An Interview With Markus Rossler, Managing Director, Homag Asia "Most of the innovative concepts come from Homag"

Markus Rossler, managing director of Homag Asia, is optimistic about markets in rising Asian economies because manufacturers there are embracing automatic machinery to substitute for increasingly expensive labor.

This is significant for Homag Asia, an affiliatre of the Homag Group of Germany, the world's largest woodworking-machinery conglomerate. Homag set up its first logistics facility in Taiwan in July this year to enable it to serve domestic customers directly. The company displayed its products here for the first time at the triennial Taipei International Woodworking Machinery and Supplies Show this year.

The Homag Group has 16 affiliates with a total worldwide work force of 5,141. Group turnover reached 681 million euros (about US$817.2 million) in 2004, a 13% growth over the year before.

In this interview with CENS staff reporter Ken Liu, conducted during the show, Rossler discusses Homag's success and talks about the woodworking-machinery industry in general.

Q. With so many affiliates, how can the Homag Group operate so smoothly? Aren't there conflicts of interest among its affiliates?

A. Homag has 16 affiliates, each of which has its own professional products. Torwegge Hozbearbeitungsmaschinen GmbH, for example, specializes in panel-manufacturing solutions; Weeke Bohrsystems GmbH focuses on CNC (computerized numerically controlled) processing centers and drilling systems; Weinmann Holzbausystemtechnik BmbH is known for machines for making wall, gable, roof, and ceiling elements; and Friz Kaschiertechnik Gmbh concentrates on surface-lamination solutions. Their products do not compete with each other.

The Group holds a major stake in each of its members. It forms market strategies and goals in cooperation with them, and then lets them operate independently unless they fail to achieve the goals-like staying in the No. 1 position in the market. If they fail, Homag will take over their operations while the companies continue offering service.

Whether they can meet their goals depends on if they can meet customers' needs, which means that the market ultimately decides their destinies.

Q. Why did Homag decide to participate in this year's Taiwan woodworking machinery show? Was this your first appearance at the show?

A. Homag has decided to supply the Taiwan market directly. Technology is developing very rapidly in response to the need to reduce labor, and so the scope of woodworking production has changed. In addition, competition has become quite tough. Normally this is a good thing, but it leads to a situation in which manufacturers have an overflow of information influencing the decision of what processes and technical equipment are needed. That's why we've decided to use our own people to support the market directly.

Another factor is that woodworking machines can operate well only when they're properly maintained. We're not talking about replacing something that breaks down, but preventive maintenance. There are always certain problems with machines that have not been well maintained, and that's our responsibility as an equipment supplier.

We're not just selling machines; we've come here to show our customers how to properly use their machines throughout the whole life of the equipment. Machines make money for manufacturers-if they have good quality and are well maintained. For this reason we've decided to come to the market, and to the exhibition. This gives us a good chance to make a further presentation of our local service.

Q. You mentioned that high labor costs have prompted manufacturers to embrace automatic machines. So manufacturers in rising Asian economies are following the example of their Western counterparts in automating their production?

A. Generally speaking, that is the trend. Years ago, you could perhaps see production being carried out manually. At that time the machines were smaller, and each of them required a worker, or maybe more than one. Today you have machines for serial production and mass production with a single operator, even in Asia.

These days, customers buying furniture require special solutions. This situation is prevalent in Europe, and it's slowly coming over to Asia. Kitchen furniture, for example, is made according to customer requirements. Varying demands mean that kitchen-furniture manufacturers will make one piece of furniture in a certain size and a certain color, and then the second and third pieces in different sizes and colors and materials. So the machines have to be adapted to handle complicated requirements.

Q. What is the trend of technological development in the German woodworking industry?

A. In Germany, we're developing integration and linkage technologies which allow woodworking machines to carry out serial operations from, for example, hedge banding and cutting to drilling. Also, we're using robots to feed and remove woodworking materials. All of these developments are being pushed by Germany's relatively high labor costs, and this trend will spread to other countries once labor costs climb to an insupportable degree.

Whatever technologies are developed, good maintenance will continue to be the most important factor because, in Germany, the production environment is quite expensive. When a machine breaks down, it means that the manufacturer loses big money. That's why we've decided to open maintenance facilities in Taiwan and other markets where our major customers are operating.

Q. What has your company done to keep ahead of its rivals?

A. First of all, it's our continuous approach to look at customers' requirements. Second, it's the way that all of the group's companies are organized; they're relatively small units, which are responsible for the success or failure of their own products. The production companies do not push their products onto the marketing companies and then watch them sell; the production companies themselves are in charge, and they make sure about the ability to sell the products. This keeps them lively and active, and always working to improve their operations.

In woodworking you might say that there are two levels to the market; one is for industrial equipment, and the other is for workshop equipment. So you have two ranges of operation. In the industrial market your customers clearly know what solutions they really want, and you need a variety of machines with different specifications in order to fulfill all of their requirements. We do that with our modular systems.

At the same time, you have the workshop market, where the customer knows that he has to do some cutting and edge banding, but does not really know about cutting patterns and what work he will do tomorrow. These customers need standard machines.

Q. Who is able to challenge Homag in the world market today?

A. Manufacturers in Italy are, in the standard range. And a few Taiwanese manufacturers are coming up into this range; you have to take them as serious competitors in this respect. If you feel you're the best and ignore the rest, sooner or later you'll be overtaken. Never deny that others can do things well. So we keep focusing on developments in the market, and naturally keep up with it.

I'm pretty sure that we can show, at the major exhibitions, that most of the innovative concepts in the industry come from Homag.

Q. How would you analyze Taiwan's woodworking industry?

A. Taiwan is a strong woodworking country. If you look around you in this exhibition hall, you see a lot of local manufacturers exhibiting extremely good woodworking machinery. That is definitely a sign that Taiwan has a strong woodworking industry. The leading suppliers of woodworking machinery are Germany, Italy, and then Taiwan.

Taiwan's ability to compare favorably with these strong woodworking countries means that you really have a strong and substantial woodworking industry here. In addition, the Taiwanese are good entrepreneurs, and they are expanding their business into China, Vietnam, and Malaysia. They take their expertise to those countries, but they come back to get support here. We understand that woodworking manufacturers in Taiwan are like those in many other countries; they are under pressure from big neighbors. But that leads to a situation in which they can hardly compete with cheap local products. So we expect that our customers here are always looking for ways to make themselves more competitive, ways to upgrade their quality and performance in order to keep ahead of the competition from China.

What is actually happening is that we're getting inquiries not so much for low-end business and low-end machines, but rather for high-end equipment that can help manufacturers upgrade quality and that support different materials. Inquiries are also coming in about reducing manpower in operations, because labor costs are rising in Taiwan and you have to cut costs to be competitive. Our machines are able to support this.

Q. How do you see the world market for woodworking machinery? Are you optimistic about it?

A. The world woodworking-machinery market is recovering after years of crisis. You can see that the Taipei exhibition this year is having good sales. Two years ago you had the SARS crisis, which hurt the world woodworking business; during the crisis, people did not go out of their houses to buy furniture. The last big international exhibition, they said, indicated that we were doing poorly; but this exhibition is successful, showing that the world market is recovering.

The European market is generally good. Central Europe is fascinating, Eastern Europe is booming, and Asia is booming, especially in China. Other countries are also recovering, and the industry's performance is solid.