Which keywords do you associate with globalization?
Machtlinger: Regulated goods traffic, global travel, the bringing together of people and also great growth opportunities for the location Austria. After all, all Austrian high-tech companies live off exports.
"FACC has developed well since we have mostly Chinese owners."
The FACC has been majority-owned by the Chinese for more than ten years. How open is Austria to foreign investors?
Machtlinger: There are differences. When a Swiss or German company joins an Austrian company, it is relatively welcome. It's a bit of a problem with an American company, and there are differences in understanding between Asian companies. FACC has developed well since we have a majority of Chinese owners. We invested 450 million euros in research and site expansion and in Austria we hired nearly 2.000 new employees. In my opinion, the strategy of the investor counts more than its origin. A typical financial investor sells after a few years, a strategic investor who wants to develop the company, has a long-term horizon of ten or twenty years. The second applies to our main owner AVIC, who also works in the aviation sector.
How do you assess the current economic situation?
Machtlinger: The trends show that economic growth slows somewhat in Europe and the US, but also in Asia. We note a relative caution with investors, every message causes a strong volatility on the stock exchanges. I keep expecting growth, but not as fast as in the last three years.
Where are the growth markets of the FACC?
Machtlinger: First and foremost in China, followed by India, the Middle East and also Turkey. Of course, we must not neglect the highly developed markets in North America and Europe, nor South America, where we have a large customer, Embraer, with whom we make one fifth of our sales. But every second aircraft built goes to the Asia-Pacific, with one in five traveling to China alone. Our customers also set up plants there and expect the same from the supply chain.
And what about Africa?
MachtlingerIf we see where China is today, then India will follow at a distance of ten years - and Africa will be ten years behind India once again. With a huge potential, of course. Not only because of various raw materials, but also because the incomes in these countries will increase. But that will take 20 years.
The term growth is controversial, is often associated with collateral damage. Does your business need to grow?
Machtlinger: The question is: do we have to or do we want to grow? We want to grow. Our growth strategy is based on innovation and globalization. This is what has driven us since we came into being 29 years ago. We grew by around 20 percent every year during this period and we want to continue growing in the future - with sustainability. The lightweight construction we are working on has enormous potential in the aviation sector. Current commercial aircraft are 25 percent more efficient than their predecessors, thanks to a high proportion of lightweight construction. The goal of aviation is to halve CO2050 emissions by more than doubling the number of passengers by 2. It's a tough goal. This is exactly where we start with our innovations.
The FACC has an exciting history, from skier to aviation supplier. How did that succeed?
Machtlinger: As so often, this has happened out of a certain need. The sporting goods industry was in crisis during the 1980 years. At that time, it was decided to make a virtue out of necessity and use the established know-how for other industries. It was not thought of aviation, but rather the automotive and medical industries. However, before 30, the automotive industry was unwilling to use composites on a grand scale - and is still barely so today. The same applies to medical technology. We then found the way to aviation via American contacts. And that is very well done.
"As an Austrian company in the aviation industry, we have to be innovative because we do not have a home market."
What does it need?
Machtlinger: It takes a visionary thinking of the owners: In a crisis, not to release employees and destroy know-how, but to give management time to seek new applications for the know-how. In addition, there was a strong commitment on the part of executives and engineers to tackle new markets, to convince them of composite technologies - and then deliver them. Imagine that FACC has won $ 100 million worth of contracts from 1988, a $ 3 million revenue development business. There was a great deal of customer confidence that this team delivered the promised performance as well. And that has always happened from the first hour.
Which trends determine the aviation industry?
Machtlinger: In principle, that's innovation and globalization. We assume that the next innovation surge will come in the aircraft industry in five to seven years. Today lightweight components make up a little more than 50 percent of the weight of an aircraft. Annual production in the aircraft industry will double over the next ten years, and the proportion of lightweight construction will continue to grow. This requires new processes and materials. The second trend is certainly global manufacturing. High technologies will continue to come from western countries, but beyond that it is about global sourcing in growth markets. We have therefore been manufacturing in China since 2003 and today we have manufacturing partners in India and Abu Dhabi. We will continue to expand this global sourcing.
How do you manage innovations?
