The world is getting used to driverless cars, so unmanned combine harvesters? "They are entirely possible," says Lothar Kriszun. As CEO of Claas, a German agricultural machinery company, Chris is a large mechanical specialist and his company is one of the largest large-scale agricultural machinery manufacturers in the world.
He is standing in a large factory in Harsewinkel, northern Germany. Most of the time, the production line here goes offline with 40 harvesters and related agricultural machinery. Each unit sells for up to 650,000 euros and consists of 50,000 components – including about 30 sensors that measure various indicators, from temperature to harvesting rate. These sensors, data communications and digital control are critical to the reality of self-driving harvesters.
Claas is one of a number of German medium-sized private companies (so-called Mittelstand) that are grafting new technologies into manufacturing. At the heart of it is the Internet of Things (connecting smart products and machines through data networks) and the related "Industry 4.0" concept (digitalizing manufacturing technologies from design to after-sales service).
Mittelstand (a German small and medium-sized enterprise, usually a family business, often skilled in manufacturing) is a global market leader. They account for about 40% of Germany's manufacturing and service industries' gross domestic product (GDP), characterized by long-term and resilience – thanks to the fact that these companies traditionally avoid debt or deviate from core areas of expertise. They were cited as one of the reasons why Germany was relatively unharmed during the 2008 financial crisis. Now they are brave enough to face technical challenges.
Mid-sized companies around the world are making progress in using the Internet of Things for manufacturing. In Japan, excavator manufacturer Komatsu operates a factory that receives data from customers' excavators to improve efficiency and reliability. Swedish industrial group Sandvik uses sensor technology to monitor remote equipment from offshore drilling rigs to rock crushers.
But most experts believe that German mid-sized companies with a history of innovation and decades of experience are at the forefront. Hermann Simon, a consultant working in Bonn, has been studying German SMEs for 30 years. He said that these companies are “very serious about... Industry 4.0â€. Ailke Heidemann of the Stuttgart office of the Boston Consulting Group (BCG) said that German SMEs with a background in mechanical engineering are “incrementing the digital and data domain experts they need to recruitâ€.
Here are three examples of German SMEs that are entering the new era of industry – each one is a family business and has a history of more than 100 years.
Digital agriculture
Claas' Chris said that of the company's more than 11,000 employees worldwide, 300 software engineers are the most important employees. “We have seen a lot of opportunities (both electronic and software) that these opportunities did not exist five years ago,†he said.
The company invested 2 million euros to develop a method of automatically transferring information from field-operated harvesters to farmers or grain experts thousands of kilometers away via satellite networks, bringing continuous remote monitoring common in many plants to the farm.
The company has developed a smartphone app that allows operators of combine harvesters to use this app to assist with machine control or to learn how to better operate the machine – even allowing them to operate on their own. Chris Zun pointed out that this 103-year-old company has become accustomed to change.
“We have had to adapt to a lot of things all the time, so we don’t really do anything very new to accept new digital ideas.â€
data service
Founded in 1874, Vaillant, the second largest manufacturer of central heating boilers in Europe, has 12,000 employees, and one third of them work on the server side, taking care of maintenance and repairs. Among the 2 million boilers produced by the company each year, the more and more boilers are equipped with communication systems, allowing machines or people to remotely monitor the operation of the boilers.
According to Carsten Voigtländer, the company's chief executive, this means that Vaillant is able to consider new services based on big data. The company is studying how to absorb and analyze the massive amounts of data generated by boilers and then use them to create new sources of revenue. “We are able to provide our customers with a better way to control their equipment than in the past, while analyzing factors such as energy use,†said Vogtrund.
Philipp Leutiger of Roland Berger, a Munich-based consultancy, said that Vaillant's approach is typical for German SMEs. Just as many of these companies are in the “hardware niche market,†he said that some companies will open up “service niche marketsâ€, often based on their proprietary software.
Networking tool
Knipex specializes in the manufacture of pliers and produces more than 12 million 800 different types of pliers per year. Almost all of these pliers are produced at the company's headquarters in Wuppertal, which employs 1,000 people.
CEO Ralf Putsch said the 134-year-old company used a variety of strategies, from new alloys to improved tool handling to create a competitive advantage.
Pucci stressed that the company uses the company's own forging and grinding machines in production. “If we rely on production methods that are open to anyone, I don’t see how we can innovate and differentiate,†he said.
One method developed by Knipex's subsidiary in eastern Germany is to connect the pliers to the computer so that technical experts in safety-critical industries such as aerospace and electricians can monitor the applied force. Pucci's company invested 200,000 euros to study the technology.
He was inspired by a recent trip to Silicon Valley. He said: "It is important to create an environment that is willing to embrace new thinking."
Concerned about surprises
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