2.5 tons of CO 2<br />
emissions per vehicle per year.<br />
Environmental protection and workplace health & safety<br />
In 2001 <strong>Knorr</strong>-<strong>Bremse</strong> launched a process of certifying the Group’s rail and commercial vehicle sites<br />
according to the ISO 14001 environmental management standard. This program continued in <strong>2010</strong>,<br />
with sites in Johannesburg (South Africa) and Guangzhou (China) achieving certification. As part of its<br />
global health and safety and environmental policy <strong>Knorr</strong>-<strong>Bremse</strong> also takes a systematic approach to<br />
workplace safety. Having long since achieved certification of virtually all its European sites, confirming<br />
their compliance with the international occupational health and safety standard OHSAS 18001, the<br />
company is now rolling out a program of external auditing of its other sites world-wide.<br />
In <strong>2010</strong> the sites in Suzhou and Shanghai (China) as well as Westminster (USA) achieved OHSAS 18001<br />
certification. In order to minimize environmental impact and energy consumption at new sites from<br />
the very outset, <strong>Knorr</strong>-<strong>Bremse</strong> has drawn up a list of requirements in the form of a “Green Building<br />
Guideline”. The idea is that intelligent planning can reduce the environmental impact and resource<br />
requirements of new buildings and create a pleasant and healthy working atmosphere for employees.<br />
Health promotion<br />
<strong>Knorr</strong>-<strong>Bremse</strong> regards health promotion as an important duty, and its health facilities and measures<br />
are designed for young and old alike. At its European sites the company increasingly has to adjust to<br />
an aging workforce. Many sites run special sports programs and health campaigns aimed at promoting<br />
employees’ health and wellbeing, maintaining their ability to give of their best and encouraging<br />
communication and a team spirit. Health days and health fairs are also used to raise awareness and<br />
show employees what is on offer. <strong>Knorr</strong>-<strong>Bremse</strong>’s subsidiary Bendix has already attracted several<br />
awards for the measures it has taken at its four North American sites, where health programs include<br />
mammography check-ups provided by the company medical service, a slimming program entitled<br />
“Weight Watchers@Work”, an in-company fitness center, cardiovascular training, free blood tests for
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employees and their families, an annual health fair, breakfast seminars with information on health topics<br />
and a monthly health newsletter.<br />
Energy management<br />
When it comes to measures for reducing energy consumption and CO 2<br />
emissions in its processes,<br />
<strong>Knorr</strong>-<strong>Bremse</strong> adheres closely to the provisions of the international standard for energy management<br />
(ISO 50001). This requires continuous improvement of the energy balance through efficient and sustainable<br />
use of energy resources of all kinds.<br />
The concept of energy management thus affects a wide range of different company processes, including<br />
energy procurement, use and conversion. One important aspect is the fact that efficient energy<br />
use should be taken into account at them planning stage for new company sites and production facilities,<br />
so that the scope for achieving energy savings is identified in advance and can be utilized during<br />
implementation.
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Providing long-term<br />
assistance<br />
The charitable organization <strong>Knorr</strong>-<strong>Bremse</strong> Global Care e. V. was set up by the<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Group to provide long-term aid to individuals who, through no<br />
fault of their own, are victims of environmental catastrophes, accidents, armed<br />
conflict, poverty or disease. At the start of <strong>2010</strong>, the organization celebrated its<br />
fifth anniversary. Since its foundation five years ago it has implemented 50 aid<br />
projects in 31 countries on four continents, providing assistance to some<br />
200,000 people.<br />
In December 2004 the world witnessed a tragic and shocking event: a tsunami triggered<br />
by an earthquake devastated entire coastal areas of Thailand, Indonesia, Sri<br />
Lanka and India as well as many other states in Southeast Asia and East Africa. More<br />
than 230,000 people lost their lives. <strong>Knorr</strong>-<strong>Bremse</strong> was quick to react, and on January<br />
18, 2005 the charitable organization <strong>Knorr</strong>-<strong>Bremse</strong> Global Care e. V. was set up with<br />
the aim of providing targeted and effective aid to victims of the disaster. The first projects<br />
were launched as early as February, and within a year the organization was supporting<br />
no fewer than 13 different programs in the region.
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A new approach<br />
Then as now, the basic approach taken by <strong>Knorr</strong>-<strong>Bremse</strong> Global Care e. V. differed from that of other<br />
aid organizations. It is not just funding that is provided – volunteers, including members of the company’s<br />
management, also act as sponsors for individual projects, monitoring their progress closely.<br />
Their input ranges from visits to the regions concerned to collaboration with local partners over drawing<br />
up plans for hospitals or schools. Their close involvement with the projects ensures a high degree<br />
of commitment to the people at local level.<br />
The aim is always to provide sustainable, long-term support and the most important criterion when<br />
selecting projects is therefore an emphasis on helping people to help themselves. Project funding is<br />
intended as an investment in an economically independent future for the people concerned.<br />
Expansion of activities<br />
In 2006, Global Care expanded its activities to include Africa, where it funded a number of school projects<br />
in a bid to help improve the often catastrophic situation of education in that part of the world. Since 2007,<br />
<strong>Knorr</strong>-<strong>Bremse</strong> sites around the world have also become increasingly involved in projects – around half of<br />
Global Care projects now benefit from the involvement of local <strong>Knorr</strong>-<strong>Bremse</strong> employees.<br />
2008 and 2009 saw the organization continue its work in these two regions and also become involved in<br />
Central America. Other areas of focus were emergency aid and reconstruction projects in the aftermath of<br />
the cyclone in Burma, the earthquake in the Chinese province of Sichuan and the cholera epidemic in<br />
Zimbabwe. At the same time, Global Care intensified its involvement in educational projects.<br />
The basic emphasis is on long-term projects that enable people to support themselves and determine<br />
their own lives. In <strong>2010</strong> a total of 35 projects in 24 countries were funded, with more than EUR 1,100,000<br />
donated and over 65,000 people provided with assistance and support. For example Global Care joined<br />
forces with the aid organization Jnana Pradodhini to construct a three-story building with five apartments<br />
per floor to house divorced or widowed women in the rural district of Harali, India. Global Care also decided<br />
during <strong>2010</strong> to build and equip two learning centers in the Sabeh region of Borneo. A floating<br />
classroom was also created for teaching children who live in such remote locations that they cannot otherwise<br />
attend school on a daily basis. During the year <strong>Knorr</strong>-<strong>Bremse</strong> Global Care e. V. also ran five emergency<br />
aid projects in Haiti, Chile, Pakistan, the Czech Republic and Hungary.
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Employees<br />
Thanks to the outstanding work ethic and motivation of its employees, in <strong>2010</strong> <strong>Knorr</strong>-<strong>Bremse</strong><br />
was again able to strengthen its position in the global marketplace. The effects of the global<br />
economic crisis had made adjustments in staffing levels inevitable in 2009, particularly in the<br />
commercial vehicle segment. In the year under review, by contrast, the number of employees<br />
rose across the Group.<br />
Employment situation<br />
By the end of <strong>2010</strong>, the workforce of the <strong>Knorr</strong>-<strong>Bremse</strong> Group had risen to 16,277 employees, 1,845<br />
more than in the previous year. This represents a 12.8% increase in staffing levels compared to 2009.<br />
In the Rail Vehicle Systems division, the number of employees grew by 15.3%, from 8,256 in 2009 to<br />
9,523 in <strong>2010</strong>. Due to the global recovery in truck production, the number of employees in the Commercial<br />
Vehicle Systems division rose by 9.6%, from 6,014 in the previous year to 6,590 in <strong>2010</strong>.<br />
Employees in the regions<br />
In the Europe, Middle East and Africa region, the <strong>Knorr</strong>-<strong>Bremse</strong> Group employed 9,243 people at the<br />
end of <strong>2010</strong>, 8.0% more than in 2009 (8,555). 56.8% of the <strong>Knorr</strong>-<strong>Bremse</strong> workforce was employed in<br />
this region (2009: 59.3%) at the end the year under review. In absolute terms, this represents an increase<br />
of 688 employees.<br />
As per December 31, <strong>2010</strong> <strong>Knorr</strong>-<strong>Bremse</strong> employed 3,235 people in Germany, 5.3% more than one<br />
year previously (3,071). In <strong>2010</strong>, 19.9% of the company’s total workforce was employed in Germany<br />
(2009: 21.3%). In the rest of Europe the number of employees grew from 5,484 to 6,008, which equates<br />
to 36.9% (2009: 38.0%) of the total workforce.<br />
The Group had 2,751 employees in North America on December 31, <strong>2010</strong>, up 7.5% from the previous<br />
year (2,559). This represents a decline in the proportion of employees in North America from 17.7% to<br />
16.9%. The Group had 658 employees in South America at the end of 2009, compared to 806 at the<br />
end of the year under review. The Asia/Australia region saw a rise in staffing levels from 2,660 employees<br />
in 2009 to 3,477 at the end of <strong>2010</strong>. As a result, the proportion of the Group workforce employed
126 RepoR t | KnoRR-BR e MSe GR o U p<br />
in this region climbed to 21.4% (2009: 18.4%). This increase also reflects the extremely positive growth<br />
of <strong>Knorr</strong>-<strong>Bremse</strong>’s business in Asia/Australia.<br />
Human resources development<br />
<strong>Knorr</strong>-<strong>Bremse</strong> stands for outstanding, globally recognized products, processes and services. The<br />
Group’s human resources policy plays an important supporting role by providing for systematic and<br />
targeted HR development and placing particular emphasis on international job assignments around<br />
the entire globe. In the year under review, the HR development instruments defined in the Human<br />
Resources Roadmap and the People Excellence Initiative (PEX) were harmonized worldwide and implemented<br />
in all <strong>Knorr</strong>-<strong>Bremse</strong> locations.<br />
A comprehensive talent management program develops qualified successors for key management<br />
positions and offers high potentials attractive career opportunities within the Group. The International<br />
Development Center and International Development Programs modules for junior managers were<br />
redesigned and reworked during the period under review. The Development Center, which is held<br />
several times each year, allows <strong>Knorr</strong>-<strong>Bremse</strong> to identify individual strengths and areas for improvement<br />
and to define targeted and systematic professional development measures for each participant.<br />
The Leadership Feedback initiative, which was successfully completed in November <strong>2010</strong>, for the first<br />
time featured a uniform international questionnaire and made use of a supporting online program.<br />
Approximately 1,000 managers in over 50 locations were evaluated by around 13,000 employees. This<br />
confidential and anonymized process aims to promote and optimize cooperation within each team by<br />
allowing managers to receive feedback from their employees on their leadership skills.<br />
<strong>2010</strong> also saw the revision of the staff dialogue – the regular performance review process between<br />
supervisor and employee – and the introduction of a uniform global standard for performance review<br />
procedures and timing.<br />
Management Evolution Program (MEP)<br />
Successfully established twelve years ago, <strong>Knorr</strong>-<strong>Bremse</strong>’s Management Evolution Program (MEP)<br />
gives new hires the opportunity to participate in three important projects as trainees, gaining valuable<br />
insights into operations in different parts of the Group. The combination of direct project responsibility<br />
and special training courses helps to develop the trainees’ hard and soft skills in a professional<br />
context. In the year under review, strong growth in the Asia region led to the inclusion of two Chinese<br />
and one Indian participant in the program for the first time. <strong>Knorr</strong>-<strong>Bremse</strong> has given priority to the<br />
continued internationalization of the MEP.<br />
University marketing<br />
In <strong>2010</strong> <strong>Knorr</strong>-<strong>Bremse</strong> again participated in around 40 human resources and recruiting fairs, strengthening<br />
the awareness and position of the company among university professors and departments as<br />
well as university graduates. Cooperation agreements with well-known universities and colleges in<br />
Germany and other locations around the world allowed early links to be forged between <strong>Knorr</strong>-<strong>Bremse</strong>
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and students with key qualifications. This helps the Group to meet its demand for highly qualified<br />
specialists, especially in the technical fields.<br />
International human resources policy<br />
<strong>Knorr</strong>-<strong>Bremse</strong> is a successful global corporate player with 87 locations around the world. The expertise,<br />
innovative capabilities and work ethic of the Group’s workforce are important factors in its success. To<br />
safeguard the high quality standard of its products around the globe, <strong>Knorr</strong>-<strong>Bremse</strong> actively encourages<br />
its employees to participate in job exchanges across all regions. The International Transfers Department,<br />
which is located at corporate headquarters in Munich, is responsible for coordinating all<br />
overseas assignments and supporting global networking within the Group. In addition to long-term<br />
international assignments, in the past year <strong>Knorr</strong>-<strong>Bremse</strong> sent more employees abroad for shorter<br />
periods of time to receive training in departments in different Group locations. The number of new<br />
international assignments rose again during the year under review after stagnating during the economic<br />
crisis. While China continues to be the primary destination for international transfers within<br />
<strong>Knorr</strong>-<strong>Bremse</strong>, there has also been a steady increase in the number of employees from other countries<br />
coming to work in Germany.
