The whole sector was affected. "But when we received 60% to 70% less orders from our customers than previously agreed, we got into a rather tight spot,” describes Karl-Hugo Schick, Managing Partner of the automobile supplier Burgmaier Hightech, the sales slumps experienced by his company in January and February 2009. The company from Laupheim in Baden-Würtemberg produces cylinder heads featuring the latest injection technology for diesel engines for the big players in the industry such as Bosch, Delphi, Denso and Schaeffler Group. These products use less petrol, have lower emissions and at the same time boast a higher performance. Fantastic products you would think, but the order crisis in the automotive sector also started to affect suppliers and in the end was felt by Burgmaier Hightech GmbH + Co. KG as well.
Problems with realising promising investments
In 2007, everything was still pointing towards growth. The company generated positive results and expanded its capacities. Karl-Hugo Schick invested again, just three years after the company had been established. “We doubled our original floor space from 5,600 sqm to 11,200 sqm and purchased machinery and equipment,” he says. This investment worth millions was necessary as in the supplier industry machinery is often specifically tailored for producing just one certain product.
But things did not go as planned. The project was delayed, naturally incurring huge costs. And the investment required more money than originally planned. “We needed an entire range of measures because sales also slumped at the end of 2008,” remembers Karl-Hugo Schick. This included taking out loans and concluding lease agreements and the partners invested their own capital in the company. The investment of Mittelständische Beteiligungsgesellschaft at the beginning of 2009 also strengthened the equity base of Burgmaier Hightech.
Improved financial position and various savings measures
Apart from improving the financial position of the company, Karl-Hugo Schick employed every means available to him for lowering costs. The company reduced working hours between December 2008 and July 2009. “We did not dismiss any employees in Laupheim,” he says. “But we were unable to extend existing temporary employment contracts.” He imposed various savings programs as well as an energy savings program. The company started heating its production facilities with the waste heat produced by its own machinery. As a result, the company no longer has to purchase fossil fuels. Raw materials inventories were reduced to cover just two days, which in turn improved liquidity. “Due to the tense situation, our company and all its employees were extremely eager to implement the various measures as quickly as possible,” explains the 40-year-old with hindsight.
Karl-Hugo Schick and his 105-strong team are optimistic for 2010. “This year will definitely be better than 2009,” he is convinced. But Karl-Hugo Schick expects that it is going to take until 2012 before the company will achieve the high level recorded by the automotive sector in 2007. He also knows that his company is extremely well positioned with the products it manufactures and its customers. And other market players see it the same way. “We received the largest number of customer requests ever in 2009. We are confident about the future thanks to the support of Mittelständische Beteiligungsgesellschaft and the supplied capital.”