Machtlinger: What is an innovation today will be standard tomorrow and obsolete the day after. You have to keep your finger on the pulse, otherwise you will simply lose market share. As an Austrian company in the aviation industry, we have to be innovative because we don't have a home market. We have intensive connections with universities and participate in endowed professorships in order to do basic research on trends such as digitization and new materials. We also get very good ideas from start-ups. And last but not least, FACC 500 engineers research and work. A broad understanding of a global network and an openness to new markets and new cultures is also very important in order to enter into global partnerships. To this end, it is important to prepare managers and employees for the fact that globality is a motor that takes FACC forward.
What momentum has the IPO brought?
Machtlinger: It was very important that our Chinese owner opens up the market and wants to set up FACC in a transparent and global way. For us, of course, learning effects were involved: It is no longer about convincing an owner, but also to constantly inform the free float, how and where the company develops. After four years on the stock market I see this very positively: transparency, information, reporting have improved significantly, both internally and externally. Because I can not only open to the outside. Today we communicate strategies, there are regular feedback on the market and the performance of the company. The internal feedback is very positive.
"We are dealing with autonomous flying, because we can open up new markets here in the next decade."
How do you shape the environment in which you operate in countries such as China, India or Brazil?
MachtlingerEvery country has its own culture - even in Europe you have to treat French customers differently than German. The challenge for us is to create the same quality, performance and flexibility at our foreign locations as at our Austrian locations. To do this, you have to help shape the microcosm in and around a manufacturing facility so that the company's DNA is also present there. And that's the real challenge. It's not just about setting up a machine in China, but about how people think and deal with challenges, for example. Essentially, we do this by bringing our employees to Austria, training them for a while and getting used to the FACC culture. Especially in the case of skilled workers, we are much better positioned in Austria with dual training than in these countries. Especially in China it is relatively difficult to set up a dual system. We therefore bring new talents to our FACC academy, where we offer a dual education on a small scale, so to speak. So we are doing it in our own right in these countries and hardly in connection with training centers.
What do corporate responsibility and sustainable development mean for the FACC?
Machtlinger: Our sustainability strategy covers topics ranging from energy use and emissions to the values we live in the company. For example, we recently doubled sales and halved our energy use. How does that succeed? At the location of Upper Austria with geothermal energy and with energy recovery systems that heat and cool entire office complexes. And we also transfer these approaches to China, where we work with the same energy efficiency as in Upper Austria. Especially in China, it's about a model effect. And in the end, we also end up with something like that: The construction of the Chinese plant was of course much more expensive. It's sustainable for that. As an employer to 3.500 direct employees, we also have a strong commitment to our workforce and we take social responsibility seriously.
What makes a company fit for the future?
MachtlingerThe most important thing is to have an idea of what the FACC 2030 or 2050 might look like. I consider it my most important task as CEO to make the company so fit and to steer investments and innovations in such a way that FACC can continue to operate successfully globally in the future. Take urban mobility and autonomous flying, for example. We have been dealing with this for about two years, because I am convinced that I can open up new markets here in the next decade. Today, many people can not imagine that - but before 40 years, few people could imagine flying to London over the weekend. Today is everyday life. That's the key: to see where the developments are going, what the market will need in ten or twenty years, and how the company needs to position itself to be a sought-after mobility partner to 2030.
Many thanks for the interview!
Robert Machtlinger, 51, is CEO of FACC AG. The Innviertler started his professional career in 1982 with an apprenticeship as a technical draftsman with the then FACC parent company Fischer-Ski in Ried im Innkreis. In 1989 he moved to FACC and rose to head of the Aerostructures division through positions in manufacturing engineering, project management and sales & marketing in 2000. In 2011, Machtlinger, who holds a professional pilot's license, became Chief Technology Officer before taking over the management of the group in 2016.
TO THE COMPANY
High-tech from the Innviertel
The FACC (formerly Fischer Advanced Composite Components) based in Ried / Innkreis was established in the 1980s as a small department within the Fischer Ski Group. Today FACC is a listed high-tech company with the Chinese aerospace group AVIC as the main shareholder. The group manufactures engine parts and fairings, components for fuselage, wings and tail units up to complete cabin equipment for aircraft and helicopters and supplies all leading manufacturers such as Airbus, Boeing, Bombardier, Embraer, Rolls-Royce and Pratt & Whitney. FACC employs 3.500 people in 13 countries and is globally positioned with branches from Austria to China, from India to the USA and Canada. In the 2017/2018 financial year, the company achieved the best result in its history, with sales of EUR 751 million. The Upper Austrian hidden champion is currently investing 100 million euros in new factory buildings, facilities and R&D.