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Trade fairs<br />
Local presence as a global player: <strong>Knorr</strong>-<strong>Bremse</strong> was represented by expert teams at all the<br />
major trade fairs and also showcased its innovative products to an international audience at<br />
other national and international events. Over the next few years, the business of both <strong>Knorr</strong>-<br />
<strong>Bremse</strong> divisions will be influenced by the major trends of energy efficiency, safety, urbanization<br />
and globalization.<br />
In <strong>2010</strong>, <strong>Knorr</strong>-<strong>Bremse</strong> presented innovative products at the two key industry showcases, InnoTrans in<br />
Berlin and the IAA Commercial Vehicles in Hanover, under the motto of “Efficient.Technology.Worldwide“.<br />
Also in the year under review, <strong>Knorr</strong>-<strong>Bremse</strong> exhibited solutions for current and future market<br />
requirements to a wide audience at the main industry shows.<br />
39th Conference on Modern Rolling Stock, April <strong>2010</strong>, Graz<br />
The first event attended by <strong>Knorr</strong>-<strong>Bremse</strong> Rail Vehicle Systems in <strong>2010</strong> was the 39th Conference on<br />
Modern Rolling Stock, which was held at the Technical University of Graz in Austria. For the first time,<br />
the <strong>Knorr</strong>-<strong>Bremse</strong> Mödling plant had its own stand at the event, which became a popular meeting<br />
point for actual and potential customers.<br />
Metro China, Mai <strong>2010</strong>, Shanghai<br />
Metro China is one of China‘s largest and most highly reputed industry showcases for metro technology.<br />
The event covers all aspects of the metro sector from planning and design through to operation<br />
and maintenance. The trade fair has long been established as a key platform for exhibitors from around<br />
the world. At the show, <strong>Knorr</strong>-<strong>Bremse</strong>, IFE, Microelettrica and EMC Traction displayed innovative solutions<br />
for the Chinese metro market.<br />
EXPO Ferroviaria and INTERtunnel, June <strong>2010</strong>, Turin<br />
Growth of 12% in visitor numbers compared with the previous event confirmed the sustained success<br />
of EXPO Ferroviaria and INTERtunnel. In June <strong>2010</strong>, 7,000 visitors from 48 countries attended the only<br />
regular rail and tunnel trade fairs in Italy. IFE and Microelettrica were among the successful participants.
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Automechanika, September <strong>2010</strong>, Frankfurt<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Commercial Vehicle Systems organized an exclusive customer event at Automechanika<br />
in Frankfurt. More than 200 guests took part in the chill-out event at the auto industry‘s most important<br />
meeting point in September. The program at the event was rounded off by brief product presentations<br />
given by <strong>Knorr</strong>-<strong>Bremse</strong> experts against the backdrop of the world‘s largest automotive aftermarket<br />
showcase.<br />
Business on Rails Trade Fair, November <strong>2010</strong>, São Paulo<br />
In November, more than 7,000 experts from the rail sector exchanged views on the latest rail trends at<br />
the 13th Business on Rails Trade Fair, held in São Paulo, Brazil. 180 exhibitors from across the globe had<br />
their latest developments on show. The <strong>Knorr</strong>-<strong>Bremse</strong> Group was represented by its Brazilian subsidiary<br />
Indústria Freios <strong>Knorr</strong> and Group company IFE.<br />
Modern Railways und UIC Highspeed, December <strong>2010</strong>, Beijing<br />
In December <strong>2010</strong>, the 7th World Congress on High Speed Rail (UIC Highspeed) was held in Beijing at<br />
the same time as Modern Railways. Modern Railways is a major platform for interchange between<br />
manufacturers and rail operators from more than 20 countries and regions. UIC Highspeed has also<br />
established itself as the premier major international event for the high-speed rail sector. The congress<br />
provided a good overview of recent successes and developments in high-speed rail systems. <strong>Knorr</strong>-<br />
<strong>Bremse</strong> and Group companies IFE, Westinghouse, Merak and Microelettrica took the opportunity to<br />
present themselves and their products to a wide trade audience at the two events.
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<strong>Knorr</strong>-<strong>Bremse</strong> a magnet<br />
for visitors<br />
Under the heading of “Efficient.Technology.Worldwide”, <strong>Knorr</strong>-<strong>Bremse</strong> showcased<br />
its leading-edge braking technology and on-board systems to a broadbased<br />
audience at the two key trade fairs of <strong>2010</strong> – both held in Germany. At<br />
the rail transportation fair InnoTrans in Berlin, efficient products and technological<br />
innovations shared the spotlight with solutions that underpinned the<br />
Group’s worldwide systems expertise. At the IAA Commercial Vehicles show in<br />
Hanover, the focus was on energy efficiency, cutting emissions, and boosting<br />
safety through driver assistance systems.<br />
Hundreds of thousands of visitors from across the globe, top level customer contacts<br />
and impressive trade fair stands left exhibitors with plenty to talk about at<br />
the InnoTrans and IAA Commercial Vehicles fairs in <strong>2010</strong>. With an increase of over<br />
20% in visitor numbers the InnoTrans broke the previous record set in 2008. This<br />
was also reflected at the <strong>Knorr</strong>-<strong>Bremse</strong> stand, which at times hosted as many as<br />
300 visitors at once. At the <strong>Knorr</strong>-<strong>Bremse</strong> Commercial Vehicle Systems stand at<br />
the IAA too, visitor numbers were up by around 10% compared to the previous<br />
IAA in 2008, despite an overall downturn in attendance at the fair.
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133<br />
InnoTrans <strong>2010</strong> – top level talks<br />
The main highlight of the InnoTrans fair in Berlin came right at the start with a visit from the German<br />
Federal Minister of Transport Dr. Peter Ramsauer, who also opened the fair. Dr. Dieter Wilhelm, Member<br />
of the Executive Board responsible for Rail Vehicle Systems, showed Dr. Ramsauer around the <strong>Knorr</strong>-<br />
<strong>Bremse</strong> stand and explained the latest exhibits. The German Federal Minister of Transport showed a<br />
special interest in the bogie equipment for high-speed trains with integrated eddy current brake. This<br />
exhibit, which was on show in its entirety for the first time at a trade fair, gave an impressive demonstration<br />
of the perfect interplay between all the <strong>Knorr</strong>-<strong>Bremse</strong> components.<br />
In the procurement and operation of rail vehicles and their sub-systems the topic of efficiency is moving<br />
steadily up the agenda. As a result, at this year’s InnoTrans <strong>Knorr</strong>-<strong>Bremse</strong> chose to focus on low<br />
life-cycle costs and efficient maintenance. As the world’s leading manufacturer of braking systems for<br />
rail vehicle and the technology leader, <strong>Knorr</strong>-<strong>Bremse</strong> also had innovations on show at the fair that are<br />
designed to maximize customer benefits, increase passenger safety and comfort and ensure ecofriendly<br />
operation. On top of this, in the international project business sector <strong>Knorr</strong>-<strong>Bremse</strong> is increasingly<br />
out to provide customized solutions for the different regional requirements encountered around<br />
the world. At the InnoTrans fair this was impressively documented by the presentation of control<br />
valves, for example, that comply with all of the major globally applicable standards.<br />
IAA <strong>2010</strong> an all-round success<br />
The <strong>Knorr</strong>-<strong>Bremse</strong> stand at the IAA Commercial Vehicles <strong>2010</strong> proved a magnet for visitors and hosted<br />
almost 600 meetings with customers. The main topics were cutting fuel consumption, boosting safety<br />
and protecting the environment. One particularly impressive factor was the very high level of our visitors,<br />
with a vast increase in the proportion of visitors from Asia. This was clearly a reflection of the<br />
Group’s long-standing and sustained commitment to the Asian region. Around 100 customers from<br />
China and India were welcomed to the <strong>Knorr</strong>-<strong>Bremse</strong> stand in the course of the week-long fair.<br />
Along with the Innovation Center, where the latest product developments and future technologies<br />
were presented to selected customers, the Regional Technology Center again proved another crowdpuller.<br />
Here <strong>Knorr</strong>-<strong>Bremse</strong> used the IAA <strong>2010</strong> to present a large number of products specially geared<br />
to the requirements of the BRIC markets, in each case adapted precisely to the needs of the respective<br />
region, taking into account the different climates, infrastructures and driving conditions.<br />
Among the visitors to the <strong>Knorr</strong>-<strong>Bremse</strong> stand was the President of the Association of the German<br />
Automotive Industry, Matthias Wissmann, who was brought fully up to speed with the latest <strong>Knorr</strong>-<br />
<strong>Bremse</strong> technologies and developments by Hans-Peter Moser, Member of the Executive Board of<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Systeme für Nutzfahrzeuge GmbH.
