Technologies · Systems · Solutions - Dürr

Letter from the Chairman of the Board of Management
a buyer, the Voith Group. Ultimately, the synergies that were expected in 1999, at the
time this business area was acquired, have not been realizable. It has emerged that,
as a rule, our customers award contracts for production plants and for manufacturing
support services separately. Also, truly large pay-on-production models, for which
we had equipped ourselves with the Services unit, have not become established in
the automotive industry.
Concentration on strengths
With the new Group structure, we are concentrating fully on our strengths in plant
and mechanical engineering. By combining and selling firms, we are reducing the
number of our individual companies by about one-third. That will promote a cohesive
and clear-cut market presence and enable us to provide even more intensive customer
service. The leaner and more efficient organization will lead to annual savings
of about € 10 million beginning next year.
Expansion of high-margin business areas
Targeted expansion of fast-growing, high-margin business areas in the general
industrial sector, outside automotive engineering, is another strategic element of our
reorientation. The Schenck Group plays an important role in this connection as a
leading globaly supplier of sectors such as the mining and basic materials industries
and mechanical engineering. For example, with process technology solutions for the
mining industry, Schenck is benefiting from the rising demand for raw materials and
energy and is utilizing continuing market opportunities in major economic regions
like China and North America. We will also continue to grow profitably in the aircraft
industry, whether in balancing technology or with assembly and painting systems
such as those we recently supplied for the Airbus A380.
Our target for the current year is to achieve about 20% of Group sales in general industrial
business. Nevertheless, the automotive sector is and will remain our principal
market. The Dürr and Schenck brands have been standing for innovativeness, proximity
to customers, and reliability there for decades. We will also expand our leading
positions in business with this sector in the future, despite high competitive pressure.
We are strategically well equipped for that thanks to the new Group structure, expansion
of our capacities in Eastern Europe and Asia, and strengthening of our business
with automobile component suppliers. We are systematically supplementing our
range of products with simpler and more cost-cutting solutions to improve our competitive
position for bids and tenders where price is the critical factor. We are furthermore
supporting our customers in such urgent endeavors as improving quality, reducing
production costs, and complying with environmental standards. Consumption
of paint and energy, as well as wage costs, can be reduced considerably, for example,
by retrofitting and modernizing existing plants.
Competitiveness improved by
The earnings enhancement program continues to be an important element in
improving our performance. It has enabled us to save a total of about € 105 million in
the years 2003 and 2004. By the end of 2005, the savings will reach about € 170 million.
The cost reductions are of enormous importance for securing our competitiveness
in a tough price environment.
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