2008-08-20

Peter Spuhler: "We must seek the niches"

Peter Spuhler
Peter Spuhler

Peter Spuhler's interview in the "LANDFREUND" magazine No. 12/2008. Landfreund is a Swiss Agro Management Magazine

"Aebi supplies technology in the top segment, now it is essential to get the costs under control", declares Peter Spuhler, who since 2007 is the majority share holder of the Aebi-Schmidt Group. The Swiss farmers ought to adopt a similar approach in the opening market.

Does your commitment at Aebi Burgdorf result from your entrepreneurial spirit or is it more of a hobby?
Pure hobbyism and entrepreneurial spirit are not really very compatible. I stand wholeheartedly behind this commitment as an entrepreneur. I believe in the workplace Switzerland. When the Aebi owners were unable to find a successor in the family, we were prepared to step in.

How did Aebi come into your possession?
Today's CEO at Aebi, Roger Kollbrunner, was at that time involved with the Aebi family as a management consultant. He came to me with the idea of a takeover.

What the deciding factor in the takeover?
Aebi is a very good and traditional brand name. In many areas the technology is also at a very high level. We still have to solve two or three problems. Overall, the potential for a success story is very high.

You have mentioned problem areas. How was the mood during the takeover?
For a very long time the company was very cautious about investments in new technology, in new plant or in marketing, for example in the development of new markets. If no one in the family wants to continue, one becomes defensive and and pays too little attention to the basic strategic issues.

What have you changed, for example, regarding technology?
We are at present eradicating teething troubles with certain vehicle types and generally improving the products.

Is there an intensive, direct exchange between Aebi Burgdorf and Stadler Rail?
These are two completely different areas of commitment, which are only connected through the majority shareholder Peter Spuhler. Discussions only take place at the management level.

How much of your time does your position as Chairman of the Board at Aebi demand?
At the beginning of such a commitment the time required is always much greater. We have a number of projects running, such as the merging with Schmidt to form the Aebi-Schmidt Group.

What are the benefits of the merger with Schmidt?
It will help us to optimize sales and services because Schmidt maintains very good sales and service structures in several European countries. Other projects are a completely new financial and bookkeeping system, a controlling and reporting system, the new factory building in Burgdorf...

...Why is a new factory necessary in Burgdorf?
Because in a new factory, we can in future manufacture vehicles based on state-of-the-art production methods. This would not be possible in the old, very cramped Aebi factory.
What are you particularly pleased with at Aebi?
Aebi can offer very good products in a top segment. We now have to secure the sustainable technology leadership.

And your worries?
On the cost side we have to get the figures under control. A main problem remains the seasonal fluctuations in the production. We are working on balancing this out.

What overall cost reduction potential do you anticipate at Aebi?
Recently Aebi was financially not in a good condition and has been in the red for many years. In this situation it is necessary to comb through the whole operation to discover every possible cost reduction possibility.

What have you found?
We must apply cost saving measures all over the place. To quote just one example from many: Aebi carried a huge inventory, which generated costs that were far too high and tied up capital.

What turnover does Aebi achieve?
The Aebi-Schmidt Group achieves a turnover in excess of 500 million Swiss francs with 1400 employees. We are in the black, even if the figures are not exactly overwhelming.

Aebi itself as well?
Yes, just; since last year.

What visions do you foster for Aebi's sales and turnover?
The turnover is not the measure of all things. We want to operate in the black and give our customers full satisfaction with our products. Growth will then follow automatically. We offer products in a top technological segment. This is not only true for Aebi-Schmidt but also for Stadler Rail. If we want to exist with a base in Switzerland, we have to be a leader in the technology. After all, you can always find someone who manufactures even cheaper. We still have some homework to do in this respect.

How do you intend to position yourself in the agricultural machine sector? Will Aebi remain a niche player?
Absolutely. It would be wrong for us to take on the major tractor manufacturers. But I believe that further niches exist within the field of agriculture. Additionally, there is great potential in the municipal market. With a Terratrac you can mow mountain meadows just as well as you can mow railway embankments or golf courses. An increase in sales in the municipal and recreational sectors can help us to reduce the unit prices.

Which is your favorite Aebi product?
Terratrac, it is superb.

Do you have one of your own at home?
No (laughing), my garden is too small for that. But I love driving it.

What is your relationship to agriculture?
A healthy farming industry is essential. As a representative of the economic wing of the SVP political party, I have always supported the concerns of the farmers.

What is your opinion of the EU agricultural free-trade?
Basically agriculture has to be freed from the State chains. The State and the people must accept the farmer as a business man and the farmer must behave like a business man.
Are you not playing with fire?In order to release the chains, the State would have to abolish ecological and animal protection legislation. These are, however, one of the reasons why the people support agriculture.
There are two sides to this. On one side the State must reduce its influence that dates back to the cultivation plan of the 1940s. On the other hand there are a whole range of laws in ecological and animal protection areas that impose additional costs on the farmers. If the people wish to have these, then they must naturally pay for them so that the farmer can remain competitive in the international market. I personally believe that agriculture must move towards opening the market. But the two key questions are: How much opening can the farming industry stand and at what cost?

Your answer?
A complete opening would lead to a bloodbath in the farming industry. If it is to be opened then stepwise with accompanying measures; and always with the objective of bringing the farmer to the market as a businessman. The agricultural industry already brings innovative and high quality products to the market. We have a good chance of offering these products abroad in the top segment. There are definitely parallels here to the machine industry. They also have a cost and exchange rate problem.

You make a comparison between the agricultural and machine industries. But while a machine manufacturer can differentiate his product, the milk producers, for example, have a very limited influence on the end product.
That is absolutely correct. Staple foods are difficult to differentiate. But in the export of cheese or meat specialties, the Swiss foodstuffs industry can certainly operate at the highest level. The agricultural industry and the workplace Switzerland have no reason to hide. We have good prospects and must believe in them.

How would you proceed if you were a farmer?
I am not a farmer. But I would attempt to conquer niches like Stadler Rail has done.

How did you manage to expand the small company Stadler Rail into an internationally active company?
Three points are important: Firstly the technological leadership. One has to be better than his competitors. Secondly you have to have control of the costs. Thirdly one must challenge the competition. Entrepreneurship demands passion, the courage to deal with the setbacks and the will to succeed.