3/<br />
Notes to the Consolidated<br />
Financial Statements
136<br />
1<br />
Principles and methods<br />
The consolidated financial statements have been drawn up in accordance with generally accepted<br />
accounting principles, complying with the accounting requirements of the German Commercial Code<br />
(HGB) and additional statutory provisions. Figures in the consolidated financial statements are shown<br />
in thousands of euros (TEUR). Certain items on the balance sheet and in the statement of income are<br />
combined for the sake of greater clarity. These items are explained separately in the Notes to the Consolidated<br />
Financial Statements.<br />
Accounting and valuation<br />
The financial statements of the companies included in the consolidated financial statements are prepared<br />
according to uniform principles of accounting and valuation applied to the Group. For the purposes<br />
of consolidation according to the equity method, any valuations in the financial statements of<br />
the associated companies that deviate from the uniform principles applied to the Group are retained.<br />
In fiscal year <strong>2010</strong>, the provisions of the German Accounting Law Modernization Act are applied for<br />
the first time. Because this is the first time they have been applied, the requirements of §§ 252 (1) no.<br />
6, 265 (1), 284 (2) no. 3 and 313 (1) no. 3 of the German Commercial Code (HGB) have not been applied,<br />
as provided for under Article 67 (8) of the Act Introducing the German Commercial Code (EGHGB). In<br />
accordance with EGHGB Article 67 (8) clause 2 subclause 1, the previous year’s figures have not been<br />
adjusted. Consequently the previous year’s figures are only comparable with the figures for the year<br />
under review to a limited extent, as specified in HGB § 265 (2) clause 2.<br />
Purchased intangible assets are valued at acquisition cost less scheduled depreciation; additional depreciation<br />
is taken where necessary.<br />
Fixed assets are recorded at acquisition or production cost, less scheduled depreciation in the case of<br />
items subject to wear and tear; additional depreciation is taken where necessary. Depreciation on<br />
fixed assets is generally applied using the linear method, based on useful life. In the case of German<br />
companies included in consolidation, additions prior to January 1, 2008 and after January 1, 2009 are<br />
for the most part depreciated using the declining balance method, switching over to the linear method<br />
as soon as the latter results in higher depreciation. For fiscal year <strong>2010</strong>, application of the linear<br />
method results in a difference of TEUR 496. Minor fixed assets are depreciated to the maximum extent<br />
permissible under the respective countries’ tax provisions.<br />
Interests in affiliated, associated and related companies and miscellaneous investments are stated at<br />
cost or, in the event of a probable sustained diminution in value, at fair value (where the latter is lower).<br />
Materials and supplies are carried in inventories at the lower of average acquisition cost or replacement<br />
cost. Provision against realization risks is made where necessary.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 137<br />
Work in process and finished products are stated at production cost, but in no case higher than the<br />
projected sales revenues less any costs accruing prior to sale. Production cost includes direct cost of<br />
materials and labor, as well as production overhead. A reasonable allowance is made where there is a<br />
risk of a decline in inventory values. Receivables are stated at their nominal value, less any necessary<br />
provisions against specific debts. Receivables bearing no or low interest are stated at their net present<br />
value. General charges have been made to cover the general credit risk.<br />
Other assets are stated at the lower of average acquisition cost, net present value or fair value.<br />
Earnings or disbursements prior to the balance sheet date are shown as prepaid income or prepaid<br />
expenses where they represent revenues or expenses for a certain period after the balance sheet date.<br />
Foreign currency items are valued at the rate existing at the transaction date or – if less favorable – at<br />
the rate at the balance sheet date. Where foreign currency items have been hedged, they are valued<br />
at the corresponding hedging rate. In the individual financial statements of companies included in<br />
consolidation, assets and liabilities denominated in foreign currencies are translated at the mean spot<br />
rate at the final balance sheet date. Unrealized currency gains as defined in § 256a clause 2 and § 252<br />
(1) no. 4 of the German Commercial Code (HGB) have no overall significance.<br />
Rate-hedging and option transactions are performed selectively and exclusively for hedging purposes.<br />
Wherever possible, financial derivatives covering assets, borrowings, open contracts or transactions<br />
with a high probability of closure are bundled together as single items for valuation purposes (“macro<br />
hedges”).<br />
Accrued liabilities include reasonable and sufficient allowance for all perceivable risks and any contingent<br />
liabilities. Accruals are valued in accordance with § 253 (1) and (2) of the German Commercial<br />
Code (HGB), whereby use has been made of the options for retention of control laid out in Article 67<br />
(1) clause 2 and (3) clause 1 of the Act Introducing the German Commercial Code (EGHGB). Transfers<br />
to accrued liabilities are made using the net method.<br />
In Germany, pension plan accruals and similar commitments are set up according to actuarial principles<br />
based on realistic assumptions. Assumptions included in the calculations include future salary<br />
increases and future pension adjustments, as defined in § 16 of the German Law on Occupational Pensions<br />
(BetrAVG), as well as assumptions relating to staff turnover. The calculations are based on the<br />
biometric reference values devised by Klaus Heubeck (mortality tables RT 2005 G). The following parameters<br />
were applied:
138<br />
Interest rate: 5.16% p. a.<br />
Salary increases: 3.00% p. a.<br />
Annuity trend: 1.00% to 1.50% p. a.<br />
Pension plan accruals are determined using the modified discount value method. Our foreign subsidiaries<br />
cover pension plans and similar commitments by accruals which are calculated according to<br />
principles similar to those used in Germany. Only in the United States of America are pension plans<br />
and similar commitments of major significance to the net worth, financial position and results of the<br />
Group. Here the projected unit credit method has been used, based on the following parameters:<br />
Interest rate: 6.24% p. a.<br />
Salary increases: 3.50% p. a.<br />
Annuity trend: up to 3.00% p. a.<br />
Liabilities are stated at their settlement value.<br />
Consolidated companies<br />
In addition to <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong>, 19 German and 93 foreign subsidiaries over which <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong><br />
can exert a direct or indirect controlling influence are included in the consolidated financial statements.<br />
Investments in one German and two foreign companies are shown in the consolidated financial statements<br />
as investments in associated companies. Eight foreign subsidiaries have not been included in<br />
consolidation because of their minor significance with respect to the net worth, financial position and<br />
results of the Group. For the same reason, three German companies are not shown as associated companies,<br />
but instead are stated at acquisition cost.<br />
During fiscal year <strong>2010</strong> the Group acquired the following companies, which are included in consolidation:<br />
Heine Resistors GmbH, Dresden/Germany<br />
Heine Resistors (Suzhou) Co. Ltd., Suzhou/China<br />
Sigma Coachair (UK) Ltd., Newhall/Great Britain<br />
Sigma Coachair Group (China) Co. Ltd., Changzhou/China<br />
Sigma Coachair Group Pty. Ltd., Wetherill Park, Sydney/Australia<br />
Sigma Coachair Systems (US) Inc., Chicago/USA<br />
Sigma Transit Systems Pty. Ltd., Wetherill Park, Sydney/Australia
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 139<br />
The following companies are also newly established or included in consolidation for the first time:<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Rail Systems (Machining) Ltd., Melksham, Wiltshire/Great Britain<br />
<strong>Knorr</strong>-<strong>Bremse</strong> SA Holding Company (UK) Ltd., Melksham, Wiltshire/Great Britain<br />
Merak <strong>Knorr</strong> Climatizacion S.A., Buenos Aires/Argentina<br />
The following companies have been renamed:<br />
<strong>Knorr</strong>-<strong>Bremse</strong> IT-Services GmbH, Munich/Germany (formerly KB Delta Beteiligungs<br />
GmbH, Munich/Germany)<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Rail Systems Italia S.r.l., Campi Bisenzio/Italy (formerly Frensistemi S.r.l.,<br />
Florence/Italy)<br />
The following companies have been merged or wound up:<br />
Hasse & Wrede North America Inc., North Aurora, IL/USA<br />
Di-Pro Inc., Fresno, California/USA<br />
This means that compared to the previous year, the number of companies included in consolidation<br />
has increased by one German and seven foreign companies. On the following pages, a detailed list of<br />
affiliated and associated companies appears in a separate breakdown of the Group’s shareholdings.<br />
The above-mentioned changes in the scope of consolidation had no significant impact on the Group’s<br />
net assets, financial position and operating results. The newly consolidated companies caused the<br />
balance sheet total to increase by MEUR 46.9.<br />
Principles of consolidation<br />
Until December 31, 2009, the book value method was used to consolidate investments in subsidiaries.<br />
This entailed offsetting book values against the value of our interests in the shareholders’ equity of the<br />
subsidiaries at the time of the initial consolidation. Companies were included in consolidation at the<br />
date of acquisition or at the balance sheet date. Since fiscal year <strong>2010</strong>, investments in subsidiaries have<br />
been consolidated using the revaluation method. This entails reporting shareholders’ equity at the<br />
value corresponding to the market value of the assets and borrowings to be included in the consolidated<br />
financial statements. Companies are included in consolidation at the date of acquisition. Since<br />
2002, any resulting goodwill has been capitalized in compliance with GAS standards. Scheduled depreciation<br />
is applied on the basis of operational considerations relating to useful life, which may not<br />
exceed 20 years in the Group. The useful life of goodwill is determined using the subsidiaries’ longerterm,<br />
strategic business models.<br />
Wherever possible, a negative goodwill resulting from the consolidation in investments is released for<br />
the year in which it arises, as permitted by German commercial law and accounting standards.
