Who needs cranes in a recession? Lots do apparently, for Liebherr Cranes, now Sunderland’s only heavy industry group, continues to ratchet up sales and keep 204 workers busy to the extent of winning a Queen’s Award for a 97% export achievement. Liebherr In many ways epitomises a good business.
Part of a European family-owned group employing 32,000 at 100 locations in all, it has Sunderland as one of 30 sites in manufacturing. The rest provide service and sales. Managing director Ralph Saelzer points out almost apologetically, one feels, that his riverside operation has only a fraction of the numbers who once worked on the same Deptford site when one of the nation’s oldest shipyards occupied it. But Liebherr’s prospects look secure as it runs the gamut in crane building - construction cranes, mobiles and crawlers.
You name it, the group, in its line, surely does it. Maritime workhorses are its forte.
One of the first things new apprentices are told is that Liebherr builds one in four of all cranes for the world’s ships, mostly at Sunderland. The Queen’s Award is particularly good for business in the Far East where, Saelzer says, the accolade is especially respected. Singapore and South Korea are major customers and more than 30% of product goes to China.
But German, Irish, Turkish and Dutch markets are also strong, and Liebherr cranes will also be readily seen along Britain’s coastline. Speaking of the entire group, Saelzer can say: “We’re countering recession in different ways. We’re highly diversified, with many different products. And Sunderland, being in the maritime division, is not doing badly – all in all, we’re quite well off, quite stable, working 24/7 again to keep up demand.
“The maritime section produces ships’ cranes, offshore cranes and harbour mobile cranes. We ourselves have felt the pinch - some cancellations or postponements - but offshore industries are picking up again. So we can balance these gaps with fresh orders.” Significantly, the pound’s falling value does little to stoke Sunderland’s export excellence, because the business works in euros.
It gets all its main components and raw materials from mainland Europe - mainly Germany, Switzerland, Austria and Norway. So sterling only appears in wage costs and some articles and services bought within the UK. Sunderland builds cranes in the 30 to 40 tonne range, and also the MTC 6000 - at 150 tonnes “a beast,” as Saelzer describes it.
Where Liebherr builds for construction purposes, current sales are suffering; the Spanish market has collapsed, for example.
But, says Saelzer: “Within the group we swap products in between to balance capacity. We still expect a quite substantial group result for 2010 - a little less than in 2008 and 2009 - but we in Sunderland are quite well off. We still invest, and have no major setbacks.” The group, active since 1949, has an £8.4bn turnover (the pound and the euro are presently almost equal). It opened at Sunderland 21 years ago, mopping up skilled workers made jobless by shipbuilding and coalmining’s demise, and who had not found work at the infant Nissan motor plant.
Today, at its expanded workplace, more than half of Liebherr’s Sunderland workforce has been with the firm for more than 10 years. Six employees have been there since day one. Saelzer himself came in 2002.
Since 2000, the Sunderland site’s crane production has risen from 63 to a peak of 189 in 2007, with only six fewer built in 2008. This has raised turnover from £23.7m to a 2007 peak of £59.8m, and easing by less than £3m since - remarkable, given Liebherr’s prices are up to 30% more than competitors’.
Saelzer looks beyond his panoramic office window to the opposite bank of the Wear, and the overlooking Stadium of Light (where incidentally he’s a season-ticket holder) and he sums up the group success formula in a word: Quality.
He explains: “We say cranes from Liebherr are the best money can buy. If you ask our guys on the shop floor, ‘who’s paying your wages?’ they’ll tell you it’s the client. We must produce what the client wants. We also stick to our delivery promises. If it’s really tight the guys here do their best to fulfil the demand. This may mean working overtime day, night and weekends.” Everything, then, suggests quality, commitment and flexibility. It starts with reaching this MD in the first place - no long, involved negotiation with PAs, PROs or receptionists, one e-mail and you’re through to the man himself. It’s a very flat hierarchy. Siblings Isolde Liebherr and Dr Willi Liebherr run the group.
“Being family owned brings great advantages,” Saelzer affirms. “They give the divisions independence. The divisions decide what kind of product they want to develop. The family has the last word, but generally that’s on the division’s side.
“The board of directors at our parent company in Austria are my superiors. Between here and the owners there is only one other level, group director, and I am able to contact the owners directly, which I sometimes do, and meet them regularly.
“They’re like you and me - millionaires, though, of course,” Saelzer laughs.
