[CemExec] Jouni Salo, KHD Wedag CEO: Company in transition looks ahead (Part 1 of 2)

Following KHD Wedag's recent reorganization, CemWeek spoke to the company's CEO, Mr. Jouni Salo, about the changes, the industry and strategy. We also touched upon the Colonge-based industry major's success in Asia and in particular India and discussed what has brought this success.

CemWeek: Thank you for taking the time to talk to CemWeek today. A lot of things are going on at KHD that we look forward to hearing your views on. While we are of course familiar with KHD, perhaps we could nonetheless start with you telling us a bit about the group?

Mr. Jouni Salo is KHD Wedag's CEO, based in Cologne. Mr. Salo is Finnish by birth and has spent more than 25 years working in the industrial plant equipment sector, most recently with Metso Minerals as head of the construction materials division.

His career has taken him to many different regions of the world but he has always been involved with industrial plant equipment. Mr. Salo joined KHD two years ago as head of the cement operations, when the cement market was still growing strongly with a brief to further expand this business, and was subsequently appointed as Chief Executive Officer in April 2009.

Mr. Jouni Salo: Thank you. Of cousre, to start with KHD has a very long history, over 150 years, and the company has changed a lot over that time period. Today we are very much focused on our core skills and on serving our customers, which are predominantly in the cement sector.

KHD's process knowledge has always been at the centre of our offering to our customers and we are putting renewed emphasis on understanding the changing needs of our customers and supporting their growth in both mature markets such as North America and Western Europe and in emerging markets, such as India. I think that KHD, over the years, has been associated with excellent quality equipment and this has not changed.

 

CW: KHD recently underwent some important changes. Why did you decide to reorganize the company? Why now and how will this change help you position you better within the cement industry?

JS: I think that you have to see the reorganization of the company in the context of the cyclical nature of the industry that we operate within, as well as the recent history of KHD.

The last ten years have seen tremendous changes in both our customer base and in the competitive landscape and I would argue that this is simply the latest step in the evolution of KHD. The whole industry witnessed perhaps an unprecedented boom in demand up to the end of 2008 and this made us somewhat complacent.

Our focus now is very much on taking what we already do and improving this. Being closer to customers, understanding their needs and making sure that we meet and exceed those requirements is central to our competitive offering.

Similarly, improving and strengthening our product portfolio, putting increased emphasis on our environmental offering and expanding our customer services business is also part of ensuring that we are competitive and able to fully meet the requirements of customers. We have been in this business for over 150 years and want to still be in the business in another 150 years.

 

 

CW: As the CEO, what are your priorities now post-reorganization?

JS: My main priorities are ensuring that KHD continues to improve its global competitiveness and that we maintain the momentum that is beginning to gather within our organization. KHD has a good reputation and a long history and we need to ensure that we are really providing our clients with the best possible service and really serving their needs.

I want to make KHD into a focused, competitive and hungry organization that consistently exceeds the expectations of our customers.

I believe KHD is clearly recognized in the industry as a leader for its technical capabilities and, in particular, our knowledge of pyro-processing and grinding. This is really at the heart of our value proposition. The area that we are perhaps not recognized for is our competencies in our customer service offering ÔÇô from spare parts, plant audits, made to order parts, services with tools, technical assistance and consultancy, and training. This is an integral part of our strategy and we believe that we have a lot to offer in this area.

 

CW: While KHD has been successful in many parts of the world, the particular success in Asia strikes us as notable. To what factors would your attribute the success in Asia relative to other regions?

JS: Our success in Asia is very much due to the quality and dedication of our people there. At the moment, when we think of Asia, our biggest area of activity is India and I particularly enjoy visiting our office in Delhi and witnessing the enthusiasm and drive of KHD's staff there. We have been in the Indian market for a long time ÔÇô over 40 years ÔÇô and having a local presence is very important to serving our customers successfully.

As regards for regions where we are less strong, I would have to highlight China as a market where we have, to date, only had limited success. It is probably fair to say that we are not the only company in the cement business who would say this. The reasons for this are many and are a mixture of internal and external factors.

 

 

 

CW: With cement technology being fairly mature and Chinese low-cost options growing, how will you sustain market share, particularly in emerging markets, going forward?

JS: This is a very good question and certainly one that we are constantly asking ourselves. We recently held an internal seminar to discuss this issue and the central theme of this question is how can KHD become even more competitive.

There are many aspects to being competitive, but our conclusion was that the definition of being competitive was meeting, and exceeding, the needs of our customers. "Low-cost options," as you call them, are certainly growing, but in a market like India we can compete because we have a local presence and can increasingly utilize local manufacturing options.

We see the local presence and the understanding of customer requirements as key to this. And we believe that research and development will give us a competitive edge, and we are continuing to invest in this area.

 

 

The second part of the interview can be found here.