140<br />
Associated companies are consolidated using the equity method, with goodwill generally included as<br />
part of the cost of acquiring interests in associated and related companies. Associated companies acquired<br />
prior to January 1, <strong>2010</strong> were consolidated at the date of acquisition or the balance sheet date.<br />
As from year-end <strong>2010</strong>, companies are included in consolidation at the date of acquisition.<br />
Our share in the annual results of companies consolidated in accordance with this method, including<br />
amortization on goodwill, is shown in the statement of income under Financial results. Receivables<br />
and liabilities are offset between consolidated companies. Unrealized intercompany profits resulting<br />
from intercompany trade in goods and services are eliminated in the consolidated statements. In the<br />
consolidated statement of income, revenues from intercompany sales and other intercompany income<br />
are offset against the corresponding expenses.<br />
Foreign currency translation<br />
The individual financial statements of the foreign companies included in consolidation are translated<br />
into euros at the mean spot rate at the balance sheet date, with the exception of shareholders’ equity,<br />
which is translated into euros at the historic rate. Income statement items are translated into euros at<br />
the mean rate. Any resulting translation difference is shown in Group equity as the equity difference<br />
arising on currency translation.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 141<br />
Deferred taxes<br />
Deferred taxes as defined under §§ 274 and 306 of the German Commercial Code (HGB), resulting from<br />
temporary differences between the amount stated in the tax accounts of individual group companies<br />
and the amount stated in the consolidated balance sheet (including differences arising as a result of<br />
accounting and valuation adjustments or during the consolidation process), are netted wherever possible,<br />
in accordance with legal requirements. In the individual balance sheets prepared according to the<br />
uniform principles of accounting and valuation applied to the Group (”Financial statements II“), the option<br />
to capitalize assets to the amount of probable tax relief in the following years is used in individual<br />
cases. The calculation of deferred taxes is based on the tax rates that are expected to be valid at the time<br />
of their realization.<br />
Deferred taxes on losses carried forward are capitalized in individual cases, where there is sufficient<br />
probability that the tax benefits can be realized. At each balance sheet date, the book value of deferred<br />
tax assets is reviewed and, if necessary, adjusted as appropriate.
142<br />
2<br />
Changes in intangibles, fixed assets and investments<br />
Acquisition or production cost<br />
Additions to purchased fixed and intangible assets amounted to TEUR 197,271 in fiscal year <strong>2010</strong>.<br />
This figure includes investments in the amount of TEUR 113,369.<br />
In EUR thousands (TEUR)<br />
Carried forward<br />
Jan. 1, <strong>2010</strong> *)<br />
Additions *) Reclassifications *) Disposals *)<br />
Industrial property rights/trademarks 246,017 10,039 58 (4,027)<br />
Goodwill 177,734 70,326 0 (1,427)<br />
Purchased intangibles 423,751 80,365 58 (5,454)<br />
Land, equivalent rights to real property, and buildings,<br />
including buildings on land not owned<br />
256,525 11,073 31,055 (802)<br />
Technical equipment and machinery 439,969 27,958 8,206 (13,947)<br />
Other equipment, plant and office equipment 340,140 30,115 28,688 (9,814)<br />
Advances to suppliers and construction in<br />
progress<br />
75,411 47,760 (68,007) (931)<br />
Fixed assets 1,112,045 116,906 (58) (25,494)<br />
Investments in affiliated companies 6,301 0 0 0<br />
Investments in associated companies 330 4,500 0 (260)<br />
Miscellaneous investments 46,482 22,851 0 (32)<br />
Investments 53,113 27,351 0 (292)<br />
Intangibles, fixed assets and investments 1,588,909 224,622 0 (31,240)<br />
*) valued at acquisition or production cost
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 143<br />
Currency<br />
differences *)<br />
Balance<br />
Dec. 31, <strong>2010</strong> *)<br />
Accrued depreciation/amortization<br />
Net value<br />
Dec. 31, <strong>2010</strong><br />
Net value<br />
Dec. 31, 2009<br />
Depreciation/<br />
amortization during<br />
the fiscal year<br />
9,627 261,714 (179,581) 82,133 90,914 (21,843)<br />
10,117 256,750 (121,606) 135,144 99,788 (38,437)<br />
19,744 518,464 (301,187) 217,277 190,702 (60,280)<br />
5,540 303,391 (121,904) 181,487 143,451 (7,665)<br />
13,963 476,149 (301,835) 174,314 163,237 (43,339)<br />
14,517 403,646 (291,364) 112,282 101,921 (35,389)<br />
623 54,856 (5,938) 48,918 69,630 (190)<br />
34,643 1,238,042 (721,041) 517,001 478,239 (86,583)<br />
309 6,610 (2,788) 3,822 5,584 (2,046)<br />
0 4,570 0 4,570 330 0<br />
3,953 73,254 (16,077) 57,177 30,437 (32)<br />
4,262 84,434 (18,865) 65,569 36,351 (2,078)<br />
58,649 1,840,940 (1,041,093) 799,847 705,292 (148,941)
144<br />
3<br />
Intangibles<br />
This heading includes primarily the acquisition of goodwill, patents, rights to the use of names and<br />
trademarks, and IT software. IT software and goodwill account for the majority of additions. Any resulting<br />
goodwill is subject to scheduled depreciation over a period of not more than 20 years. Other intangibles<br />
are subject to scheduled depreciation over periods of between three and 10 years.<br />
In fiscal year <strong>2010</strong> a TEUR 29,137 provision was made against goodwill from the acquisition of the Sigma<br />
Group. All intangible assets have a limited useful life.<br />
4<br />
Fixed assets<br />
Movements of fixed assets are presented in the compilation on the preceding pages. To take technical<br />
and economic factors into account, scheduled depreciation was applied to acquisition costs.<br />
During the fiscal year, unscheduled depreciation amounting to TEUR 522 was applied to a plot of land.<br />
5<br />
Investments<br />
Investment movements are set out in the compilation above. Miscellaneous investments consist of<br />
miscellaneous loans (TEUR 21,237), loans to affiliated companies (TEUR 33,956), long-term investments<br />
(TEUR 1,829), and investments in other companies (TEUR 155).<br />
During the fiscal year a TEUR 2,046 provision was made against the Group’s shareholding in <strong>Knorr</strong>-<br />
<strong>Bremse</strong> RUS OOO, Nizhny Novgorod/Russia, an affiliated company which is not included in consolidation.<br />
List of shareholdings<br />
1 Consolidated affiliated companies Share in<br />
capital in %<br />
Albatros GmbH, Munich/Germany 100.0<br />
Anchor Brake Shoe Company LLC, West Chicago/USA 100.0<br />
BCVS Canadian Holdings LLC, Anjou, Quebec/Canada 100.0<br />
BCVS Mexican Holdings LLC, Cd Acuña, Coah/Mexico 100.0<br />
Bendix Commercial Vehicle Systems LLC, Elyria, Ohio/USA 100.0<br />
Bendix CVS Canada Inc., Anjou, Quebec/Canada 100.0<br />
Bendix CVS de Mexico SA de CV, Cd Acuña, Coah/Mexico 100.0<br />
Bendix Spicer Foundation Brake Canada, Inc., Kingston, Ont./Canada 100.0<br />
Bendix Spicer Foundation Brake LLC, Elyria, Ohio/USA 80.0<br />
Bost Ibérica S.L., Madrid/Spain 100.0<br />
BSFB Holdings, Inc., Elyria, Ohio/USA 100.0<br />
Dr. techn. Josef Zelisko Ges.m.b.H., Mödling/Austria 100.0<br />
EMC Traction S.r.l., Milan/Italy 100.0<br />
Freinrail Systèmes Ferroviaires S.A., Reims/France 100.0
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 145<br />
1 Consolidated affiliated companies<br />
(continued)<br />
Share in<br />
capital in %<br />
Hasse & Wrede CVS Dalian, China Ltd., Dalian/China 70.0<br />
Hasse & Wrede GmbH, Berlin/Germany 100.0<br />
Heine Resistors GmbH, Dresden/Germany 51.0<br />
Heine Resistors (Suzhou) Co. Ltd., Suzhou/China 100.0<br />
IFE ČR a.s., Brno/Czech Republic 100.0<br />
IFE North America LLC, Westminster, Md./USA 100.0<br />
IFE-Tebel Australia Pty. Ltd., Granville/Australia 100.0<br />
IFE-Tebel Technologies B.V., Leeuwarden/The Netherlands 100.0<br />
IFE-VICTALL Railway Vehicle Door Systems (Qingdao) Co. Ltd., Qingdao/China 59.0<br />
IGE-CZ s.r.o., Brno/Czech Republic 100.0<br />
Indústria Freios <strong>Knorr</strong> Ltda., São Paulo/Brazil 100.0<br />
KB Gamma Beteiligungs GmbH, Munich/Germany 100.0<br />
KB Lambda Beteiligungs GmbH, Munich/Germany 100.0<br />
KB Media GmbH Marketing und Werbung, Munich/Germany 100.0<br />
KB Sigma Beteiligungs GmbH, Munich/Germany 100.0<br />
KB Omikron Beteiligungs GmbH, Munich/Germany 100.0<br />
<strong>Knorr</strong> Amabhiliki (Pty.) Ltd., Kempton Park/South Africa 74.0<br />
<strong>Knorr</strong> Brake Corporation, Westminster, Md./USA 100.0<br />
<strong>Knorr</strong> Brake Holding Corporation, Watertown, NY/USA 89.3<br />
<strong>Knorr</strong> Brake Ltd., Kingston, Ont./Canada 100.0<br />
