FOCUS online: When talking about Bauer and Schrobenhausen, the first thing people think of is asparagus. What does the Bauer Group do?
Rüdiger Kaub: We are divided into three segments: Machinery, Resources and Specialized Foundation Engineering. There is currently a huge construction site in Bad Wiessee and we also helped create the foundations. But this is a small project compared to the Burj Al Arab. We were involved in that too.
Probably the most famous hotel in Dubai.
Kaub: Yes. Or the construction of the bridge from Macau to Hong Kong, which was also initiated by specialized civil engineers. Creating foundations with piles in the sea is something that perhaps only 30 companies in the world can do. Bauer is one of them.
However, they do not belong to the sector specialized in foundation engineering, but to the machinery sector.
Kaub: That's right. But that's why I know this sector very well, because at Bauer we not only use the machines, but we also sell them to the competition.
Bauer is headquartered in Schrobenhausen, Upper Bavaria, employs more than 10,000 people in around 70 countries and has more than 110 subsidiaries. Are you a hidden champion?
Kaub: Definitely 30 years ago. Anyone who then thought about specialized foundation engineering could not ignore Bauer.
And not today?
Kaub: In particular, competition from China has greatly expanded. The Chinese are now very good at this, especially when it comes to drilling piles at depth.
China is said to learn a lot when it creates joint ventures with foreign companies and then happily copies them.
Kaub: Unfortunately, this is still the case today. I'm thinking of a machine at Bauma 2019. It was an exact copy, even the name was in the same place. Only one letter was replaced…
…and there's nothing you can do about it?
Kaub: That depends on whether there are still patents on it. And if so, if they are valid in China.
Are there other examples?
Kaub: We built a machine with a new design. Ten days later, the contest arrived with a 3D scanner, measured and recreated everything. We were hoping to have a little more time before product piracy hit. But laser technology greatly shortens deadlines.
Where else are you a technology leader?
Kaub: For example, in screen wall technology.
Do not tell me anything. When is this used?
Kaub: For example, with the construction of the subway in train stations. But competition is gaining ground there too. More and more we are pushed into a niche market.
At the Summit Ludwig Erhard will participate in the round table “Development of the global economy: determining the position of a new value for new markets.” What needs to change from his perspective?
Kaub: If we are honest with ourselves, we lived comfortably as middle class people for many years, but we were too comfortable. We need to go more to Asia and also act more locally. When I think about the fact that we have been in China for almost 30 years and we are still shipping components from Germany to China instead of manufacturing them there, then we have missed opportunities.
It is also a question of costs.
Kaub: Precisely, manufacturing costs have to go down. This is our main issue: we have to reduce costs significantly, not by three or four, but closer to 15 percent. A lot of people think I'm crazy, but this also sparks a discussion about how we can do this.
How much more expensive is production in Germany compared to abroad?
Kaub: In steel construction it is extremely difficult to produce competitively. Prices are clearly higher than in China or India, also due to high energy costs. China is still a little cheaper than India.
How big are the price differences?
Kaub: About 40 percent compared to production in Eastern Europe. Compared to Germany, it is 50 percent more. We have a steel mill in Nordhausen, Thuringia, where we manufacture undercarriage components. But that is not the only problem: we are also looking for qualified workers such as welders or, better known, construction mechanics. But it is a difficult and also hard job. I always say bluntly that there are enough people who would rather work at the Aldi checkout for the same money.
Is there much talk about deindustrialization? How do you assess the current situation?
Kaub: Bauer will maintain its location in Germany; In the main plant in Schrobenhausen we will invest between 50 and 60 million euros. So we will increase the number of units there, but at the same time reduce the depth of production. So we will increasingly source these steel components from Asia.
Quite Asia. Is there no fear of geopolitical escalation in China?
Kaub: Our production network must become more global, including bases in China, but of course also in India. As you say, this also serves to minimize the risk if something were to happen in China.
What can or should politics do?
Kaub: Where should I start? I don't want to attack traffic lights, but bureaucracy has been killing us for years. An example: we bought a property in Germany in Drolshagen and another in Houston/Texas at the same time. Production began in the US just under a year later.
And in Germany?
Kaub: That took three years. Animals worthy of protection were discovered and the start of work was delayed ten months for this reason alone. We take all this for granted.
So bureaucracy is the main problem?
Kaub: That is incredible. Another example: we wanted to invite employees to Germany for further training and for this we needed a visa. It was almost impossible, we almost gave up. Or the Bauma fair in Munich, which is of great importance for us to be able to contact international clients. But the visa was once again a big obstacle. These are just small pieces of the puzzle, but we support each other incredibly across the board. The paradox is that we make it easier for competitors to access the German market and at the same time German companies have difficulties inviting their customers here.
Or the issue of sustainability. We can do a lot: reduce emissions and noise, we have many options. This can also sell well internationally. But if German politicians want to spread our strict sustainability standards around the world, we have huge problems.
What do they look like?
Kaub: There is a project in Saudi Arabia that the government considers unsustainable. That is why we do not take out Euler-Hermes credit insurance. But this type of financing is important. This is a huge competitive disadvantage compared to China or the United States. And also in Europe: within the European Union, France or Italy have no problems insuring these transactions with national credit insurers. This doesn't stop. But we have to dismantle these economic obstacles that have been building up over the years.
Then we return to deindustrialization.
Kaub: I'll tell you what. I have been to India three times in the last six months. It's incredible how many German companies are there and are thinking about how to gain a foothold there. The race to India is incredible. This is happening so fast that development can no longer be stopped.
It does'nt sound good.
Kaub: If we can no longer find young people here who want to work in a factory to learn professions like welding, then it will be difficult. Then it will be done somewhere else. But I would like to stress one thing: I don't see anything bad for Germany as a location, but some production areas will be moved in the future. The trend is towards the Far East and we have to be prepared for it.