corporAID: How is Wienerberger doing in the new reality?
Scheuch: There is no new reality. There is an old reality and we have to get back to it quickly. Every generation believes that their challenges are a new reality. Mankind has been on the move for thousands of years. There is not one break. Therefore, one thing counts in this world: we have to renew ourselves again and again. In a crisis, we have to come up with new solutions. Wienerberger - with at least 200 years of company history behind it - has weathered many crises. The economic situation is good for Wienerberger: 2019 was the company's most successful year. We have done a lot of homework in the past decade. Wienerberger has fundamentally changed from a product-oriented company to one that focuses on customer benefit and wonders what value it can create for society.
How do you assess the impact of the corona pandemic on the international economy?
Scheuch: Wienerberger itself is not very dependent on international value chains, we are more of a local player. But many industries that have cut themselves off from the local and have only turned to international have faced completely new challenges: delivery bottlenecks, product unavailability, lack of contact with customers. In the future, advanced globalization will certainly be rethought in many areas. It's not just about the pandemic. For some years now, we have seen steps towards economic nationalism with “America first” and Brexit, which was primarily a “UK first”. Overall, this leads to shifts and discussions about supply chains, production sites and integrative approaches to trade relationships. We will only see the effects in five to ten years, but they will certainly be massive.
So you expect localization of the economy?
Scheuch: We will see the value chains within regions become more inclusive. And I hope that Europe will become such a region because only then will Europe last. This means that the economy, industry, services as a whole and the extended workbenches that we have in Central Eastern Europe and will also have in southern Europe in the future must be integrated into our value creation region in the medium term. The outsourcing of entire production chains to other regions of the world will be more of a question. Regionalization would also have a huge positive impact on our CO2-Emissions and our raw material consumption. These are topics that are not of a philosophical, but of a very practical nature. And here everyone is called on to take the corona crisis as an opportunity to rethink economically. Politicians in particular are required to think outside the box. Now would be the time to make the economy sustainable and really think in terms of industrial policy.
How is internationalization going at Wienerberger?
Scheuch: Internationalization is nothing new for Wienerberger. We were very international in the Austro-Hungarian monarchy in 1913 and then it took almost 80 years to get there again by starting to build up our positions in those countries in which we were already were once strong. That is also a logical development. Where are you travelling to? There is certainly a difference here to the strategy of the 2000s, when the company wanted to follow the zeitgeist on all continents. Nowadays it's no longer like that. Today our aim is to be a strong player in the EU and North America, because here we find fantastic growth opportunities that we will take advantage of. For me it is relevant that we make progress in the areas in which we are active. I took over the company in 2009 during its greatest crisis. We had a turnover of 1,6 billion euros, last year it was 3,5 billion euros. With our strategy, we have achieved significant growth in a decade and have more than quadrupled profitability.
They are also represented with plants in India and Russia. How do you see these markets?
Scheuch: In India we managed to enter a whole new market with a brand new product. According to the current doctrine, this is exactly what you shouldn't do. But we dared to do that back then and it took a long time. It was similar in Russia. But to reach a relevant size in our industry in a market like India, we would need investment volumes of 300 to 400 million euros and ten years. And now I have the alternative of using the money and ten years to make my business more digital and sustainable, and growing three times as fast in North America and Europe. The direction is relatively clear: this is where the journey will go. I can tell you very relaxed that Wienerberger will not be active in Asia in the next five to ten years. Of course, we will continue to operate our Indian plant and our three Russian plants, because they are operating satisfactorily, but we have no ambitions to grow strongly in these regions beyond what is already there.
How do growth and sustainability interact? Are these contrary terms?
Scheuch: Maybe a philosophical word at the beginning. A very well-known Austrian economist, who has unfortunately been forgotten a bit in this country, said something very right: There is no steady growth. Because every phase of growth is followed by creative destruction, then there is growth again. Joseph Schumpeter is absolutely right. We have to feed a growing world population, give them opportunities to live and work. We have to deal with this, and it is important to use resources accordingly in a sustainable manner. And it's not about talking - the Western world likes to lecture, but it doesn't do enough. On the contrary, we have to set a good example here. For me, growth and sustainability are one thing, you can't and shouldn't divide them. And the question is ultimately about the purpose of this company. It's not just about making money. It's also about what we contribute in the societies in which we operate.
