However, with such a class of product, it has been into Red for the last two consecutive years. No wonder the CEO got changed this year. Shareholders don't listen to impeding conditions and only want to see the growth trajectory.
FMCG companies, Banks, MNC, etc etc each of them year after year try to show growth to keep the shareholders pleased. No matter, how much the books have to be cooked or what funny things need to be done, otherwise the managers life is miserable. AIG, GM, Citi Bank, Enron, and now Toyoda have all shown that relatively risky decision are taken to keep the stock market in good humor for their stocks.
This reminds me of my own personal experience, when I first presented my budget for my little business and had shown some 9% growth over the previous year. I had a brilliant boss, ( in fact I had the privilege of working with many brilliant bosses, I must admit, each of them better then the other ) who advised me Atul, Future is not always Previous Year + 10%, but it is something which will show exponential growth. I did that year, 100% over my budget and he has a President created history for the company for his full business.
Now, the above story relates to the Power of Thinking. Wherein great managers do not move the company incrementally, but exponentially.
SSM was such a success story, where Beat Siegrist, ex CEO, created exponential growth for the company. He moved further to manage other businesses, and Herr Nadalini took the process forward, however, after Beat and then Nadalini departure never could get the company back to the same acceleration.
Let us dig into this interesting Case Study.
SSM specializes in Winding Machines and at one point of time, it was Rewinding Machines, Soft Package Winders, Assembly Winders, Gassing machines and later added Air Covering Machines. Then went in to take over Stahle and Hacoba.
SSM was one of the first winding machine makers to make a modular machine, where each position was like independent machine, precision winding technology for the first time came in for spun yarns, speeds went up from 400 metres per minute to 800 metres per minute or still higher. And above all the machine was rather simple and would make a very nice final package.
SSM had product offerings for both Filament yarns and Spun yarns. The Filament machine was any time much better with its flexible traverse and flexible crossing angle , and could run soft, rewinding or whatever application required winding. Spun machines had a propeller traverse and this was also an interesting change from the old system of wire guide or drums. The world flirted with these machines. If it was winding, then it was SSM. Fadis was a distant second and then there was no one.
SSM was a virtual monopoly as far as good winders were concerned across the globe. And when a company slips into this stage, it only breeds complacency and over confidence in its management. This is what happened to SSM. After having innovated and positioned itself on the Top, it forgot that, competition is always tracking the success and redefining itself.
It also forgot that the honey moon with the innovation is only for a limited period, then market wants the next innovation. Which SSM never planned.
Now, before I take up competition and what it did to SSM, let me analyze for the reader, whether the innovative technologies actually passed the Viability Threshold for the user or was it the hype of the brand.
Soft Package Winder for filament yarns : As a machine and its design, PW1 and now PW2 is a very nice machine, perhaps the best of the Horses, SSM has and it later successfully changed it to PW6 and made the spun yarn run on the same machines, which was quite ingenious and intelligent.
Viability Threshold Test : At a certain price, this machine was great. However, given that texturized yarns, which are the largest of the filament yarns, that get dyed, this was not the Ideal solution in terms of investment.
DTY yarns are by far the easiest to dye and a simple soft package winder, converted out of the take up of a texturizing machine, which Lohia or Himson sold in India and no other company in the rest of the world was the best solution for this application.
These machines would run at 800 to 900 metres per minute and had a texturizing take up, which means, a dyer could actually take up large packages and get a much higher effieceny in yarn dyeing . These machines are at crazy low prices. but again Lohia and Himson were nowhere to be mapped as a potential threat to this product line. So SSM enjoyed the position and Fadis was close second. It will not take long before Barmag finds out this application or Indian companies realize the potential of their winder.
SSM still is not aware of this threat, but is the biggest threat in this segment , when it comes to passing the Viability Threshold. With Stahle in its fold, SSM should quickly bring this model forward. However, for certain applications like Nylon or viscose yarns, or flat yarns or rewinding to pineapple cones , PW2 is still the best solution without a comparable technology.
Second is the spun yarn soft winder : Which is now PW6. Actually for spun yarns, as long as a dyer uses Mantex Dyesprings, there is absolutely no use of a precision winder. A good random winder is more then enough investment.
Visit any Japanese yarn dyeing plant and most of these have only random winder.