<strong>Knorr</strong> Brake Truck Systems Company, Watertown, NY/USA 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> / Nankou Air Supply Unit (Beijing) Co., Ltd., Nankou/China 55.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Asia Pacific (Holding) Ltd., Hong Kong/China 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Australia Pty. Ltd., Granville/Australia 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Benelux B.V.B.A., Heist-op-den-Berg/Belgium 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Beteiligungsgesellschaft mbH, Munich/Germany 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Brake Equipment (Shanghai) Co., Ltd., Shanghai/China 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Braking Systems for Commercial Vehicles (Dalian) Co., Ltd., Dalian/China 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> CARS LD Vehicle Brake Disc Manufacturing (Beijing) Co., Ltd., Daxing/China 50.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Commercial Vehicle Systems Japan Ltd., Tokyo/Japan 80.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Fékrendszerek Kft., Kecskemét/Hungary 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Ges.m.b.H., Mödling/Austria 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> India Pvt. Ltd., Faridabad/India 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> KAMA Systems for Commercial Vehicles OOO, Naberezhnye Chelny/Russia 50.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Investment GmbH, Munich/Germany 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> IT-Services GmbH, Munich/Germany 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Nordic Rail Services AB, Lund/Sweden 75.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Polska SfN Sp. z o.o., Warsaw/Poland 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Rail Systems Italia S.r.l., Campi Bisenzio/Italy 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Rail Systems Japan Ltd., Tokyo/Japan 94.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Rail Systems Korea Ltd., Seoul/South Korea 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Rail Systems OOO, Moscow/Russia 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Rail Systems (Machining) Ltd., Melksham, Wiltshire/Great Britain 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Rail Systems (UK) Ltd., Melksham, Wiltshire/Great Britain 100.0
146<br />
1 Consolidated affiliated companies<br />
(continued)<br />
Share in<br />
capital in %<br />
<strong>Knorr</strong>-<strong>Bremse</strong> SA Holding Company (UK) Ltd., Melksham, Wiltshire/Great Britain 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> S.A. (Pty.) Ltd., Kempton Park/South Africa 75.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> S.R.L., Bucharest/Romania 70.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Sistemas para Veículos Comerciais Brasil Ltda., São Paulo/Brazil 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Sistemas para Veículos Ferroviários Ltda., São Paulo/Brazil 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Sistemi per Autoveicoli Commerciali S.p.A., Arcore/Italy 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> System för Tunga Forden AB, Malmö/Sweden 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Systeme für Nutzfahrzeuge GmbH, Munich/Germany 80.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Systeme für Schienenfahrzeuge GmbH, Munich/Germany 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Systeme für Schienenfahrzeuge Ibero Holding GmbH, Munich/Germany 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Systèmes pour Véhicules Utilitaires France S.A., Lisieux/France 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Systems for Commercial Vehicles India Pvt. Ltd., Pune/India 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Systems for Commercial Vehicles OOO, Moscow/Russia 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Systems for Commercial Vehicles Ltd., Bristol/Great Britain 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Systems for Rail Vehicles (Suzhou) Co., Ltd., Suzhou/China 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Systemy dla Kolejowych Środków Lokomocji PL Sp. z o.o., Cracow/Poland 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Systémy pro uzitková vozidla ČR s.r.o., Hejnice/Czech Republic 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Ticari Arac Fren Sistemieri Limited Sirketi, Istanbul/Turkey 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> US Beteiligungs GmbH, Munich/Germany 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> US Investment GmbH, Munich/Germany 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Vasúti Jármü Rendszerek Hungária Kft., Budapest/Hungary 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Verwaltungsgesellschaft mbH, Munich/Germany 100.0<br />
Maquiladora de Acuña SA de CV, Cd Acuña, Coah/Mexico 100.0<br />
Merak Jinxin Air Conditioning Systems (Wuxi) Co., Ltd., Wuxi/China 51.0<br />
Merak <strong>Knorr</strong> Climatizacion S.A., Buenos Aires/Argentina 100.0<br />
Merak North America LLC, Albany/USA 100.0<br />
Merak Railway Technologies (Shanghai) Co., Ltd., Shanghai/China 100.0<br />
Merak Sistemas Integrados de Climatización S.A., Getafe/Spain 100.0<br />
Microelettrica Power Devices (Pty) Ltd., Johannesburg/South Africa 100.0<br />
Microelettrica Power (Pty) Ltd., Johannesburg/South Africa 74.0<br />
Mircoelettrica Scientifica (Pty) Ltd., Johannesburg/South Africa 100.0<br />
Microelettrica Scientifica S.p.A., Rozzano/Italy 100.0<br />
Microelettrica USA LLC, Randolph, New Jersey/USA 100.0<br />
MicroEner S.A.S., Noisy le Grand/France 89.9<br />
M.S. Resistances S.A.S., Saint Chamond/France 51.0<br />
New York Air Brake Corporation, Watertown, NY/USA 100.0<br />
Oerlikon-<strong>Knorr</strong> Eisenbahntechnik <strong>AG</strong>, Niederhasli/Switzerland 100.0<br />
Officine De Zan S.R.L., Rozzano, Milan/Italy 100.0<br />
Sigma Coachair (UK) Ltd., Newhall/Great Britain 100.0<br />
Sigma Coachair Group (China) Co. Ltd., Changzhou/China 100.0<br />
Sigma Coachair Group Pty. Ltd., Wetherill Park, Sydney/Australia 100.0<br />
Sigma Coachair Systems (US) Inc., Chicago/USA 100.0<br />
Sigma Transit Systems Pty. Ltd., Wetherill Park, Sydney/Australia 100.0<br />
Skach Ges.m.b.H., Mödling/Austria 100.0
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 147<br />
1 Consolidated affiliated companies<br />
(continued)<br />
Share in<br />
capital in %<br />
Sociedad Española de Frenos, Calefacción y Señales S.A., Getafe/Spain 100.0<br />
Stahlwerk Volmarstein GmbH, Wetter (Ruhr)/Germany 100.0<br />
STE Schwingungs-Technik GmbH, Klieken/Germany 100.0<br />
SYDAC PTY. LTD., Adelaide/Australia 100.0<br />
Sydac Ltd., Manchester/Great Britain 100.0<br />
Techtrain Associates Limited, Doncaster/Great Britain 100.0<br />
Unicupler GmbH, Niederurnen/Switzerland 100.0<br />
Westinghouse Brakes Australia Pty. Ltd., Concord West/Australia 100.0<br />
Westinghouse Platform Screen Doors (Guangzhou) Ltd., Guangzhou/China 65.0<br />
Westinghouse Platform Screen Doors Ltd., Walsall/Great Britain 100.0<br />
2 Associated companies valued using the equity method Share in<br />
capital in %<br />
Gorilla Brake & Components, Inc., Brantford, Ont./Canada 20.0<br />
Icer Brakes S.A., Pamplona/Spain 25.0<br />
Webasto Kiekert Bustüren GmbH, Karlsfeld/Germany 50.0<br />
3 Affiliated companies not included in consolidation Share in<br />
capital in %<br />
Black River Air Logistics Corp., Watertown, NY/USA 100.0<br />
Di-Pro LLC., Fresno, California/USA 100.0<br />
Freios <strong>Knorr</strong> Argentina S.A., Buenos Aires/Argentina 100.0<br />
KB Investment UK Ltd., Chippenham/Great Britain 100.0<br />
<strong>Knorr</strong>-<strong>Bremse</strong> RUS OOO, Nizhny Novgorod/Russia 100.0<br />
Metco Technical Consulting <strong>AG</strong>, Zug/Switzerland 100.0<br />
Sigma Coachair (UK) Holdings Ltd., London/Great Britain 100.0<br />
Sigma Transit Systems (Taiwan) Co. Ltd./Taiwan 100.0<br />
4 Associated companies valued without using the equity method Share in<br />
capital in %<br />
Megalith Grundstücksverwaltungsgesellschaft mbH & Co. Vermietungs KG, Mainz/Germany<br />
100.0<br />
– Deutsche-Anlagen-Leasing GmbH holds majority voting rights<br />
OLB Oberlandbahn Fahrzeugbereitstellungs GmbH, Munich/Germany 24.8<br />
Sanctor Grundstücks-Vermietungsgesellschaft mbH & Co. Objekt Marzahn KG, Düsseldorf/Germany<br />
99.0<br />
– Deutsche-Anlagen-Leasing GmbH holds majority voting rights<br />
After reporting an annual net loss for the year of TEUR 402, OLB shows a net deficit of TEUR 11,199 which<br />
is not covered by equity capital (as at 2008, based on most recently available figures). Icer Brakes S.A. is<br />
headquartered in Pamplona/Spain. The company was included in consolidation for the first time as at<br />
September 30, <strong>2010</strong>. The purchase price amounted to TEUR 4,500. The TEUR 2,869 goodwill included in<br />
the purchase price will be amortized over a 20-year period. As at the balance sheet date, there are no<br />
other differences for companies valued using the equity method.
