At a time when lide has rerely benn tougher for manufacturers in the developed world, miele’s strategy for survival is to break almost all the rules. The german company, a global leader in high-quality domestic appliances such as washing machines and vacum cleaners, is renowned for its exavting manufacturing standards and its refusal to move down-market and compete on price.
Miele bases nearly all its manufacturing in high-cost Germany and is self-sufficient to a high degree. Rather than outsource to low-cost supliers, it makes 4m electric motors ayear (enough for all its products) in its own plant near cologne. Which it says is essential to maintain its quality standards. Sales last year ...view middle of the document...
Markus miele and Reinhard Zinkann – whose families still own the business - share adjoining offices in its unfussy headquarters in Gutersloh, a quiet town in northern germany. Just along the corridor are their two fathers, who still have a say in running the business. Emphasising the sense of togetherness, the side walls to all the offices contain enormous glass windows that make the office suite resemble a greenhouse.
‘it means all the family members can see what each other is doing,’ says markus miele.’it saves a lot of time when we want to have a discussion.’
The Miele/Zinkann clan has been spending a lot of time recently debating the tough times facing the industry. Total annual domestic appliace sales in Europe – worth some E20bn at manufacturers’ prices – are barely froced down by cost pressures while volumes expand at no more than 1 to 2 per cent a year. Some 90 per cent of miele’s sales are in Europe, where it has a 6 per cent market share, with the rest mainly in the US.
Its main competitors include BSH (a joint venture between Bosch and Siemens of Germany), Sweden’s Electrolux and Whirlpool of the US, as well as low-cost producers from eastern Wurope, China and Turkey.
Apart from domestic appliances, Miele has a professional division supplying commercial caterering equipment and also sells high-quality kitchen fittings for the domestic market.
With Germany accounting for 30 per cent of its sales, the company has been hit by the country’s economic slowdown, which has dramatically shaved demand. While Miele does not divulge its profit margins, arivals suspect these have shrunk significantly since the mid – 1990s. Miele has recently put 1,900 emloyees in Germany, or 13 per cent of its global workforce, on short – time working until next spring.
More ominously for those who would like to see miele maintain its manufacturing strategies, the company has announced plans to set up a small washing machine plant in the Czech Republic next year. This will employ only 100 people but could easily be expanded, although the company has given no hint about this. ‘i don’t see how they can stick with their current way of doing things,’ says a senior executive at one of miele’s European competitors. ‘In my view, to survive they will have to face the music and move more of their production out of Germany, while making parts such as motors in their own factories is just not viable.’
The mood at miele’s headquarters, however, is serene. Markus Miele says the fall in demand in Germany has been partly compensated for by better sales in other European countries, including the UK, [plus] Australia and the US.
‘A few years ago we made our products mainly for the German market and then adapted them to orher countries and hoped they would sell,’ syas Mr Miele. ‘now we are more international: for instance, because we know people in Greece use a lot of oil, the ovens we make for this country contain special coatings that make it easier to remove oil...