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7.4.2005
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TECHNOLOGY CONTEST – “THE BEST PRODUCTION PLANT”
THE NE
BOSSES SPORER (left),
MURMANN
Revenues grown
a full fivefold
within ten years
84 WIRTSCHAFTSWOCHE I 7.4.2005 I NR.15
CHERRY*
Operational strategy
Product development
Supply chain management
Organisation and personnel
Service and partner management
Continuous improvement
*Auerbach plant
Deficient
Adequate
Satisfactory
Good
Excellent

XT WAVE
Germany’s top plants use intelligent production
concepts to face down the low-wage competition
and build on their market standing.
1.
They do still exist:
German production
plants that
are growing
strongly, are
highly profitable and create
jobs. Cherry GmbH in
Auerbach, the German site
of US corporate founder
Walter Cherry north of
Nuremberg, is one example.
Originally famous for
its computer keyboards,
the company today earns
around half of its revenues
with car electronics. They
control seat adjustment
systems, brake cylinders
and door locks, check that
seat belts are fastened or
what position the gear
lever for the automatic
gearbox is in. Revenues
have multiplied more than
fivefold to over 100 million
within ten years and
the “Oberpfälzer” have
become one of the industry’s
key suppliers. “At
least one of our products
is installed in four of every
five new cars on
Europe’s roads,”
reports managing
director Günter
Murmann proudly.
The people in Auerbach
worked hard and purposefully
to achieve their success.
The key factors: despite being a
supplier working from the second
row and delivering parts directly to the car
manufacturers only in exceptional cases,
Cherry has exploited the trend towards
more and more electronics in cars to become
a partner in great demand thanks to its
particular know-how. For its customers,
among them major system suppliers such
as Valeo, Brose and Kiekert, the company
1.PLATZ
SPECIAL
PLANT OF THE FUTURE
84 COMPETITION: “BEST
PRODUCTION PLANT” The
winners’ strategy for success
88 Conference: Production
elite to meet in Nuremberg
91 France: The winners from
across the border
94 PRODUCTION The secret
of Toyota’s success
98 Interview Mentor Miura on
the perfect production plant
develops tailor-made solutions,
making itself indispensable
to them with a
constant stream of new
products. “We’re more
than just a development
partner” emphasizes plant
manager Norbert Sporer,
“We drive the process”.
With their innovations, the
people in Auerbach concentrate
on partners and
business segments with
high potential growth. For
instance, they’re presently
working on getting into
business with leading
Japanese carmakers. They
offer ever more complex
modules and components
to benefit from a higher
value creation share. They
deliver quality at competitive
cost. Two newly established
plants in the Czech
Republic and the Ukraine
contribute by manufacturing
simpler products with
high manual work content.
The shift was not at the
expense of Auerbach
however. The workforce
there has since grown by
150 to 1300 employees. “Germany as a
manufacturing location is by no means at
risk”, assures Murmann.
The jurors of Insead business school in
Fontainebleau, near Paris, and the Scientific
University for Enterprise Leadership
(WHU) in Vallendar, close to Koblenz,
were impressed by so much determination,
drive and imagination. They selected
Cherry as the overall winner in Germany
(see inset) in the “Best Production Plant”
contest. Europe’s demanding benchmark
for production operations, staged together
with the business magazine
“Wirtschaftswoche” and the French trade
NR.15I 7.4.2005 I WIRTSCHAFTSWOCHE
FOTO: ROBERT BREMBECK FÜR WIRTSCHAFTSWOCHE
85

TECHNOLOGY CONTEST – “THE BEST PRODUCTION PLANT”
MANAGING DIRECTOR WITTE (left), FOUNDER MAIWALD At the top with specialised electronics and top-class service
journal “L’Usine nouvelle”, was held in
Germany for the ninth time and in France
for the eleventh time.
In all the categories that go into the assessment
and decide the quality of a production
plant - whether strategy, product development
or service (see page 84) - the
people in Auerbach were rated “Excellent”,
or at least “Good”. “They know exactly
where they’re going. They master their
processes standing on their heads.
Particularly amazing is the enthusiasm
with which the management and workforce
unswervingly seek improvements,” praises
Insead juror Ludo Van der Heyden.
WHU juror Arnd Huchzermeier regards
Cherry as a lesson in how companies -
even way down in the value chain - can
avoid becoming the plaything of market
forces. “The company profiles itself with a
clear service spectrum, acts instead of reacting
and pursues a distinct growth path”.