148<br />
6<br />
Inventories<br />
<strong>2010</strong> TEUR 2009 TEUR<br />
Materials and supplies 184,402 132,980<br />
Work in process 60,164 43,021<br />
Finished products, merchandise 195,916 161,290<br />
less advances received on orders (221,145) (204,306)<br />
Total 219,337 132,985<br />
7<br />
Receivables and other asset<br />
<strong>2010</strong> TEUR <strong>2010</strong> TEUR 2009 TEUR<br />
Remaining term<br />
more than 1 year<br />
Accounts receivable, trade 8,425 689,066 493,974<br />
Other assets 7,660 92,133 96,748<br />
in total<br />
in total<br />
Total 16,085 781,199 590,722<br />
8<br />
Cash and cash equivalents<br />
This item includes cash at bank, checks and cash on hand.<br />
9<br />
Prepaid expenses<br />
Group prepaid expenses amounted to TEUR 12,182. In the previous year (TEUR 80,765) this heading<br />
comprised primarily deferred tax assets and liabilities.<br />
Following implementation of the German Accounting Law Modernization Act, the deferred taxes reported<br />
in this item in 2009 now appear under Deferred taxes. In accordance with Article 67 (8) clause 2<br />
subclause 1 of the Act Introducing the German Commercial Code (EGHGB), values for the previous year<br />
have not been adjusted.<br />
10<br />
Deferred taxes<br />
At the balance sheet date deferred tax assets amounted to TEUR 68,713 (2009: TEUR 70,382), while deferred<br />
tax liabilities totaled TEUR 1,636 (2009: TEUR 0). In compliance with the legal requirements, deferred<br />
tax assets and liabilities are stated at the netted amount. Of the deferred tax assets, TEUR 39,169<br />
(2009: TEUR 46,137) relate to deferred taxes on individual balance sheets of group companies and TEUR<br />
29,544 (2009: TEUR 24,245) relate to consolidation entries affecting net income. Deferred tax<br />
assets on individual balance sheets result primarily from temporary differences in accrued liabilities,<br />
receivables and other assets. Deferred tax assets relating to consolidation adjustments are primarily the<br />
result of eliminating unrealized intercompany profits. Deferred tax liabilities relate solely to deferred<br />
taxes on individual balance sheets of group companies. At individual company level and at Group level,<br />
deferred taxes are stated at the projected tax rate in the respective countries at the time of realization.<br />
Tax rates range from 0% to 40%, while the rate on consolidation activities is ca. 35%.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 149<br />
11<br />
Capital stock<br />
The capital stock of <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong> is divided up into 2,600,000 bearer shares, each with a nominal<br />
value of EUR 26. Stella Vermögensverwaltungs-GmbH and KB Holding GmbH, both based in Grünwald/<br />
Germany, have informed <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong> that directly or indirectly, they hold a majority interest in<br />
<strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong>.<br />
12<br />
Capital reserves<br />
Capital reserves are unchanged from the previous year. Like the legal reserve, they are subject to the<br />
restrictions of § 150 of the German Corporation Law (AktG).<br />
13<br />
Retained earnings<br />
In addition to the legal reserve, retained earnings include the accumulated earnings of the companies<br />
included in consolidation, where these have not been distributed. Furthermore this heading reflects all<br />
Group items that exert an influence on shareholders’ equity. The legal reserve for <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong> is<br />
unchanged at TEUR 6,607. Combined with TEUR 153 in capital reserves, the legal reserve stands at its<br />
statutory maximum.<br />
14<br />
Pension plan accruals<br />
Pension plan accruals are valued according to the provisions of the German Accounting Law Modernization<br />
Act.<br />
<strong>2010</strong> TEUR 2009 TEUR<br />
Pension plan accruals 192,257 160,390<br />
As a result of adjustments made to comply with the German Accounting Law Modernization Act, a<br />
special allocation was made in the amount of TEUR 31,840. The voting option in Article 67 (1) clause 1<br />
of the Act Introducing the German Commercial Code (EGHGB) was not used. The special allocation was<br />
made in full in <strong>2010</strong>. The shortfall in cover for pension funds in the USA and Great Britain amounted to<br />
TEUR 23,867 as at year-end <strong>2010</strong>.<br />
15<br />
Other accrued liabilities<br />
<strong>2010</strong> TEUR 2009 TEUR<br />
Provisions for taxes 59,109 31,829<br />
Miscellaneous accruals 469,412 368,599<br />
Total 528,521 400,428<br />
The taxation provisions include projected income tax payments for the year under review or, where the<br />
fiscal year diverges from the financial year, an income tax charge allocated on an accrual basis. Tax charges<br />
are also shown for preceding assessment periods. Miscellaneous accruals relate primarily to warranty<br />
and product liability commitments, personnel costs, restructuring activities, anticipated losses on contracts<br />
and other risks in connection with current operations, as well as invoices outstanding. Use of the<br />
retention option specified in Article 67 of the Act Introducing the German Commercial Code (EGHGB)<br />
means that surplus cover for accrued liabilities amounts to TEUR 4,122.
150<br />
16<br />
Liabilities<br />
<strong>2010</strong> TEUR <strong>2010</strong> TEUR 2009 TEUR<br />
Remaining term<br />
less than 1 year<br />
Accounts payable, banks 3,053 110,615 167,346<br />
Accounts payable, trade 492,022 492,782 337,768<br />
Other liabilities:<br />
Liabilities from accepted bills 114 114 488<br />
Miscellaneous liabilities 96,626 111,353 62,191<br />
(thereof for taxes) (37,281) (37,281) (22,743)<br />
(thereof for social security) (11,530) (11,530) (10,144)<br />
in total<br />
in total<br />
96,740 111,467 62,679<br />
Total liabilities 591,815 714,864 567,793<br />
(thereof with a remaining term of more than<br />
(101,758) (102,662)<br />
5 years)<br />
17<br />
Contingencies and miscellaneous financial commitments<br />
<strong>2010</strong> TEUR 2009 TEUR<br />
Warranties 8,601 7,288<br />
Guarantees 8,474 9,937<br />
Land charge 11,000 11,000<br />
Leasing commitments 195,697 183,292<br />
The <strong>Knorr</strong>-<strong>Bremse</strong> Group has entered into leasing contracts primarily for office buildings and production<br />
facilities in which the leased asset is assignable to the lessor. These off-balance-sheet leasing transactions<br />
represent an alternative form of finance to borrowing. Commitments associated with these<br />
leasing agreements are carried under miscellaneous financial commitments and amount to TEUR<br />
195,697; maturities range from one year (TEUR 30,587), to between one and five years (TEUR 82,096), to<br />
over five years (TEUR 83,014). The agreements do not include any unusual termination or renewal options.<br />
A long-term purchase agreement exists between Group company Bendix Spicer Foundation LLC, Elyria,<br />
Ohio/USA and Gorilla Brake & Components, Inc., Brantford, Ontario/Canada. Under the terms of this<br />
agreement, Bendix Spicer Foundation LLC undertakes to purchase from Gorilla Brake & Components, Inc.<br />
85% of the spare part deliveries made within the latter company’s regional sphere of influence. Thanks<br />
to the risk management system in place, the risk of a claim arising on contingent liabilities is rated as<br />
minimal.<br />
18<br />
Other operating income<br />
Other operating income consists primarily of gains on currency exchange, income from the reversal of<br />
reserves, income from disposals of fixed assets and rental income. The heading also carries gains on<br />
currency differences amounting to TEUR 70,799 (2009: TEUR 37,946), as well as income relating to other<br />
accounting periods in the amount of TEUR 16,016, primarily from the reversal of reserves.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 151<br />
19<br />
Cost of materials<br />
<strong>2010</strong> TEUR 2009 TEUR<br />
Expenditure on materials, supplies and merchandise 1,836,789 1,335,788<br />
Expenditure on services purchased 75,956 54,455<br />
Total 1,912,745 1,390,243<br />
20<br />
Personnel expenses/staff<br />
<strong>2010</strong> TEUR 2009 TEUR<br />
Wages and salaries 580,733 518,762<br />
Statutory social welfare contributions and expenses relating to<br />
140,131 121,769<br />
pensions and employee benefits<br />
Personnel costs 720,864 640,531<br />
(thereof for retirement benefits) (33,225) (24,462)<br />
Average number of employees during the fiscal year Number Number<br />
Wage earners 7,211 6,700<br />
Salary earners 7,851 7,400<br />
Apprentices 201 172<br />
Total 15,263 14,272<br />
21<br />
Depreciation<br />
Depreciation and amortization on purchased intangibles and on<br />
fixed assets<br />
<strong>2010</strong> TEUR 2009 TEUR<br />
146,863 117,670<br />
In addition, rental and leasing expenses totaling TEUR 47,499 (2009: TEUR 44,590) were incurred during<br />
the reporting period.<br />
22<br />
Other operating expenses<br />
Other operating expenses consist primarily of maintenance costs, direct sales costs, legal and consulting<br />
fees, commissions, travel expenses and miscellaneous administrative expenses. Other taxes for the<br />
Group amount to TEUR 12,078 (2009: TEUR 10,523). Expenses resulting from foreign exchange fluctuations<br />
during the fiscal year amounted to TEUR 72,354 (2009: TEUR 46,076). The fee paid to the independent<br />
auditors, KPMG <strong>AG</strong> Wirtschaftsprüfungsgesellschaft, amounted to TEUR 660 for fiscal year <strong>2010</strong>. Of<br />
this TEUR 570 was paid out for audit services, TEUR 10 for tax advice and TEUR 80 for other services.