However, my favorite is always the example of Pacific Textiles ( with its visionary Technical Director, Dr Clemant Lam,) in Hong Kong, with its plants in Southern China and Sri Lanka and is now adding a plant in Bangladesh. This company has one of the best and large yarn dyeing and exports to US Top Brands. I tried many many times to sell a precision winder to him and he was unequivocal in saying that as long as a company uses MANTEX DYESPRINGS, there is never any need for a precision winder. Because Mantex Dyesprings bring in the same functionality of Density equalization , what precision winders will do with large investments.
And, I could not agree with him anymore. But then it needs the conviction and expertize of a Dyer Like Dr Clement Lam to run a dye house. Dr Clement Lam did his doctorate from UMIST UK and has 30+ years of experience in running a dyehouse. So, it is not just the enthusiasm to avoid a precision winder, but the expertize and genius of a dyer to use the optimal solution.
Therefore the PW6 actually does not pass the Viability Thrshold Test, however, till the world realizes , PW 6 still has a potential. But again as a machine, it is a very nice and versatile machine. Only if it was clubbed with MANTEX DYESPRINGS, it would have added the benefit of density equalization, expanded capacity of dyeing without additional capital outlay and lowered the operational cost of dyeing. I wonder, why did SSM, remove the presentation , it had for dyesprings along with its soft package winding machines. Atleast, there the Viability Threshold was borderline.
Assembly Winder : SSM failed in this segment. When I say failed, not that the machine failed, but the investment could never justify the viability threshold. None of its engineers could convince the buyer that a smaller pot diameter in twisting was the key to the investment into precision winder. ( Later, we will see, how the competition used this tool to corner and grow manifold) However, in Europe and in South America, it managed clubbing its drum winder as the solution.
Gassing Machines : The Investment Viability Threshold was not important, as the solutions were either Ritte or SSM and SSM is anytime a good choice.
Air Covering Machines : An excellent extension to winding , but was wrongly priced. Adding a few rollers and room for air jet does not make a machine 50% more expensive then the standard winder. SSM created its own barrier in viability. A very nice market, which could have been exploited with sensible pricing was lost with wrong pricing decision. SSM could have flooded the market with this product, but concentrated on the wrong segment and ofcourse a wrong price.
Re-winders etc have limited markets, so we will not discuss the threshold.
Stahle and Hacoba : No comments on viability threshold, because I always considered both these product lines superfluous to SSM.
Stahle is a niche machine, but the fact that the product had a limited market, the company went bankrupt. And was more synergistic for Barmag , then SSM.
SSM had no experience in texturizing and to start venturing into this segment would take a long learning curve. And now with Nylon as a focus of SSM for this machine is again deviating from its original niche.
Hacoba was again a sewing thread segment, which is a fragmented market, except for Coats , A&E and few more European players, the viability is doubtful. However, here again, there is atleast a room for growth in this market at sensible prices, given that garment manufacturing investment is increasing on year to year basis.
To sum up , the viability threshold for each of the product line is questionable, so as and when competition attacks, the chances of sales slipping away are highest.
This is exactly what happened to SSM. Let us now study the competition and its influence .
First Error:
SSM segmented the markets with its product applications and not as per the Industry Segment, which is to say, winders for knitters, winders for towel makers, winders for spinners, winders for Polyester plants, winders for home furnishing companies, winders for elastic makers, silk winders, winders for narrow fabric makers, winders for metallic yarns, winders for Industrial Yarns, winders for Technical Textiles and winders for special applications.
The result was that the sales team would only focus on the dyeing and sometimes rewinding segment of the industry. They could not travel beyond and see that the global industry was very well segmented by Product and not by application. If you visit the website of SSM, then it is like a notice board, ( Actually more like a railway time table ) where one should find his application, it is not about solutions for knitters, dyers, weavers, etc etc. Until and unless you are a textile engineer, you cannot spot the machine required for your application. Knowing well that most of the knitting, weaving and such post spinning areas are fragmented and medium sized companies, where the owner does not know, what is long staple or short staple or elastene, he quickly abandon and moves past and calls the local winder supplier to help him with his requirement.
Knitter would need air covering and may need rewinder and may need soft package winder and may be some special application machine.
So, if they had a sales rep, who was attacking only knitters, then one segment was already covered.
