How Grundfos supports MT manufacturers’ global challenges

Conversation with Grundfos Group Director Ole Gerlich at JIMTOF 2014

Ole Gerlich, Grundfos’ Group Director of Global Direct Accounts, shares how the Danish pump maker spots new market opportunities in today’s changing market. We caught up with him at the Grundfos stand at the 27th Japan International Machine Tools Fair (JIMTOF 2014) in Tokyo.

Q: What are some of the notable trends in the machine tool industry?

Ole Gerlich: There has been a gradual but significant shift in the machine tool market dynamics over the years as global demand swings to the east.

Post industrialisation, the world’s largest machine tool market was dominated by the USA. However, this began to change when China opened up its giant economy in the 80’s. By 2002, China has firmly established itself as the world factory and overtaken America to be the biggest consumer of machine tools. Together with USA, Germany, Korea and Japan, these five economies acquired more than 65% of the machine tools produced globally.

This trend towards a global marketplace, where economies and industries are becoming increasingly more interdependent of one another, also means that machine tool manufacturers – whether they are local or international companies – must have the ability to support their customers’ global strategies and operations.

This has seen a steady convergence of the machine tool industry as suppliers merged to form larger specialist manufacturers to meet the increasing customer demands.

Today, some 30 machine tool companies in Germany, Japan and China are accounting for more than 70% of global machine tool sales. Asia is making mostly standard machines while Germany and Japan are focusing on advanced and specialised equipment.

Interestingly, about 70% of all machine tools are used in the machining of engine and power train parts for the automotive industry. It raises interesting questions of how the machine tool industry may be transformed as more electrical vehicles requiring less machining hit the road.

Q: How does Grundfos bring about its global resources to meet the exacting demands of machine tool manufacturers?

We have established a structure within Grundfos’ machining industry division to provide pump solutions and services that complement the machine tool makers’ requirements by focusing on three areas: globalisation, product development and business centres. Let me elaborate.

As a global group with more than 80 companies in 50-over countries, Grundfos is able to provide the most comprehensive support with a complete range of solutions for the machine tool manufacturers wherever they are located. Grundfos pumps and solutions fulfil all the major international standards and industry regulations. Our global footprint and widespread partnership network means that dedicated customer service, readily available parts and components, and responsive engineering support are just a simple call away. As part of the aftersales service, we provide technical training, making sure that vital product information is communicated not just to the customer, but also to their end-users. Grundfos assures peace of mind for all our customers.

In product development, Grundfos strives to maintain its market leadership as the world’s largest pump producer by ensuring product reliability, energy efficiency and a wide product range that can be custom-fitted for different applications.

We invest in R&D well above the industry norm for both product improvement and innovation. For machine tools, we are constantly bringing new products to market. In fact, more than 15% of machine tool sales come from new products.

To ensure strong customer support, Grundfos has established three business centres in Germany, USA and Japan. These are competency centres that serve to deepen technological knowledge, capture industry best practices and develop professional capabilities in pumps for the machining industry.

As Grundfos’ machining experts, the business centres play a critical role in enabling our understanding of customer needs, developing new products and enhancing services. This has, in turn, seen the delivery of tangible value-add to our customers in terms of productivity gains and cost savings.

Take for example a Japanese machine tools company that has moved its production over to China. Grundfos’ machining industry business centre can assist the company in ensuring that the machines made in China will conform to the Chinese industry standards and market requirements, in areas such as product range and delivery pricing.

Q: The pumps and pipes are integrated within machine tools to move fluids in the machines. How can machine tool makers be assured of reliability of these components, which in turn, determines the quality and through-life cost of the entire equipment?

This is where I will let the numbers speak for themselves. Grundfos is not only the biggest pump maker globally, we are also the world-leading pump solutions partner for the machine tool industry.

In fact, at more than 200,000 pumps supplied annually, we are providing three times more pumps than our closest competitor. These pumps ranged from small transfer pumps in simple applications to specialised pumps designed for high pressure and flow rate for large machine centres and central filtration systems.

We intend to maintain our market leadership. And this is possible because firstly, we have the capability and capacity.

Grundfos is well known within the industry to invest heavily in R&D – some three to five times the value put in by our competition. This strong tradition of innovation has empowered and motivated us to consistently design and bring to market innovative, reliable and efficient solutions for our global customers.

This regular innovation is especially important for the product-oriented machine tool industry, where machine designers and engineers regularly discuss technical specifications of the machines in microns for tolerance and parts per million in failure rates. Working hand in glove with our competency centres, we are able to assure every customer of reliable and competitive pump solutions, backed by strong design and engineering expertise, for the machines. We’ve also introduced The Design Tool, an easy-to-use product-selection interface that helps the user to customise the results to suit specific needs.

A good example to illustrate this close partnership between Grundfos and our machine tool customers is our effort to meet the growing demand for high efficiency and environmental-friendly pumps in recent years.

Coolant and lubrication pumps are commonly used in machines. However, these pump systems can consume large amount of energy, sometimes by as much as 40% of the total energy consumption of the entire machine.

Grundfos realised the significant energy and cost savings if more efficient pumps could be installed. We became the first pump supplier to focus on delivering high efficiency pumps to the machine tool industry, and lead the global pump industry in meeting global motor efficiency industry standards and complying with national electrical and environmental regulations.

Q: Grundfos is participating in JIMTOF at Tokyo, Japan this year. What is the significance of this market to the company?

As the world’s largest machine tool producer, Japan is obviously a priority market for Grundfos. Besides leveraging on Grundfos’ global resources and R&D efforts, we have an experienced team of pump experts specialising in machine tools at our business centre in Nagoya. The business centre also supports clients in Korea, Taiwan, China and the rest of the Asia Pacific region. We also operate a factory in Hamamatsu, which incidentally is our largest machine tool pump facility.

The entire team in Japan, under the capable leadership of Michio Takarada, Business Development Director for Asia Machining Industry, and Hideo Shirakawa, General Manager of Grundfos Japan, works very closely with the other product and engineering divisions in Grundfos to ensure we deliver high value-add consistently to the Japanese machine tool makers.