Growth Through Technical Innovation

Gerhard Schubert GmbH is on a growth trajectory. This company, headquartered in Crailsheim, Germany, invests around 10 million euros annually into development. “We like to venture into unexplored territory and we are driven by engineering”, explains engineer Gerald Schubert, managing director of sales at Schubert GmbH, in an interview with sweets processing.

sweets processing: Mr. Schubert, both Gerhard Schubert GmbH and the Schubert Group have grown by double digits annually. In which segments does Gerhard Schubert GmbH want to grow primarily? Gerald Schubert: Our ambitions are lofty, but not unrealistic. The total market for packaging equipment is around 30 billion euros, of which German machine-builders generate about 5.6 billion euros. Our share of that is relatively small, so there is still ample growth potential.

For one, we grow along with our customers in existing markets. The markets are shifting, however. Europe and North America dominate today, but new markets will become relevant in the future, such as Russia, India, China, South-east Asia, and South America. There is vast growth potential in these markets. We can't reach our objectives through our clients' growth alone; they grow by 5% annually, but we are aiming for 10%. For this reason, we are constantly seeking to increase our market share.

We have been focusing on primary packaging for several years, and we have invested a lot into thermoforming in recent years. This is an interesting technology with regard to the new markets in particular. Filling is another important topic. We are still at the onset of development in this area, but we are confident in new technologies – primarily in connection with the trans-module – which will allow us to realise gravimetric filling.

SP: Gerhard Schubert GmbH earns the majority of its revenues with packaging machines for food products. What growth potential do you see for this area? GS: At present, around 70% of our revenues come from packaging machines for food products and confectionery, but that can change relatively quickly. The growth potential in this segment is receding, if anything. We have seen strong growth currently in the pharmaceutical segment, which makes up almost 20% of our revenues – and this trend is growing. We see great opportunities here because our technology offers precisely what pharmaceutical companies need. Further, the pharmaceutical industry requires high levels of quality and safety for their packaging. Track and trace is a major issue, as it will become mandatory starting in 2017. We have outstanding opportunities with the trans-module, because everything can be tracked seamlessly.

In order to demonstrate our expertise in this area, we founded our own expert team, Schubert Pharma, in early 2014.

SP: According to your figures, you invest around 10 million euros each year into development - and this is expected to increase. GS: Yes, we invest around 10 million euros, which equates to approximately 7-8% of our revenues, into research and development each year. Around 30 people work on the optimisation of VMS control alone – there's always something we're working on; we never stop innovating. SP: What's currently on the drawing board? GS: My brother is a computer scientist, and I'm a mechanical engineer. Together, we are very driven by engineering, which is why we have such high levels of innovation. We often explore new territory and blaze trails where no one has ventured before. That's part of the company tradition. The big breakthrough came in the mid-1970s when our father decided to leave behind conventional mechanical engineering and focus on robots. That was visionary in his time. Back in 1981 we introduced our first robot at interpack. With this decision, we were a decade ahead of everyone else on the market. We still have a head start today, and we are trying to expand or at least maintain it. At that time, it was the right decision and successful from the start with intial revenue growth of up to 40% annually.

SP: I'd like to come back to your growth strategy. Do you have any acquisitions planned? And how do you equip your production in order to maintain this tempo? GS: We don't have any acquisitions planned; that's not how we work at Schubert. When we approach new areas, then we delve into these technologies and ensure that we get good people on board who can help us develop it organically ourselves.

SP: Which investments do you have planned for your facilities? GS: We invest in our facilities in order to ensure our continued growth. The semi-finishing facility is constantly expanding as we modernise our machine equipment. In recent years we have also invested heavily in the pre-assembly of machine components and hardware modules. Today, we are to the point where we can assemble a complete hardware module in three days. This will be further expanded and streamlined. In addition, we have also been expanding our assembly space since March of this year. We are building a new plant with 10,000 m² that will be completed in 2015. The next step should then be a new plant for the pre-assembly of machine components and hardware modules. Construction is expected to start in 2016, and the plant should be complete in 2017.

SP: An important trade fair is coming up with the 2014 interpack. Which innovations will you be introducing there? GS: One of the new products is the latest generation of control system, a switchboard-free machine. We will be previewing a prototype at interpack. This development is a real quantum leap in making machines even better and more affordable.

We will be introducing a new generation of the trans-module in Düsseldorf that is even faster, more compact and robust.

A very important new product is our 3-D scanner. For 30 years we have dealt with recognition systems and have the best optical recognition system for our area of application available anywhere on earth. Scanning is often carried out with a top-light scanner, which scans from top to bottom. This type of scanner cannot recognise, for example, when multiple objects are stacked on one another. A dirty belt can also cause problems. Compared with its predecessors, the 3-D scanner has the advantage of scanning the product in three dimensions. By doing so, we can recognise the complete profile. The volume model enables conclusions to be drawn about weight and volume and, thus, the calculation of product weight. It also recognises when products on the packaging line are overlapping or stacked. Our goal is to obtain the highest possible level of measuring precision. Once again, Schubert is a pioneer with the 3-D scanner. This is an exciting issue because, for example, bulk good products no longer have to be separated – now they can even overlap.

At present we are working with two types of scanners. One scans a silhouette from below, while the other scans the shape and surface from above. Once the 3-D scanner has been implemented, this will open many new possibilities. It is likely that it will replace the other two.

Two other important topics at interpack are thermoforming and filling. We'll be showing videos on these topics. Another highlight is the fully-automated tool exchange at the press of a button.

SP: Many years ago you invested in logistics, namely in fully automated materials and parts warehousing. Which benefits has this had with regard to your service? GS: We are very proud of this. We were one of the first to delve into this issue. While we don't do everything ourselves, such as the drive engineering, we are completely supplier-independent when it comes to controls and image recognition. We have 12 million euros worth of parts – of which 8 million is made up by replacement parts alone – in our product logistics centre. There has never been an instance where we were unable deliver a replacement part.

SP: Mr. Schubert, thanks very much for your interview with us.