The jurors were similarly impressed by
another three plants: BuS Elektronik in
Riesa, near Dresden, the equipment products
division at Fresenius Medical Care
Deutschland in Schweinfurt and SRI Radio
Systems in Durnach, near Kempten. They,
too, refuse to simply capitulate in the face
of the assault by the low-wage competiti-
on; they fight back with their own
strengths. The reward for their commitment:
The jury voted them jointly into
second place.
ESPECIALLY STEEP WAS THE CAREER
CURVE of BuS Elektronik. Dieter Folkmer,
an engineer from the former state-owned
Robotron Elektronik Riesa, was convinced
he could find an adequate market niche as
a contract manufacturer of circuit boards.
After 30 years as a top developer at
Siemens, Werner Maiwald from Munich
shared that view and, in 1991, came up
with the money to found a limited liability
company. Two years later, the pair took
over the core business of the former
Robotron. Since then, things have only
looked up.
The Saxons have specialised in producing
electronic modules and, increasingly, complete
systems that are needed in relatively
small batches. For customers like Motorola
or Bosch building up their own production
line is not worthwhile. But the volumes are
too small to interest the major, global, contract
manufacturers like Solectron and
Flextronics. BuS is flourishing nicely in this
niche. Revenues have exploded since 1994
from 7 million to over 56 million, while
the workforce has grown from 119 to
almost 450 in the same period. And the
BuS Elektronik
Operational strategy
Product development
Supply chain management
Organisation and personnel
Service and partner management
Continuous improvement
2. PLATZ
Deficient
Adequate
Satisfactory
Good
Excellent
profits are good. “Meanwhile
we’ve become the region’s
second-largest employer,” says a
delighted Maiwald.
At their customers’ request, the people in
Riesa take development and purchasing of
the parts needed off their hands. “No
Chinese competitor can offer this service”,
says BuS managing director, Werner Witte.
“The word spreads and brings us more and
more customers”.
ITS GOOD REPUTATION is the lifeblood
of the Schweinfurt plant of Fresenius
Medical Care (FMC). The Dax-rated company
turned over some 6.2 billion dollars
last year, above all in the USA. The plant
supplies some 1,500 treatment centres
around the world with dialysis equipment,
which helps almost 123,000 kidney sufferers
purge their blood of poisons. FMC
operates many of these centres itself. The
fact that the Schweinfurt plant builds the
best equipment, and at moderate prices,
has made it world market leader. But for
plant manager Christoph Sahm that’s no
reason to let up: “We have the ambition to
build on our position by improving every
day.”
In the jury’s opinion, they’re doing so very
successfully. The people in Germany’s
Franconia region already earned a place on
the winner’s podium as far back as 1999.
“Since then they’ve made enormous progress”
praises WHU expert Huchzermeier.
One of the plant’s strengths is its high
innovation tempo. “No competitor can
keep up with that”, says Huchzermeier.
Close contact with doctors and patients
ensures the usefulness of new products.
For instance, the Schweinfurt team is
always observing how its customers handle
the machines to pick up pointers for easier
operation. Another source is the machine
data they obtain via a network and then
evaluate. The FMC developers are currently
working intensively on equipping the
devices with sufficient intelligence for
them to largely manage and control themselves.
“That significantly reduces treatment
costs, a key selling argument”,
explains Sahm.

TECHNOLOGY CONTEST – “THE BEST PRODUCTION PLANT”
FRESENIUS MEDICAL CARE *
Operational strategy
Product development
Supply chain management
Organisation and personnel
Service and partner management
Continuous improvement
*Schweinfurt plant
To avoid even needing to discuss shifting
production to low-wage countries, the
management does everything it can to
keep the share of direct labour in production
costs below eight percent. “Wages then
play hardly any role in siting decisions
when compared with quality and competence
arguments,” says Sahm. The people
in Schweinfurt achieve that by procuring
most components inexpensively worldwide
and concentrating on assembly. With only
a few extra people they manufacture one
third more machines than only seven years
ago - over 20,000 instead of around 15,000.