152<br />
23<br />
Financial results<br />
<strong>2010</strong> TEUR 2009 TEUR<br />
Miscellaneous interest and similar income 6,163 5,129<br />
Depreciation on investments (2,078) (3)<br />
Interest and similar expenses (14,818) (8,742)<br />
(thereof for discounts on accruals) (8,044)<br />
Income from associated, affiliated and other companies (239) 80<br />
Total (10,972) (3,536)<br />
24<br />
Extraordinary result<br />
Extraordinary expenses reflect the one-off effect of adjustments in compliance with the German<br />
Accounting Law Modernization Act.<br />
25<br />
Net income<br />
<strong>2010</strong> TEUR 2009 TEUR<br />
Net income 239,381 98,729<br />
Minority interests in earnings of consolidated subsidiaries (30,690) (6,398)<br />
Retained earnings brought forward from the previous year (after<br />
180,670 107,762<br />
distribution of dividends)<br />
Withdrawals from retained earnings (126,805) 32,577<br />
Unappropriated consolidated net income (<strong>Knorr</strong>-<strong>Bremse</strong><br />
<strong>AG</strong> unappropriated retained earnings)<br />
262,556 232,670<br />
26<br />
Financial derivatives<br />
Financial instruments are not held for trading purposes.<br />
Underlying transactions and their derivatives are bundled together as single items for valuation purposes<br />
(“macro hedges”). These bundled derivatives are netted out without affecting net income wherever<br />
the respective impact on income of the underlying transaction (hedged item) and the related<br />
hedge offset each other (net hedge presentation method).<br />
Forward exchange and option transactions are performed purely and exclusively in order to hedge current<br />
and future foreign currency payables and receivables from the sale and purchase of goods and<br />
services and the elimination of exchange rate risk for selected assets. The aim of hedging operations at<br />
<strong>Knorr</strong>-<strong>Bremse</strong> is to reduce the risks posed by foreign exchange fluctuations to the ordinary course of<br />
business. Currency hedging is based on the volume of open commitments arising or expected to arise<br />
from core business activities. Maturities are based on the lifespans of the underlying business transactions,<br />
whereby highly probable transactions are hedged over a rolling three-year planning period. Because<br />
the conditions and parameters of the hedges match those of the hedged items, any payment
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 153<br />
flows or changes in value are offset in full. The <strong>Knorr</strong>-<strong>Bremse</strong> Group uses forward exchange contracts,<br />
currency options and cross currency swaps as hedging instruments.<br />
Not included in the hedging report are forward exchange derivatives with a nominal value of<br />
MEUR 28.0 and a negative net present value totaling MEUR 3.4. Currency futures contracts amounting<br />
to MEUR 876.6 in total (representing hedged risks) are included in macro hedges. Of this amount,<br />
MEUR 295.0 is attributable to the hedging of assets (micro hedges), MEUR 221.8 to the hedging of open<br />
contracts (micro hedges) and MEUR 359.8 to the hedging of high-probability transactions (portfolio<br />
hedges).<br />
Commodity futures contracts are used exclusively to hedge price risks arising on fluctuations in the<br />
purchase prices of raw materials used in <strong>Knorr</strong>-<strong>Bremse</strong> Group products (portfolio hedges). The volume<br />
of underlying transactions (hedged items) is calculated on the basis of high-probability requirements<br />
for raw materials over a rolling two-year planning period. The derivatives are based on reference indices<br />
traded on commodity futures exchanges. The effectiveness of the hedging relationship is retrospectively<br />
analyzed using statistical correlation techniques, showing a correlation in excess of 80%. Concluded<br />
contracts totaling MEUR 13.9 are carried in full in macro hedges.<br />
The nominal and market values of financial instruments as at December 31, <strong>2010</strong> break down as follows:<br />
Total<br />
Dec. 31, <strong>2010</strong><br />
Total<br />
Dec. 31, <strong>2010</strong><br />
Total<br />
Dec. 31, 2009<br />
Total<br />
Dec. 31, 2009<br />
in EUR millions Nominal value Market value Nominal value Market value<br />
Foreign exchange contracts<br />
Forward exchange transactions 652 (8) 668 (7)<br />
Currency options 113 1 112 2<br />
Interest rate contracts<br />
Cross currency swaps 140 (26) 140 (12)<br />
Commodity-related contracts<br />
Swaps 14 1 10 1<br />
Negative market values correspond to the risks associated with financial derivatives; of these, MEUR 3.4<br />
are recorded under accrued liabilities. Positive market values are offset by risks associated with the underlying<br />
transactions (hedged items) in the respective macro hedges.<br />
While cross currency swaps generally come under the heading of interest rate instruments, in terms of<br />
content they are used exclusively to hedge foreign currency risks, because the interest rates in the underlying<br />
currencies are exchanged at fixed rates.<br />
The market value of financial derivatives is best defined as the price one party is prepared to pay in order<br />
to assume the rights and/or obligations of another party. Market values are calculated on the basis<br />
of market information available at the balance sheet date and by applying standard market valuation<br />
methods as follows:
154<br />
• Currency hedging contracts are valued on the basis of reference rates, taking account of<br />
forward premiums and discounts.<br />
• Cross currency swaps are valued analogously to pure interest rate contracts or currency<br />
hedging contracts, on the basis of discounted, projected cash flows using market interest<br />
rates and reference rates for the remaining life spans of the instruments.<br />
• Commodity contracts are used to hedge risks associated with steel and aluminum price<br />
fluctuations. The contracts are valued at market price.<br />
• Options are valued using recognized models for calculating option prices (e. g. Black-Scholes).<br />
Paid option premiums are carried under “Other assets”. As at the balance sheet date, the book value of<br />
call option premiums paid out amounted to MEUR 2.0.<br />
27<br />
Research and development expenditure<br />
In fiscal year <strong>2010</strong>, Group expenditure on research and development amounted to TEUR 175,284 (2009:<br />
TEUR 152,610).<br />
28<br />
Miscellaneous<br />
The Group financial statements are published in the official electronic Federal Gazette and in the Commercial<br />
Register at the local first-instance court in Munich, Germany. Under the terms of § 264 (3) of the<br />
German Commercial Code (HGB), the subsidiary companies <strong>Knorr</strong>-<strong>Bremse</strong> Systeme für Schienenfahrzeuge<br />
GmbH (Munich/Germany) and Hasse & Wrede GmbH (Berlin/Germany) are exempt from the<br />
obligation to publish their figures pursuant to § 325 of the German Commercial Code.<br />
29<br />
Total remuneration of the Supervisory Board and Executive Board<br />
The total remuneration of members of the Supervisory Board amounted to TEUR 257 and the total remuneration<br />
of the Executive Board to TEUR 4,651. Pension commitments to former members of the<br />
Executive Board and their surviving dependents are covered by an accrual of TEUR 24,228; payments in<br />
the fiscal year amounted to TEUR 2,926.<br />
Munich, March 2, 2011<br />
<strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong><br />
Executive Board<br />
Dr. Raimund Klinkner<br />
Chairman<br />
Klaus Deller<br />
Dr. Dieter Wilhelm<br />
Dr. Lorenz Zwingmann
CONSOLIDATED CASH FLOW STATEMENT<br />
155<br />
Consolidated Cash flow Statement in Compliance with GAS 2<br />
(German Accounting Standard)<br />
Cash funds are comprised of the Group’s cash and cash equivalents, and marketable securities.<br />
<strong>2010</strong> TEUR 2009 TEUR<br />
Result for the period (including minority interests in consolidated<br />
239,381 98,729<br />
results)<br />
Depreciation and amortization on intangibles and fixed assets 148,941 117,673<br />
Increase in accruals 134,927 53,634<br />
Profit on disposals of intangibles, fixed assets and investments 1,908 4,057<br />
Decrease (2009: increase) in inventories, receivables and other<br />
(208,489) 112,850<br />
assets not related to investing or financing activities<br />
Increase (2009: decrease) in payables and other liabilities not<br />
139,716 (40,544)<br />
related to investing or financing activities<br />
Cash flows from operating activities 456,384 346,399<br />
Disbursements for investments in intangible assets (8,344) (6,467)<br />
Proceeds from disposals of intangible assets 1,294 1,197<br />
Disbursements for investments in fixed assets (105,025) (94,148)<br />
Proceeds from disposals of fixed assets 2,313 9,188<br />
Disbursements for investments in financial assets (27,347) (16,344)<br />
Disbursements for the acquisition of consolidated companies and<br />
other business units<br />
(42,672) (11,595)<br />
Cash flows from investing activities (179,781) (118,169)<br />
Proceeds from additions to shareholders’ equity 956 17,608<br />
Disbursements to company owners and minority shareholders (64,737) (124,104)<br />
Proceeds from borrowings 43,557 80,903<br />
Disbursements for the redemption of borrowings (118,491) (107,968)<br />
Cash flows from financing activities (138,715) (133,561)<br />
Change in cash funds resulting from exchange rate movements<br />
and changes in group structure<br />
20,335 1,347<br />
Changes in cash funds resulting from cash-relevant<br />
158,223 96,016<br />
transactions<br />
Cash funds at the beginning of the period 154,656 58,640<br />
Cash funds at the end of the period 312,879 154,656
156 SEGMENT REPORT<br />
Segment <strong>Report</strong> in Compliance with GAS 3<br />
(German Accounting Standard)<br />
In order to comply with GAS 3, <strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong> has compiled the following report on three segments<br />
that are subject to reporting requirements. The breakdown by segment is based on the Group’s activities<br />
in the three major geographical regions that provide the geographical framework for the Group’s<br />
internal organizational and reporting structures. The operating segments cover three regions: Europe,<br />
the Americas and Asia/Australia, each of which is characterized by different market and customer demands.<br />
The <strong>Knorr</strong>-<strong>Bremse</strong> Group’s main product lines – braking systems for rail and commercial vehicles<br />
– are represented in all three regions.<br />
Fiscal Year <strong>2010</strong> Europe America Asia/<br />
Australia<br />
<strong>Knorr</strong>-<strong>Bremse</strong><br />
Group<br />
in EUR thousands (TEUR)<br />
Sales by region 2,288,048 891,346 1,041,295 4,220,689<br />
thereof net sales with third parties 1,886,009 826,977 999,177 3,712,163<br />
thereof net sales with other segments 402,039 64,369 42,118 508,526<br />
Net income 109,783 47,320 82,278 239,381<br />
Income tax charge 59,754 25,758 44,783 130,295<br />
Investments (excluding financial investments) 74,751 21,337 17,281 113,369<br />
Depreciation (excluding financial investments) 72,350 33,134 41,379 146,863<br />
Result for associated companies 0 (252) 0 (252)<br />
Result for affiliated and other companies 13 0 0 13<br />
Assets 998,130 523,777 672,250 2,194,157<br />
Fiscal Year 2009 Europe America Asia/<br />
Australia<br />
<strong>Knorr</strong>-<strong>Bremse</strong><br />
Group<br />
in EUR thousands (TEUR)<br />
Sales by region 1,841,381 661,232 529,313 3,031,926<br />
thereof net sales with third parties 1,626,013 620,437 514,497 2,760,947<br />
thereof net sales with other segments 215,368 40,795 14,816 270,979<br />
Net income 65,180 7,493 26,056 98,729<br />
Income tax charge 32,014 3,681 12,797 48,492<br />
Investments (excluding financial investments) 70,796 16,732 13,087 100,615<br />
Depreciation (excluding financial investments) 77,442 32,066 8,162 117,670<br />
Result for associated companies 0 74 0 74<br />
Result for affiliated and other companies 6 0 0 6<br />
Assets 871,718 455,984 336,718 1,664,420
SEGMENT REPORT<br />
157<br />
Fiscal Year <strong>2010</strong> Net sales Investments<br />
(excl.<br />
financial<br />
investments)<br />
in EUR thousands (TEUR)<br />
Depreciation<br />
(excl.<br />
financial investments)<br />
Assets<br />
Rail vehicle systems 2,024,389 61,236 82,941 1,435,022<br />
Commercial vehicle systems 1,700,682 50,361 61,043 967,908<br />
Miscellaneous/consolidations (12,908) 1,772 2,879 (208,773)<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Group 3,712,163 113,369 146,863 2,194,157<br />
Fiscal Year 2009 Net sales Investments<br />
(excl.<br />
financial<br />
investments)<br />
in EUR thousands (TEUR)<br />
Depreciation<br />
(excl.<br />
financial<br />
investments)<br />
Assets<br />
Rail vehicle systems 1,552,550 66,649 51,253 1,061,758<br />
Commercial vehicle systems 1,221,460 33,362 63,403 809,847<br />
Miscellaneous/consolidations (13,063) 604 3,014 (207,185)<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Group 2,760,947 100,615 117,670 1,664,420<br />
The analysis does not show borrowings or interest payable by region, because these items are controlled<br />
centrally across the Group by the parent company, thus are not dependent on regional decisions<br />
associated with day-to-day business operations.<br />
The usual prices apply as agreed between counterparties.
