New drive – Curtain up for the technology of the future - DEUTZ Home

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intended to secure short term
earnings as well as structural
measures for long term improvements
in performance. The package’s
cornerstones included a
new pricing policy, increased
productivity and efficiency targets
for manufacturing, R&D and
quality control as well as a lowering
of material and overhead
costs.
Staff levels also required adjusting
to the drop in demand. In
the second half of 2008, DEUTZ
was compelled to implement an
initial course of staff restructuring
that continued into 2009 and
eventually led to a reduction of
more than 700 personnel. The
Board of Management and employee
representative boards
also agreed on short time working,
first for production and then
for all company departments
excluding R&D. These measures
were also to continue through to
the spring of 2010.
For the first half of 2009, DEUTZ
had to report drastic downturns
on incoming orders, sales and
turnover. With the background
of an ongoing global recession,
overall sales and turnover had
halved compared to 2008. The
collapse of sales in the US
meant up to 60 % losses in the
under 4 litre engine segment.
These heavy downturns pushed
DEUTZ ever deeper into a trough
whose way out was unknown.
Despite all the uncertainties in
making any prognoses, DEUTZ
focused on maintaining and expanding
its technological lead
and continued to heavily invest
in research and development in
order to create a solid basis for
future growth.
Staying power and
technological expertise
While more than 85 % of staff in
Germany went on to short-time
working, in the development
departments work continued at
full speed on the new emission
standards EU Stage IIIB/ US
EPA Tier 4 interim and EU Stage
IV /US EPA Tier 4, which are to
come into force from 2011 to
2015 in western Europe and
North America. At the Paris In-
termat trade fair in the spring
of 2009, DEUTZ was able to
present at one of the world’s
most prestigious construction
machinery trade fairs, its entire
range of four litre products
that comply with the new emission
standards. The engines
received an excellent response
and acceptance from the DEUTZ
customers.
A further step included organisational
restructuring of
the company. After the Board
of Management was reduced
from four to three members in
March 2009, there was then a
significant slimming down by 35
percent of staff below management
board level. Operational
functions at the Cologne and
Ulm locations were amalgamated
to achieve greater structural
efficiency with faster decisionmaking
procedures and a flatter
hierarchy.
In the midst of the crisis DEUTZ
then took another step towards
the future. Together with Robert
Bosch GmbH and J. Eberspächer
GmbH & Co. KG, DEUTZ signed
a “Memorandum of Understanding”
on collaborating on the
development, manufacture and
marketing of diesel exhaust gas
aftertreatment systems for the
non-road sector.
At the time of signing in the autumn
of 2009, there appeared
to be a slight stabilisation taking
place for the first time for
over a year. Although this stabilisation
was still at a low level,
the trend, having already been
evident in the second quarter,
was confirmed by there being
demand for DEUTZ engines and
services in the third quarter of
2009 despite the ongoing difficult
economic situation. In
September 2009, DEUTZ was
able to achieve a satisfactory
DEUTZ at the Intermat 2009 - sets future course during the crisis
performance for the first time
in months, mainly through
the progress made from the
“MOVE” package of measures.
DEUTZ reaches a trend
reversal
Despite all its cost-saving measures,
DEUTZ kept investing
heavily in research and development.
This enabled the new TCD
2.9 L4 and TCD 3.6 L4 engines
to be virtually presented to the
public at the Agritechnica 2009.
They are examples of DEUTZ’s
technological lead that it wants
to expand on into the future.
The future began in the spring
of 2010. In March of this year
Expertise
DEUTZ could report that it had
survived the crisis practically
debt-free. This was made possible
not only from the €136m
savings from “MOVE” but also
a systematic management of
working capital. The financial
crisis has still hit DEUTZ hard.
Turnover dropped by more than
42 % to around €863m and engine
unit sales of 118,000 were
not even half the level of the previous
year. But the worst seems
to be over. The hard hit engine
segment for construction machinery
has clearly recovered
with orders currently exceeding
expectations. Short-time working
could also be lifted across
the entire company. The outlook
for 2010 is for a significant rise
in sales and turnover.
In hindsight all these factors
make one thing clear: A crisis is
always a challenge. It demands
being able to think differently,
to be resilient and to know your
strengths. Above all to be active
and not reactive. Over the past
year DEUTZ did not just react
but acted by investing in future
technology despite being in the
midst of a recession. During the
crisis, DEUTZ set a course for
profitable growth and now goes
strongly into the future reenergized
by its new engines. $
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