A MOVING TALE is the history of SRI
Radio Systems since it was founded in
1962. Part of Siemens’ communications
division, it today builds cellular telephony
base stations, but in the past faced extinction
several times. But somehow the Allgäu
company kept coming back. Today it’s
regarded as one of the best electronics
plants in the world. “We could stay in business
even if Siemens would dispose of us,”
insists managing director Martin
Kampmann confidently. “Then we would
continue as a sought-after contract manu-
88 WIRTSCHAFTSWOCHE I 7.4.2005 I NR.15
Deficient
Adequate
Satisfactory
Good
Excellent
2. PLATZ
THE WINNING TEAM AROUND
PLANT MANAGER SAHM (left)
First-class reputation
facturer. With our knowhow
we could also manufacture
first-class servers
any time we wanted.”
But a separation is not on
the agenda. On the contrary,
two years ago the executive
board of the Munichbased
multinational approved
7 million for a new
building to expand the
plant. “Normally, Siemens
won’t invest any more
money in new plants in
Germany”, and
Kampmann regards this
as a particular honour.
The strength of the
Durach team is bringing
new products into
series production within
only a few weeks. Once the
processes are running and stable
they are transferred to partner plants in
China, Brazil and Italy. Kampmann controls
the production network. It guarantees
delivery of products adapted to the regional
markets within five days (as
Kampmann says “No-one else is that
quick”) and helps to even out order fluctuations.
THE FUNCTION AS LEAD PLANT alone,
however, would not guarantee survival.
“We also have to demonstrate that we can
produce large quantities at costs as low as
the wage havens”, says co-managing director
Matthias Wist. The Durach team achieve
that with the help of extremely lean and
flexible processes. A largely automated
order chain limits inventories to a minimum.
A logistics service provider takes
care of goods in and out, as well as internal
material flows, and helps in pre-assembly.
Paying the service provider against output
is substantially cheaper than paying one’s
own personnel to do it.
Production is tuned for maximum performance
in such a way that, in terms of productivity,
the Allgäu plant beats the
Chinese factories despite the high payroll
cost disadvantage. “A fantastic performance”,
enthuses Insead juror Van der
Heyden. To capture more customers from
their key rivals, Sony Ericsson and Nokia,
the SRI managers plan to save a further
13 million by 2007, which equates to an
annual cost reduction of ten percent or
more. “A hard nut to crack”, says
Kampmann, “but we’ll make it”.
PRODUCTION CONFERENCE
GATHERING OF THE ELITE
TThe top plants have been honoured.
In the autumn every entrepreneur
and plant manager has the chance
to learn from their example at the
conference of the German production elite
organised by Euroforum and Wirtschaftswoche
on 27 and 28 September in
Nuremberg. The winners will be presenting
their concepts for success and receive their
prizes during a gala ceremony. Experts of
the business school, Insead, and the
Scientific University for Enterprise Leadership
will present the production trends of
the future. Leaders of top companies will
speak about Germany’s chances as a production
location. Apart from theory, there
will be practice on the agenda too with an
exclusive tour through Cherry’s winning
plant. Potential visitors can register from
now on at www.bestefabrik-konferenz.de
where there is more information about
the event. Information by phone from
Tanja Möller, Euroforum, at
+49 (0)211-96 86-3646
or by e-mail:
tanja.moeller@euroforum.com.
HIGH PRICE
Cost-benefit effects of shifting production
versus site optimisation*
While companies moving production to low-wage countries reduce their
costs more strongly, they lose out in terms of speed, reliability and flexibility.
Potential cost savings ...from moving ...from optimisation
Logistics costs
Marketing and sales costs
Administration costs
Development costs
Materials costs
Manufacturing overhead
Benefit effects
Direct labour costs
...from moving
Throughput time
...from optimisation
Supply times
Delivery times
Capacity utilisation
Flexibility
Delivery performance
Productivity
Manufacturing quality
Realisable price**
*Change in percent, **In home market
Source: Prof. Horst Wildemann / TCW Transfer Centre

FOTO: ROBERT BREMBECK FÜR WIRTSCHAFTSWOCHE, SÉBASTIEN SINDEU / IPTC
TECHNOLOGY CONTEST – “THE BEST PRODUCTION PLANT”
The professors at Insead and WHU see
things the same way. “That you can no
longer produce in Germany is a myth,” says
Huchzermeier. The crucial factor is the
management. “It must understand how to
make something out of particular skills
like state-of-the-art engineering and a
good level of education”. The simple jobs
will certainly wander away, “but whenever
they succeed in coupling high-quality,
differentiated products with first-class,
customer-specific service and short
delivery times, these plants are practically
unbeatable”, adds Insead production expert
Christoph Loch.
