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It’s difficult to overstate how disruptive the COVID-19 pandemic was to businesses worldwide, but according to President of Andritz China Thomas Schmitz, challenging times can lead to necessary and positive change.
A wholly-owned subsidiary of Andritz Group, Andritz China specializes in four main business areas: pulp and paper, hydropower, energy and environment and metals. With more than 2,100 employees and four manufacturing centers across China, the company reported historic performance in 2023, thanks to Schmitz’s leadership and his dedicated team.
“There is a saying, ‘Never let a good crisis go to waste,’” Schmitz says. “Sometimes outside pressure can focus your team and help get things done. In our case, it forced us to grow up fast and become more independent which contributed to the success we’re seeing today.”
In early 2020, just before Chinese New Year, Wuhan went into lockdown, beginning a long period of turbulence for the Andritz China team and its customers.
“We had a very special situation because we were sealed off,” Schmitz recalls. “People could leave China but it wasn’t certain whether they would return.”
Facing immense uncertainty, Schmitz explained the seriousness of the unfolding situation to his colleagues in Europe. While that happened, the senior management team of Andritz China in Foshan began preparing the company for what was going to come. When asked how to keep employees safe and the business running, they explained they were setting up an emergency response plan, including a system to ensure everyone could communicate easily, Schmitz explains.
“Leadership is about motivating a team in terms of focus and direction.”
Rather than scaling down its operations, in 2020, Andritz decided to invest US$42 million to build a workshop to showcase the latest digital solutions, Schmitz explains.
“We wanted to send a strong signal to the government and our customers in China that we were still confident in the market, as well as demonstrate technology that allows for fully transparent monitoring of what’s going on,” he says.
Despite the disruptions caused by the pandemic, Andritz China was fortunate that due to the strict quarantine rules in China, most of its workshops and many of its offices avoided being closed due to COVID-19 restrictions. Yet meeting and servicing clients remained key challenges.
“Due to the changing conditions, we didn’t know whether appointments with customers would go ahead,” Schmitz remembers.
“This made us think a lot about customer relationships and how to maintain them. We reassigned people to act as key account managers, so we could support them more efficiently. I appointed myself to be a key account manager for two of our top clients.”
Another challenge, however, was providing technical services to clients. No longer able to fly experts in from Europe, services had to be provided by local staff with assistance provided remotely through digital channels, such as video conferencing and virtual reality.
These changes enabled Andritz China to continue operating during the pandemic which coincided with an investment boom in the pulp and paper market.
“Thanks to the changes we introduced, we ended up extremely busy,” Schmitz recalls. “In 2022, we had our highest order intake and have been continuously increasing our profitability.”
The newfound independence of Andritz China helped the company grow from strength to strength, both during and after the pandemic.
With the completion of the company’s new workshop in mid-2023, Andritz China had the ideal centerpiece with which to showcase its industrial 4.0 solutions. Andritz China also invested heavily in digital solutions to improve its supply chain, providing real-time data from its thousands of suppliers.
Ever focused on cost savings and efficiencies, Schmitz made use of the fact that Andritz China was in an ideal location to source much of the wider company’s equipment.
“I convinced the board that if we handled purchasing on behalf of another Andritz company, we could save an additional five percent because we were buying locally and exporting globally. So that’s become a real additional business of ours as well,” Schmitz says.
“These improvements have helped us cover all our cost increases. As a result, our clients are buying the same machines from us at basically the same cost or lower compared to 10 years ago.
“This would seem shocking in Europe or the United States, but here in China, you are exposed to very different market conditions. This focuses your thinking toward maintaining cost competitiveness. And all our suppliers are thinking the same way, everybody has the same ideas and that makes it possible.”
“Sometimes outside pressure can focus your team and help get things done.”
As a result, 2023 was another record sales year for Andritz China with a historic EBITDA.
“We gained a better profile in the eyes of our customers which helped us gain more market share and overtake our key competitor on chemical kraft equipment,” Schmitz says.
These successes have been recognized by the European Chamber of Commerce, with Andritz China winning various awards, including most profitable and most innovative foreign company in South China.
As a result of its global setup reorganization, Schmitz has now been appointed as Head of Pulp and Paper for the whole Asia–Pacific region.
“We are using what we have learned here in the Chinese market and applying this to the rest of Asia,” he explains. “We have big organizations in India, Japan and Indonesia which we are supporting with our Chinese team, similar to how Andritz China initially functioned with support from Europe.
“Over the long-term, we want these branches to get more expertise and become more independent, while also benefiting from the synergies we have internally to support each other.”
Reflecting on the events leading up to now, Schmitz admits that the pressure caused by the pandemic was a catalyst for change.
“Working during a period of a crisis requires a special set of skills,” he says. “You need to unite the team and give them confidence so they can be independent. By providing a clear focus on what needs to be achieved and getting buy-in, you can actually get more done and more efficiently because everyone is focused.
“Leadership is about motivating a team in terms of focus and direction. A team must understand how they are part of a whole and why their actions are important. So you need to give sufficient acknowledgment, feedback and motivation to build up a good team culture.”
Schmitz encourages this by having open discussions with people across the entire business, regardless of their seniority.
“One of the most important aspects of leadership is communication, and it has to go both ways. I can’t just call out into a forest, I also need feedback. And this needs to be fostered daily to encourage two-way discussion.”
As Andritz China continues its expansion across the Asia–Pacific region, Schmitz is confident about the road ahead.
“At the start of the pandemic, things looked dire, but our performance shows our strategy worked out nicely. We were like a kid who had to grow up faster than planned, and now it’s our turn to help the wider business.”
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