Lower order intake, higher sales in 2012
Order intake down – Sales up – Result comparable to previous year – Integration of Paul Wurth – Continued investment in German and foreign locations – Further expansion in growth fields electrics and automation, service, energy, and green technology
The SMS group, a group of companies in metallurgical plant and machinery construction, generated an order intake in business year 2012 of EUR 2.835 billion (2011: EUR 3.423 billion). Sales increased by five percent to EUR 3.237 billion (2011: EUR 3.070 billion).
Acquiring a majority share in Luxembourg company Paul Wurth at the end of 2012 means that the group added roughly EUR 500 million to the total order volume.
That produced a net group result of EUR 258 million (2011: EUR 265 million), almost matching the previous year’s level.
Both Business Areas, SMS Siemag and SMS Meer, clearly felt the impact of customers’ restraint in placing orders. Specifically, order intake by SMS Siemag contracted by 24 percent to EUR 1.519 billion (2011: 2.007 billion). SMS Meer experienced a decrease by 16 percent to EUR 1.152 billion (2011: EUR 1.365 billion). The elexis group contributed an unchanged order intake of EUR 180 million to the group.
On average over 2012, the number of employees in the SMS group – including apprentices – was 11,822 (2011: 10,477). Due to the acquisition of the majority share in Paul Wurth, the number of employees in the SMS group increased to a total of 13,588 at the end of 2012.
Close cooperation between SMS Siemag and Paul Wurth
Paul Wurth will continue to operate as an independent company within the SMS group. Numbering more than 1,500 employees and 25 subsidiaries, it ranks among the world’s leading producers of blast furnaces, coke oven plants, and green technology for metallurgical plants. The product ranges of Paul Wurth and especially SMS Siemag complement each other perfectly. That’s why Paul Wurth is associated organizationally with the Business Area SMS Siemag. The merger creates a solid basis for future growth.
Dr. Heinrich Weiss, Chairman and CEO of the SMS group, stated: „Despite a persistent reluctance of our customers to invest, we expect a slight recovery on the market by the end of the year. Based on the continued high level of orders in hand, and taking into account the effects of the first full year of consolidation of the Paul Wurth group this year, we anticipate a modest increase in sales compared to 2012, but a decline in profit."
Characteristic of the market for metallurgical and rolling mill plants in 2012 was a cautious mood. Struggling with a difficult profit situation, many steel producers waited to see how the market would develop and postponed project activities. Furthermore, ongoing purchasing processes for existing metallurgical plants in North America and Brazil are blocking other investment decisions by some key accounts.
Still unchanged, the main sales markets are the developing and threshold countries.
Dual strategy: Globally networked manufacturing
To ensure high quality, SMS remains committed to producing the most complex components of its machinery and plants in Germany. That’s why the company invested heavily over recent years in expanding and upgrading its facilities in Hilchenbach and Mönchengladbach. Yet, parallel to these measures, it expanded its production capacity in China. Here it is mainly about better customer service on the ground as well as special products designed for the Chinese market. These can be produced at a lower price locally.
Overall, the aim is to further cut manufacturing costs by focusing on production-optimized design, greater efficiency in logistics, plus increased productivity in both engineering and production. Using the same strategy as that pursued in the years after the first financial crisis, the company will make the most of the weaker order intake to drive technological development. Equally important to the management is intensifying on-the-job training and qualification of experienced core personnel as well as training new staff.
"Carrying out these activities," says Heinrich Weiss, "means we strengthen our ability to supply both high-tech and low-cost plant and machinery. That will enable our customers to produce even more competitively. We are also expanding our presence outside Europe by hiring qualified personnel as well as building production and service facilities in our key markets of China and India.
This is how we will be able to meet demands in China for a locally- produced share of supplies without increasingly losing these types of orders to local competitors.“
International human resources operations
Globalization in the SMS group continued at a dynamic pace last year. Meanwhile, a growing number of its employees work outside Germany. That creates challenges the company meets by devising and implementing uniform human resources development programs and structures around the world, while still taking into account national and cultural differences. All the HR managers in the SMS group are in regular contact with each other to discuss issues including recruitment, talent and performance management, and training.
Attracting new talent
The SMS group has been working steadily for years to make itself even better known and more attractive as an employer. To reach school children, university students, and qualified specialists, it also relies on its own employees as ambassadors who attract new apprentices and recruits through personal recommendations and by talking about their work.
The SMS group does a great deal to interest young people, including kindergarten and school-age children, in technical subjects. Apart from direct contact with schools in the form of cooperations and projects, it also uses the new communication channels made possible by social media. This means, for example, online TV and YouTube posts that illustrate activities and the apprenticeships on offer.
Moreover, last year, internships and works tours for school students gave youngsters an insight into the world of work at the SMS group.
Many employees with degrees stay in contact with their alma maters. They give talks, accompany lectures, or participate actively in various research projects at different institutes.
There is also a program of support measures including scholarships, dual-study courses, internships in Germany and abroad, and assistance with BA and MA dissertations.
Vocational and on-the-job training
The number of apprentices in 2012 was 561 (2011: 551). The apprenticeship quota in Germany is some seven percent. One reflection of the high quality of the company’s vocational training is the good exam grades regularly attained by its apprentices. This also applies to 2012 when they were higher than the average recorded by the Chambers of Commerce. Some apprentices even won awards as the best in the state.
The SMS Akademie invites employees to voluntarily attend a broad- based educational program in their free time. It covers not only.
technical subjects, but also intercultural topics, personal development seminars, and sporting activities. In 2012, 3,464 participants attended a total of 268 events.
Especially plant and machinery construction relies heavily on the experience and know-how gained over the years by core staff.
To promote structured knowledge transfer, the SMS group founded its "WERT" program at the end of 2010. It ensures employees shortly due to retire pass on their expertise to their successors in a structured transition process.
The SMS group supports its employees in finding a good work-life balance. That’s why, in 2012, it was awarded the "Beruf und Familie" certificate from the Federal Ministry of Family Affairs.
Included here are company pensions, company loans, flexible working hours, lifetime working hour accounts, sabbaticals, and professional childcare in SMS kindergartens. To promote health, the company also supports a broad range of sports groups in line with the "healthy company" model.
Many SMS employees regularly carry out voluntary or charity work, and the company does all it can to encourage them. The SMS group received an award from the state of North-Rhine Westphalia for this commitment in 2012.
SMS Siemag AG and SMS Meer GmbH are both companies of SMS group which, under the roof of SMS Holding GmbH, consists of a group of companies internationally active in plant construction and mechanical engineering for the steel and nonferrous metals industry.