A study by the TCW Transfer Center for
Production Logistics and Technology
Management run by Munich University
professor Horst Wildemann confirms that
assessment. While companies relocating
reduce their costs more strongly than companies
optimising their production in
Germany can achieve, they also have to
accept significant drawbacks. For example,
their products spend more time on their
way to the customer and they lose flexi-
SRI RADIO SYSTEMS
Operational strategy
Product development (not present)
Supply chain management
Organisation and personnel
Service and partner management
Continuous improvement
*Schweinfurt plant
Deficient
Adequate
Satisfactory
Good
Excellent
bility and quality (see chart, page 88).
“Anyone approaching it intelligently can
also create competitive value chains here”,
says Wildemann, summing up. Like the
winning plants:
■ They pursue a clear strategy, constantly
set themselves new goals and check their
attainment.
■ They don’t chase after market developments,
but develop top-class products
faster than the competition.
■ They collaborate very closely with their
suppliers and customers. The objective is
a perfectly synchronised production chain,
in which customer orders set the
machinery in motion and control it.
■ They adjust their production to the
demand smoothly and without added cost
using flexible working time models.
■ They manufacture individual products
instead of mass commodities. Despite the
number of variants, they don’t lose control
of costs. The trick is highly flexible systems
and a versatile workforce.
THE KEY SUCCESS FACTOR, however, is
the employees. “If you let their creativity
go to waste, you’ve already lost”, says Loch.
“In the top plants the managers set the targets,
but leave realisation to the workforce”,
adds Huchzermeier. They control the processes,
check quality and maintain contact
with suppliers and customers.
If you take those principles to heart, you
don’t need to worry about the competition.
That was confirmed by
an empirical evaluation of
the contest by Insead
and WHU, which
shows that the winning
plants grow much
faster than the average
in their industry - by up
to 30 percent.
2.PLATZ
From September there’s
another opportunity to test
one’s own punch. That’s
when the next round of the
contest for “The Best
Production Plant” starts.
From then on, potential candidates
can print out the
questionnaire at www.bestefabrik.de.
Insead professor
Loch hopes for lively participation.
“Most production
plants are now lean. What is
still missing is sufficient
innovation. That needs to be
the next wave of attack”, he
demands.
DIETER DÜRAND
RESCUERS WIST (left), KAMPMANN
Tuned plant for maximum performance
WINNING TEAM
SURROUNDING
ADJIMAN
(CENTRE)
Set clear goals
FRANCE
DEFINING DIMENSION
WWhere his plant’s strengths lie?
Marc Adjiman, director of the
Valeo plant in Nogent-le-Rotrou
in south-eastern Normandy doesn’t need
to think for long: “We’re a young, dynamic
team which is open to change.” The
boss of 850 employees, who on average
are younger than 40, wants to apply the
“latest production methods” and be the
defining dimension in the group around
the French automotive equipper Valeo
( 9.4 billion revenues). The plant produces
heating and air-conditioning systems
for cars. Customers include Renault, PSA,
Rover and Toyota, among others.
AT 37 YEARS OF AGE, ADJIMAN sets his team
clear goals: productivity should increase
every year by up to ten percent. One third
of the improvements are achieved
through engineering projects. Teams
brainstorm about how a system can be
redesigned in such a way that it can be
assembled in five instead of eight minutes.
Every employee is involved in the
thought process. “That employees’ ideas
are accounted for in changes is praiseworthy,”
says Stephen Chick, professor at
the business school Insead in
Fontainebleau. The Insead jury selected
the Valeo plant as France’s best production
plant in 2005. Especially worth
mentioning, according to the experts, was
the collaboration with customers. Beside
fast and reliable delivery, part of the
strategy is to follow the carmakers to the
low-wage countries. When major customer
Renault called on the Normandy
managers to supply the Renault subsidiary
Dacia in Romania, Valeo built an
offshoot in Mioveni. “We work there at
the same performance level as here,” says
Adjiman, who also runs the plant in
Mioveni. The engineer wants to keep as
many jobs as possible in France: “We have
to compensate for our high labour costs
by better performance.”
ANNETTE RUESS
NR.15I 7.4.2005 I WIRTSCHAFTSWOCHE
91