corporAID: The Austrian economy is currently going through the biggest crisis in decades. How are the various Fronius business areas affected?
Engelbrechtsmüller bouquet: A lot has changed this year, but there is no doubt that as an Austrian company we can only grow steadily through export and internationalization. It has proven to be successful that our sales markets are global and balanced, and that we also serve different markets with the three business units. A decline in demand in one region was cushioned quite well by stable demand in other countries. Nevertheless, Fronius is of course affected. We felt the corona crisis very strongly in terms of demand in the areas of welding technology and battery charging systems, as we are heavily involved in the B2B area and especially as an outfitter in the automotive industry. In the solar energy sector, on the other hand, where we produce inverters that convert the direct current generated by solar modules into alternating current, we were primarily affected by the disruptions on the procurement market. Fronius is a global company that manufactures mostly in Austria. But of course we source components from different countries. Maintaining these supply chains has been very challenging. Even before Covid-19, we pursued a second source strategy as far as possible in supplier management. This means, for example, that we purchase components from India, but also have a supplier for them in Italy. Unfortunately, both India and Italy were affected by the lockdowns in spring.
How do you see the general conditions for serving the whole world from Austria?
Engelbrechtsmüller bouquet: We position ourselves as a leader in innovation and quality, not as a cost leader. This is an essential prerequisite for being able to produce in Austria. At the same time, it is necessary that we continuously become more efficient in production. That is only possible with very well trained employees. And in this respect Austria is a good location. But there is always room for improvement, and I cannot emphasize that often enough: education is very central. A growth inhibitor in Austria and especially here in Upper Austria is the fact that the demand for skilled workers is greater than the supply - even in times of Corona. That is why we take a lot of measures ourselves to train specialist personnel, especially in the digital environment. What would also help us would be to reduce bureaucracy so that we can simply be faster on many topics.
How are your markets changing due to the crisis? Do you assess emerging and developing countries differently today than two years ago?
Engelbrechtsmüller bouquet: Emerging and developing countries are particularly interesting in the area of solar energy. Photovoltaics makes sense especially in countries where solar radiation is strong all year round, energy costs are high and there is a great hunger for energy at the same time. In order to improve the energy supply in such countries, it makes sense not to invest in fossil fuels, but rather in photovoltaics. And the coronavirus has not changed this enormous potential either. This year we opened a location in Egypt to provide technical support for the North Africa region. Of course there are exceptions: Brazil is an important market for the Solar Energy business unit because there are also good conditions for photovoltaic solutions there. However, the general economic conditions are challenging: Due to the high number of infections and the strict lockdown, demand has fallen sharply. But we will still be active in Brazil and believe in a recovery in the coming year.
And where are Fronius' future growth markets?
Engelbrechtsmüller bouquet: Our growth markets are everywhere. Even Europe is a growth market thanks to the Green Deal, as there is still a lot of investment in the renewable energy sector. But at the same time, industry in Europe will continue to be a part of it, because we have the necessary innovative strength and therefore create the opportunity to use new technologies. Of course there are also major growth markets in Asia. India, for example, is a very interesting market for the welding technology sector, as there is a lot of investment in high technology. We also have a very important subsidiary in China, but only in the field of welding technology and battery charging systems. The Chinese energy sector is heavily subsidized, which makes it almost impossible to succeed as a European supplier there. In addition to India and China, Thailand and Australia as well as the entire American continent also belong to the markets with potential. Africa, on the other hand, is more of a market in the medium term that will continue to be observed.
What are the megatrends that determine your Fronius company?
Engelbrechtsmüller bouquet: There are two relevant megatrends. On the one hand, there is digitization. This enables us to use new manufacturing processes. In my opinion, this is the great opportunity to be able to continue manufacturing competitively in Europe. In addition, digitization offers many opportunities in the development of products and new business and sales models. I expect all-encompassing changes and opportunities here, and I think we are still at the beginning here. The second big issue is sustainability. This will continue to occupy us intensively, because if we use keywords such as climate protection and CO2- To take neutrality seriously and at the same time to maintain our standard of living, the industry has to bring solutions. And that will be with us strongly in Europe.
How do you see the connection between growth and sustainability?
Engelbrechtsmüller bouquet: Sustainability has several dimensions. One is economic sustainability. Start-ups are currently very much in vogue, but I am convinced that companies have their value that are not sold straight away, but rather have a history and develop. It is important to us to grow on our own so that we will still exist in the coming decades. The other is ecological and social sustainability, i.e. what is understood by sustainability in the classic sense. These aspects are very firmly anchored in our mindset. Fronius was founded in 1945 out of a sustainability concept: At that time there were few functioning car batteries, my grandfather wanted to develop a device that can recharge batteries so that they can be reused. This basic idea generally carries us as a company from product design to production. We consider: How can we reduce the energy consumption of our products with our technology? Which materials do we use? How can we reduce our CO2-Reduce the production footprint as best as possible? We see sustainability as a great opportunity and, as a company, are aligning ourselves with it - for example by producing more photovoltaic inverters. I believe that growth can make sense and go well with sustainability.
