As Hauni celebrates its 70th anniversary with an in-house trade fair, CEO Juergen Spykman reflects on the challenges and opportunities facing the business.
TR Staff Report
Juergen Spykman became CEO of Hauni Maschinenbau in April. He takes the helm of the world’s leading tobacco technology firm at a turbulent time for the global tobacco industry, characterized by stagnating cigarette sales, mounting regulation and the rise of a new generation of products. Despite the difficult business environment, Spykman sees plenty of opportunities for Hauni, as technology can help customers meet the rapidly changing market demands and regulatory requirements. Tobacco Reporter caught up with Spykman at Hauni’s Hamburg, Germany, headquarters.
Hauni is celebrating its 70th anniversary this year. What do you consider to be the company’s greatest accomplishments?
All companies in the Hauni network consider themselves to be global partners of the tobacco industry. This has been our basic understanding for the last 70 years, since the founding of Hamburger Universelle, today known as Hauni.
We are proud to be leaders in cutting-edge technologies for tobacco processing, cigarette and filter manufacturing, as well as in service offerings for our industry. The Business Area Tobacco within the internationally leading technology group Koerber grew out of Hauni through a continuous development and broadening of our offerings for customers in the international tobacco industry.
Sixty years ago Hauni broke through on the international market with its filter-application machine Max. Today, Max is still the synonym for high-tech industrial filter application, while our Protos line of machines is the established market leader.
With the Protos M generation, we again set new standards. Everything we do is oriented toward the needs of our customers and changes in the market. That’s why we use market intelligence to always stay a step ahead—and on the side of our customers—when it comes to developing solutions for the requirements of tomorrow. With more than 4,000 employees worldwide and more than 20 locations, we combine the skills of our experts in the individual companies with the benefits of a global network of competences.
How has the stagnation of cigarettes sales worldwide affected your business?
The international tobacco industry is reacting to changing consumer behavior and stricter regulatory conditions. Everyone in the industry is faced with the challenges that this long-term structural change brings with it, including us. But we see opportunities: Changes always bring about new technological possibilities or other potential for improving our products and processes in the interest of our customers.
Adapting our range of services in anticipation of changing customer requirements is a matter of course for us, because we are always looking for ways to improve—and often simplify—and find new approaches to solutions for the needs of our customers. I am thinking in particular of [overall equipment effectiveness] strategies and increasing digitization, but also of relocation and rebuild overhaul. There are several new trends to be observed in the industry. And we are the right partners for developing suitable solutions for our customers.
What is your strategy for competing in a smaller market? Please comment on the strategic realignment that has been underway at Hauni. What have you accomplished to date, and what remains to be done?
We have tackled the new market conditions with the clear goal of not only adapting all of the companies in Business Area Tobacco; we used the occasion to increase our Business Area’s overall effectiveness by becoming better, faster and more flexible when it comes to operating in a changing market environment.
In doing so, we have already achieved significant milestones: We have continued to sharpen our focus for development projects—particularly for customer-specific developments—and accelerated important production processes using Lean methods. This also means a lot of new challenges for our teams, but thanks to consistent involvement, our employees worldwide are actively contributing to our strategic realignment. We are even more pleased that this is already showing results; we have made a positive start to the new fiscal year. The aim now is to build on this and further accelerate our accomplishments.
In recent years, Hauni has embarked on a bit of a buying spree, purchasing companies such as Sodim, Borgwaldt and Garbuio Dickinson. How does each of these acquisitions fit into your growth strategy?
Our acquisitions over the previous years have allowed us to round out our portfolio for our customers. With Borgwaldt we have supplemented our product range with physical measuring devices and smoke machines and expanded our analysis business, which we had already extended with Sodim. With the area of flavor, a new business field was added that represents additional expertise for us as an international supplier of the tobacco industry.
Roughly two years ago, with the purchase of the Garbuio Dickinson Group [GDG], the Hauni network expanded into the primary area. GDG offers a full range of tobacco preparing technologies such as high expansion, green-leaf treshing and recon, which makes it an ideal complement to our existing portfolio.
All of our new companies set the same high technological standards for themselves and for solutions for our customers as the more established ones do. In the age of globalization and global customer presence, this cultural mix is enriching because everyone across our network learns from one another and with one another, and we benefit from the different approaches applied in the different companies.
Based on all this, we are creating synergies. And we want to utilize the expertise that all of these companies bring to the table throughout the Hauni network for our customers, because from their comprehensive product and service portfolios arise more innovative and more comprehensive solutions. As a result, we can offer our customers one-stop shopping for the best solution.
Critics may argue that consolidation reduces competition among suppliers, which may not be in the best interest of customers. What is your response to such concerns?
Consolidation is part of normal market development cycles, regardless of which industry we’re talking about. But that is not a disadvantage for our customers because their end customers have very high requirements, which keeps major momentum in the market. The entire environment in our market has been, and will continue to be, permanently changing; no one can rest on the laurels of their past successes. And we would certainly never want to do that—simply because change, ongoing development, technological progress and upheaval are part of our network’s self-understanding, stemming from the mindset of our founder. They are also an invaluable motivation for our teams all over the world.
Illicit trade is a major concern in the cigarette industry. What can machinery suppliers do to prevent their machinery from falling into the wrong hands?
We have integrated a sophisticated internal audit system called “Know your customer” into our organization worldwide. New customers go through a very discerning verification process before we enter into business with them. This system is, in our opinion, one of the most effective means of preventing illicit trade.
Is Hauni developing equipment for the manufacture of e-cigarettes?
The issue of e-cigarettes is complex. With around 160 different types of e-cigarettes currently on the market, the market share numbers are still relatively low, though the market has also reached a very significant size. We have been observing the development of the e-cigarette market for years and look into all of the various products. We are particularly driven by the following question: What will the e-cigarette of tomorrow look like? We have always been leaders and innovators when it comes to new developments in the area of alternative tobacco products. Our motivation is and will always remain to excite with innovations.
What about other “next-generation” products and alternative tobacco products?
“Heat not burn” is the most similar to the classic cigarette. That’s why we can effectively apply our know-how from cigarette machines here—and we’re already doing it. We have been involved in heat-not-burn developments for more than 30 years—and we were already expanding our basic know-how and developing solutions for new products in the late 1980s.
Alternative tobacco products are just as important though. We already offer machines for the production of shisha capsules and integrated solutions for the increasingly internationally popular snus. Overall, the following applies: Whenever any of our customers have a special product or a special request, we will stand by their side as an effective partner as we offer them customized solutions.
What have been your priorities since becoming CEO?
After more than 20 years with the Business Area and through my several different positions, I have gotten to know the most diverse aspects of our companies, regions and our market. Every new position came with added responsibility and a new perspective on the industry. My five years as CFO of Hauni further increased the scope of my management and market experiences.
As CEO of the Business Area, it is my role to continue to write the success story of our network of companies as a whole. And I am convinced that, together with Dr. Juergen Heller and Dr. Martin Hermann, two colleagues with strong experience in market and technology, we will succeed in this.
The ongoing further structural and strategic development of the Business Area tops our list of priorities. Currently, market trends undoubtedly add a few demands. The most important thing for us, however—and by “us” I mean our more than 4,000 colleagues worldwide—is customer satisfaction. This is what we all get up for in the morning, and it is thus also our highest priority on the executive board.
In the interest of our customers, we also consider encouraging transparency, networking and joint developments in the Hauni network as some of our most important tasks. Because this is the only way we can make sure that we continue to offer our customers the best and most innovative solutions for their challenges. This, in turn, will form the base for making sure that, in 70 years, we are still the leading partner of the tobacco industry.