Setting High Standards

Logistics Insight Asia, 1/1/2008

We will not compromise on delivering high quality, reliable, and safe material handling and storage solutions, even at the risk of losing a sale, says Brian Miles, Regional Director, SSI Schaefer. He talks here to Bob Gill.

Brian Miles arrived in Asia in 1984 to set up a Singapore distributorship for German material handling specialists SSI Schaefer. With the Asian tigers beginning to roar, it was not long before the company realized that there was the considerable potential over in the Far East. The distributor became a wholly owned subsidiary and, later, the operational hub for a rapidly expanding regional network ofSchaefer sites.

Today, Brian Miles oversees an area that extends from the Middle East right down to Australia and New Zealand, encompassing 12 offices and two manufacturing plants (Malaysia and China), with further expansion in the pipeline. The healthy growth is reflected in sales revenue, which doubled between 2003 and 2007 to reach some 100 million euros.

Q: What are some of the key factors behind Schaefer’s recent growth and success in the region?

A: To give customers the level of service they need you have to have people on the ground. So to develop the market in Asia we decided to establish our own subsidiary companies, staffed by our own designers, project managers, and sales and service people to provide a real local presence.

Planting these roots shows that you’re in a country for the long term, which provides further assurance to the customer. With the distributor approach, you are only as good as the guy representing your portfolio, and the allegiance can change at any time.

We are also one of the very few companies that is a “one stop shop”, in that we provide all the hardware – plastic containers, racking, conveyors, sortation systems, etc – plus all the necessary design, project management, and integration services. Thus we are able to carry out turnkey projects using our own resources.

Q: And what is the current state of the markets thatyou serve?

A: Right now, our single largest and also highest growth market is the Middle East. And we have only been operating there with a full subsidiary for six years. Oil at $100 a barrel means there is a lot ofmoney to spend on infrastructure.

Dubai is witnessing tremendous growth as it aims to be the hub for that part of the world; three million square meters of warehouse space is being developed in Dubai Logistics City (DLC), for example. We will be supplying the racking system for Panalpina’s 10,000 sq m warehouse, which is the first to be built in the DLC.

And there’s also significant logistics related activity in Abu Dhabi, Qatar, Kuwait, and across in Armenia and Azerbaijan.

We are also seeing good growth in China and Australia. Being a highly competitive, price-driven market, for us, China is not as “frantic” as the Middle East. We are opening our first subsidiary in India later this year; the country is a lot more attractive now that the import duties have been reduced.

Q: HOW ABOUT SOUTHEAST ASIA?

A: Good, steady growth overall. Our business is generally geared to population levels and that’s one reason why Indonesia, Thailand and the Philippines have good potential. And rising incomes drive demand for food, clothes, consumer goods, etc, which again is a positive for us.

There has been a slight cooling in Malaysia, mainly from an oversupply of warehouses. Vietnam is coming up strongly although there are still some issues in doing business there. In Singapore, given its drive to be a “hub”, a lot of our business is with the logistics service providers rather than manufacturers.

Q: WHAT TRENDS DO YOU SEE IMPACTING THE MATERIAL HANDLING BUSINESS?

A: As I mentioned, when people’s lifestyles change, e.g. because of greater affluence, then the market will tend to follow to meet these new desires and aspirations.

For example, in Asia, where the norm has been daily trips to the wet market, there is an increasing acceptance of frozen food, which is driving development of the “cold supply chain”.

And greater emphasis on convenience and 24 hour service is increasing the frequency of warehouse activities like item picking, which is driving demand for the type of semi and fully automated systems that can help meet the increased fulfillment rates.

Q: WHY SHOULD A PROSPECTIVE CUSTOMER SELECT SCHAEFER AS ITS SUPPLIER?

A: We are an international company and we follow international design standards like FEM and CEN. Lots of companies in Asia will claim they follow standards but their products have rarely been tested or approved. If you buy the cheapest steel to build your racks then you are trading safety for cost, which is something we will never do.

Because we won’t chase the low cost market, we tend to have the more selective clients such as the P&G’s, Unilevers and BMWs that have their own corporate standards to follow. What we are selling is German quality and reliability with equipment manufactured in Asia to international standards.

Gerhard Schäfer, who, incidentally, is now 83 and still goes into the office every day, built up the company to have a reputation for quality, service and performance, and this is a philosophy we follow here in Asia, even if it means losing a sale.

Q: HOW SATISFIED ARE YOU WITH THE GENERAL MARKET AWARENESS OF SCHAEFER?

A: There are companies that have been in the region a lot longer than we have and are better known, but the awareness is growing – our revenue figures are a fair indication of that. We can certainly do more in terms of product branding and are increasing our marketing spend accordingly.

Q: WHEN YOU ARE LOOKING TO HIRE NEW STAFF FOR THE BUSINESS, WHAT KIND OF PEOPLE DO YOU LOOK FOR?

A: For country manager positions, I am after people who can lead from the front, who don’t need day to day supervision, have strong sales and marketing skills, and who are trustworthy. We pay our staff well, give bonuses, promote internally, provide people with the chance to move around. In return, I expect a high level of commitment.

Whereas some businesses, like forklift trucks manufacturers, for example, can depend on service contracts and spare parts as a source of revenue after they have made the sale, we are not in that position. We may work for a year on one warehouse project, but once it’s over, we have to move on to the next one. So it’s important for Schaefer staff to understand that the company is only as good as its customer base, and that we have to continue to find new customers and develop new markets.

Q: WHEN SOMEONE HEARS THE SSI SCHAEFER NAME OR SEES THE LOGO, WHAT SHOULD BE THE FIRST THING THAT COMES TO MIND?

A: Storage Solutions. We don’t want people to think of us as just a product company – because we are much more than that. Working with the customer as a partner, analyzing workflow, designing optimal solutions – this is how we bring value to the table. And that’s how I would like us to be perceived.

Q: FINALLY, WHAT CAN WE EXPECT TO SEE FROM SCHAEFER IN 2008?

A: This year, India will be a big development as we open our own office there; we expect further good growth in our key markets; we are increasing our production floor space at the Malaysia factory by 4,000 sqm; and a number of new products will also be launched. Schaefer is now the market leader in Asia – something we have achieved by providing solid service and support to the customer base – and we intend to work hard to stay there.

Brian Miles, Regional Director, SSISchaefer

Schaefer Seismic Drive-In System