158 STATEMENT OF CHANGES IN GROUP EQUITY<br />
Statement of Changes in Group Equity in Compliance with GAS 7<br />
(German Accounting Standard)<br />
Changes in group equity <strong>2010</strong> Capital stock Capital<br />
reserves<br />
Retained<br />
earnings<br />
Net income<br />
Minority<br />
interests<br />
<strong>Knorr</strong>-<strong>Bremse</strong><br />
Group<br />
in EUR thousands (TEUR)<br />
As at Dec. 31, 2009 67,600 153 153,717 232,670 78,639 532,779<br />
Dividend payments (52,000) (9,882) (61,882)<br />
Net income <strong>2010</strong> 208,691 30,690 239,381<br />
Transfers to retained earnings 126,805 (126,805) 0<br />
Currency fluctuations 37,319 4,565 41,884<br />
Other fluctuations (4,833) 6,532 1,699<br />
As at Dec. 31, <strong>2010</strong> 67,600 153 313,008 262,556 110,544 753,861<br />
Changes in group equity 2009 Capital stock Capital<br />
reserves<br />
Retained<br />
earnings<br />
Net income<br />
Minority<br />
interests<br />
<strong>Knorr</strong>-<strong>Bremse</strong><br />
Group<br />
in EUR thousands (TEUR)<br />
As at Dec. 31, 2008 67,600 153 279,071 211,762 80,753 639,339<br />
Dividend payments (104,000) (20,104) (124,104)<br />
Net income 2009 92,331 6,398 98,729<br />
Withdrawals from retained earnings (32,577) 32,577 0<br />
Currency fluctuations 17,167 (176) 16,991<br />
Offsetting of goodwill (138,544) (138,544)<br />
Other fluctuations 28,600 11,768 40,368<br />
As at Dec. 31, 2009 67,600 153 153,717 232,670 78,639 532,779<br />
Group equity includes capital differences arising on foreign currency translation in the amount of<br />
TEUR -1,534, of which TEUR -1,047 relates to minority interests.<br />
Other changes in minority interests result primarily from the purchase of former minority interests in<br />
<strong>Knorr</strong>-<strong>Bremse</strong> Systems for Commercial Vehicles India Pvt. Ltd., Pune/India. Following the purchase, the<br />
Group holds a 100% interest as at the balance sheet date.<br />
Minority interests also reflect the first-time inclusion in consolidation of Heine Resistors GmbH, Dresden/Germany<br />
and Heine Resistors (Suzhou) Co. Ltd., Suzhou/China, as well as a capital increase for<br />
<strong>Knorr</strong>-<strong>Bremse</strong> KAMA Systems for Commercial Vehicles OOO, Naberezhnye Chelny/Russia.
INDEPENDENT AUDITOR’S REPORT<br />
159<br />
Independent Auditors’ <strong>Report</strong><br />
We have audited the consolidated financial statements prepared by <strong>Knorr</strong>-<strong>Bremse</strong> Aktiengesellschaft,<br />
Munich, comprising the balance sheet, income statement, notes to the financial statements, cash flow<br />
statement, statement of changes in equity and segment report, together with the group management<br />
report, for the business year from January 1 to December 31, <strong>2010</strong>. The preparation of the consolidated<br />
financial statements and the group management report in accordance with German commercial law is<br />
the responsibility of the parent company’s management. Our responsibility is to express an opinion on<br />
the consolidated financial statements and on the group management report based on our audit.<br />
We conducted our audit of the consolidated financial statements in accordance with § 317 HGB [German<br />
Commercial Code] and German generally accepted standards for the audit of financial statements<br />
promulgated by the Institut der Wirtschaftsprüfer (IDW). Those standards require that we plan and perform<br />
the audit such that misstatements materially affecting the presentation of the net assets, financial<br />
position and results of operations in the consolidated financial statements in accordance with German<br />
principles of proper accounting and in the group management report are detected with reasonable<br />
assurance. Knowledge of the business activities and the economic and legal environment of the Group<br />
and expectations as to possible misstatements are taken into account in the determination of audit<br />
procedures. The effectiveness of the accounting-related internal control system and the evidence supporting<br />
the disclosures in the consolidated financial statements and the group management report are<br />
examined primarily on a test basis within the framework of the audit.<br />
The audit includes assessing the annual financial statements of those entities included in consolidation,<br />
the determination of entities to be included in consolidation, the accounting and consolidation principles<br />
used and significant estimates made by management, as well as evaluating the overall presentation<br />
of the consolidated financial statements and group management report. We believe that our audit<br />
provides a reasonable basis for our opinion.<br />
Our audit has not led to any reservations.<br />
In our opinion, based on the findings of our audit, the consolidated financial statements comply with<br />
the legal requirements and give a true and fair view of the net assets, financial position and results of<br />
operations of the Group in accordance with these requirements. The group management report is<br />
consistent with the consolidated financial statements and as a whole provides a suitable view of the<br />
Group’s position and suitably presents the opportunities and risks of future development.<br />
Munich, March 2, 2011<br />
KPMG <strong>AG</strong><br />
Wirtschaftsprüfungsgesellschaft<br />
signed Rupprecht<br />
Independent auditor<br />
signed Peth<br />
Independent auditor
160 CONSOLIDATED BALANCE SHEET<br />
Consolidated Balance Sheet as at December 31, <strong>2010</strong><br />
Assets Notes Dec. 31, <strong>2010</strong> TEUR Dec. 31, 2009 TEUR<br />
Purchased intangibles (3) 217,277 190,702<br />
Fixed assets (4) 517,001 478,239<br />
Investments (5) 65,569 36,351<br />
Intangibles, fixed assets and investments<br />
(2) 799,847 705,292<br />
Inventories (6) 219,337 132,985<br />
Accounts receivable, trade (7) 689,066 493,974<br />
Other assets (7) 92,133 96,748<br />
Other marketable securities 12 6<br />
Cash and cash equivalents (8) 312,867 154,650<br />
Current assets 1,313,415 878,363<br />
Prepaid expenses (9) 12,182 80,765<br />
Deferred tax assets (10) 68,713 0<br />
Balance sheet total 2,194,157 1,664,420<br />
Equity and Liabilities Notes Dec. 31, <strong>2010</strong> TEUR Dec. 31, 2009 TEUR<br />
Capital stock (11) 67,600 67,600<br />
Capital reserves (12) 153 153<br />
Retained earnings (13) 313,008 153,717<br />
Unappropriated consolidated net income (25) 262,556 232,670<br />
Minority interests 110,544 78,639<br />
Group equity 753,861 532,779<br />
Pension plan accruals (14) 192,257 160,390<br />
Other accrued liabilities (15) 528,521 400,428<br />
Accruals 720,778 560,818<br />
Accounts payable, banks 110,615 167,346<br />
Accounts payable, trade 492,782 337,768<br />
Other liabilities 111,467 62,679<br />
Liabilities (16) 714,864 567,793<br />
Deferred income 3,018 3,030<br />
Deferred tax liabilities (10) 1,636 0<br />
Balance sheet total 2,194,157 1,664,420
CONSOLIDATED STATEMENT OF INCOME<br />
161<br />
Consolidated Statement of Income for the Fiscal Year from January 1<br />
to December 31, <strong>2010</strong><br />
Notes <strong>2010</strong> TEUR 2009 TEUR<br />
Net sales 3,712,163 2,760,947<br />
Changes in inventories 2,832 (25,831)<br />
Own work capitalized 272 162<br />
Total operating performance 3,715,267 2,735,278<br />
Other operating income (18) 154,943 94,951<br />
Cost of materials (19) (1,912,745) (1,390,243)<br />
Personnel expenses (20) (720,864) (640,531)<br />
Depreciation and amortization on purchased<br />
intangibles and fixed assets<br />
(21) (146,863) (117,670)<br />
Other operating expenses (22) (677,250) (531,028)<br />
Financial results (23) (10,972) (3,536)<br />
Income before taxes 401,516 147,221<br />
Extraordinary expenses (24) (31,840) 0<br />
Taxes on income (130,295) (48,492)<br />
Net income (25) 239,381 98,729<br />
Minority interests in results of consolidated<br />
subsidiaries<br />
30,690 6,398
Contact<br />
<strong>Knorr</strong>-<strong>Bremse</strong> <strong>AG</strong><br />
Moosacher Strasse 80<br />
80809 Munich<br />
Germany<br />
Corporate Communications<br />
Christoph Günter<br />
Tel: +49 89 3547-1402<br />
Fax: +49 89 3547-1403<br />
E-Mail: public.relations@knorr-bremse.com<br />
Additional information about <strong>Knorr</strong>-<strong>Bremse</strong>:<br />
www.knorr-bremse.com