That means to follow the mantra to be “in the market for the market,” he said. “The way our business is done in the US is a little bit different than it is in Europe or Asia, but the fundamentals are the same everywhere.”
Gerstenberger said the strategy is to act more market-driven, or work from the outside in, rather than the other way around. “You develop, produce and provide solutions, which are more than just products,” he said, noting that can include supplying predictive maintenance services, using digital tools and relying on data for guidance. “We want to do that together with our distributors and other partners.”
He talked about connecting the old world with the new world. “The old world is we develop, produce and sell. The new world is you connect, you use information, you digitise. You have smart factories, you use automation, and you work with the internet and e-commerce.”
One aspect of the integration that remains ongoing is what philosophy will be followed in factories around the globe. Gerstenberger said Veyance – particularly in North America – often operated factories that were 100 percent dedicated to industrial fluids. ContiTech in Europe, on the other hand, often had “zebra plants,” where several different business units shared one plant.
“That is something where we as a company have to decide in which market does which production process make sense,” he said. “We have not yet 100 percent defined what that will look like. What we have defined in my unit and ContiTech in total is that our production process needs to be transformed from the old way of doing things to new.”
Gerstenberger's unit has room for improvements in its product portfolio. He said it is unrivaled in terms of rubber-based industrial hose, but it needs to make progress on the hydraulics side of the business and in polyvinyl chloride products.
The business climate in some sectors – particularly oil and gas – also has brought about changes in ContiTech's industrial hose operations. Gerstenberger said a hose plant in Turkey was closed earlier this year, and production schedules were adjusted in North American factories that had a high dependency on oil and gas.
“Besides all the optimism, we also have some tough homework to do,” he said. “We have to look at our manufacturing footprint and how it serves the market and industry, and we have to decrease our dependence on the petrochemical industry.”
He likened the diversification strategy to that of a chair, which starts to be stable with three legs, is better with four and is really safe with five.
“So if your business portfolio has four or five strong legs to stand on from an industry, customer, product and global/regional perspective, then it is easier to balance uncertainties.”
Gerstenberger said the oil and gas sector was so strong from 2012-14 that many firms understandably focused on that business while neglecting other opportunities.
Those particularly serving the production side of oil and gas were hurt, while those on the demand side weren't impacted as much.
But many suppliers to the industry, including ContiTech, were caught by surprise when plunging oil prices led to such a precipitous drop in business.
“That led to a very rough wake-up call for everybody,” he said. “We will balance our portfolio of business activities and focus more than in the past. It doesn't mean we don't like petrochemicals, but there will be other industries that we put more focus on.”