Has the topic of value orientation become stronger over the years?
Scheuch: Of course, values also develop depending on the zeitgeist. Go back 150 years when the issues of workers' rights and social issues gained importance - Wienerberger implemented that at the time. This company's DNA has shaped us for many years and shows that we have always been a pioneer for new developments. It is important to me that we have this responsibility, ethical principles and values that are long-term oriented. If we say very clearly today that our strategy is based on the circular economy, then we really want to have a portfolio in which 100 percent of the products are recyclable and have a positive carbon footprint. It is a clear commitment and a big order that we take seriously. I also increasingly see a rethink in the financial market, which is still short-term and profit-oriented. But sustainability issues are becoming more and more established, and they will also lead to entrepreneurial decisions being shaped much more sustainably in the future.
What measures are you taking in terms of emissions reduction and circular economy?
Scheuch: We have developed our product portfolio enormously in recent years. Wienerberger is not only about building, but increasingly also about water. Very few talk about that. Today we are a company that produces pipes and systems for water supply and wastewater disposal and offers smart solutions here. We have mutated from a very classic brick manufacturer to a solution-oriented system provider. That means customers work with us because they don't just want to buy a brick, but are looking for a wall, facade, roof or water solution. In building projects, incredible increases in efficiency of up to 50 percent are possible - both in terms of costs and in terms of the use of resources. Finding a new approach here is clearly Wienerberger's goal. As a system provider, we have a much greater leverage here. But we also want to significantly reduce our energy and raw material consumption ourselves - with new technologies that we have developed in-house.
Who are the drivers for sustainability ambitions in your company?
Scheuch: Above all, the driver is our personal responsibility. We are by far the biggest player in our industry, our competitors are mostly family businesses with one or two locations. They are more likely to follow. When it comes to sustainability, it's not just about greenhouse gas emissions and the consumption of raw materials, it's also about dealing with people and the environment. Sustainability goals are also of great relevance because they are also reflected in the bonuses we all receive. We had a roadmap until 2020, of which we achieved almost all of the goals. But we also clearly state why we did not achieve individual goals and what still needs to be done. For more than 15 years now, our commitment has also included transparent communication. We are currently working on a new vision for the company, the basic principles of which include circular economy, decarbonisation and the conservation of biodiversity. These principles are linked to clear goals, which are evaluated every three years. Another important driver today are investors from the Anglo-American region. We have a relatively stringent set of rules in Central Europe. Because we have been working in these structures for a long time, it is a matter of course for us, in the Anglo-American region it is not. Do we have to map every aspect of our self-image in a policy? The Anglo-American says: Yes. And that's why we do it.
What do you think makes a company sustainable?
Scheuch: There is actually a very clear answer to this: A company can only be fit for the future if it has strong, innovative products and invests in continuous innovation. The second key point is people. That is the corporate culture, because we are only as strong as our team. And here the question of meaning plays an increasingly important role. Why are we working on something? Young people come to us because we are working on solutions for the future. That interests people.
Thank you for the interview.
Heimo Scheuch has been CEO of the building materials group since 2009 Wienerberger AG.
He has been with the Group since 1996 and has held various management positions. The 54-year-old Carinthian studied law and economics in Vienna and Paris and worked as a lawyer in corporate finance in Milan and London.
TO THE COMPANY
From brick manufacturer to system provider
Wienerberger AG is an international building materials group with headquarters in Vienna. Wienerberger was founded in 1819 and 50 years later the company went public. Since then Wienerberger has developed from a pure brick manufacturer to a leading provider of building material and infrastructure solutions in the three business areas of bricks, pipe systems and pavers. Wienerberger is the European market leader for clay roof tiles and, with 195 plants in 30 countries (Europe, North America, India, Russia), is the largest brick producer in the world. Since taking over Pipelife, a manufacturer of plastic pipes and pipe systems, in 2012, Wienerberger has also established itself as a player in the water supply sector. In the 2019 financial year, the Wienerberger Group, which currently has around 16.000 employees, generated sales of just under EUR 3,5 billion and a positive net result of EUR 249 million.