HOMAG Group will 
be slimmer, faster and more agile

Photo: HOMAG Group
Ralf W. Dieter, CEO of the HOMAG Group

Ralf W. Dieter, CEO of the HOMAG Group and its owners Dürr, has been running the company since his January appointment. And already he has made some significant changes by creating clearer structures, for example, by simplifying sales and distribution. Next, there is a three-year almost 100 million euro investment plan, the biggest in the company’s history. The investments will be made in Schopfloch (Germany), Poland and China. In addition, Dieter will continue the implementation of digital technology within the company. In this context, his experience gained as chairman of the IIoT ‘Adamos’ platform will doubtless be of considerable value to the HOMAG Group.
Dieter has been CEO of Dürr AG since 2006, and became chairman of the HOMAG Group in January. His is also chairman of the IIoT Adamos platform advisory committee.

Question: Until last year you led the supervisory board for the HOMAG Group, and since 2006 you have been chairman of the board for Dürr AG. Why did you decide to also become chairman of the HOMAG Group, and take on the responsibility for worldwide operations employing nearly 7,000 employees?
Ralf W. Dieter: I have always been a great fan of HOMAG, which is why I put my influence behind Dürr’s purchase of HOMAG in 2014. Dürr has three major businesses: Dürr Systems, Schenck and HOMAG. I headed up the sales side of Dürr’s automotive business interests for many years. That is now in the hands of my colleague and deputy Dr. Jochen Weyrauch. Then came the departure of HOMAG CEO Pekka Paasivaara, creating the opportunity for me to take on the chairmanship of HOMAG. I wanted to do that because it gives me the opportunity to hone the business and make it even better.

Question: How would you describe the direction you want to take the company in?
Ralf W. Dieter: I intend to manage HOMAG once again more like a medium-sized business and make it faster. At Dürr we have a cooperative management style, one which makes quick decisions. In this context, we must do much better at HOMAG Group. At present the focus is too much on a ‘corporate style’ with complex lines of responsibility, which customers have criticized.
I have already eliminated a number of restrictions and simplified decision-taking processes in sales and distribution, so that we can be faster and more flexible.

Question: So you have 
got the ball rolling?
Ralf W. Dieter: Yes, we want to be slimmer, faster, with less complexity, more delegated responsibility, and especially with much clearer structures. In addition, we want to be more transparent for our customers.
We now have a HOMAG Management Board, where every member has the final responsibility for decisions taken in his own particular sector. That was not previously the case.
Question: Will the regional subsidiaries regain some independence?
Ralf W. Dieter: Yes, our sales subsidiaries will have more decision-making powers. But of course that also results in having to accept more responsibility. We trust our people; they know their market and how best to serve it.
Our basic philosophy within Dürr is that each employee is his own entrepreneur within the company. This is a concept that we want to reinforce here at HOMAG.

Question: How much 
are you focused on the
furniture industry?
Ralf W. Dieter: The furniture industry has a small number of big companies manufacturing on an industrial scale, and a huge number of essentially craft-based smaller businesses. Both sectors are extremely important to us. I have already met a number of key customers, and so far this year both sectors have got off to a good start.

Question: What are the 
strengths of the HOMAG Group and what areas will you focus 
on in the near future?
Ralf W. Dieter: We have made an enormous effort to improve in terms of sustainability, for example with respect to our paint spraying lines. Many people don’t realize that about 70 per cent of the energy consumed in automotive production is for surface treatment and painting. Dürr has achieved a major energy reduction in these processes.
HOMAG is also committed to sustainability and it’s a major consideration in many parts of the business, especially in the construction of timber buildings.
In addition, our employees’ posses an amazing range of high-level skills and sector know-how and are very enthusiastic about the products they make and sell. We have an excellent range of services, which we will develop further. When all is said and done, the deciding factor is long-term customer loyalty. We are also a leader when it comes to digitalization as well as top supplier of complete factory systems. But we can be even better.

Question: Are there any areas 
of expertise in your other business that could be used to benefit the HOMAG Group?
Ralf W. Dieter: Over the last few weeks we have established a useful exchange; HOMAG stands to benefit from its Dürr links with respect to digitalization and system project management: our purchasing departments now work more closely together. When it comes to IT infrastructure we have plenty to learn from each other; there are plenty of core points where there is useful knowledge and experience. Various parts of the corporation are moving closer to each other.

Question: China was and remains a growing market and HOMAG has on managing that business now? How is that 
going and what – if anything – have you changed?
Ralf W. Dieter: We have made very few changes there in sales and distribution because there was not much that we could improve. At the moment we are thinking more in terms of the administrative and commercial aspects, finance bookkeeping, IT processes and so forth.
 
