TRUMPF - Vom Maschinenbauer zum High-Tech-Unternehmen – CFO Dr. Lars Grünert im Interview

Well, I definitely wanted to make clear that such a development is only possible if you also develop side products, innovations, the business model, and have a good control system to support it. I think that's a good combination, and there's a lot in that.

Very gladly. TRUMPF, as you said, comes from machine building. We make machine tools for sheet metal processing, but over the last decades we have developed beyond that. Today we are a leader in laser technology for industrial manufacturing processes, and also active in electronics. Most recently, very successfully, we make CO2 lasers, gas lasers for semiconductor lithography, so we are a very essential element in microchip production. We have a sales volume of four billion euros, 17,000 employees worldwide, but still focused here in Germany. We are a family business headquartered here in Ditzingen near Stuttgart.

I can also say we tried a lot and did many things that didn't work. That is very important. To develop, to open up new markets, to generate growth, you must be willing to fail, to not be successful with things. Here, our company structure as a family business helps us, having shareholders who closely accompany this process and also support us. That is a very essential element: accepting failure. I believe a second element is that we are ambitious, we want to continue to grow, we are not satisfied with being a good machine builder for sheet metal processing. We want to use the know-how and competencies we have in the company to find new applications and enter new markets. I think those were the decisive factors to then steer the company into new waters, while also transforming and developing further.

Yes, I also tried to make clear in my talk that a few points are important for that. First, you need strategic competence. It is clear that our strategic competence 10, 20, 30 years ago was different than today, but even back then we had strategic competence. Today we do it very systematically, very soundly, strongly analytically driven. That is important: to flank the company's further development with a further development of this strategic competence. I believe that was crucial for the further development of the company. Another point is that we use the competencies we have in the company. Organization is important; today we have a divisional organizational structure that accounts for the individual business units, with management closely tied to the business. I also made clear in the talk that M&A was decisive for us: making the right acquisitions that on one hand advanced us technologically, or brought us new business fields.

Our senior boss always said, fortunately, slightly more succeeded than failed. That is correct, something must succeed. There must be a good foundation where you are financially profitable and stable, making such experiments possible. On the other hand, regarding cycles, we have phases where TRUMPF's business is weaker, where we have difficult times. The capital goods industry is particularly dependent on economic cycles. I think there are two sides of the same coin. One is that in those phases we are financially stable, that our shareholders also then forego financial performance or cut back; they understand our business and accept that in such phases we are not quite as successful financially as in the high phases of our business. At the same time, as management, we are required to react in those phases, and our flexibility helps us. Quality on one side, flexibility on the other. At TRUMPF, we have always placed great value on having flexible structures: working time accounts, for example, and a value chain structure that gives us flexibility. So we can also ensure a certain financial performance in economically difficult times.

I think, on one hand, a broad competence. Before, as a machine builder, we mainly had mechanical design competence. Today, software competence is much more important. I have to think in more comprehensive solutions. I have a much broader range of competencies. I believe a second point is to talk about corporate culture again. You have to delegate responsibility, you have to give managers and employees the trust to try something new, the courage to do something new. And here again, our shareholders, the family, are ones who strongly promote that and also accept setbacks and look at how it was done, not just at the outcome.

Yes, I was able to prepare well for that role. I've been in various commercial leadership positions for 20 years, and as CFO for seven years. I believe what's important as CFO in such a company, a family high-tech firm, is that I have to have a handle on the finance side. I have a good structure, very good employees, good systems. I think we are very well set up there. My role is more that I engage with the business very well, understand it well, and can argue from a financial perspective. But I am not put in a corner like 'Mr. Grünert, if you report the numbers, thank you, we don't expect more from you.' It's quite different with us, and that runs through the finance area at different management levels. We are allowed and expected to have a say in the business and contribute. I think it is also important what you just said: you can only be a sparring partner for management if you understand the business model in a more differentiated way. Only then are you taken seriously. But let me add one thing: at the end of the day, you are part of the team. I bring my opinion and my perspective, but in the end, it was always important to me, and that corresponds to my personality and I believe it's a good character trait, that as a team we make a decision together. It also requires willingness to compromise, to say, okay, let's go this way, even if I have doubts, I stand behind it. I believe you need that ability to be accepted.

I don't know where you heard that, but it probably fits quite well. The euphoria I typically leave to others. But I also see that self-critically when you are the one who sees everything critically and only sees pitfalls, that's not good for you. So you have to be careful to also be enthusiastic, and I am that. I say, this is actually a great topic. I was given the responsibility and was very happy to be responsible for a new business field we acquired. And there I cannot stay in my classic CFO role; I have to act entrepreneurially. It did me good to put on a different hat back then.

Yes, it was important to us in recent years to meet the demands of the business from the finance organization. First, we aimed to appear worldwide as one finance department. We have a very decentralized structure with various companies having their own finance responsibilities, and that's good, we don't want to throw that overboard. But we say we have a common understanding, we act similarly, we work with the same systems, etc. That's something we have changed in recent years and developed. Then, regarding the shaping of roles: we say a finance person in a smaller company cannot wear all three hats well: first, being a very good advisor to management and knowing the business well; second, perfectly mastering finance processes; and third, governance topics. Those roles we are now shaping separately for each. That is a significant change for some employees, but I believe it will make the finance area even stronger.

Yes, value contribution is quite classic. We oriented ourselves strongly on the typical definition. We take a profit figure, for us EBIT, and subtract the cost of capital, i.e., invested capital multiplied by the cost of capital rate, and the remainder is the value contribution. Why did we do that? For two reasons. One, we always had a very strong focus on results at TRUMPF. EBIT margin or earlier profit before tax as a percentage of sales was always very pronounced. But the invested capital – what have we put into plant assets, machinery, buildings, how much is working capital – that was a bit neglected. We were also never under cash pressure, except during the machine tool crisis in the 90s, but in recent years we have been financially very strong. So that topic was underdeveloped. We said we want to change that; we want to be efficient there as well. That is achieved very well via the value contribution and the invested capital, because it clearly shows the influence of invested capital on value contribution. The second argument is that we are now more broadly positioned with different business fields. Different business fields have different risks and possibly different capital needs, which can be very well expressed in the value contribution. So if you have a larger portfolio to manage, the value contribution is very suitable.

Yes, thank you very much, thank you.