Similarly for weaver, there was a rewinder, because one and every weaver has left out packages and he needs a 6 spindle winder and if it has length measurement, then it is like sone pe suhaga. ( Gold Plated ). Therefore a special winder called " Weavers Delight " was not there. Only if a weaver would approach the machine maker and ask for such a winder, SSM would quickly offer one of the rewinder. But , if would have posted on the net, Weavers Delight, Price starts Euro 9990 for 6 spindles, then it would have created a whole new market for a very large untapped weaving segment. ( But this is one segment, no winding maker has exploited )
The extension of similar segment would open opportunities which were never linked to the product.
What I love about FMCG is that they have sales rep who is all the time in the field and visiting customers . And these sales reps are very low salaried and have very high incentives and the qualification is only enough to track the opportunity. The sales, anyway the manager would ensure. This concept is not there in Industrial Marketing .
Thus with a channel marketing of Agents, the way of marketing of each and every machine maker is spotting new projects , replacment and expansion projects. It was never about expanding the market itself.
The result is that SSM is now perceived as a Soft Package winder and Rewinder company. If the Industry segment finds a solution for itself in the winding offerings of SSM, then it is lucky for SSM, otherwise, it did never spot the opportunity itself.
Second Error : Under Estimating The Competition.
In markets, where capital goods industry is well developed, the competition profiling has to be very rigorous. Say for China and India, the situation for SSM is not the same as in Egypt, Bangladesh, Central Asia or S. America.
China, Taiwan, S.Korea and India on account of their highly Industrialized positions have the competence to track the global technologies and quickly bring forward a competing solution. No matter, how much foul is cried for the Copying, the reality is that the business in these countries is a real challenge for any machine maker. And to sell into such an environment, one needs a very aggressive sales positioning , as these are also some of the worlds largest markets . And interestingly , Indian, Chinese, Taiwanese and S.Koreans, then do not limit themselves only to their own domestic markets, they become regional and later global players.
SSM did succeed in China, but in reality, it was majorly in the South region, which was again the investments from Hong kong or in Hangzhou and some other small areas, where there was Taiwan investments. For all the other areas, it had marginal success, but still not so bad. In rest of China, it was the brand " Switzerland" that would sell and not SSM. ( Selling machines into China is another long story, I will write a blog soon)
In India, it did quite well, till a leading Indian winding maker started challenging the SSM product line. Year 2002, ( I had left SSM channel partner at this time ) the competition first found the gap in the spinning sector of SSM, and quickly moved forward to take away this segment. The irony was that SSM did not even know, what was happening in the market and before my departure, I had very strongly advised the sales manager that the southern region rep was extremely weak and he should not depend on him. They ignored my warnings and the result was that within 6 months, competition had sold around 500 spindles and within one year, they sold 1000 spindles, thereafter there was no looking back for the competition. The success was the effort of one single man in competition and failure of one single man in SSM. Despite SSM having placed its own sales manager alongside the sales rep, the quality and skill required to stop the competition was missing.
Competition is " Peass " a winding maker in India since last 40 years, so it is a strong brand and for them to capture the rest of the market was not difficult at all. However, the story did not end here. In SE Asia, I took over the marketing of this brand and for me it was very easy to sell, given that I knew the weaknesses of SSM. This meant, India and SE Asia was marginalized. Other markets like Bangladesh, Turkey, Egypt, West Africa and little in S. America were also quick to find value in this brand.
By the year 2007, Peass was at ITMA and there, it was now a run away success. The world had seen an Indian company with competitive offerings. And ironically the competition was always willing to tie up with SSM to find a common ground for success, but the opportunity was more seen by Schlafhorst and ultimately this company is now Peass- Schlafhorst . And what can be more interesting, that only division which makes profits in Oerlikon is Peass -Schlafhorst.
The lesson is " Never Underestimate The Competition "
The biggest failure of SSM was not about the competition low prices. But for SSM to have not been able to visualize that competition had only and only one product and all it required was to place a fighter brand at the same price band and kill the competition. However, this kind of foresight was never there in the management. SSM was in the same vicious circle of low price versus high price, as I wrote in my last blog.
Third Error: Not Exploiting the Modular Concept
The beauty of modular concept was that one never had to invest heavily and hence the smallest machine of less then chf 10,000 should have been targeted to one and every application area and industry segment. In fact, if chf 5000 was possible, then make it only 3 spindles and shove the machine to all of them. Many many of them would have then gone into extend the machine and the customer base of SSM would have gone up manifold.
We have already seen that as long as the value of product is low, everyone tries it for whatever it may be worth. Further, feels pride of owning a Swiss machine. It is all about getting a person started and once having tasted, he automatically comes back.
