Navigating 2012: The Road Ahead

After another good year, how is Grundfos approaching 2012 and the global economic downturn? Our Executive Vice President of Sales and Service, Søren Sørensen, talks about why we have done well recently, and how he expects us to navigate the road ahead.

A commentary by Søren Sørensen, Grundfos Group Executive Vice President, Sales & Service

One question I have been hearing a lot lately: Don’t you feel the global economic downturn?

We had another very good year in 2011, with an estimated 8-9% growth, after our quick recovery from the financial crisis.
Looking ahead at 2012, it is difficult to tell how the course will continue. We are approaching the year with some uncertainty.

There are markets that have reached a degree of recession, but there are other markets zooming ahead.
We have a challenging discipline ahead of us: pushing the speeder and braking at the same time. If you’re a good rally driver, you should be able to do that.

Speeding and Braking
In Grundfos overall, our Industrial business area is progressing the fastest. Much of this growth is thanks to our Machining Industry. In 2011 it had a super year, with a 35% increase over last year. That was an all-time high. The growth happened not only in the standard machine tool markets of Japan and Germany, but in other markets, too – like China, Taiwan and Korea.

Otherwise, we now see a little slowdown in machine tool order intake in Taiwan and Japan. We are also a bit worried what will happen in Germany. The statistics from the German Engineering Federation (VDMA) show a downward trend in order intake. We know we cannot expect the same growth in 2012. Our machine tool business approaches the year with conservative expectations.

In Grundfos overall, the southern European region decreased in 2011: Greece, for sure, the Iberian Peninsula (Spain and Portugal), and now Italy. Yet some markets – like Russia, China, the Ukraine and even the U.S. – grew last year. So, yes, we’re feeling the crisis in some places, but we’re gaining market share in others.

A revolution
What’s the main reason for our good performance?
One reason is our focus on new technology and resource-efficient equipment. The machine tools market is progressing through a technology change, with the result of larger investments in new production. Companies are focusing on resource-efficient and energy-saving equipment, and this generates a new demand for production equipment.

In the automotive industry, for example – accounting for more than 60% of our machine tool business – the talk is all about an ecological revolution,  unique in its history. Consumers are demanding that automotive manufacturers reduce their environmental impact while increasing resource efficiency of both vehicle production and operation. This demand drives a variety of developments toward the hybridisation and electrification of the power train, along with highly efficient, lightweight designs.

Grundfos fits right in to this picture with our intelligent  products, like smart motors and electrically regulated pumps. Our intelligent e-pump solutions use less energy. Of the total lifetime costs of a pump, 85% of those costs are from the electricity it uses. With an e-pump, that’s a lot of savings over the years.

More and more, our message is coming through that people must not look only at the sticker price of a product but its lifetime cost. This is something we have been preaching for years. It seems that the time is finally right – people are beginning to take the message to heart.

High Standards
Grundfos generally has high ambitions for growth. We are working with new technologies and bringing in new products – like our new MTA pump for the diirty side  of machining processes. We are trying to make this world a slightly better place.

So on this next stretch of the road in 2012, we must be agile and ready to react.
We hope that by setting our own standards high, we can avoid using the brakes while keeping a steady speed for the way ahead.