Question: What is your 
take on the future of the business in the U.S.?
Ralf W. Dieter: For starters, we are very glad to be there together with Stiles. In essence, America is facing the same situation we are, with people working from home – with the result that many people are spending money on new furnishings for their homes.
Last year there was a dip in investment for large new projects. That will improve to a degree this year.
In addition, we hope that the election of President Joe Biden will improve general stability and the business atmosphere.

Question: Over the past few months we have seen numerous weak spots in global supply lines. Are you concerned?
Ralf W. Dieter: Right now we are in a good position and I’m glad our manufacturing facilities are spread over a number of countries.
As a result, HOMAG has been largely unaffected by supply line interruptions. Nonetheless, we do think that supply lines will become more regional in nature. That is already the case for Dürr Systems, where these days, everything is produced within the respective market. At HOMAG we are also moving in that direction, but we have the potential to ‘localize’ even more and are working on that.

Question: The HOMAG Group is very active when it comes to UPC Unified Architecture and works closely with the VDMA (the German machine manufacturers association). As such, HOMAG frequently interacts with its major competitors. Is it likely that the industry will have to work more closely together in future?
Ralf W. Dieter: Unfortunately, machinery manufacturers are not known for their desire to work together and that’s too bad because they could save a great deal of money if, for example, they agreed on standard interfaces, so that individual companies don’t have to reinvent the wheel.
In 2017 Dürr was a founding member of the Adamos platform, a strategic alliance for the next generation of equipment for Industry 4.0 and the industrial IoT (Internet of Things), which has attracted many partners among plant and machinery manufacturers. I believe such cooperation will become more important and in this context the VDMA is important 
as a neutral meeting ground.
I also want to mention that HOMAG’s experience with Tapio is very valuable and will be important going forward. Unfortunately, so far we have been unable to persuade many of our competitors to join in. However, we have made such progress on the past few years that it would make a lot of sense for them to join us.

Question: Do you understand 
their reservations?
Ralf W. Dieter: Yes, of course. The decision to establish Tapio separate from HOMAG was quite deliberate, because we did not want to give the impression that ‘big HOMAG’ wants to grab everything for itself. Unfortunately, the market saw it differently. But perceptions notwithstanding, Tapio is just as neutral as Adamos, and someone had to make the start-up investment.

Question: A moment ago you mentioned prefabricated timber homes as a growth area. HOMAG recently bought machinery manufacturer System TM in Denmark. What’s next?
Ralf W. Dieter: The real boom in this market is still to come and will be driven by a demand for sustainability, as represented for example by a reduction in CO2 emissions. We bought System TM because our long-term strategic objective is to be in the supply chain from the tree trunk all the way through the added-value chain to the finished home. At the moment there is a gap in that chain and that is CLT, Cross-Laminated Timber. That would be the next step.

Question: Is HOMAG able 
to access Dürr’s expertise 
with respect to spraying 
wood surfaces?
Ralf W. Dieter: HOMAG can certainly have access to Dürr application techniques and the associated know-how. That is an interesting niche, but we have no plans to build complete paint spray lines for furniture manufacture.
Question: Long-term customer relationships are often decided by good service support, which is also a profitable side of the business. What are your plans there?
Ralf W. Dieter: As far as our customer service coverage is concerned we are in a good position, but we could still do better. There is always room to grow and we are in the process of examining all of our markets to see where we have work to do.
I believe a strong service network is a key component to long-term success.

Question: HOMAG has a 
market share of about 30 per cent. Are you happy with that?
Ralf W. Dieter: No. That is not enough for a business of our size. Our plan is to work hard to increase market share and I believe the key to that is the combination of good products, good service and a good digital strategy.

Question: What’s your forecast for 2021
Ralf W. Dieter: We are aiming to book orders in the range 1.17 to 1.27 billion euros, turnover in the range 1.12 to 1.22 billion euros, and an EBIT margin of four to five per cent. Right now, the trends we’re seeing are pointing in the right direction.

Question: Your medium-term EBIT goal is said to be nine per cent and a market share of 40 per cent. Is that realistic?
Ralf W. Dieter: We want the EBIT margin to reach about nine per cent by 2023. The market share will vary according to the particular product sector. I am looking at the sectors where we are not doing so well to find our why that is. Our minimum target is a market share of 40 per cent and with the support from Dürr we have the liquidity and determination to get there.
Question: How to you feel 
about the future of trade fairs?
Ralf W. Dieter: We will have to rethink trade fairs. I think the future is for a smaller stand with more supplementary items on show in digital format. LIGNA for example is very important in sustaining customer loyalty, especially for smaller customers.
However, in my experience, most of the sales made at trade fairs would have happened with or without the fair. This is particularly so for systems. There is no need to set up a demonstration machinery line that’s 80 metres long. Customers already know that we can do that if we want to. n