Fourth Error : Lack of Innovation
Herr SSM, Innovation is not about adding UPS to avoid a ring on the soft package, or adding a digitens or tensiso, or presitens or lubitex . The customer is only making simple yarn, which is most of the time is an input to the next process and any of these application is not making any difference to the customers revenue stream. Market values these as standard supplies for machine differentiation. These are cosmetic innovations. Like applying lipstick to a pig. But is still a Pig. ( Famously told by Obama )
SSM did not have any Textile Technologist on its board or management. The result was that, it could not ever find any further industry solutions with its product offerings.
Air Covering or the Slub attachment is a good application , but the thought process could not be taken further.
Herr SSM, if the Japanese can make MVS and shrink the process of simplex, ring spinning and winding, then they could see beyond the usual. Similarly winding is only a secondary application ( whether soft or rewinding or assembly winding ) and not a primary output , so its value will never be judged by the industry, till you could find primary applications like air covering.
Let me list out for you many such applications, where the value of winding machine changes from a secondary machine to a primary machine.
Herr SSM, hope you recall the famous ad campign of UBS bank.
You see a child playing with his grandfather, we see succession planning.
What you see as winders, we see as potential Sizing Machine.
It does not take in 21st century "n" number or rollers to size cotton yarns, but it takes a smart resin application on the winder to make it strong enough to weave the yarn. We therefore see winder as the condensed smart sizing machine.
We see winder as the yarn dyeing machines condensing dyeing, drying and winding.
We see winders as the Machine changing normal tenacity yarns to High Tenacity yarns and give solution to technical textiles.
We see winders as the solution to make comingled and speciality yarns.
We see winders making Industrial yarns. Twisting and winding togather.
Making of Industrial yarns : There was no technology to make high deniers beyond 1100 deniers and I have now developed winders to make upto 5000 deniers and would come out with yarns upto 100,000 deniers soon. I will show these yarns in Bandungtex.
We see winders as Twist setting and conditioning machines.
Conditioned yarns on winder : See my product at Bandung Tex.
Nevertheless, you can buy all the above machine "application" patents from me.
We see winders as the yarn hairiness removal solutions and not gassing machines as the solution. See my yarns developed out of winder at Bandung Tex exhibition.
So, what you see as Winders, we see Technology.
The biggest opportunity of Innovation was when the world moved to compact spinning. SSM did not spot the opportunity that yarn hairiness was a forte of SSM and it could duck in the fire box into its winders or offer the fire box to the autoconers. Rieter and others made the best out of it.
Herr SSM, it needs the genius of a Textile Technologist, besides the management to run a technology oriented machine company.
In a world of Knowledge economy, it is the knowledge which is bringing about value to the organization, the commodity time is gone.
If Nokia can take away the market of canon and sony on camera and become the largest selling camera in the world, then it has silently intruded into the domain of camera makers and captured the global market.
It is upto you to see winders as sizing , industrial yarns, conditioning, twisting etc etc as your Brainware or be contented with fighting head on with other winders.
If only IBM would have seen the PC market rightly, it would have not collapsed on its mainframes.
Conventional Machines are like PC makers, the world will see innovative designers, who would sell designs on the internet and assemblers will make machines. It is time, that SSM changes and moves forwards and be the provider of the core components to these assemblers. Winding machine is all about the winding head, rest does not matter, any machine shop will do it for you anywhere in the world.
If the Japanese can fully make a machine in Japan itself and yet be successful, then moving production to China is not the solution. The solution is to create an assembler in India, China, etc etc and sent him the winding head .
And for technologies, until you really have technology geeks,, this is too big a dream to capture. I don't see that subtlety in SSM or for that matter in any European machine maker. This is what is "Innovating the Future ".
Well I am being arrogant here, but then there is no other person under the sun, who knows winding and its markets better then me.
Herr SSM, in the Indian subcontinent, we have a saying. " Jo Jita Wo Sikander " ( One who wins is Alexender the Great " and I will make an extension to it, " Jo Hara Wo Chukander " ( Who Looses is a cucumber )
Herr SSM, when your sales turnover in the year 2009 slipped from 82 million to 38 million with losses of 7 million CHF, Peass turnover moved up from 16 million to 22 million CHF and its profitability could have sent Zurich stock market to frenzy with its stock, had it been listed there.
Bitte lesen sie dies für die Möglichkeiten zur SSM und nicht als Kritik.
Aufweidersehen. Kunder ist immer richticg.
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