Do family businesses find it harder to grow than listed companies?
Engelbrechtsmüller bouquet: I wouldn't see it that way. As a family business, it is important to me to remain independent. This gives us the opportunity to decide things for ourselves. Many innovations are only possible in a company like ours because they need staying power and the question is not always where the immediate return on investment lies. It is only thanks to this courage that we still have a technological lead over our competitors, for example with our special CMT welding process that we introduced 15 years ago. Sometimes you can only achieve such an outstanding market performance if you have perseverance and a certain degree of independence.
And yet a lot of innovation processes are increasingly taking place in China. Will the importance of Austria as an innovation location decrease?
Engelbrechtsmüller bouquet: No, not for Fronius. We have the essential core competence in Austria and a good interaction between local production and innovation. But that doesn't mean that everything has to take place in Austria, because in general it is of course important to be present in countries like China and India in order to follow local trends and developments. We cannot go into a bubble and say Austria over everything or Europe over everything, but we have to go through the world with open eyes. That is why there is always decentralization here, but always in conjunction with the bigger picture.
What are the major challenges in emerging markets?
Engelbrechtsmüller bouquet: Definitely the bureaucracy. In the eighties we were a purely Upper Austrian company. In an initial wave of internationalization, we then went to Europe and North America, and recently increasingly to Asia. In 2014 we founded a subsidiary in India. If India had been our first subsidiary, it would have stayed the last, it was so bureaucratic and laborious. Experience helps a lot here: We have now founded more than 30 subsidiaries and know how to deal with many hurdles. The be-all and end-all are trustworthy local people who know the local framework and can find their way around them. In addition, there is a need for clear management and good connections between the subsidiaries and the parent company. In the initial phase it makes sense to send employees from Austria who also act as cultural carriers. A central challenge in internationalization is to really manage this growth by integrating employees well and maintaining the corporate culture. And that cannot be taken for granted. Just imagine: when I visited our Indian subsidiary a few years ago, I discovered that not a single woman worked there - I was horrified. Since then, the manager has always reported to me when he has hired a woman again. That also contributes to development - albeit on a small scale.
What makes an entrepreneur successful?
Engelbrechtsmüller bouquet: A good entrepreneur - whether man or woman - has to be courageous and open to new ideas. Creativity and the perspective of seeing opportunities in challenges rather than threats are also important. In short: an optimistic look. A good entrepreneur also values the development of his employees and creates the appropriate framework conditions for this. And it acts in a motivating way by signaling to the entire team: We are all in the same boat and pulling together.
What is your main concern in the management of Fronius? What is it that drives you?
Engelbrechtsmüller bouquet: I like working at Fronius. We are a cool team and we have cool products. What drives me is the company's innovative strength. And I want us to keep that spirit. And that we will keep the core of a family business, even if we are much larger now and have well over 5.000 employees. When I visit our subsidiaries today, I can feel Fronius. And these are our values and the culture of how we treat each other. Of course, growth is necessary so that we can implement our ideas. But above all, I want to preserve what has been created and continue to build on it. And if we can do that, I'll be satisfied. It does Sense of working for it.
Thank you for the interview.
Elisabeth Engelbrechtsmüller-Strauss took over the management of the in 2012 in the third generation Fronius International GmbH. The 49-year-old studied commercial science at the Vienna University of Economics and Business and was responsible for the company's accounting for many years before she was appointed CFO in 2008. In 2019 she became the first female vice-president of the presidium Federation of Austrian Industries .
Innovation leader with strong roots
The Upper Austrian family company Fronius was founded in 1945 as a specialist repair shop for radio and electrical engineering and developed into a technology leader in the field of welding and battery charging technology as early as the 1950s. Since 1992, the company has also been focusing on the future topic of solar energy with the production of inverters for photovoltaic systems. Most recently, the solar energy division was the largest growth driver. Today, Fronius has a broad base with its three business units: battery charging technology, welding technology and solar energy, and with an export quota of 93 percent and 34 subsidiaries on five continents, it is a true global player. Production is still mainly in Pettenbach and Sattledt as well as in Krumau in the Czech Republic; there are other domestic Fronius locations in Steinhaus, Thalheim and Wels. In the current 75th year of existence, the company has more than 5.400 employees and generated sales of 2019 million euros in the 856 financial year.