Even as the current tough market favors its business model, Spikker Specials continues to reinvent itself.
By Taco Tuinstra
For the tobacco machinery business, the golden days are over. Whereas the sky used to be the limit in terms of production speeds, technical options and other mechanical wizardry, the ghost of austerity now haunts cigarette manufacturers’ procurement departments. Smoking restrictions, rising taxation and growing health awareness have dented cigarette sales. As a result, tobacco companies are postponing investments and consolidating production. Machinery suppliers have felt the chill, with many reporting a downturn in business.
It’s an ill wind that blows no one any good, however, and some specialist suppliers have fared remarkably well in the economic downturn. Spikker Specials is one such company. Based in Zevenaar, Netherlands, its business—supplying premium machinery parts—seems to have been almost custom-designed for the current environment, in which tobacco companies try to make existing equipment last as long as possible.
“Today’s emphasis is on efficiency, maintenance and cost,” says Hans Schijfs, sales manager at Spikker Specials. “Those have been our strengths all along.”
Spikker Specials was founded in 1962, when Gerhard Spikker started making tools and machine parts in a backyard shed. Gerhard Spikker was interested in wear-and-tear-related problems, particularly those of cigarette making and packing machinery. Realizing that the same parts consistently wore down and caused machines to malfunction, he started looking for ways to improve those parts.
The products he developed earned Spikker Specials an unmatched reputation for quality within the tobacco industry. The company’s offerings are manufactured to such high standards that they outlast OEM varieties by a considerable margin. According to Spikker Specials, the lifespan of its parts is up to five times longer than that of ordinary spare parts, while the price is competitive to achieve a cost reduction for the users.
Part of the secret lies in the raw materials: Spikker Specials uses carbide, ceramic, powder metallurgical steel and even diamond—materials that are harder and more wear-resistant than ordinary steel grades. The other half of the secret is know-how. Over the years, Spikker Specials’ engineers have developed an unrivaled knowledge of materials, manufacturing processes and the application of parts on machines.
Hans Spikker, who started helping out in his father’s factory at age 12, took over the business in 1986. Today, the company employs 75 people and sells wear-and-tear parts to tobacco companies worldwide. In the beginning, Spikker Specials supplied primarily local, independent factories; today its customer base includes the leading multinationals.
But while the gods of commerce have smiled on Spikker Specials, it would be a mistake to conclude that the company has been able to sit back as business flowed to Zevenaar. To be sure, the playing field has tilted in Spikker Specials’ favor, but if the company had not done its homework it would not have been in a position to take advantage the way it did. “When the market shifted, we were ready,” says Hans Spikker.
To adapt to the new market conditions, Spikker Specials had to evolve from an industry supplier into a full-fledged business partner. “It’s no longer sufficient to sell a part,” says Schijfs. “You have to deliver customized solutions and understand your customer’s approach.” For example, as opportunities to promote tobacco products dwindle, cigarette manufacturers are looking for new ways to make their products stand out on the store shelf. As a result, the variety of pack designs has proliferated, while the frequency of redesigns has accelerated. So in addition to individual parts, Spikker Specials now offers format- and size-change kits. The company’s porftolio has expanded to include complete assemblies, along with overhaul and customized offerings. These are available not only for the latest generation of machinery, but also for older equipment for which other suppliers have stopped offering parts and service.
Intimate knowledge of customers’ equipment allows the company to supply customized solutions quickly. “We say to the client, ‘Just tell us what machine you are using and we’ll supply the appropriate assembly,’” says Schijfs. Speed is of the essence, he insists. Fast deliveries allow customers to reduce their inventories, which in turn lowers cost.
The company has kept up with evolving information technology, as well. “The new generation of tobacco industry employees is accustomed to working with screens,” says Schijfs. “We must cater to them.” Among other investments, Spikker Specials has updated its electronic data-interchange system so that it can “talk” with customers’ business-management software. “You should make it easy for clients to deal with you,” says Schijfs. “In the wake of corporate restructuring, many tobacco companies no longer have the staff to deal with complexity.”
Preventive maintenance features prominently in the era of austerity. Spikker Specials now offers a service where it reviews the client’s production line and makes proposals for optimization. “A customer may have 10 machines bought over a period of 15 years,” says Schijfs. “Even if the machines are supplied by the same manufacturer, each of them will be slightly different due to evolving technology. By standardizing the parts, we can not only reduce the inventory required but also facilitate maintenance—and thus save the customer money.”
While much has changed over the decades, some aspects of the tobacco business remain reassuringly familiar. Despite the advent of modern communication tools, personal relationships are as important now as they were 50 years ago. Spikker and Schijfs fondly remember the days when they were still spreading the word about Spikker Specials, lugging suitcases with samples, polishing parts in their hotel rooms and visiting clients in the world’s remotest outposts.
Today, Spikker Specials is a household name in the tobacco industry, but the company’s representatives continue to travel the world in order to maintain customer relationships. It’s more than a feel-good exercise: “If clients don’t see you for two years, you will experience a drop in orders,” says Schijfs.
The other constant in tobacco is the importance of sticking to commitments. “You must deliver what you promise,” says Schijfs. This is the case even if doing so creates considerable stress, as happened last year when Spikker Specials accepted a project for which it still had to do some development. “If you say yes, you take on a huge responsibility because the customer will plan his operations based on your promise,” says Spikker. The successful completion of the 2015 project boosted customer confidence and Spikker Specials’ reputation, but Spikker prefers not to think about the alternative: “They would have shot us!” he says.
Despite the tobacco industry’s difficult predicament, Spikker sees plenty of opportunity for his company over the next decade. “After that, it’s difficult to predict,” he says. To diversify its business, Spikker Specials has begun investigating additional sectors that might benefit from its products and services. Perhaps surprisingly, that is proving to be more challenging than anticipated. Production speeds in the tobacco industry are famously high, resulting in lots of equipment wear and tear. Other industries, such as food packaging, manufacture at slower speeds, which means parts last longer.
Spikker and Schijfs are confident that they will eventually identify an industry with demands similar to those of the tobacco business. Until that time, they must console themselves with the strange satisfaction that comes from having products that are almost “too good” for other sectors.