“And they are involved day-to-day. They visit our various places and apply family values.” As an example, redundancy among permanent employees is a last resort, even now.
“We’ll do everything possible to find something for anyone suddenly available. We even swap personnel around the group to keep people in work. It’s a big, big thing with us.” Investment policy also reflects family values.
“For us, it’s not about share value but about increasing company value,: he says.
“We’re cash rich. In 2008, £914m was re-invested in new factories and facilities, more than we earned that year.”
Because many departments are centralised and in Austria, operations like Sunderland’s carry small overheads. Of its £50m sales in 2008 it had £2m re-invested. About £1m is likely to be re-invested next.
The workplace is immaculately tidy despite the quayside’s swirling winds and wheeling gulls. Cheery greetings drift over to Saelzer’s towering figure as he strides past neatly stored materials towards the cranes’ outdoor testing area.
Besides job security, employees are encouraged to learn new skills. The apprenticeship scheme started in 2004 with two; now there are 27, including Harry Klein who was one of Britain’s top two last year in a SkillWeld competition recognised by the Welding Institute.
Liebherr apprentices are time and again commended in awards, and the company itself regularly gains commendations for its training standard. Saelzer has previously expressed his disappointment in the Government’s attitude to apprenticeships but setting up training schemes is now easier. Now, he says, it finally recognises that a university education for all young people is not feasible and there’s life after GCSE.
Sunderland’s scheme, aligned with those in Germany and Austria, is thorough and comprehensive. An apprentice plater, for example, is also trained to weld, read drawings, use a lathe and fulfil many other incidental tasks. “He becomes multi-skilled, that’s what we need,” says Saelzer. “Also our apprentices are sent to Austria, and Austrian apprentices work here. So we learn also about skill cultures, and our guys are doing not badly, they can compete with those in Austria and Germany.” Thus integrated, and with machinery and working methods aligned to those in the Austrian and German operations, everyone is similarly skilled; a Sunderland apprentice on foreign work experience can contribute right away to productivity there.
And, it’s mostly a male experience as yet. There’s only one woman on the engineering side in Sunderland, Vicki Shields, supervisor of the electrical department. “Vicki has a Royal Navy background, so I presume she’s used to the industrial language,” says Saelzer with a smile.
“We’ve no objections to female apprentices and do get applications. But usually when the applicants see what we’re doing they decide it’s not for them. It’s real heavy engineering.” Regardless of sexes, the standardised approach facilitates the exchange of projects between centres as production levels and capacity dictate.
“Having the right skills in place, we can be sure a project leaving Sunderland will match the quality of one leaving the plant in Germany or Austria and vice-versa,” he says.
“A client ordering, say, 10 cranes from us, may have them built in three countries - but should not be able to recognise where any one crane has come from.” As he spoke, eight colleagues from Rostock were about to be welcomed to assist with Sunderland’s present workload. Training works well here because Saelzer sees it as a key daily responsibility.
He participates in the skills group run by the Engineering Employers Federation and a lot of off-job training is done in co-operation with the Rolls-Royce North East Training Centre at Michell Bearings in Newcastle, as well as at colleges in South Tyneside, Newcastle and Durham.
Despite the Government’s push on apprenticeships, a regulation “jungle” still flourishes. Liebherr is thankful that a partner in the North East training centre tackles this particular bugbear on its behalf. Liebherr is doing its bit to restabilise Britain’s economy, and Saelzer feels the Government could go further in encouraging the apprenticeships.
The Sunderland firm surprisingly given its performance, is on paper a “small and medium size business”. Normally such firms can apply for state funding towards training, but Liebherr and many other non-national companies in the region don’t benefit in this way because their equity is held abroad.
Saelzer says: “We do our best to train in-house and externally, but it would be far easier if we too had such a tool from the Government. We could then get platers and welders trained to even higher standards.” To the credit of Liebherr’s labour relations, trade unions have stepped in. Saelzer explains: “We are unionised here – the GMB and Unite – and we have three union representatives.
It’s not always easy, but we have a good working relationship which has benefits. I mentioned we’d struggled for funding to send one of our hands on a management foundation degree. The unions asked if we’d thought to seek funding from them. We said not.
They funded 50% and we’re funding the same.” The company reciprocates, too: “We’ve just achieved the bronze level Better Health at Work award which is rarely given in the private sector. We shall carry on with it.” And you can be confident that if Ralph Saelzer says something is going to be done, then it will be.